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Supreme Court rules for Wal-Mart in massive job discrimination lawsuit

By Bill Mears, CNN Supreme Court Producer
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Supreme Court: Wal-Mart case too big
  • NEW: Plaintiff Betty Dukes says she will "proceed forward" and urges other women not to be discouraged
  • A giant class-action lawsuit was not justified, the high court rules
  • The ruling eventually could affect nearly every private employer, large and small
  • Scalia: No "significant proof that Wal-Mart operated under a general policy of discrimination"

Washington (CNN) -- The Supreme Court put the brakes on a massive job discrimination lawsuit against mega-retailer Wal-Mart Stores Inc., saying the plaintiffs had not shown justification for sweeping class-action status that could have potentially involved hundreds of thousands of current and former female workers.

The 5-4 ruling Monday -- which addressed the claims in the lawsuit only in terms of whether they supported such a huge class action -- was a big victory for the nation's largest private employer, and the business community at large.

The high-profile case -- perhaps the most closely watched of the high court's term -- is among the most important dealing with corporate vs. worker rights that the justices have ever heard, and could eventually affect nearly every private employer, large and small.

"On the facts of the case," wrote Justice Antonin Scalia for the majority, the plaintiffs had to show "significant proof that Wal-Mart operated under a general policy of discrimination. That is entirely absent here."

He added, "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."

While this particular class action has effectively ended, the individual plaintiffs could band together and file a series of smaller lawsuits aimed at individual stores or supervisors.

Plaintiff Betty Dukes told CNN affiliate KRON she was disappointed, but not altogether discouraged by the ruling and urged other working women not to give up hope.

"The Supreme Court has definitely muddied the waters for civil rights class-action lawsuits," she said. "We will proceed forward and we will continue to believe that this case has some merits to be judged upon."

Wal-Mart tops the Fortune 500 list

Four more liberal justices agreed this particular class should not proceed to trial, but criticized the majority for not allowing the female workers to move ahead with their claims under a different legal approach.

"The court, however, disqualifies the class from the starting gate," wrote Justice Ruth Bader Ginsburg.

"Wal-Mart's delegation of discretion over pay and promotions is a policy uniform throughout all stores," said Ginsburg, arguing the plaintiffs' claims had some validity. Establishing that delegation of discretion "would be the first step in the usual order of proof for plaintiffs seeking individual remedies for companywide discrimination." She was supported by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.

The company said it was pleased with the court's decision.

"As the majority made clear, the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy," said Gisel Ruiz, a company executive vice president. "Wal-Mart has a long history of providing advancement opportunities for our female associates and will continue its efforts to build a robust pipeline of future female leaders."

At issue was whether as many as 1.6 million current and former female Wal-Mart employees could make a unified claim of systemic discrimination, which they say has occurred over the past decade, at least. The plaintiffs alleged women were paid less than, and were given fewer opportunities for promotion than, their male counterparts. They sought back pay and punitive damages against the world's largest retailer.

A divided 6-5 ruling by the San Francisco-based 9th U.S. Circuit Court of Appeals last year had allowed the combined, multiparty litigation to move ahead to one trial, where a verdict against the company could result in tens of billions of dollars in damages.

The Supreme Court ruled only on whether the original lawsuit should be handled as a class action, instead of lower courts potentially being flooded with thousands of individual discrimination claims against the company. If the justices had ruled against Wal-Mart, permitting class-action status, it could have put severe pressure on the company to settle the claims out of court.

The lawsuit alleged the company's "strong, centralized structure fosters or facilitates gender stereotyping and discrimination." The workers who brought the suit also said women make up more than 70% of Wal-Mart's hourly workforce but in the past decade made up less than one-third of its store management.

The litigation was filed in 2001 by Dukes, a store greeter in Pittsburg, California, along with five of her co-workers from different facilities. She and another of the original six plaintiffs attended the oral arguments in Washington in March.

"I brought this case because I believe that there was a pattern of discrimination at Wal-Mart, not just in my store, but I believe that it is across the country," she told CNN at the court. "Since we have filed our lawsuit in 2001 I have heard from numerous women telling me basically the same story as mine of disparate treatment in lack of promotion as well as in lack of pay."

The company protested the size of the class action, which it called "historic" in scope, saying it would be too onerous to litigate. The company has more than 4,300 U.S. facilities in 41 regions.

Most workplace discrimination lawsuits fail to reach a court for resolution, according to data compiled by the federal Equal Employment Opportunity Commission.

In 2003, when the Wal-Mart litigation was in its preliminary court stages, about 27,000 sex discrimination claims nationwide were resolved administratively by the Equal Employment Opportunity Commission, little changed from the prior decade. More than 57% -- some 15,000 claims -- were ruled administratively to have "no reasonable cause," and those usually were dismissed.

Just over 10% were judged to have merit, resulting in a total of $94.2 million in settlements, or $34,200 on average per case, according to the data, which include all such claims, not just those involving Wal-Mart.

The case was also a clash of dueling cultures -- some have dubbed it the Battle of Bentonville vs. Berkeley, for the corporate headquarters and the home to the liberal legal team outside San Francisco where the lawsuits first percolated.

While the high court split on whether there was a common policy of discrimination at Wal-Mart, all nine justices agreed on the key questions of damages: The class-action claim lacked merit, said the court, because the plaintiffs sought individual awards of back pay for the women. Such "monetary relief" claims could not be made under the current class-action certification rules, the ruling said.

"Class counsel has planned for various outcomes before the Supreme Court -- including this one -- and have put in place plans to assist as many women Wal-Mart class members as possible with their claims," said a joint statement issued by a group representing the plaintiffs. "The fight for justice will continue."

Declaring class-action status for the lawsuit would have raised the financial and judicial stakes considerably, since more individual plaintiffs could have joined, creating greater potential liability for the company. In federal courts, such certification must generally follow well-established principles to ensure a lawsuit does not become so large as to be impracticable, and does allow the parties to fairly represent the common interests of the larger class of plaintiffs.

Wal-Mart also has been accused in separate lawsuits of discrimination against African-American truck drivers and workers with disabilities. In 2001 the company settled 13 lawsuits by paying out $6 million. It employs 1.4 million people in the U.S. alone.

The case is Wal-Mart Stores Inc. v. Dukes (10-277).