The Dukes employment discrimination litigation – stemming from the U.S. Supreme Court’s seminal ruling this past spring in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) – remains relevant for all employers. The lessons of Dukes are wide and varied for a myriad of issues involving workplace class action litigation. The Dukes litigation is undoubtedly well-known to our readers, as its meaning and implications have been the focus of intense scrutiny. In the SCOTUS case, the district court certified a class in 2004, which was seeking both injunctive relief and back pay, under Rule 23(b)(2). The Supreme Court unanimously held that individualized monetary relief claims such as back pay cannot be certified under Rule 23(b)(2). In the 5-4 portion of the opinion, the Supreme Court held that plaintiffs failed to satisfy the Rule 23(a) commonality requirement, which requires that plaintiffs present significant proof that an employer operated under a general policy of discrimination. The Supreme Court’s majority reasoned that plaintiffs’ statistical evidence was insufficient to establish that plaintiffs’ theory could be proved on a class-wide basis. Plaintiffs had provided regional and national data showing pay disparities, but the majority determined that the regional disparity may be attributable to only a small set of stores, and cannot by itself establish the uniform, store-by-store disparity upon which plaintiffs’ theory of commonality depended.
Additional chapters in the class action playbook stemming from the Dukes litigation are now being written. On October 27, 2011, with much fanfare, the consortium of law firms representing plaintiffs filed their long-awaited amended complaint to “re-boot” their class theories on account of the SCOTUS ruling. The amended complaint in Dukes, et al. v. Wal-Mart Stores Inc., No. 3:01-CV-02252 (N.D. Cal.), is narrowed down to current and former female Wal-Mart employees in California. The amended complaint continues to challenge Wal-Mart’s allegedly discriminatory pay and promotion practices against women. Plaintiffs seek to certify an injunctive relief class under Rule 23(b)(2) of the Federal Rules of Civil Procedure and a Rule 23(b)(3) monetary relief class for back pay, front pay, and punitive damages. The new complaint scales back the proposed class size – from a nationwide class to one that encompasses California only. The new proposed class has 45,000 members, about 3% of the total class size proposed and certified – and then decertified – previously.
In their amended complaint, plaintiffs allege that women in Wal-Mart’s California stores also were less likely to be promoted, and waited longer for the promotions they received. In press statements (links here and here) accompanying their new pleading, class counsel referred to a new statistical analysis – conducted on a store-by-store and district-by-district basis – showing that women in the California stores have been paid less than men in comparable positions, although on average the women have more seniority and higher performance ratings than the men.
At the same time, class counsel announced they expect to file additional complaints around the country in the coming months covering current and former employees in other states. Their strategic response to the SCOTUS received significant media attention (read articles here and here).
Then, just one day later – on October 28, 2011 – another group of plaintiffs filed a tag-along gender discrimination class action against Wal-Mart in Texas entitled Odle, et al. v. Wal-Mart Stores, Inc., No. 3:11-CV -2954 (N.D. Tex.). Like its California counterpart, the Texas suit alleges Wal-Mart gave female workers fewer promotions and paid those in salaried and hourly positions less than men in comparable positions, even though the female employees on average had more seniority and higher performance ratings. Plaintiffs are looking to certify a class of female employees that could exceed 45,000. According to the complaint, stores in Texas instituted an application for employees interested in management-level positions that required them to agree to a set of conditions that plaintiffs claim had the purpose and effect of discouraging women from seeking such positions. Many of those conditions included unusual work schedules and the possibility of being forced to travel for six weeks at a time.
With the new amended complaint in California and the new lawsuit in Texas, the plaintiffs’ strategic approach is beginning to coalesce. Given that alleged gender-bias due to subjectivity and stereotyping by local managers is no longer available as a “glue” to hold the class together, plaintiffs are resorting to the notion that a single group of regional managers makes tens of thousands of pay and promotional decisions, merely because they may audit or oversee overall payroll budgets, notwithstanding that individual decisions are predominantly made at the store or district manager level. At first blush, this “one team” argument seems a little silly in that Wal-Mart is a very large organization even as to California and Texas. Plaintiffs may have scrubbed most references to local mangers’ “discretion” and “excessive subjectivity” from their new complaint, but they continue to target a lack of job-related criteria in pay and promotion decisions as the cause of gender disparities, which amounts to a repackaging of their same theory of subjective discretion rejected for class treatment in the Dukes decision. In the end, Plaintiffs’ state-wide claims may represent a downsizing of their proposed classes, but their complaint does not avoid the earlier defects with respect to a national class. Translated over to other workplace class actions, we would expect the plaintiffs’ class action bar to posit their future theories based on the notion that a small group of company executives collectively make pay and promotion decisions for entire regions, divisions, or even the whole nationwide operations of a company. The page from this playbook would seem to permit its use in many corporate contexts.