Supreme Court blocks huge class-action suit against Wal-Mart

Women and minorities who think they are underpaid will find it nearly impossible to band together to sue employers for discrimination under a Supreme Court ruling against 1.5 million female Wal-Mart employees in the most important job-bias case in a decade.

Only if there is proof a company has a policy of paying less to women or minorities can the employees get together in a class-action suit, the court said in an opinion Monday by Justice Antonin Scalia. Statistics showing that a company’s female workers earn far less and get fewer promotions than men will not suffice, the court said.

The decision is the latest in a series of major rulings favoring business under the stewardship of Chief Justice John G. Roberts Jr.

Columbia University law professor John Coffee said the Wal-Mart ruling all but sounded the death knell for class-action suits that seek money from employers for discrimination. “This significantly changes the balance between employers and employees. And it largely eliminates the monetary threat facing big employers,” he said. Lawsuits are expensive to bring, “and if there is no money relief at the end of the road, there is no incentive to bring the suit,” he said.

The suit against Wal-Mart Stores Inc. has been seen as a key test of whether civil rights lawyers, armed with computer-generated data on wages, could force the nation’s largest employer to stand trial and face billions of dollars in potential liability. Had they won against Wal-Mart, other similar suits against nationwide retailers were in the offing.

Though the justices all agreed that the employees had no right to group damages, that unanimity masked a fundamental split largely along gender lines over the extent of discrimination at Wal-Mart and the amount of proof required to proceed with a class action.

Speaking for a 5-4 conservative majority in the central holding, Scalia said the class-action claim and others like it were doomed without “convincing proof of a companywide discriminatory pay and promotion policy.”

Pointing to a provision of the federal rules of civil procedure requiring a class action to have “questions of law or fact common to the class,” Scalia said this suit did not get to first base.

He said Wal-Mart had 3,400 stores spread across the nation and left it up to store managers to decide on pay levels and promotions.

“In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction,” Scalia said. “Significant proof that Wal-Mart operates under a general policy of discrimination is entirely absent here.”

Roberts and Justices Anthony M. Kennedy, Clarence Thomas and Samuel A. Alito Jr. agreed with Scalia in Wal-Mart vs. Dukes.

Scalia said the suit was flawed for another reason. A single class-action claim that supposedly speaks for a huge number of people does not entitle all of them to “an individualized award of monetary damages,” he said.

Ruth Bader Ginsburg, joined by Sonia Sotomayor, Elena Kagan and Stephen G. Breyer, agreed that Wal-Mart could not be forced to pay damages to all the women without individual hearings, but they argued forcefully that there was substantial evidence of discrimination and that the case should have been allowed to proceed.

Ginsburg, who specialized in cases involving gender discrimination before joining the court, pointed to data obtained from Wal-Mart that painted a portrait of a “company culture” that was biased against women. For example, while women hold about 70% of the hourly jobs, they make up only 33% of the management employees.

“The plaintiffs’ evidence, including class members’ tales of their own experiences, suggests that gender bias suffused Wal-Mart’s company culture,” Ginsburg wrote. “Among illustrations, senior management often refer to female associates as ‘little Janie Qs,’ ” she said.

Giving male managers a free hand to make decisions on pay and promotions can, and apparently did, lead to discrimination, she said. “Managers, like all humankind, may be prey to the biases of which they are unaware,” she wrote.

The decision did not absolve Wal-Mart of the allegations that it had shortchanged its female employees. Rather, the justices decided only that the suit did not fit within the rules for class-action claims. Individuals will still be free to file discrimination suits.

Liberals reacted with outrage to the decision, while business groups heaved a sigh of relief.

Nan Aron, president of the liberal Alliance for Justice, called the decision “another in a long series of cases where the conservative majority has … erected a wall of privilege and protection around big business.”

This is “tantamount to closing the courthouse door on millions of women who cannot vindicate their rights one person at a time,” said Marcia Greenberger, co-president of the National Women’s Law Center.

The U.S. Chamber of Commerce applauded the court for ruling that “bet-the-business blockbuster class actions” were unfair and were “completely inconsistent with federal law,” said Robin Conrad, lawyer and vice president for the chamber.

She said anti-discrimination law was based on the idea that individuals bring a claim of mistreatment. Business lawyers portrayed huge class-action claims as a scheme to enrich plaintiffs’ lawyers at the expense of employers.

Class-action discrimination claims were a product of the civil rights era of the 1960s. In the early years, many suits accused employers, such as trucking firms, construction companies or police departments, of refusing to hire or promote blacks. Often, these cases resulted in an agreement to change the hiring practices.

In recent decades, federal courts — with the exception of the U.S. appeals courts in San Francisco and New York — have frowned on class-action claims that seek money on behalf of a large group of employees who say they were victims of discrimination.

david.savage@latimes.com

Times staff writer Salvador Rodriguez in Los Angeles contributed to this report.