Supreme Court Ruling on Wal-Mart: A Win for Employers

The following excerpts are from the Workplace Class Action blog of Seyfarth Shaw LLP, one of the nation’s leading national employment and labor law firms. (To read the full posting, go to workplaceclassaction.com)

Today, the U.S. Supreme Court issued its long-awaited and much anticipated opinion in Dukes, et al. v. Wal-Mart Stores, Inc. The Supreme Court reversed, and ruled in favor of Wal-Mart.

The decision is likely to spark a transformation of Rule 23 class certification law, and the workplace class action litigation is apt to change dramatically in the future. In short, the Supreme Court’s opinion re-positions the goal posts on the playing fields of how workplace class actions are structured, defended, and litigated.

In a 5 to 4 ruling, the SCOTUS held that plaintiffs failed to demonstrate commonality under Rule 23(a)(2), and unanimously held that the back pay claims could not be properly certified under Rule 23(b)(2).

The impact of the ruling will be significant to employers for their approach to employment discrimination litigation. As such, Dukes determines how much, for purposes of Rule 23(a), class members must have in common for a class action to be certified and the extent to which claims for money damages can ever be certified under Rule 23(b)(2).

The SCOTUS ruling in Dukes addresses several cutting-edge class action issues. These issues are of substantial importance to employment discrimination class-action litigation and to employers generally because it establishes a roadmap for plaintiffs' lawyers and defense counsel alike in approaching class certification briefing and hearings.

The new roadmap is decidedly more favorable to employers than before. Employers should be upbeat in terms of the Supreme Court's articulation of the required showings plaintiffs must make in the future to certify an employment discrimination class action. In short, the bar has been raised.

The impact of the Dukes case also impacts all employers’ human resources administration, policies, and procedures. As a result of the decision, employers should review HR practices related to pay and promotion decisions -- subjective or not -- to determine whether they are adversely impacting any classification of employee. Employers should design any subjective decision-making process and procedure carefully, by linking the process and procedure directly to each position and criteria for performance, ensuring that managers closest to performance are trained to make effective decisions, and consider an appeal process for employees considered but not selected for promotion or training opportunities. Employers should review their programs aimed at increasing diversity and preventing discrimination to ensure that they are being implemented effectively, and should not avoid implementing these programs. Further, employers should continue providing training and communications regarding company policies, including those relating to equal employment opportunities, non-discrimination, and career opportunities.

Upcoming Seyfarth Webinars On Dukes:
On Tueday, June 21, 2011, at 12 ET/11 CT/9 PT, Seyfarth Shaw LLP is hosting a short, interactive Webinar on the Dukes ruling, and initial thoughts regarding the impact of the ruling on employers, and what it means for the future of workplace litigation.

Click here to register.

Gerald L. Maatman, Jr. is a partner of Seyfarth Shaw LLP, where he is resident in the firm’s Chicago and New York offices. Laura J. Maechtlen is a partner in the San Francisco office of the firm, and serves on the Firm Diversity Action Team’s Executive Committee.