At U.S. Supreme Court, Christmas Comes Early for Wal-Mart

With just 18 days shopping days left until Christmas, the U.S. Supreme Court gave the retail giant Wal-Mart a wonderful holiday gift on Monday: the justices agreed to hear the company's appeal of a ruling that had permitted a massive class action employee discrimination lawsuit against it to proceed to trial. And, better yet, it's a gift that almost certainly will keep on giving. Not only did the Supreme Court action delay the case and thus improve Wal-Mart's bargaining position against its litigation opponents, there is every reason to believe that the court's conservative majority, consistent supporters of big business interests over the past five years, took the appeal to permanently block the lawsuit and free the company from paying billions of dollars in damages.

Even before the Supreme Court took the case, styled Wal-Mart Stores v. Dukes et al., the contest was renowned in legal circles for its sheer size and scope and longevity. The case is already nearly a decade old. Wal-Mart is one of the largest private employers in the world. The U.S. Court of Appeals for the 9th Circuit certified an enormous class of potential plaintiffs -- perhaps as many as 1.5 million strong -- who claim that Wal-Mart neither paid nor promoted them on equal terms with men. The parties already have fought bitterly through vast civil discovery just to get the case this far -- indeed, the class of employee-plaintiffs already has gotten further than any individual plaintiff likely would have against the fiercely defensive corporate giant. But now it's all on hold, for six months at least, while the court undertakes its review.

Wal-Mart asked the justices to intervene, before trial, on two grounds. First, the company argues that the remedy being sought by all those plaintiffs -- billions of dollars in back pay under the Civil Rights Act of 1964 and other authority -- is unavailable to them even if they prevail at trial. Wal-Mart also argues that the class of former and current female employees arrayed against it is simply too large and undefined. From its brief: "This nationwide class includes every woman employed for any period of time over the past decade, in any of Wal-Mart's approximately 3,400 separately managed stores, 41 regions and 400 districts, and who held positions in any of approximately 53 departments and 170 different job classifications."

In asking the Supreme Court to stay out of the dispute, at least until after the long-awaited trial, the plaintiffs countered the company's two arguments. First, the plaintiffs contend, they are entitled to equitable back pay if they win just like most other civil plaintiffs. And second, they argue, as the trial judge found, that there is no "exemption" for huge companies in class-action law. From their brief: "The class is large because Wal-Mart is the nation's largest employer and manages its operations and employment practices in a highly uniform and centralized manner." No need to get involved, the plaintiffs told the justices, because there is no pressing conflict among the lower courts on the issue of certifying a large class.

In the 9th Circuit's 6-5 ruling, which is the subject of the appeal, the majority was blunt in its assessment of the latter of the two Wal-Mart arguments. "[G]iven that the class is suing by far the largest employer in the United States, we are unsurprised that Plaintiffs are seeking to represent such a large class," Judge Michael Hawkins wrote. (Incidentally, to show you the slim degrees of separation, Judge Hawkins presided Monday over the Proposition 8 appeal before the 9th Circuit. Arguing before him was Ted Olson, who is also the lead attorney for Wal-Mart in the Dukes case). Judge Hawkins then declared that the court was satisfied that the trial judge had properly evaluated the class-action claim against Wal-Mart before allowing it to proceed to trial. For example, he wrote:

The district court found that plaintiffs had provided evidence sufficient to support their contention that significant factual and legal questions are common to all class members. After analyzing plaintiffs' evidence, the district court stated: Plaintiffs have exceeded the permissive and minimal burden of establishing commonality by providing: (1) significant evidence of companywide corporate practices and policies, which include (a) excessive subjectivity in personnel decisions, (b) gender stereotyping, and (c) maintenance of a strong corporate culture; (2) statistical evidence of gender disparities caused by discrimination; and (3) anecdotal evidence of gender bias. Together, this evidence raises an inference that Wal-Mart engages in discriminatory practices in compensation and promotion that affect all plaintiffs in a common manner.

If the court rules in Wal-Mart's favor based upon the first question alone -- if the justices block the plaintiffs from money damages even if they were to win at trial -- it would be a huge victory for Wal-Mart because it would chill future class action lawsuits and enhance the bargaining power of corporate defendants charged with employment discrimination. But if the court rules in Wal-Mart's favor on the second issue -- if the justices say Wal-Mart is too large and unwieldy a company to be subject to this sort of a class-action lawsuit despite the trial judge's factual findings -- it could end class-action litigation as we have known it for decades in America. And that wouldn't just be a holiday gift to Wal-Mart -- it would be a present to every other large corporation that's accused in court of widespread wrongdoing.