Nearing the 10th anniversary of the U.S. Supreme Court's landmark ruling in Wal-Mart v. Dukes, the pay and promotion bias opinion has not been the existential threat for class actions that some predicted — at least on the wage and hour side of employment law. But the decision has shifted litigation strategies, attorneys say.
At the time the justices handed down their 5-4 June 2011 majority opinion in Wal-Mart Stores Inc. v. Betty Dukes et al ,many observers saw it as a blow to workers' ability to band together in lawsuits taking on businesses accused of violating employment laws.
But attorneys said that impact was greater on class actions brought under anti-discrimination statutes, like Title VII of the Civil Rights Act, than on collective actions brought under the main federal wage and hour law, the Fair Labor Standards Act, because those suits are governed by a different standard.
"There was a transformation of the biggest risk [for employers] being now wage and hour class and collective actions rather than employment discrimination, because it made it more difficult to certify those," said Gerald Maatman, a partner at employer-side firm Seyfarth Shaw LLP who oversees the firm's annual workplace class action report.
'Game-Changer' or 'Negligible at Best'?
The Dukes decision overturned the certification of a class of 1.5 million female Walmart employees, whose Title VII class action alleged Walmart's habit of giving managers discretion to make pay and promotion decisions resulted in male employees earning more money and holding a disproportionate number of leadership positions.
In a majority opinion written by the late Justice Antonin Scalia, the justices ruled that the workers had not cleared the hurdle for class certification under Federal Rule of Civil Procedure 23(a)(2), which requires parties to prove that the claims of putative class members share common questions of law or fact. Additionally, all nine justices rejected certification under a separate section of the class action rule, Rule 23(b)(2), which is designed for cases primarily seeking injunctive or declaratory relief.
The high court ruling was a "game-changer" in employment class action litigation, said Theane Evangelis, a Gibson Dunn & Crutcher LLP partner who represented Walmart in the Supreme Court case.
"The Supreme Court hadn't, until that point, articulated many guidelines governing class actions at all," Evangelis said. "It squarely rejected the notion that a class could be maintained where there was no glue to hold it together."
The massive class in the Dukes case included women who had varied experiences working for Walmart, and the plaintiffs didn't identify a discriminatory policy that applied to all of them, Evangelis said.
"The Supreme Court looked at all that and said there's no way you can bring a claim of discrimination on the basis of all of those very different women where there is only a policy against discrimination," she said.
However, class actions brought under Title VII are governed by the Federal Rules of Civil Procedure, whereas collective actions brought under the FLSA are not. Sometimes, FLSA claims are brought as "hybrid" class and collective actions when plaintiffs also make claims under other laws. But the certification standard for class action claims differs from the standard that applies to FLSA claims, said Joseph Sellers, a Cohen Milstein Sellers & Toll PLLC partner who represented the workers in the Dukes case.
The Federal Rules of Civil Procedure require a finding of "commonality" for a class action to proceed. That's a higher bar to clear than the requirement of Section 216(b) of the FLSA that workers must be "similarly situated" to pursue a collective action, Sellers said.
"The impact, if any, of the Walmart decision on the similarly situated determination is negligible at best," he said.
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