Wal-Mart v. Dukes: Implications For Antitrust Class Actions

On June 20, 2011, the United States Supreme Court decided Wal-Mart Stores, Inc. v. Dukes, No. 10-277, holding that 1.5 million female Wal-Mart employees around the nation could not bring discrimination claims under Title VII of the Civil Rights Act of 1964 against Wal-Mart on a classwide basis, because the requirements of Federal Rules of Civil Procedure 23(a) and 23(b)(2) were not satisfied. The decision is yet another major decision from the Court this term relating to class actions. ( See, e.g., AT&T Mobility LLC v. Concepcion, No. 09-893 (U.S. Apr. 27, 2011)). The Supreme Court's decision in Wal-Mart clarifies the "rigorous analysis" that courts must conduct under Rule 23, and reaffirms that the Rules Enabling Act, 28 U.S.C. section 2072(b), cannot be applied in a way that changes substantive rights. Wal-Mart gives antitrust defendants additional potential ammunition to defeat class certification, but it remains to be seen how courts will apply Wal-Mart to a Rule 23(b)(3) antitrust class action instead of a Rule 23(b)(2) Title VII discrimination class action.

The Wal-Mart Decision

The named plaintiffs in Wal-Mart alleged that Wal-Mart's local store managers exercised their discretion over pay and promotion matters in a way that disproportionately favored men over women. Plaintiffs alleged that Wal-Mart itself was liable under Title VII because Wal-Mart knew its managers were treating men and women differently but refused to do anything about it. According to plaintiffs, Wal-Mart's inaction gave rise to a "corporate culture" of bias against women that affected each and every female Wal-Mart employee. (Slip Op. at 4). The District Court and Ninth Circuit both held that the prerequisites to class certification under Federal Rule of Civil Procedure 23(a) -- numerosity, commonality, typicality, and adequacy -- were satisfied. The Supreme Court reversed, holding that commonality was lacking because plaintiffs failed to prove the existence of common "questions of law or fact." Plaintiffs had presented three types of evidence to establish commonality: (1) "statistical evidence about pay and promotion disparities between men and women" at Wal-Mart; (2) "anecdotal reports of discrimination from about 120 of Wal-Mart's female employees"; and (3) expert testimony from sociologist Dr. William Bielby, who conducted a "social framework analysis" of Wal-Mart's culture and practices. (Slip Op. at 5-6). The Court held that none of this evidence constituted "significant proof" of a "general policy of discrimination" at Wal-Mart, as required to establish commonality in Title VII cases. (Slip Op. at 12-13) (the other method of establishing commonality in a Title VII case, showing a "biased testing procedure," had no application to the case)...