Fenwick Employment Brief Special Bulletin: Wal-Mart Defeats Largest Class Action For Gender Discrimination; All Employers Benefit From Reduced Risk Of Class Claims Arising Out Of Subjective Decisions

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In a far-reaching and favorable decision for employers, the U.S. Supreme Court in Wal-Mart Stores, Inc. v. Dukes barred the “most expansive class action ever” as lacking evidence of the “common policy of discrimination” necessary for class treatment. Betty Dukes, a Wal-Mart greeter, and two other female employees sued Wal-Mart for gender discrimination on behalf of themselves and up to 1.5 million current and former female employees of the nation’s largest private employer. The purported class of current and former employees worked in stores across the country and were allegedly subjected to discrimination in pay and promotional opportunities.

With respect to pay and promotion decisions, Wal-Mart largely operates in a decentralized fashion. Decisions to increase the pay of hourly employees are generally committed to the local store manager’s broad discretion, which is exercised in a largely subjective manner. Decisions to promote employees to management and/or to select them for the management training programs were similarly left to the discretion of local store, regional and district managers applying their own best judgment. Plaintiffs did not allege any express corporate policy of discrimination. Indeed, Wal-Mart policy expressly prohibited discrimination on the basis of gender, and imposed penalties for any proven violation. Rather, plaintiffs asserted that Wal-Mart fostered an informal yet strong and uniform “corporate culture” of bias against women by allowing individual managers to use their subjective judgment in making pay and promotion decisions. The Ninth Circuit Court of Appeals agreed with plaintiffs that, by allowing its managers to use their subjective judgment, Wal-Mart exhibited a common policy of discrimination against women.

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