Legal View: Supreme Court's Wal-Mart sex-discrimination ruling

By John Dudrey The Daily Record Newswire One sure sign of summer in the legal community is when the U.S. Supreme Court unveils its most important (or at least most hotly contested) decisions of the term. In many instances, these cases become national news headlines and political fodder, with ramifications far beyond the law. Previous employment law cases that fit this description include Ledbetter v. Goodyear Tire & Rubber Co. (the gender discrimination case that prompted a major change in federal antidiscrimination law as it pertains to compensation decisions), Faragher v. City of Boca Raton (which established a defense employers often rely on in sexual harassment cases) and Ricci v. DeStefano (a case in which the court rejected an employer's attempt to disregard a standardized exam's results when the exam produced a workforce that was not racially diverse). This year was no different. Late last month, the court released its decision in Wal-Mart Stores Inc. v. Dukes. The question was whether a proposed sex-discrimination class action of 1.5 million female Wal-Mart employees could proceed as a class action rather than (practically speaking) as 1.5 million individual lawsuits. A federal trial court in California, and the Ninth Circuit Court of Appeals both said that the employees' case should indeed be "certified" as a class. In a 5-4 decision, the Supreme Court reversed. In simple terms, the court decided that the case could not proceed as a class because the employees could not show that their alleged injuries had a common factual basis, which is necessary for a case to proceed as a class action. Although the 1.5 million employees worked in stores scattered throughout the United States, and many of the promotion and compensation decisions they complained about were made by local supervisors, the employees alleged that a class was appropriate because the decisions were not individualized but instead were part of a "corporate culture" at Wal-Mart that actively discouraged women from advancement. The court disagreed with the premise, finding that the employees did not adequately explain how literally millions of discretionary employment decisions made by numerous managers and supervisors from around the country could stem from a common basis. The Supreme Court's decision is most applicable to large employers like Wal-Mart, which because of their size necessarily have to make lots of small-scale employment decisions that, when viewed collectively, may provide grounds for discrimination allegations. However, there are several important lessons for employers of any size. First, discretionary decision-making is not per se inappropriate. The Wal-Mart employees challenged the company's decentralized discretionary decision making, arguing that it was a front for an established practice and policy of discriminating against women. The court clarified that while a discretionary decision-making policy can result in discrimination, it is hardly illegal on its face and may in fact be a smart business decision. Second, companies should have strong anti-discrimination policies in effect and enforce them reliably. The court paid attention to Wal-Mart's equal employment policies, which weighed heavily against the employees' argument that Wal-Mart's de facto corporate culture was to discourage women from advancement within the company. Finally, important decisions (especially discretionary ones) should be supported with good documentation. If (and, more likely, when) discretionary decisions are challenged, employers must be in a position to explain why they were made. Strong and appropriate documentation is critical to surviving challenges. ---------- John Dudrey, an attorney with Barran Liebman LLP, represents management in employment litigation and provides advice in employment matters. Contact him at 503-276-2192 or at jdudrey@barran.com. Published: Mon, Jul 25, 2011