Wal-Mart plaintiffs have no class

Everybody was watching this one pretty closely.  I know I’ve certainly been tuned into it.  And now that it’s over, I almost feel like something’s missing.  But you shouldn’t – because this is a big win for employers.

On Monday, June 20th, 2011, the Supreme Court unanimously decided that a sexual discrimination lawsuit – involving 1.5 million female Wal-Mart employees – could not continue as a class action.

The women’s allegation was that Wal-Mart fostered a corporate culture of sexual discrimination, which, they claimed, caused company-wide disparate treatment towards women – and so they thought they could act as a class.

But the Supreme Court didn’t believe the claim could continue as a class action, since the local managers in each of Wal-Mart’s 3,400 stores are allowed to exercise their own discretion over pay and promotions – making it very unlikely that so many managers throughout the entire United States would act in a common way, which was necessary for class action in this case.

Because of this set-up, there would have had to been a corporate directive from Wal-Mart that would lead to the alleged behavior.  But there was no substantial proof of this – only a sociologist’s analysis of Wal-Mart’s corporate culture, which the Court said was “worlds away” from “significant proof.”

The significance of this case is that in order to have a class action, you have to show that everyone’s claim “will produce a common answer to the crucial question why was I disfavored.”

It’s expected this will limit future use of class action against large employers.

To learn more about the Wal-Mart case, click here to read “A Huge Win for Employers” by our partners at Holland & Knight LLP.

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