Protesters hold signs in front of the Supreme Court over Dukes v. Wal-Mart Stores Inc. on March 29, 2011
The Supreme Court's decision to throw out a sex-discrimination suit by a large group of female Walmart employees may seem like a mere procedural decision on class-action rules. But it is a much bigger deal: it significantly shifts power from workers to big employers.
The ruling on Monday in Dukes v. Wal-Mart Stores Inc. puts a halt to a class action that could ultimately have included as many as 1.5 million current and former female employees of Walmart. It also weakens Rule 23, the federal procedural regulation that allows plaintiffs to join together to file class actions.
The court ruled on two issues in the case: back-pay rules and class-action standards. The Justices were unanimous in ruling that the women were not eligible for back pay, but split 5-4 — along the court's now predictable conservative-liberal lines — on the more far-reaching class-action question. The 5-4 ruling against the employees was at odds with two lower federal courts, which had approved of the class action.
The Walmart women had put forward a classic case of sex discrimination. They noted that women fill 70% of the hourly jobs at the company but make up only 33% of the managers. They also introduced evidence of serious mistreatment, like their contention that senior managers often refer to female associates as "little Janie Qs." For its part, Walmart denied that it discriminates against its female employees.
The case focused on a requirement of class actions under Rule 23: that the plaintiffs bringing the suit must have a legal claim on the basis of "common questions of law or fact." The women insisted that they met the test because all were victims of Walmart's sexist corporate culture. Walmart insisted that there was no overall sexist culture, that each woman had her own individual set of facts and that the corporation as a whole was not responsible for the discretion (or potential mistakes) of managers at the local level.
In an opinion written by Justice Antonin Scalia, the majority of the court agreed with Walmart. The five most conservative Justices insisted that the women had failed to show the "commonality" that Rule 23 required. The women, Scalia insisted, "have little in common but their sex and this lawsuit." The majority dismissed the women's expert witness and anecdotal evidence of broader patterns of discrimination as falling "well short."
The court was also concerned that the class action would be unfair to companies being sued because they might be held liable for injuries calculated by a formula for the class as a whole, which would not allow them a full opportunity to defend themselves against specific claims.
The court's four liberal Justices, including all three women, dissented. Justice Ruth Bader Ginsburg, writing for the dissenters, argued that the employees had provided ample evidence that "gender bias suffused Walmart's company culture." The dissenters noted that Rule 23 does not require that all questions raised by the women be common — only that there be at least one common question of fact. And the dissent pointed to many common facts — like the promotion and compensation policies used by Walmart stores across the country.
By rejecting the class-action bid, the court has severely curtailed one of the few legal tools afforded to individuals who have disputes with corporations. Class actions let individuals who may not have the money to hire a lawyer band together and get top-flight legal representation — lawyers who in many cases will invest large amounts of their own money to develop a strong case. The nation's most skilled lawyers are not lining up to represent individual workers who say they were discriminated against by Walmart. They may, however, line up to represent a collective group of a million such women.
Class actions also give workers who are discriminated against, consumers who are injured by defective products and other victims a strength-in-numbers impact. It is not hard for an employer to say that an individual employee was bad at her job or was simply a complainer. It is harder to make that case to a judge or a jury when many thousands of workers all say the same thing.
Class actions do one more important thing: they make headlines. When a large group of women sue Walmart for discrimination, or a class of black customers sue Denny's restaurant for mistreatment (the chain settled such a suit in 1994), the lawsuits are big news — and the companies have to worry how their businesses will be affected.
It is no wonder big employers hate Rule 23. Class actions are not going away — no one is repealing Rule 23 anytime soon — but courts can whittle away at them by making them harder to bring. That is what the Walmart ruling does. It is the kind of hollowing out of rights that the court has been doing in many areas, from the right to be free from unreasonable searches to age discrimination.
The employees can, it should be noted, still sue Walmart — but they cannot do it as a group, or at least not such a large one. That makes life a lot easier for Walmart — and for other big companies worried about being sued for discrimination. The best lawyers are not as likely to represent individual employees. There will not be as much money to put together evidence of discrimination. And it is less likely that there will be headlines if other lawsuits are filed.
Class actions are intended to help victims of discrimination recover from their injuries, but they also have a larger impact on society. They help act as a check on the American workplace by giving companies a financial incentive to treat all employees fairly. By making it more difficult for workers to bring class actions, the Supreme Court has significantly dialed down the pressure on employers.
Cohen, a former TIME writer and a former member of the New York Times editorial board, is a lawyer who teaches at Yale Law School. Case Study, his legal column for TIME.com, usually appears every Monday.