The 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 overturned a U.S. appeals court ruling that more than a million female employees nationwide could join in the lawsuit accusing Wal-Mart of paying women less and giving them fewer promotions and seeking billions of dollars.
The Supreme Court agreed with the giant American retailer that 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 was a setback for women’s groups, which have said a decision for the company could signal a significant retreat for women’s rights in the workplace.
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,” the company said.
Although the court rejected the class-action status, the small group of women who brought the lawsuit, such as Betty Dukes, a Wal-Mart greeter at a store in Pittsburg, California, still can pursue their individual claims.
The plaintiffs said they are disappointed by the decision.
“The court’s ruling erects substantially higher barriers for working women and men to vindicate rights to be free from employment discrimination,” the plaintiffs said in a statement, stressing that the decision does not address whether Wal-Mart committed sex discrimination.
Wal-Mart, the world’s largest retailer and the largest private U.S. employer, has denied the allegations and said it has operated under a policy barring discrimination.
The ruling in the biggest business case of the high court’s 2010-11 term could affect class-action lawsuits against the tobacco industry and Costco Wholesale Corp. It also was the court’s most important job-discrimination dispute in more than a decade.
Corporate defense 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 expert at Navigant Economics consultants, 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.
“In all, Wal-Mart operates approximately 3,400 stores and employs more than one million people. 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 (Justices Samuel Alito, Anthony Kennedy and Clarence Thomas and Chief Justice John Roberts) joined all of Scalia’s ruling. The court’s four liberals joined the 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.
The Supreme Court case is Wal-Mart Stores Inc. v. Betty Dukes, No. 10-277.
(Additional reporting by Jessica Wohl in Chicago, Moira Herbst in new York and Jeremy Pelofsky; Editing by Doina Chiacu)
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