Labor Law Report - October 2004

Contents

Court Certifies Largest Employment Class Action Ever

Illinois Attorney General Empowered To Bring Class-Action Lawsuits Under The Human Rights Act

Employee's Right To Bring Retaliation Suits Expanded In Illinois

Sixth Circuit Says Title Vii Protects Transsexuals From Sex Stereotyping

NLRB'S Crown Jewel Tarnished, But Election Results Stand

Employer Bound By Multiemployer Agreement Provision Affecting Other Workers

FLSA White-Collar Exemption Regs In Effect; Legislative Amendments In Limbo

Court Certifies Largest Employment Class Action Ever

On June 21, 2004, a federal court in San Francisco certified the largest employment class action ever against the world's largest employer. Dukes, et al. v. Wal-Mart Stores, Inc., No. C 01-02252 (ND Cal). The class consists of approximately 1.6 million women who have worked for Wal-Mart in hourly and salaried managerial positions and were subject to Wal-Mart's "pay and management track promotions policies and practices." The lawsuit, filed in 2001, alleges that Wal-Mart violated Title VII by paying women less than men in comparable positions despite higher performance evaluations and greater seniority, and by promoting fewer women to in-store positions and making women wait longer than comparable men to advance. The Dukes plaintiffs and class representatives (Ms. Dukes and five other women) blame the severe disparity in pay and promotions on company-wide policies and practices that allow for "excessive subjectivity which provides a conduit for gender bias that affects all class members in a similar fashion."

While no determination of the merits of a case is made at the certification stage, a court must consider whether the evidence supports a finding that: (1) a class is numerous enough; (2) common questions of law and fact exist; (3) the named plaintiffs' claims are typical of the other class members; and (4) the named plaintiffs are adequate representatives of the class. If these requirements are met, the court then considers whether a class action is the appropriate vehicle for the remedies sought and whether the class action would be manageable.

Numerosity

Class members are included in the suit until they affirmatively "opt out." With well over a million potential class members, numerosity was easily satisfied.

Commonality

The plaintiffs satisfied the commonality requirement for their pay and promotion claims with evidence that Wal- Mart's company-wide policies reflected excessive subjectivity in personnel decisions, gender stereotyping and a strong corporate culture that favored men. Store managers had a discretionary range for setting employees' pay, and women were typically assigned lower pay rates. Statistical evidence showed that pay for women was up to 15 percent lower than the pay of similarly situated men.

The plaintiffs also showed that Wal-Mart's promotion process relied heavily on subjective criteria and was essentially "a tap on the shoulder" grant at all management levels. Although women constitute 72 percent of the Wal- Mart workforce and 65 percent of hourly workers, they hold only 33 percent of all managerial positions and on average take a year and a half longer than men to reach higher management levels. Wal-Mart did not post promotional opportunities company-wide, and women were denied promotion or were delayed in promotion in percentages disproportionate to men.

The validity of this evidence was vigorously contested, but the court decided that, at the certification stage, the plaintiffs needed only to satisfy a minimum burden of presenting some evidence that there was company-wide discrimination. The ultimate validity of the evidence will be decided at trial by a jury.

Typicality

To satisfy the typicality element, the plaintiffs had to show that they possess the same interest as the class they want to represent and that they suffered the same injuries as the class. The court found typicality with regard to hourly employees because five of the six plaintiffs were hourlyrated. A tougher issue was whether the plaintiffs could represent salaried managerial positions since only one of them was a salaried manager. Because the class sought to represent only lower-level salaried managers, the court concluded that the distinction between salaried and hourly managerial employees was not significant at the class certification stage.

Adequacy of Representation

To satisfy the adequacy of representation element, the plaintiffs showed that they had no conflict of interest with the class and were represented by qualified counsel.

Appropriateness of the Class Action

A class action is appropriate when the party opposing the class (in this case, Wal-Mart) has acted or refused to act on grounds generally applicable to the class thereby making injunctive or declaratory relief appropriate for the class as a whole. Although the plaintiffs seek back pay and punitive damages, the court found that a class action was appropriate because the plaintiffs' primary claims were for injunctive and declaratory relief. The court noted that these claims, if successful, "would achieve very significant long-term relief in the form of fundamental changes to the manner in which Wal-Mart makes its pay and promotions decisions nationwide that would benefit not only current class members, but all future female employees as well."

Manageability of the Class

Wal-Mart argued that sheer size of the proposed class would make it completely unmanageable; because each employee's case was different, there would have to be thousands of individual mini-trials to resolve the claims of discrimination made by the class. The court rejected this argument, observing that "[i]nsulating our nation's largest employers from allegations that they have engaged in a pattern and practice of gender or racial discrimination simply because they are largewould seriously undermine the imperatives [of Title VII]." The court acknowledged that determining the remedy for each class member would be difficult, but nevertheless found that it was manageable.

What does the Wal-Mart Certification Mean to Employers?

The significance of the Dukes certification, recently appealed to the Ninth Circuit, has yet to be determined. Dukes is nevertheless troublesome because it may spawn copycat actions against other large, nationwide employers. Given the ongoing wave of Fair Labor Standards Act collective actions filed against large retail employers, class actions like Dukes are an unwelcome development. Dukes suggests that courts will not shy away from certifying a class because of its...