Today the Ninth Circuit issued its decision on the Wal-Mart gender discrimination class action, affirming that the class was properly certified. A group of women have sued the company claiming that women are systematically denied equal pay and promotion opportunities. Over two years ago, the trial court ruled they could proceed as a class, in the largest employment discrimination case ever certified as a class action. It is estimated to include approximately 1.5 million women.
Wal-Mart appealed on a host of grounds, ones that have implications for many other similar cases involving much smaller groups of employees. This is probably why the Chamber of Commerce and other employer groups filed amicus briefs in support of Wal-Mart's position.
The Ninth Circuit resoundingly rejected all of these defenses, ruling that the lower court was right all along. A copy of the court's decision can be found here. Two very happy-looking plaintiffs can be seen here.
The case revolved around Wal-Mart's pay and promotion practices, which granted managers a great deal of discretion to decide how much workers get paid, and who gets promoted. Under this system, although women made up a large proportion of the workforce, they are dramatically underrepresented in management. The plaintiffs presented statistical evidence of gender-based disparities, and expert testimony that Wal-Mart's corporate culture and employment practices were part of the problem.
Some of the important issues on appeal included (1) the kind of evidence and claims plaintiffs can use when claiming a company discriminates against a whole class of employees; (2) how courts should handle class actions that involve both significant damages, including punitive damages; and (3) whether Wal-Mart has a constitutional right to challenge every single class member's claim individually. All of these issues involve how much the plaintiffs claims are individualized, and how much they relate to institutional practices common to all of the female Wal-Mart workforce. Common issues must be significant enough to justify class treatment.
The Ninth Circuit rejected challenges to plaintiffs' statistical evidence and other expert testimony, ruling that Wal-Mart's position imposed too high a burden. It also ruled that evidence an employer uses excessively subjective practices can be the basis of a systematic discrimination claim -- in other words, it can be a problematic institutional practices that causes harm to a whole class of workers, and not just an individual problem. If there is a widespread failure to post promotions, and managers just play favorites, and if that means men systematically do better than similarly qualified women, treating this as just a series of random bad decisions that have no basis in the company's practices would be wrong.
The Court also ruled that the punitive damages claims could be considered classwide harm and not just a form of individual injury. Defendants in other similar cases have been arguing that class certification of punitive damages would not be proper. Allowing this claim to go foward raises the stakes significantly.
Finally, Wal-Mart argued that due process means it needs to be able to have an individual hearing on the extent to which each class member has been harmed. Although this is common in discrimination class actions, it is simply not possible here given the size of the class. If that were the rule, it would be impossible to certify this class. Courts in other cases have permitted alternative procedures, including using statistical formulas, as the Ninth Circuit noted here, in approving the formula-based approach the lower court endorsed.
This last point is important, because it adds up to a "we're too big to be held accountable" defense. It is also important because the practicality (in legalese "manageability") argument gets raised frequently in these kinds of cases, even for classes much smaller than Wal-Mart. Wal-Mart wrongly suggests that a formula allocation means it might have to defend against otherwise legal conduct. The aburdity of its postion is captured quite nicely in this quote from the Ninth Circuit opinion:
Moreover, as plaintiffs note, there is no danger Wal-Mart will be punished for conduct that is legal where it occurred, "because Title VII is a federal law which applies to every Wal-Mart store in the United States."
A good day for the Wal-Mart plaintiffs - congratulations. Their work is not done, though, because they have only won the right to go forward with their case to a jury. So any resolution may be far off.
One more thing to keep in mind: There was a dissenting opinion in the case, one that is an almost ad hominem attack on the class certification procedure itself. That position remains a vocal part of the public debate, and one I hope progressives can keep fighting against.
In the interests of full disclosure, I should state that I wrote one of the amicus briefs filed on behalf of the plaintiffs.