California court denies certification in regional Walmart class action

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September 3, 2013

California court denies certification in regional Walmart class action 

Courtney L. Davenport

In yet another setback for female employees claiming Walmart discriminated against them, a California district court has denied class certification to 150,000 employees in that state, finding that their new evidence does not overcome the concerns the Supreme Court cited in decertifying the nationwide class in Wal-Mart Stores, Inc. v. Dukes. The plaintiffs have appealed. (Dukes v. Wal-Mart Stores, Inc., 2013 WL 3996000 (N.D. Cal. Aug. 2, 2013).)

“The decision is a big disappointment. We believe we had supplied the evidence necessary to satisfy the standard for class certification, and obviously [the court] disagreed,” said Joseph Sellers of Washington, D.C., one of the plaintiffs’ attorneys. “It is also a decision we believe reflects some interpretations of the law, particularly the Wal-Mart decision, which we believe are incorrect.”

The women, who are the original plaintiffs in the national suit, allege disparate treatment and impact, claiming Walmart’s discretionary pay and promotion policies favored male employees. After the Supreme Court’s decertification—which found that the plaintiffs’ evidence did not prove a companywide discriminatory policy that affected all potential class members—employees in several states filed regional class actions. The California plaintiffs gathered new statistical evidence that, they say, shows a consistent pattern of discrimination across different levels of decision-making.

In his opinion, Judge Charles Breyer said that the new analyses show no statistically significant store-level disparities. But the plaintiffs contend that the court focused on the wrong statistics. They performed two analyses: One looked store-by-store to determine how many had disparities, while the other, called a sign test, compared the number of stores that would have disparities in a normal situation with the number of Walmart stores with disparities. Although it’s true that individual stores had no statistically significant disparities—such small samples rarely do—the first test analyzed stores at the district level and showed that in two of the three regions, women were underpaid compared to men in 80 to 85 percent of the stores.

The sign test also showed a glaring disparity: Normally, about 5 percent of stores have women paid less than men, 5 percent have men paid less than women, and the remaining stores have an even distribution. But women were paid less in one-third of the Walmart stores, and none of the stores had women who were paid more. Sellers said Breyer dismissed the sign test in one sentence without really addressing it.

“The judge adopted a standard--completely new and unfounded--that to satisfy the commonality requirement, you have to show that disparities adverse to the group seeking class certification are individually significant in at least a majority of the decision-making units,” he said. “The standard would, if allowed to predominate, set a very high bar that very few cases would satisfy and, more importantly, that is not a bar that either the Supreme Court or the economic [experts] require or even endorse.”

The court also ruled that the plaintiffs did not show disparate impact because the discretion given to managers—who were told to make decisions based on such vague factors such as leadership ability, common sense, and being a self-starter—meant Walmart provided no uniform guidance, making it incapable of being accused of disparate impact. But the plaintiffs argue that in Wal-Mart, the Supreme Court said parties bringing disparate impact claims can challenge a subjective decision-making system if they show that there were discrete employer practices and that managers making decisions had a common motive when they exercised discretion. The Court did not explain what would constitute a common motive. The plaintiffs say the standard requires them to show the employer provided a common set of factors and directives that all the managers had to interpret, which Walmart did.

“These factors provide evidence of a common mode for exercising the discretion Walmart entrusted to its managers, as they were each directed to interpret and apply the same factors. That these factors are susceptible to multiple interpretations permits the exercise of discretion the plaintiffs were challenging,” said Sellers. “The fact that the factors are poorly designed and allow broad discretion merely reflects the basis on which these factors can and should be challenged under a disparate impact theory of liability.”

Employees have filed similar suits in Florida, Tennessee, Texas, and Wisconsin, and more suits are expected in the coming months. The suit in Tennessee involves a region that also has stores in Alabama, Arkansas, Georgia, and Mississippi. The Texas and Tennessee courts dismissed the suits on limitations grounds, holding that the plaintiffs could not apply the tolling granted to the nationwide class to their smaller class actions. Both courts expressed displeasure at so holding but said they were bound by precedent. The Tennessee court certified the question to the Sixth Circuit, which hasn’t yet decided whether to hear the appeal. A trial court in Wisconsin held that the plaintiffs’ allegations were too complicated, and they have moved to amend the complaint. The Florida court hasn’t yet ruled on Walmart’s motion to dismiss. Sellers said the women are determined to continue the fight.

“We recognize we have hurdles. We’re not surprised by them. The courts are interpreting new legal standards, not all fully explained by the Court, so we’re trying to proceed in relatively uncertain legal terrain,” he said. “As a practical matter, without the ability to pursue their claims together, most women will never have the opportunity to vindicate their rights. They should absolutely have their day in court.”

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