December 13, 2010

SUPREME COURT TO REVIEW DUKES V. WAL-MART

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Not surprisingly, the Supreme Court agreed to review the 9th Circuit en banc ruling in Dukes v. Wal-Mart (Wal-Mart Stores Inc. v. Dukes, U.S., No. 10-277, cert. granted 12/6/10). The case was initiated by six named female plaintiffs filed on June 8, 2001. The plaintiffs claimed that (1) women are paid less then men in comparable positions even when women have higher performance rating and more seniority and, and (2) that they are they less likely to be promoted and wait longer for their promotions than men. The plaintiffs charged that: “Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.”

The plaintiffs sought to certify a class of women working at any Wal-Mart store on or after December 26, 1998. Since Wal-Mart had 3,400 stores in 41 regions, the estimated size of the class in the original claim was approximately 1.5 to 1.6 million women. In 2004, the District Court for the Northern District of California certified a proposed class of females on issues relating to alleged discrimination, including liability for punitive damages, injunctive relief, and declaratory relief, but rejected a proposed class for back pay determination. In 2007, a three-judge panel of the 9th Circuit ruled 2 to 1 to affirm the district court ruling. Wal-Mart then appealed for the en banc review, in which a 6-5 majority ruled that Rule 23 was satisfied for injunctive relief, declaratory relief, and back pay, for females employed at Wal-Mart on or after June 8, 2001 (approximately 500,000 females), but remanded to the district court regardind a separate class of current female employees seeking punitive damages relating to the promotion claims and a separate class of female employees no longer working at Wal-Mart at the time the suit was filed.

The five dissenting judges argued that the majority rulings were “made with virtually no analysis” and is “wrong both as a matter of law and fact”, and that it establishes a split among circuit courts.

As reported by BNA:

The court limited review to the first question raised in Wal-Mart’s petition: whether claims for monetary relief can be certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure, or instead are limited to suits seeking injunctive and declaratory relief, and if so under what circumstances. The justices also asked the parties to address whether the class certification ordered under Rule 23(b)(2) is “consistent with Rule 23(a)” of the Federal Rules of Civil Procedure.

The ruling in this case will have implications for several other cases, most notably, Velez v. Novartis Corp., in which a jury nearly 3.4 million dollars to 12 named female plaintiffs after a 5-week trial in front of District Court Judge Colleen McMahon of the Southern District of New York, and four days later, awarded 250 million dollars in punitive damages for a class of 5,600 current or former female sales reps employed between 2002 and 2007.

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