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July 02, 2004

Further thoughts on the Walmart gender-discrimination class action

On Tuesday, our editor posted about the decision last week by San Francisco U.S. District Judge Martin Jenkins to certify a class action gender discrimination claim against Walmart on behalf of all 1.6 million women who had worked for the retailer since December 26, 1998. That entry alluded to the Wall Street Journal column written by the Manhattan Institute's Steve Malanga, as well as to other stories and editorials shedding light on the case.

I wanted to point out that in addition to the employment law issues raised by the case, the Walmart discrimination suit exemplifies the problems inherent in modern class action litigation. As I note in my overview on the topic on this site, aggregating individual claims into class actions is in principle a useful vehicle when there are multiple similarly situated claims with damages that are relatively small when compared to the administrative costs of repeat adjudications. The problem, however, is that today's courts are prone to certify class actions even when claims are not similarly situated; i.e., they misapply the requirement of Federal Rule of Civil Procedure 23(b)(3), which permits class actions only when "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members." Cases such as securities derivative suits, or antitrust claims, in which the key variables are a common act of corporate wrongdoing and easily calculated damage claims, fit fairly well under the 23(b)(3) schema.

But an employment discrimination claim such as that in the Walmart case is singularly unsuited for the class action device. For any and each employee, the employer may have very good reasons for not promoting that worker (as Steve Malanga points out, that indeed appears to be so even for the name plaintiffs in this case). The only common threads linking the class members are that the plaintiffs are all women; that women on average earn and are promoted less than men; that hiring and promotion decisions are relatively decentralized; and that there is an asserted "culture" that inhibits women's participation. But such common threads could support a similar class claim for virtually any large corporate employer (which, doubtlessly, would not be unwelcome to the plaintiffs' bar or to anti-market forces in some circles).

Employment discrimination class actions are particularly prone to what John Beisner, Jessica Davidson Miller, and Matthew Shors call the "perfect plaintiff" problem, i.e., when "counsel are unfairly permitted to piece together evidence to show a 'perfect plaintiff'—one who, of course, does not exist in the real world—for presentation to the jury. That is, counsel may pick and choose among the facts presented by the many plaintiffs in attempting to establish all the various elements of the claim, and the jury is often left with the indelible impression that the collective evidence counsel offers satisfies each individual plaintiff’s particular burden of proof. For example, if one plaintiff had an allegedly misleading conversation with a defendant’s representative about the potential side-effects of a drug, that conversation will be repeatedly referenced to the jury, even though none of the other 1,000 plaintiffs in the action had such a conversation. As a result, the jury may come away with the patently false impression that all plaintiffs had such conversations and relied on them in electing to use the drug at issue."

I have little doubt that some women, somewhere, have been discriminated against by Walmart. But to permit every woman who's worked there to join a suit against the company, without letting Walmart address individual bias claims on their merits -- and defend itself when workers' documented performance and/or lifestyle preferences obviously explain compensation and promotion decisions -- is to deny the employer due process of the law. Such class actions are really no more than corporate shakedowns; even Walmart, well-known for litigating rather than settling claims, might settle rather than risk a wild jury verdict.

Posted by James R. Copland at 01:03 PM | TrackBack (1)

Class Actions
Employment Law



Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.