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Does the Wal-Mart decision matter?

Business and employee advocates seem to agree that the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes (No. 10-277 June 20,2011) is a landmark decision of some sort. The U.S. Chamber of Commercesays that it “is without a doubt the most important class action case in more than a decade.” According to the ACLU, the decision “increases the likelihood that discrimination will now go unremedied in many cases.” Newspaper editorial boards concur. The L.A. Times says that, because of the decision, “serious allegations against Wal-Mart dating back a decade won’t be tested in court, and similar lawsuits against other employers will never be undertaken at all.” A Wall Street Journal article says that the decision “is likely to reverberate in other class actions, making lower courts scrutinize whether large groups of employees are similar enough to sue together.”

The fact of the matter is that the decision breaks no new ground and is unlikely to have any long term effects on discrimination cases. This is an example of the Supreme Court’s correction of an error by the Ninth Circuit in applying established class action rules, not of the articulation of a new standard. It was not appropriate to use the class action device to to address pay and promotion decisions at 3,400 individual stores involving hundreds of thousands of employees. In fact, all nine justices agreed that the Ninth Circuit’s decision to recognize the class alleged in the case was wrong.

Employers should not expect that large class actions will become less frequent, particularly in the wage and hour area, where an unlawful pay practice can lead to multi-million dollar awards to employees. Wal-Mart itself has had a string of such cases go against it recently. On June 10, 2011, a Pennsylvania appellate panel affirmed the award of over $150 million in damages and penalties for wage and hour violations. Braun v. Wal-Mart Stores, Inc., 2011 PA Super 121. In December 2008, it agreed to pay up to $640 million to settle a number of wage and hour class actions around the country.

Discrimination class actions will also continue, where the plaintiffs can show that groups of employees with the same protected characteristic have different terms and conditions of employment than others. Ebbert v. Nassau County (Case No. 05-CV-5445 April 32, 2009) is a good example. Nassau County paid police communications workers (over 90 percent of whom were women) less then it paid fire communications workers (100 percent of whom were men). The county could not come up with a sufficiently convincing explanation for the disparity to win a summary judgment motion. On June 9, 2011, it submitted a proposed settlement of $7 million for court approval to settle the class action.