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Supreme Court Strikes Down Huge Sex Discrimination Lawsuit Against Walmart
Tom Ramstack

Washington, D.C.

Retail stocks closed higher after a Supreme Court ruling that spared Walmart from a class action lawsuit by its 1.6 million female employees.

The stock market was reacting to the fact the ruling limits employee lawsuits against corporations.

Women who filed the lawsuit said they were victims of sexual discrimination after they were passed over for promotion and raises that were given to their male colleagues.

However, the Supreme Court refused to allow the class action lawsuit, saying there was no "significant proof" of the women's claims that Walmart "operated under a general policy of discrimination."

"Walmart's announced policy forbids sex discrimination, and the company has penalties for denials of equal opportunity," the Supreme Court said in its decision. The female employees' "only evidence of a general discrimination policy was a sociologist's analysis asserting that Walmart's corporate culture made it vulnerable to gender bias."

"But because he could not estimate what percent of Walmart employment decisions might be determined by stereotypical thinking, his testimony was worlds away from 'significant proof' that Walmart 'operated under a general policy of discrimination,'" the ruling said.

The wide-ranging allegations also lacked common elements that could unite them in a single lawsuit, the court said.

Instead, any valid claims of sexual discrimination resulted from individual managers who were violating company policy.

The class action did not have the "glue holding together the alleged reasons" for the lawsuit, the court said.

"It is unlikely that all managers would exercise their discretion in a common way," said the ruling written by Justice Antonin Scalia.

The decision in Wal-Mart Stores Inc. v. Betty Dukes et al. was unanimous against the women suing in a class action but divided on lesser issues.

The lawsuit, filed in 2001 by six current and former Walmart employees, claimed to represent all women who worked for the company since Dec. 26, 1998.

Before the case reached the Supreme Court, some personal injury lawyers were estimating Walmart might have to pay out more than $1 billion in damages if the women won their lawsuit.

The Ninth Circuit Court of Appeals already had ruled the women could sue Walmart in a class action lawsuit.

Now, employment lawyers are saying the Walmart case has set an important precedent that more closely defines what constitutes a class of employees who can sue.

Some women's rights advocates were disappointed.

The Supreme Court ruling "set back the cause of equality," said House Speaker Nancy Pelosi.

A dissenting opinion by Justice Ruth Bader Ginsburg said "the practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects."

In addition, the risk of "discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes."

More than 70 percent of Walmart's hourly employees are women, according to the lawsuit. Less than 10 percent of store managers are women and only 4 percent of district managers are female, the lawsuit says.

Walmart issued a statement after the court's ruling that said, "Walmart has a long history of providing advancement opportunities for our female associates and will continue its efforts to build a robust pipeline of future female leaders."

At the White House, a spokesman said attorneys for President Barack Obama were reviewing how the court's decision will affect workplace policies.

"Ending pay discrimination in the workplace is a key priority of the president," said White House spokesman Jay Carney.