Corporate Counsel & Law.com: Dorsey & Whitney Attorney Mike Droke Weighs In on Wal-Mart vs. Dukes
In-House and Labor Lawyers Respond to the Supreme Court's Wal-Mart Decision
Corporate Counsel
June 22, 2011
In-house lawyers are still trying to assess the impact of the U.S. Supreme Court's decision in a massive gender discrimination class action against Wal-Mart Stores, Inc. On Monday, the Court ruled 5-4 to reverse certification for the class, which could have included as many as 1.5 million female workers.
Justice Antonin Scalia, writing for the majority, said that the plaintiffs hadn't shown that they all suffered a common injury. The plaintiffs claimed that they had, because Wal-Mart's practice of giving broad discretion to local managers had allowed the company's mostly male supervisors to discriminate against women nationwide.
But Scalia disagreed. Giving discretion to managers, he wrote, "is just the opposite of a uniform employment practice that would provide the commonality needed for a class action." Indeed, he added, "It is a policy against having uniform employment practices."
Scalia's reasoning raises the question: Could companies protect themselves from class actions by delegating broad responsibility to local managers?
Lorene Schaefer, a former in-house attorney at General Electric Company, thinks that's possible. "If your goal is to simply reduce the number of class actions, or the odds that they will prevail, that's the position you might take," she says.
"For corporate counsel, the Court's decision really poses a dilemma in terms of their efforts to prevent things like discrimination," Schaefer adds. "It almost flies in the face of what you want to do, which is to take away discretion."
The former general counsel of GE's transportation division, Schaefer is very familiar with gender discrimination class actions: she brought one herself in 2007, claiming that GE gave better pay and promotions to male lawyers. Schaefer reached a confidential settlement with the company in 2009. She is now a neutral arbitrator, mediator, and workplace investigator with One Mediation, Inc., in Atlanta.
Michael Droke, a labor and employment partner in the Seattle office of Dorsey & Whitney, also thinks there's something to be said for giving discretion to managers. "It could be a very good thing," Droke says. He notes that in the Wal-Mart case, "It served as a basis for why there was no commonality."
But that doesn't mean companies shouldn't have guidelines on topics like discrimination, Droke adds: "The Wal-Mart decision says you should have a broad policy, but give managers discretion."
How might that work in practice? Droke suggests that a company could tell its managers: "It's important to us that you follow the law—not allow harassment, not allow discrimination—and here are some ways you can do it. But it's up to you to choose how you do it."
Gerald Maatman, Jr., a labor and employment partner at Seyfarth Shaw, emphasizes that the Supreme Court found that "there's nothing sinister or untoward about subjective decision-making." And in his view, giving discretion to managers definitely isn't a way to reduce liability.
"That was the Wal-Mart plaintiffs' argument," Maatman explains. "The plaintiffs' theory was that when left to their own devices, male supervisors tend to favor male employees over female employees."
According to Maatman, the Supreme Court said that that wasn't enough—the plaintiffs had to show that there was a companywide policy of discrimination. The flip side of the ruling, he says, is that a strong policy against discrimination can be used as a defense.
A rigorous equal employment opportunity (EEO) policy by itself isn't enough, Maatman adds. A company must also implement a "state-of-the-art" complaint system in which employee grievances can be easily filed and quickly resolved. And it must evaluate managers on their adherence to the EEO policy. Managers should be graded—and paid—on how well they address complaints and how well they provide opportunities to women and minority employees.
"The Supreme Court is signaling to companies that if you do these things, you'll lower your susceptibility to discrimination claims, and you'll lower the odds that plaintiffs will be able to bring a class action," Maatman says. "In essence, you're demonstrating a policy of non-discrimination."
According to Droke, the Wal-Mart decision also reinforces the need for managers—and executives—to be on their best behavior at all times. Though the Court struck down a national class action in the Wal-Mart case, Droke says that "if you had a regional manager who permitted an atmosphere charged with sexual content—sex jokes, gender-based comments—then that could be the basis to bring a regional action."
Schaefer agrees: "Womens' rights groups are saying that the sky is falling. I don't think the sky is falling." It will still be possible to bring gender discrimination class actions, she believes—they just need to be smaller.
"If you use the Wal-Mart case as an example, they had over a million members. If they had brought 10 subclasses, they could have used the same experts, and the likelihood of prevailing would have increased substantially."
