In a major victory for Wal-Mart and much of corporate America, the US Supreme Court on Monday dismissed the largest gender discrimination class action lawsuit in history.

In a 5 to 4 opinion, the justices reversed a lower court decision allowing as many as 1.5 million female workers to sue the nation’s biggest private employer for back pay and punitive damages that could have totaled billions of dollars.

The decision makes it more difficult for employees and others to join together in a common lawsuit unless they are able to clearly identify a common injury, such as a company-wide discriminatory policy.

In a ruling on a secondary aspect of the case, all nine justices agreed that the Ninth US Circuit Court of Appeals in San Francisco erred in allowing the massive class action lawsuit to move forward on claims seeking back pay.

“The Supreme Court’s ruling should surprise no one,” said Anthony Sabino, a law professor at St. John’s University. “Class actions are predicated on ‘common questions.’ A class of millions of disgruntled employees is just too vast to present a handful of questions that are fundamental to each and every one of them,” he said. “This is especially true for employment decisions that turn on so many idiosyncrasies of individual workers and their managers.”

'Far steeper road'

Marcia Greenberger of the National Women’s Law Center called the ruling “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.”

She added, “The women of Wal-Mart – together with women everywhere – will now face a far steeper road to challenge and correct pay and other forms of discrimination in the workplace.”

The Wal-Mart litigation is not necessarily over. The female employees can file individual lawsuits claiming discrimination and seeking back pay. They could also break the massive lawsuit down into smaller, more focused lawsuits.

In reaching its decision, the high court rejected what it called “Trial by Formula.”

Writing for five members of the court, Justice Antonin Scalia said that under federal rules of civil procedure the class action lawsuit again Wal-Mart should not have been approved because it lacked a single common question tying each employee’s claims together for efficient resolution in a single trial.

“Here respondents wish to sue about literally millions of employment decisions at once,” Justice Scalia wrote. “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.”

Earlier dissent is cited

Scalia quoted an earlier dissent in the case written by Ninth Circuit Chief Judge Alex Kozinski. He wrote that members of the class “held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed…. Some thrived while others did poorly. They have little in common but their sex and this lawsuit.”

Justice Ruth Bader Ginsburg and three other members of the court dissented to that portion of Scalia’s decision, saying they would have decided the case on narrower grounds.

Justice Ginsburg and her fellow dissenters joined the second part of Scalia’s decision, holding that the Wal-Mart women’s claims for back pay should not have been approved for class-wide litigation.

In discrimination cases seeking back pay, an employer has the right to raise individual affirmative defenses on a case-by-case basis to attempt to demonstrate that each challenged employment action was taken for legitimate reasons.

“The court of appeals believed that it was possible to replace such proceedings with Trial by Formula,” Scalia wrote. “We disapprove of that novel project,” he said.

Under an approach upheld by the lower courts, a sample set of class members would be selected to have their claims of discrimination and eligibility for back pay scrutinized. The percentage of claims determined to be valid would then be applied to the entire million-member class. With no further individualized proceedings, the amount the company would have been ordered to pay would have been determined by the number of valid claims multiplied by the average back pay award.

In striking down that approach, Scalia said: “A class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims.”

The case stems from a 2001 lawsuit filed by three named employees on behalf of all current and former women who worked at Wal-Mart since December 1998.

The suit charged that women at Wal-Mart received lower pay and were promoted less often then men in comparable positions. It claimed that despite a corporate-wide policy prohibiting gender discrimination, the company allowed managers at the regional and local levels significant discretion in hiring and promotion. It also alleged that Wal-Mart maintained a corporate culture that fostered gender stereotyping.

At issue in the Supreme Court appeal was whether the lower court had properly certified the massive lawsuit as an appropriate case for a class action. Under court rules, class action lawsuits must satisfy certain requirements to prevent lawyers from attempting to use that form of litigation to by-pass due process safeguards in the civil justice system.

Class action lawsuits are justified in cases involving numerous individuals who have suffered a common injury that can be adequately represented in court by a few typical plaintiffs.

Patterns of discrimination

Lawyers for Wal-Mart argued that the number of potential plaintiffs in the class was too large to permit the corporation to adequately defend itself from charges that virtually every female employee faced illegal discrimination. The company’s lawyers said employment decisions were not uniform across the company, with significant differences from region to region, store to store, and supervisor to supervisor.

The lawyer representing the female workers, Brad Seligman of Berkeley, Calif., has said the class action suit was warranted because Wal-Mart operated a centralized management system. A statistical analysis found patterns of discrimination were consistent across 41 regions, he said.

Voting with Scalia, were Chief Justice John Roberts, and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito.

Joining Justice Ginsburg in her dissent were Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.

The case is Wal-Mart v. Dukes (10-277).