by Arthur Silbergeld and Jessica Boar of Bingham McCutchen
Counsel for Plaintiffs' time before the Supreme Court during
oral argument on Tuesday morning probably felt more like years than an
hour. The Court pounded Plaintiffs'
counsel with questions regarding the suitability of the litigation as a class
and how, assuming a class was certified, back pay would be calculated for each
class member. Plaintiffs have maintained
that Wal-Mart's policy gave local managers excessive discretion in pay and
promotion decisions leading to widespread gender discrimination. Some of the justices had difficulty with the
notion that subjective decision making is actually a policy appropriate for
class treatment. Even those justices who
seemed more accepting that a policy of decentralized decision making coupled
with excessive subjectivity could be appropriate for a class action appeared
troubled about how to calculate monetary damages for affected employees (lexis.com
subscribers may access Supreme Court briefs for this case).
Justice Kennedy stressed that Plaintiffs' complaint is
inconsistent, i.e., "faces in two directions."
He explained that first Plaintiffs say "this is a culture where Arkansas
knows, the headquarters knows, everything that's going on" and then Plaintiffs
"in the next breath . . . say, well, now these supervisors have too much
discretion." Scalia agreed, saying he was getting "whipsawed" and asked
Plaintiffs to decide" whether the individual supervisors are left on their own
or whether there is a strong corporate culture that tells them what to
do." Plaintiffs argued that the managers
are given discretion, but are told by the Company how to exercise the
discretion. Plaintiffs acknowledged that
Wal-Mart has a policy against sex discrimination, but maintained that the
written policy was not communicated to the managers. As an example, in response to the question,
"Why are women so underrepresented, or so few women in management?" at the Sam
Walton Institute, where every manager is trained, the answer is that men seek
advancement and are aggressive in doing so.
Scalia was quick, however, to respond that this explanation is just an
assessment of why the percentage is different and that this does not tell
managers not to promote women. Scalia
pointed out that statistically women at Wal-Mart did not fare any worse than
women in the general population. He
challenged Plaintiffs as to whether they have sufficiently shown that Wal-Mart's
policy is a "fraud" and "that's what's really going on is that there is a
central policy that promotes discrimination against women."
Through their questioning, it appeared that the more liberal
justices were inclined to find the Rule 23(a) standards satisfied on their
face, but had questions regarding the appropriateness of the class proceeding
under Rule 23(b)(2). Justice Ginsburg
emphasized that the advisory committee's notes explain that if dollars, i.e.,
damages, predominate, then Rule 23(b)(2) is not appropriate given that one half
of the class (i.e., the former employees) is not interested in injunctive
relief, but each potential class member is interested in damages. Justice Breyer's questioning insinuated that
the Court may be considering certifying a class for injunctive relief only
pursuant to Rule 23(b)(2). Justice
Ginsburg was also concerned about how back pay would be calculated for each
class member, assuming a class was certified.
Plaintiffs explained that back pay could be calculated by using a
formula relying on Wal-Mart's internal database which contains information
regarding performance, seniority and other job-related factors. Plaintiffs explained that a formula would
permit "precise comparisons in a way that individual hearings relying on hazy
memories, post hoc rationalizations, does not."
Justice Kagan asked for an explanation of when a formula approach is
preferable to individual hearings.
Plaintiffs said that the approach should be left to the district court,
but that they do not maintain that a formula-like approach must always be
used. Justice Ginsburg challenged
Plaintiffs, stating that she understood that because of the numbers there
couldn't possibly be individualized back pay hearings. Plaintiffs responded that individualized
hearings would be "difficult" and Justice Ginsburg cut off Plaintiffs' counsel,
stating that she thought the district court said, "impossible." Justice Sotomayor asked Plaintiffs when
Wal-Mart was going to have an opportunity to defend against the findings from
the statistical model that would purportedly identify those women who should
have received pay raises. She questioned
whether individualized hearings would result if Wal-Mart was given such a
chance. Justice Scalia opined that it is
more reliable to have a hearing with evidence on the particular promotion or
dismissal. Plaintiffs argued that,
because the allegedly discriminating pay decisions were standardless and
recordless, a statistical analysis is sufficient and more appropriate than
having managers come forward to "speculate about what they did 10 years earlier
with no records to cross-examine them on."
Scalia questioned whether such an approach is "really due process" and
sarcastically commented that perhaps the statistical model approach should be
used in jury trials for "really old cases."
A decision is expected by June 2011.
The Seattle University Law Review published an excellent discussion of this case and of class action certification in its last issue. You can download the article at http://lawpublications.seattleu.edu/sulr/vol34/iss2/7/.