Wal-Mart general counsel Jeff Gearhart did not respond to requests for comment. But the company issued a statement by Gisel Ruiz, an executive vice president: "Every female associate and every customer can feel even better about the company as a result of [the Supreme Court's] decision. Wal-Mart has a long history of providing advancement opportunities for our female associates, and, over the years, we have made tremendous strides in developing women throughout the organization. . . . As a result of our efforts, Wal-Mart is often recognized as a great place for women to work."
CTV News: Dorsey & Whitney Weighs in on Wal-Mart vs. Dukes Supreme Court Ruling
Top U.S. court rejects Wal-Mart sex bias class-action
James Vicini -http://www.ctv.ca/generic/generated/static/business/article2067621.html
The U.S. Supreme Court rejected a mammoth class-action lawsuit charging sex discrimination at Wal-Mart Stores Inc. on Monday in a ruling that could affect major cases in other industries.
The justices unanimously ruled that more than a million female employees nationwide could not proceed together in the lawsuit seeking billions of dollars and accusing Wal-Mart of paying women less and giving them fewer promotions.
The Supreme Court agreed with the world’s largest retailer and the largest private U.S. employer the class-action certification violated federal rules for such lawsuits.
It accepted Wal-Mart’s argument that the female employees in different jobs at 3,400 different stores nationwide and with different supervisors do not have enough in common to be lumped together in a single class-action lawsuit.
The ruling, cheered by business groups as the most important class action case in more than a decade, was denounced by women’s groups.
“Today, the Supreme Court issued a devastating decision undoing the rights of millions of women across the country to come together and hold their employers accountable for their discriminatory practices,” said National Women’s Law Centre co-president Marcia Greenberger.
It represented a major victory for Wal-Mart, which has also faced other legal battles including an attempt to unionize and to block the giant retailer from opening stores in New York and other places.
“We are pleased with today’s ruling and believe the court made the right decision. Wal-Mart has had strong policies against discrimination for many years,” said Bentonville, Ark.-based Wal-Mart.
Gisel Ruiz, a company executive vice president, said the ruling effectively ended the class-action lawsuit.
Theodore Boutrous, Wal-Mart’s lead attorney in the case, told reporters, “This decision will have a significant impact on other class actions.”
The court rejected class-action status, but three remaining female plaintiffs still can pursue their individual claims.
Lawyers for the plaintiffs acknowledged the ruling raised substantial hurdles to bring such challenges forward, but warned that Wal-Mart may regret this route because it could lead to lengthier litigation in many more courtrooms.
“I think it is a big win for very large companies because I think part of the message from the majority’s decision is ... there are companies that are too big to be held accountable in a single forum for these kinds of practices,” said Joseph Sellers, a lawyer for the women who sued the retailer.
He said they were considering options that included pursuing class-action lawsuits with smaller groups of women or proceeding individually, noting that more than 12,000 people have contacted them about discrimination at Wal-Mart.
Two employees of Wal-Mart and its Sam’s Club stores who were leading the class-action effort expressed disappointment with the ruling, but said that they would continue their claims against the massive retailer.
“We still are determined to go forward and we still are determined to present our case in court and I believe that we will prevail there,” said Wal-Mart employee Betty Dukes.
The ruling in the biggest business case of the high court’s 2010-11 term could affect pending class-action lawsuits against the tobacco industry and Costco Wholesale Corp.
Corporate defence attorneys said the ruling was a major victory for employers. “The decision pokes a big hole in the balloon of class actions for employment cases,” said Michael Droke of Dorsey & Whitney LLP in Seattle. “Employers are literally breathing a collective sigh of relief.”
Analysts including Brendan Burke, an employment discrimination law consultant at Navigant Economics, said the Wal-Mart decision may lead to an increase in smaller putative class-action lawsuits against large employers, which could actually increase the cost to defendants.
Justice Antonin Scalia concluded for the court majority that the class was not properly certified.
“Because respondents wish to sue about literally millions of employment decisions at once, they need some glue holding the alleged reasons for all those decisions together,” he said.
The court’s four other conservatives joined all of Justice Scalia’s ruling. The court’s four liberals joined part of it, but dissented in another part.
Large class-action lawsuits make it easier for big groups of plaintiffs to sue corporations and they have led to huge payouts by tobacco, oil and food companies.
Companies such as Wal-Mart have sought to limit such lawsuits to individual or small groups of plaintiffs. The Supreme Court, with a conservative majority that often ruled for businesses, has rejected huge class-action lawsuits.
