The Wal-Mart Class Action Victory


The Supreme Court ruled against a gigantic job discrimination lawsuit against Wal-Mart today, in a case many Court watchers described as one of the most important it will hear during this term.  In essence, the Wal-Mart Stores, Inc. vs. Dukes suit alleged that Wal-Mart has been practicing systematic discrimination against awarding pay raises and promotions to female employees.

Writing for the majority, Justice Antonin Scalia said the suit did not establish “poof of commonality,” meaning the plaintiffs did not make the case that all this alleged discrimination was emanating from Wal-Mart’s corporate offices.  “Here respondents wish to sue about literally millions of employment decisions at once,” wrote Scalia.  “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”

As anyone who has ever worked for Wal-Mart, or any other large corporation, can attest, you’ve got to rise pretty high on the food chain before the main office takes note of you.  Wal-Mart has a vast number of locations spread across the country.  The local managers make compensation and promotion decisions within broad guidelines set by regional and corporate management. 

The idea that one of those directives could be “oppress your female employees” is risible.  Certainly some hard evidence of such a directive would have been produced by now, perhaps by a disgruntled former location or regional manager.  The idea that central management would flirt with legal and public-relations disaster by telling store managers to discriminate against female staff is hard to swallow.  Why would they take such risk to push an odious and illogical policy?  Is the entire corporate structure of Wal-Mart supposed to be permeated with uncontrollable sexism?

This decision was one of those 5-4 ideological splits that reminds us why trusting liberals with the White House is a mistake that can haunt generations to come.  The Court liberals maintained that the existence of any “uniform policy throughout all stores” was sufficient to justify a class-action discrimination suit.  In essence, the main office is on the hook for everything done by local managers.

If the Court had accepted such reasoning, the stakes would have been incredibly high.  Roughly 1.6 million female Wal-Mart employees could have become involved in this suit, producing titanic judgments that would put a fortune in the pockets of trial lawyers. 

In the course of complaining about today’s decision, Marcia Greenberger of the National Women’s Law Center stumbled into an important truth.  “The court has told employers that they can rest easy,  knowing that the bigger and more powerful they are, the less likely their employees will be able to join together to secure their rights,” asserted Greenberger.  That’s transparently false – Wal-Mart’s size has nothing to do with the ability of individual plaintiffs to pursue discrimination claims, which were not the subject of the Supreme Court’s ruling.  But turn Greenberger’s complaint around, and suppose the Court had ruled against Wal-Mart.  Wouldn’t that establish the precedent that larger companies would become more vulnerable to big class-action jackpot lawsuits, due to their size? 

What effect would such a precedent have upon job creation, and upward mobility for existing employees?  It’s not hard to imagine corporate management deciding that it’s better to give out fewer raises and promotions to everyone, to avoid getting hauled into court by the next disgruntled employee who happens to belong to a privileged group that can obtain class-action standing.  Growing large enough to create exposure to this kind of suit would become dangerous.  Better to stay small enough to ensure that top management can personally supervise all promotion and compensation decisions, and police them for actionable bias!

In the absence of smoking-gun corporate memos directing local managers to treat female employees unfairly, determining the guilt of a very large company would become an act of judicial sorcery, in which the “corporate environment” would be weighed and measured by mind-reading trial lawyers.  The creation of a “culture of discrimination” would be a crime punishable by million-dollar fines… which would draw swarms of lawyers looking for million-dollar paydays.  Our economy doesn’t need any more job-killing courtroom séances.

According to an Associated Press report on today’s decision, “The business community has said that ruling for the women would lead to a flood of class-action lawsuits based on vague evidence,” while “supporters of the women feared that a decision in favor of Wal-Mart could remove a valuable weapon for fighting all sorts of discrimination.”  The business community’s fears are far more grounded in reality.  No local manager who is demonstrably guilty of discrimination or harassment is going to get off the hook because Wal-Mart, Inc. can’t be bankrupted with class-action suits.

The idea that Wal-Mart must live under the constant threat of such suits, in order to compel responsible corporate behavior, is an insulting delusion produced by the kind of thinking that has already siphoned huge amounts of money away from productive businesses, and into the hands of aggressive attorneys.  It’s easy to see why so many of the usual suspects are disappointed by today’s ruling.  Holding individuals responsible for their actions is much harder, and less lucrative, than beating on the corporate piñata until it bursts in a shower of settlement money.