Legal Alert: Supreme Court Rejects Nation-Wide Sex Discrimination Class Action

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Executive Summary: In a decision that may curtail the proliferation of employment-related class actions, the U.S. Supreme Court has ruled in favor of Wal-Mart and decertified a nation-wide class of sex discrimination plaintiffs in a Title VII action against the company. Wal-Mart v. Dukes, No. 10-277 (June 20, 2011). The Court held that class certification was inappropriate because the plaintiffs could not show that there were issues of law or fact that are common to the class as a whole. The Court also held that the plaintiffs' back pay claims should not have been certified under Federal Rule of Civil Procedure 23(b)(2). This is significant because it means that plaintiffs requesting back pay in Title VII discrimination claims may now be required to seek certification under the more demanding procedures of Rule 23(b)(3).

Background: Wal-Mart operates approximately 3,400 stores and employs more than one million people. Pay and promotion decisions at Wal-Mart are generally committed to local managers' broad discretion, which is exercised in a largely subjective manner. The plaintiffs in this case claimed that local managers' discretion over pay and promotions was exercised disproportionately in favor of men, which had an unlawful disparate impact on female employees. The plaintiffs also claimed that Wal-Mart was aware of this effect and that its failure to limit local managers' authority resulted in discrimination against female employees. The plaintiffs sought injunctive and declaratory relief, punitive damages, and back pay but did not seek compensatory damages.

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