Globe and Mail: Dorsey & Whitney Attorney Michael Droke Talks About Supreme Court Decision
Top U.S. court rejects Wal-Mart sex bias class-action
James Vicini - The Globe and Mail
The U.S. Supreme Court rejected a mammoth class-action lawsuit charging sex discrimination at Wal-Mart Stores Inc. on Monday in a ruling that could affect major cases in other industries.
The justices unanimously ruled that more than a million female employees nationwide could not proceed together in the lawsuit seeking billions of dollars and accusing Wal-Mart of paying women less and giving them fewer promotions.
The Supreme Court agreed with the world’s largest retailer and the largest private U.S. employer the class-action certification violated federal rules for such lawsuits.
It accepted Wal-Mart’s argument that the female employees in different jobs at 3,400 different stores nationwide and with different supervisors do not have enough in common to be lumped together in a single class-action lawsuit.
The ruling, cheered by business groups as the most important class action case in more than a decade, was denounced by women’s groups.
“Today, the Supreme Court issued a devastating decision undoing the rights of millions of women across the country to come together and hold their employers accountable for their discriminatory practices,” said National Women’s Law Centre co-president Marcia Greenberger.
It represented a major victory for Wal-Mart, which has also faced other legal battles including an attempt to unionize and to block the giant retailer from opening stores in New York and other places.
“We are pleased with today’s ruling and believe the court made the right decision. Wal-Mart has had strong policies against discrimination for many years,” said Bentonville, Ark.-based Wal-Mart.
Gisel Ruiz, a company executive vice president, said the ruling effectively ended the class-action lawsuit.
Theodore Boutrous, Wal-Mart’s lead attorney in the case, told reporters, “This decision will have a significant impact on other class actions.”
The court rejected class-action status, but three remaining female plaintiffs still can pursue their individual claims.
Lawyers for the plaintiffs acknowledged the ruling raised substantial hurdles to bring such challenges forward, but warned that Wal-Mart may regret this route because it could lead to lengthier litigation in many more courtrooms.
“I think it is a big win for very large companies because I think part of the message from the majority’s decision is ... there are companies that are too big to be held accountable in a single forum for these kinds of practices,” said Joseph Sellers, a lawyer for the women who sued the retailer.
He said they were considering options that included pursuing class-action lawsuits with smaller groups of women or proceeding individually, noting that more than 12,000 people have contacted them about discrimination at Wal-Mart.
Two employees of Wal-Mart and its Sam’s Club stores who were leading the class-action effort expressed disappointment with the ruling, but said that they would continue their claims against the massive retailer.
“We still are determined to go forward and we still are determined to present our case in court and I believe that we will prevail there,” said Wal-Mart employee Betty Dukes.
The ruling in the biggest business case of the high court’s 2010-11 term could affect pending class-action lawsuits against the tobacco industry and Costco Wholesale Corp.
Corporate defence attorneys said the ruling was a major victory for employers. “The decision pokes a big hole in the balloon of class actions for employment cases,” said Michael Droke of Dorsey & Whitney LLP in Seattle. “Employers are literally breathing a collective sigh of relief.”
Analysts including Brendan Burke, an employment discrimination law consultant at Navigant Economics, said the Wal-Mart decision may lead to an increase in smaller putative class-action lawsuits against large employers, which could actually increase the cost to defendants.
Justice Antonin Scalia concluded for the court majority that the class was not properly certified.
“Because respondents wish to sue about literally millions of employment decisions at once, they need some glue holding the alleged reasons for all those decisions together,” he said.
The court’s four other conservatives joined all of Justice Scalia’s ruling. The court’s four liberals joined part of it, but dissented in another part.
Large class-action lawsuits make it easier for big groups of plaintiffs to sue corporations and they have led to huge payouts by tobacco, oil and food companies.
Companies such as Wal-Mart have sought to limit such lawsuits to individual or small groups of plaintiffs. The Supreme Court, with a conservative majority that often ruled for businesses, has rejected huge class-action lawsuits.
NPR Marketplace: Dorsey & Whitney Attorney Mike Droke talks about Wal-Mart vs. Dukes Decision
AUDIO TRANSCRIPT
The Supreme Court rules in favor of Walmart
By John Dimsdale Marketplace, Monday, June 20, 2011
Listen to this Story
The Supreme Court overturned a lower court ruling that more than a million female employees could join in a lawsuit accusing Walmart of paying women less than men.
