Electronic Retailer - August 2011 - 45

by JEFFREy D. KNoWLES AND THoMAS E. GILbERTSEN

Dukes a Hazard for Consumer Class actions?
The Supreme Court recently issued a muchanticipated decision reversing class certification in a California employment case alleging that Wal-Mart discriminates against women employees. In Wal-Mart Stores, Inc. v. Dukes, the court struck down a class of more than 1.5 million current and former Wal-Mart employees to challenge the retailer’s record on equal pay and promotion for women. While the decision will have its biggest impact in the labor litigation arena, it offers powerful tools for defending consumer class actions challenging advertisements and marketing practices. Class actions are used by consumers, employees, shareholders and other groups to present common claims against a common defendant. Used properly, class actions save time and promote consistency by aggregating similar claims against the same defendant and resolving them in a single proceeding. The system works when the defendant’s liability toward the entire class can be decided by the same body of evidence necessary to resolve the named plaintiff’s case. But even where individuals share claims arising under the same law, the system breaks down if each claimant’s case arises from significantly different facts. Class action benefits quickly erode if the defendant’s liability toward the class cannot be established by trying the lead plaintiff’s case. To weed out questionable cases, the class action rule – Rule 23 – requires a plaintiff to get court approval before proceeding as a class action. Rule 23 directs judges to scrutinize whether the proposed class involves sufficiently numerous members and common issues. In a nutshell, the question is whether the plaintiff’s own case is so typical of the class claims that trial of her case will fairly determine important issues for the whole class against the same defendant. While Rule 23 requires a plaintiff to prove that class treatment is appropriate, court decisions of a prior era minimized that burden and recognized presumptions in favor of class treatment. Over the past dozen years, the pendulum has returned. The Dukes case is another installment in the Supreme Court’s efforts to reinvigorate Rule 23 enforcement and abandon old presumptions favoring class treatment. The Dukes plaintiffs claimed that while Wal-Mart had a stated policy against gender discrimination, the retailer gave store supervisors so much discretion over pay and promotion decisions that it left the policy unenforced. Plaintiffs sought to certify a class of more than one million current and former Wal-Mart employees to pursue injunctive relief and back-pay, claiming that a strong and hostile “corporate culture” overrode the stated policy and encouraged gender bias to infect store managers’ decision making. When they moved for class certification, plaintiffs presented statistical evidence of pay and promotion gender disparities at Wal-Mart, as well as anecdotal reports of discrimination and a sociologist’s opinion that the company was “vulnerable” to gender discrimination. Plaintiffs presented evidence that women comprise 70 percent of Wal-Mart’s workforce, but only 33 percent of management positions, and that women were systematically paid less than men working in the same positions across the retailer’s regional divisions.
august 2011 | electronicRetaileR

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Electronic Retailer - August 2011

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