---FOR PRINT** Wal-Mart escapes $500 billion class action by one vote

Steve Korris Jun. 28, 2011, 5:41am


WASHINGTON - By a single vote, retailer Wal-Mart escaped a class action that could have cost half a trillion and would have imposed court control on pay and promotions.

Five Supreme Court Justices ruled that Betty Dukes and others can't pursue claims for every woman Wal-Mart has employed since 1998, while four believed they should.

The five focused on differences among about a million and a half women, and the four focused on their common characteristic.

Majority author Antonin Scalia wrote, "In a company of Wal-Mart's size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction."

"Respondents attempt to make that showing by means of statistical and anecdotal evidence, but their evidence falls well short," Scalia wrote.

Dissenter Ruth Ginsburg wrote, "Women fill 70 percent of the hourly jobs in the retailer's stores but make up only 33 percent of management employees."

"The plaintiffs' evidence, including class members' tales of their own experiences, suggests that gender bias suffused Wal-Mart's company culture," Ginsburg wrote.

With punitive damages available at $300,000 per person, Wal-Mart faced potential judgment starting around $450 billion.

U.S. District Judge Martin Jenkins, who certified the class in 2004, now serves on the California appellate court.

Ninth Circuit appellate judges in San Francisco affirmed him, six to five, after a rare "en banc" hearing before every judge in the circuit.

They would have allowed claims not only for an injunction to change employment practices but also for tens of billions in back pay.

Although the Supreme Court split on a class action, all nine Justices agreed it couldn't have included claims for back pay.

Dukes started working for Wal-Mart in 1994, in Pittsburg, Calif.

Scalia wrote that Wal-Mart started her as cashier, promoted her to service manager, and demoted her to cashier and greeter for disciplinary violations.

"Dukes concedes she violated company policy, but contends that the disciplinary actions were in fact retaliation for invoking internal complaint procedures and that male employees have not been disciplined for similar infractions," Scalia wrote.

She claims the Pittsburg store pays male greeters more, he wrote.

Plaintiff Christine Kwapnoski worked at Sam's Club stores in Missouri and California.

"She claims that a male manager yelled at her frequently and screamed at female employees, but not at men," Scalia wrote.

He wrote that a manager told her to doll up.

Plaintiff Edith Arana worked at Wal-Mart in Duarte, Calif., from 1995 to 2001.

Scalia wrote that she asked the store manager about management training and he brushed her off.

He wrote that she lost her job for failure to comply with time keeping policy.

"The basic theory of their case is that a strong and uniform corporate culture permits bias
against women to infect, perhaps subconsciously, the discretionary decision making of each one of Wal-Mart's thousands of managers," he wrote.

He wrote that any competently crafted class action complaint raises common questions.

"Reciting these questions is not sufficient to obtain class certification," he wrote.

"Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury," he wrote.

He quoted a precedent that what matters is not the raising of common questions but the capacity of a class proceeding to generate common answers.

He quoted a precedent finding a wide gap between an allegation of a discriminatory policy and the existence of a class of persons who have suffered the same injury.

He wrote that a plaintiff can bridge the gap by showing bias in testing and evaluating, but Wal-Mart has no company wide test or evaluation.

"The whole point of permitting discretionary decision making is to avoid evaluating employees under a common standard," he wrote.

He wrote that a plaintiff can bridge the gap with proof that Wal-Mart operated under a general policy of discrimination.

"That is entirely absent here," he wrote.

"Wal-Mart's announced policy forbids sex discrimination," he wrote.

He wrote that it imposes penalties for denials of equal opportunity.

He wrote that the only evidence of a general policy was research from sociologist William Bielby.

"Bielby's conclusions in this case have elicited criticism from the very scholars on whose conclusions he relies for his social framework analysis," he wrote.

He quoted Virginia Law Review authors who wrote that his work didn't meet research standards, presented specific facts instead of social framework, and provided no verifiable method for measuring and testing crucial variables.

Scalia wrote that Wal-Mart challenged Bielby's qualifications and asked for a hearing under the Daubert decision of the Supreme Court.

"The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class action proceedings," Scalia wrote.

He wrote that Bielby conceded he couldn't calculate whether 0.5 percent or 95 percent of employment decisions might be determined by stereotypes.

"If Bielby admittedly has no answer to that question, we can safely disregard what he has to say," he wrote.

He rejected research by statistician Richard Drogin and labor economist Marc Bendick, finding Wal-Mart promoted a lower percentage of women than competitors.

"Even if they are taken at face value, these studies are insufficient to establish that respondents' theory can be proved on a class wide basis," Scalia wrote.

"A regional pay disparity, for example, may be attributable to only a small set of Wal-Mart stores, and cannot by itself establish the uniform, store by store disparity upon which the plaintiffs' theory of commonality depends."

He wrote that their anecdotal evidence was too weak to raise any inference that all decisions are discriminatory.

He quoted Ninth Circuit Chief Judge Alex Kozinski, who wrote that class members held many jobs at different levels for variable lengths of time at 3,400 stores in 50 states.

Kozinski wrote, "They have little in common but their sex and this lawsuit."

On back pay, Scalia wrote that Wal-Mart is entitled to individual determinations of each employee's eligibility.

"The Court of Appeals believed that it was possible to replace such proceedings with Trial by Formula," he wrote.

"We disapprove that novel project," he wrote.

Chief Justice John Roberts concurred, along with Justices Anthony Kennedy, Samuel Alito and Clarence Thomas.

Justices Sandra Sotomayor, Elena Kagan and Stephen Breyer joined Ginsburg's dissent.

"Managers, like all humankind, may be prey to biases of which they are unaware," Ginsburg wrote.

"The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes," she wrote.

"The evidence reviewed by the District Court adequately demonstrated that resolving those claims would necessitate examination of particular policies and practices alleged to affect, adversely and globally, women employed at Wal-Mart's stores," she wrote.

"The dissimilarities approach leads the Court to train its attention on what distinguishes individual class members, rather than on what unites them," she wrote.

"Wal-Mart's delegation of discretion over pay and promotions is a policy uniform throughout all stores," she wrote.

"The very nature of discretion is that people will exercise it in various ways," she wrote.

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