In what was among the most-watched case of the term, the U.S. Supreme Court this morning reversed the Ninth Circuit’s decision in Wal-Mart Stores, Inc. v. Dukes, No. 10-277, which, if allowed to stand, would have been the largest employment class action in history. The case originated as a sexual discrimination case by Wal-Mart employee Betty Dukes and some other female employees, and grew into a class action case with 1.5 million plaintiffs—all Wal-Mart female employees were included whether or not they wanted to participate and whether or not they had a grievance with the company.
This decision carries important ramifications not only for large employers like Wal-Mart, but for any company targeted by class action complaints, as the class certification decision is often a case’s critical juncture. Certification puts enormous pressure on a defendant to settle, regardless of the case’s merit. Had the Court not reversed the Ninth Circuit’s decision, it would likely have led to even more class action complaints and certifications.
The decision has far-reaching implications for both Title VII class actions and for class actions generally, and an adverse decision for Wal-Mart could have dramatically expanded the circumstances in which class certification is appropriate. In line with the arguments included in DRI’s amicus curiae brief, the Court held that the proposed class would have lowered the burden on plaintiffs to show that they were victims of intentional, institutionalized discrimination, and restricted the right of defendants to present individualized defenses for the numerous and varied claims that companies may face. The Court found that the certification of the plaintiff class by the district court, affirmed by the Ninth, was not consistent with Federal Rule of Civil Procedure Rule 23(a)(2), which requires a party seeking class certification to prove that the class has common “questions of law or fact.” “Without some glue holding together the alleged reasons for those decisions,” the Court stated in its summary argument, “it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.” The Court also held that the plaintiffs’ backpay claims were improperly certified under Rule 23(b)(2).