Analysis: Discrimination case may not go all Wal-Mart's way

NEW YORK, April 11 Mon Apr 11, 2011 8:02am EDT

Protesters hold signs in front of the Supreme Court while class action lawsuit Dukes v. Wal-Mart is being argued inside the court in Washington, March 29, 2011. REUTERS/Larry Downing

Protesters hold signs in front of the Supreme Court while class action lawsuit Dukes v. Wal-Mart is being argued inside the court in Washington, March 29, 2011.

Credit: Reuters/Larry Downing

NEW YORK, April 11 (Reuters Legal) - Oral arguments had barely finished in the Wal-Mart (WMT.N) sex-discrimination case at the U.S. Supreme Court when many commentators declared total victory for the retail behemoth. But interviews with legal scholars and civil-litigation experts suggest that the rush to judgment may have been premature, with at least a partial victory for the plaintiffs not out of the question.

The case, Dukes v. Wal-Mart Inc., centers on whether a group of up to 1.5 million current and former Wal-Mart workers was properly certified as a class by U.S. District Court in San Francisco -- a decision that created the biggest such class in U.S. history and that was upheld by the Ninth Circuit in 2007.

Wal-Mart wants the Supreme Court to decertify the class, arguing that Wal-Mart workers in different jobs in 3,800 stores with different managers could not have faced the same pattern of discrimination in pay and promotion decisions, and therefore should not be considered one class. Written broadly, a ruling dismissing the suit could effectively overhaul class certification standards, dimming the prospects for class-action lawsuits of all kinds.

But many experts are expecting a more nuanced result. "Even if they're so inclined, it will be hard (for the Court) to find a way to completely dispose of the suit at this point," said Michael Selmi, a professor of civil rights and employment law at George Washington University Law School in Washington, D.C. "It would be too inconsistent with previous case law. Other options are on the table."

'WOOLY MAMMOTH'

In one potential outcome, the justices could uphold the district court's decision that the plaintiffs potentially have enough in common to qualify as a class, but send it back to the district court to determine which specific rules of civil procedure apply. In this scenario, the court would provide guidance on whether a more stringent certification standard is appropriate. The plaintiffs would then have to begin anew the process of establishing class certification under these requirements, and the lower court could split the class into smaller components.

Such an outcome would be a blow to the plaintiffs, but it would not undermine this or future sex-discrimination lawsuits in a way that throwing out the case would, said Arthur Miller, professor of civil procedure at New York University School of Law. "Remanding the case might enable a district judge to take this monstrous class and subdivide it along rational lines, such as location, job description, or alleged type of discrimination," Miller said. "That way, you wouldn't have what some might call a wooly mammoth."

During the March 29 oral argument, Justices Sonia Sotomayor and Stephen Breyer hinted at another possible ruling: The court could uphold certification of the class and allow for possible injunctive relief, but not back pay or punitive damages. In this scenario, the case would return to the district court, where plaintiffs would argue that Wal-Mart must clarify how it makes pay and promotion decisions and ensure that managers are held accountable for their decisions. Plaintiffs would have to pursue monetary claims separately. Such a ruling would make it more difficult, but not impossible, to recover back pay in class-action suits.

JUSTICE THOMAS A 'WILD CARD'

To be sure, Justice Anthony Kennedy, often the deciding vote when the Court splits on ideological lines, expressed deep skepticism about the plaintiffs' case. "Your complaint faces in two directions ... it seems to me there's an inconsistency there, and I'm just not sure what the unlawful policy is," Kennedy told Joseph Sellers, a partner at Cohen Milstein Sellers & Toll, who argued for the plaintiffs.

Kennedy's questioning -- along with acerbic comments by Justice Antonin Scalia -- led many observers to declare that the plaintiffs' case could be doomed. "My sense from the oral arguments is that Kennedy and others may be preparing to deliver an opinion that will have implications beyond plaintiffs in the Dukes case," said Katherine Kimpel, a partner at Sanford Wittels & Heisler who served as lead counsel for the plaintiffs in the Velez v. Novartis sex-discrimination case, which resulted in the largest-ever U.S. employment discrimination verdict.

Kennedy may have tipped his hand, but the justices may not all end up voting as expected, said Alexandra Lahav, a civil-procedure expert and law professor at the University of Connecticut. Clarence Thomas, is a "wild card," Lahav argued, pointing to a 2002 ruling in another employment-discrimination case, Swierkiewicz v. Sorema, in which Thomas upheld the plaintiff's complaint and articulated a fairly low bar for bringing employment-discrimination lawsuits.

A statistical analysis of sex-discrimination cases before the high court also suggests that plaintiffs tend to fare well, though defendants in recent years have won several high-profile cases. Not including disability cases, plaintiffs prevailed in approximately 70 percent of all employment-based discrimination cases in the last two decades, according to research conducted by George Washington University's Selmi. The Wal-Mart case is also the first major sex-discrimination case before a Supreme Court that includes three women.

Theodore Boutros, a partner at Gibson, Dunn & Crutcher who made the oral argument for the defense, did not return an e-mail requesting comment on the case. Greg Rossiter, a spokesman for Wal-Mart, said the company declined to comment.

Lawyers for the plaintiffs, for their part, said they are prepared for a mixed result. "There is likely to be a nuanced resolution to this case," Sellers said in an interview. "The Court has a lot of options; it could go with us in one way and against us in another."

(Reporting by Moira Herbst of Reuters Legal; Editing by Eric Effron)

(This article first appeared on Westlaw News & Insight, www.westlawnews.com)

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