A man pushes carriages outside of a Walmart store in Valley Stream, N.Y. (Spencer Platt/Getty Images)
Kai Ryssdal: The class action case in question this morning at the Supreme Court wasn't just your run-of-the-mill lawsuit. Had the justices agreed with a lower court ruling, it would have been the biggest such case ever. A million and a half women across the country -- current and former employees of Walmart -- would've been eligible. It was a gender discrimination suit. And I say was, because it's now in the past tense. Customers of tobacco, oil and pharmaceutical companies -- among many many others -- have used class actions successfully. But now, things could change after this ruling.
Our Washington Bureau Chief John Dimsdale has the story.
John Dimsdale: Organizers of this class action claimed Walmart's pay and promotion policies in every store nationwide favored men. But the Supreme Court decided the small group of women who filed the class action didn't share the same status, or circumstances, with a million or more other Walmart workers.
Michael Droke is a labor lawyer with Dorsey & Whitney.
Michael Droke: The court says that there really has to be some common issue of fact, and in particular a common injury.
Today's ruling, he says, will shield large corporations from massive class action lawsuits that would be costly to defend.
Brendan Burke: It is unquestionably harder for large groups of plaintiffs to bring these types of cases now.
Brendan Burke is a labor discrimination consultant. He still expects to see smaller, more targeted class action lawsuits from corporate employees.
Burke: Instead of one large giant lawsuit in this case, a number of smaller lawsuits, let's say filed on behalf of you know store managers or assistant store managers. So you'll see a number of smaller lawsuits with more commonality.
Burke says smaller class actions are usually easier to prove since judges and juries can see how corporate wrongdoing hurts individuals.
In Washington, I'm John Dimsdale for Marketplace.
CBS News: Dorsey & Whitney Attorney Reacts to Supreme Court Wal-Mart Ruling
Wal-Mart victory in Supreme Court case seen as big win for U.S. businesses
June 20, 2011
In one of the most closely-watched cases of the Supreme Court's current term, the justices have delivered a huge victory to businesses trying to fend off costly class action lawsuit filed by employees.
It says lower courts were wrong to certify a class action in a case brought by a handful of women workers who accused Wal-Mart of discriminating against them as part of a company-wide policy of bias against females.
"It's a win for the company, but also for other big companies who face potential class action cases like this one," says CBS News Senior Legal Analyst Andrew Cohen. The U.S. Chamber of Commerce is even more emphatic, declaring the ruling to be "without a doubt the most important class action case in more than a decade."
Betty Dukes originally brought this workplace discrimination case, potentially the largest one of its kind in history. She worked in the Wal-Mart in Pittsburg, California and says she was passed over for promotion time and time again, while males moved up the ladder.
Other women joined her, including Chris Kwapnoski, who claims when she asked her bosses how to get promoted, one told her "to blow the cobwebs off my makeup and to doll up."
Joseph Sellers, one of their lawyers, told the court, "gender stereotypes were used," and that the women needed a class-action lawsuit to challenge "company-wide practices which discriminated against women in every one of the regions in which the company does business."
The Supreme Court determined the various claims could not be brought together into one large suit. In a key part of the ruling, the court made it clear workers in class actions must be able to prove they have common circumstances.
"One of the myths of this case I think has been shattered, that this was some common experience," says attorney Ted Boutros, who represents Wal-Mart.
He says "the court expressly notes that Wal-Mart's policies forbid discrimination, and that the plaintiffs evidence and claims were 'worlds away' from showing the kind of general policy of discrimination they were required to show to meet the class action rules."
Marcia Greenberger of the National Women's Law Center says the decision leaves her with "deep disappointment and concern." She predicts it will "make it so much more difficult for women and others who face discrimination to hold employers accountable."
She agrees with the supporters of the ruling that the Supreme Court set a new standard for bringing class action cases. Michael Droke, an expert on labor and company law at Dorsey and Whitney in Washington, DC, calls it "a terrific decision for employers."
Droke says it frees companies to delegate decisions down to the "shop-floor level" without fearing they will be tarred with accusations of carrying out company-wide bias policies when an individual goes too far. "It helps prevent the use of the class action to attack those kinds of individual decisions."
Dukes, the lead plaintiff, vows to keep fighting. "If it takes us to go one step at a time, one woman at a time, we will march forward," she says, emphatically. But many experts believe the high court's decision will make it extremely difficult for them to prevail. And Wal-Mart and other businesses will be far less willing to settle individual discrimination claims.
