Wednesday, June 22, 2011

Wal-Mart and the Future of Employment Discrimination Class Action Law

By Associate Dean Michael Waterstone

This is another installment in the Summary Judgments summer series, "The Headline Club," in which Loyola Law School professors will discuss legal issues ripped from the front page.

On Monday, the Supreme Court decided Wal-Mart v. Dukes, reversing the Ninth Circuit's certification of a historically large class of women claiming sex discrimination against Wal-Mart. Employment discrimination lawyers have been eagerly awaiting the result in this case, realizing that either way, it would be determinative of the future of employment discrimination class actions (and maybe even class actions in other areas of law).

Other commentators whose views I respect have been quicker than me, and already weighed in on various parts of the Wal-Mart opinion - noting the Court's adverse reaction to the potential size and complexity of the class, the commonality analysis, and the Court's treatment of the social science evidence. Following up on an earlier post about this case, I write here to add my own voice to this chorus.

One issue in Dukes was whether this action - brought for injunctive relief, but also including claims for backpay - could be certified as a class action under 23(b)(2). This turned out to not be much of a fault line, as the Court unanimously held that claims for monetary relief may not be certified under Rule23(b)(2), holding that the claims for backpay were not incidental to the requested injunctive or declaratory relief. Fair enough: plaintiffs had tried to finesse this by not including claims for compensatory damages, which there was clear consensus was not enough. Future plaintiffs attempting reform litigation could choose to completely forego damage claims and focus on injunctive relief. Assuming some lawyer somewhere would take that case, but for the second part of the opinion - discussed below - this possibility would technically be open.

The second issue in the case looms larger from a "future of employment discrimination class action" perspective. Writing for the majority, Justice Scalia either set forth a new or clarified meaning of commonality for Rule 23(a) purposes (I take the former view). Under the Court's view, an alleged company-wide policy of discrimination supported by affidavits, social framework evidence, and regression analysis showing disparities in pay/promotion just does not cut it, especially in class as broad and diverse as the one plaintiffs were trying to certify. Justice Ginsberg, writing for the dissenters, suggests that a "common issue" for 23(a) purposes is just that: a "common issue." Here, she argues that plaintiffs have alleged company-wide payment and promotion procedures infected by bias, and offer the aforementioned evidence supporting their allegations. Justice Ginsberg argues (and I agree) that the Court's approach of focusing on differences within the class transforms the 23(a) commonality inquiry into the 23(b)(3) requirement that common issues predominate over individualized ones.

So far, this is all relatively doctrinal. But an important undercurrent is the divergent views on the role of employment discrimination and the acknowledgement of unconscious bias. Justice Ginsberg explicitly acknowledges unconscious discrimination and stigma as providing the glue to allow widespread discretion to open the door for company-wide bias ("The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware"). Justice Scalia, on the other hand, seems unwilling to move beyond anything less than a formal policy of discrimination on a group-wide basis, suggesting that managers will generally follow policies and not discriminate ("Surely most managers in a corporation that forbids sex discrimination would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all.").

The extent to which the employment discrimination law should be used to remedy deeper power balances in society, based on an acknowledgement of unconscious bias, is certainly contested terrain. I have written in the past about unconscious discrimination against people with disabilities, and explored ways for both employment discrimination and class action law to acknowledge both. Others believe that at core employment discrimination laws are about fault, and it is inappropriate to hold employers on the wrong side of laws like Title VII on the basis of unconscious bias. In either event, the Scalia position - seemingly to ignore unconscious bias as a social science phenomenon - seems misguided. As Ginsberg herself demonstrates in dissent, it exists: she specifically references the male bias for orchestra members which continued until members began to be chosen in a process that did not reveal their sex.

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