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High Court Rules for Wal-Mart

By Human Resource Executive 06/21/2011 04:23:00

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The Supreme Court's ruling for the defendant in Dukes vs. Wal-Mart will make it harder for employees to mount class-action suits against companies. "Mere allegations or suggestions about corporate culture are not going to cut it," says one attorney.

When the U.S. Supreme Court announced its decision in Dukes v. Wal-Mart, it's a safe bet that the leaders at Wal-Mart headquarters in Bentonville, Ark., weren't the only ones smiling with relief.

The decision, employment-law experts say, has made it much harder, if not impossible, for workers to file massive class-action discrimination lawsuits against their employers, particularly large ones.

"It's a good day for employers and a good day for defense attorneys," says Gerald Maatman, an employment attorney at Seyfarth Shaw in Chicago. "The bar's been raised; the standard has been tightened."

Dukes vs. Wal-Mart was the largest-ever employment-discrimination case in U.S. history, involving approximately 1.5 million current and former female Wal-Mart employees, both salaried and hourly, from all 50 states, who alleged that the company discriminated against women on pay and promotion decisions.

In the decision, announced yesterday, the Court reversed an earlier, controversial ruling by the 9th U.S. Circuit Court of Appeals that Dukes v. Wal-Mart could proceed as a class-action lawsuit against the retailer. The nine Supreme Court justices ruled unanimously that the plaintiffs' back-pay claims could not be properly certified under Rule 23 (b)(2) of the Federal Rules of Civil Procedure -- sparing the company from having to potentially pay billions of dollars in back pay to the plaintiffs.

The ruling will effectively render class-action lawsuits by employees seeking monetary damages from the companies they work for a thing of the past, says John Coffee, a law professor at Columbia University School of Law in New York.