Supreme Court: Three Wal-Mart Plaintiffs Brought Wrong Type of Class Action to Recover Back Pay

This morning, the Supreme Court unanimously held that the three class representatives (i.e., named plaintiffs) who brought the nationwide class action against Wal-Mart proceeded under the incorrect Rule of Civil Procedure. Wal-Mart Stores, Inc. v. Dukes, No. 10-277. Because the plaintiffs sought back pay on behalf of each member of the class of 1.5 million women – and the amount of that back pay would differ for each of the 1.5M members of the class – the lawsuit should have been brought – if at all – under Civil Rule 23(b)(3) (which requires notice to the class and option to opt-out) instead of Civil Rule 23(b)(2). However, the Court split 5-4 on whether the plaintiffs satisfied the threshold requirements in Civil Rule 23(a), with the majority finding that there was insufficient proof that the 3 plaintiffs and 120 fact witnesses adequately demonstrated that each subjective employment decision being challenged shared a common question of law or fact with all of the 1.5M class members.

The provisions of Civil Rule 23 which are at issue are in relevant part:

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable,

(2) there are questions of law or fact common to the class,

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and

(4) the representative parties will fairly and adequately protect the interests of the class.

(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if:

. . .

(2) the party opposing he class has acted or refused to act on grounds that apply generally to the class, so that final injunctive or corresponding declaratory relief is appropriate respecting the class as a whole; or

(3) the court finds that the questions of law or fact common to the class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the likely difficulties in managing a class action.

There was no dispute at the Court that seeking relief for individualized back pay awards could never be obtained under Civil Rule 23(b)(2). Wal-Mart would have a separate defense for each of the 1.5M class members and the Court of Appeals' proposal to randomly select class members was rejected. The amounts of back pay awarded would vary by class member based on length of employment, job title, location, comparison to wages of male counterparts, etc.

The Court also agreed on other facts: There were only three plaintiffs and anecdotal testimony from only 120 women of alleged discrimination. Wal-Mart's corporate policy prohibited discrimination on the basis of sex, but promotion and compensation decisions were left to the individual store, district and regional managers based on their own discretion. There is no national corporate policy on factors to be utilized in making promotion or compensation decisions and no national oversight of such decisions. The plaintiffs' primary complaint is that the national hands-off policy and corporate culture has effectively resulted in discrimination against women, allegedly in violation of Title VII. The Court also agreed that subjective decisionmaking can be the basis of a disparate impact employment discrimination lawsuit in certain circumstances.

The dissent noted that 70% of Wal-Mart hourly employees are women, but only 33% of management is female.

The plaintiffs' "largely uncontested descriptive statistics" also show that women working in the company's stores "are paid less than men in every region" and "that the salary gap widens over time even for men and women hired into the same jobs at the same time." 222 F. R. D., at 149. The selection of employees for promotion to in-store management "is fairly characterized as a 'tap on the shoulder' process," in which managers have discretion about whose shoulders to tap. Id., at 148. Vacancies are not regularly posted; from among those employees satisfying minimum qualifications, managers choose whom to promote on the basis of their own subjective impressions.

The majority in turn noted that the evidence was misleading because most, or even all, of the alleged discrimination could be coming from only a few stores or a couple of regions and it does not logically follow that every manager (whether male or female) is discriminating against all women as alleged in the lawsuit. No evidence was put on about employment practices in 14 states and only one or two witness was produced to represent alleged discrimination in another 25 states. Moreover, there was only evidence produced about 235 of Wal-Mart's 3,400 stores. "Even if every single one of these accounts is true, that would not demonstrate that the entire company "operate[s] under a general policy of discrimination," Falcon, supra, at 159, n. 15, which is what respondents must show to certify a companywide class." In other words, a lawsuit might have been appropriate in some states and in some regions, but the truth of that does not mean that a national class action is appropriate.

Commonality requires the plaintiff to demonstrate that the class members "have suffered the same injury," Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of class wide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

. . .

To be sure, we have recognized that, "in appropriate cases," giving discretion to lower-level supervisors can be the basis of Title VII liability under a disparate-impact theory—since "an employer's undisciplined system of subjective decision making [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination." Id., at 990–991. But the recognition that this type of Title VII claim "can" exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common. To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all. Others may choose to reward various attributes that produce disparate impact—such as scores on general aptitude tests or educational achievements, see Griggs v. Duke Power Co., 401 U. S. 424, 431–432 (1971). And still other managers may be guilty of intentional discrimination that produces a sex based disparity. In such a company, demonstrating the invalidity of one manager's use of discretion will do nothing to demonstrate the invalidity of another's. A party seeking to certify a nationwide class will be unable to show that all the employees' Title VII claims will in fact depend on the answers to common questions.

. . .

Even if [the statistical evidence] established (as it does not) a pay or promotion pattern that differs from the nationwide figures or the regional figures in all of Wal-Mart's 3,400 stores, that would still not demonstrate that commonality of issue exists. Some managers will claim that the availability of women, or qualified women, or interested women, in their stores' area does not mirror the national or regional statistics. And almost all of them will claim to have been applying some sex-neutral, performance-based criteria—whose nature and effects will differ from store to store. . . . Other than the bare existence of delegated discretion, respondents have identified no "specific employment practice"—much less one that ties all their 1.5 million claims together. Merely showing that Wal-Mart's policy of discretion has produced an overall sex-based disparity does not suffice.

While the dissent argued that the majority was confusing Rule 23(a)(2) with 23(b)(3) and that the plaintiffs should be given the opportunity on remand to proceed under Civil Rule 23(b)(3), the majority contended that there was not a single question of common law or fact under Civil Rule 23(a) tying all 1.5M women together because they ""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."

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Court of Appeals Affirms $105K in Damages for Same Sex Harassment

Earlier this month, a unanimous Franklin County Court of Appeals affirmed $105,000 in damages for a same sex hostile work environment harassment claim. Tod v. Cincinnati State Technical & Community College, 2011-Ohio-2743. In Tod, the female plaintiff complained about her female manager referring to her "Barbie doll figure," the size of her chest, her figure, as a "bit**" and other similar comments throughout her employment. After 14 months of documenting the problems, she finally reported the problem to human resources and then began to feel retaliated against. She then found another job, but did not report her present employment out of fear of further retaliation. She was then fired from both jobs. The Court rejected the employer's attempt to argue that the harassment was welcomed, not reported in a timely basis, or sufficiently hostile. The Court also rejected the contention that the harassment was not based on sex because the manager's comments were inherently sexual.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Union Fundraising is Not Constitutionally Protected Speech

This morning, the Sixth Circuit reversed a trial court which had found that disciplinary action taken against a fire union for fundraising activities was unlawful retaliation. Doherty v. City of Maryville, No. 09-5217. In that case, the IAFF Local Union had signed a contract with a telemarketing firm to sell concert tickets to raise money for union activities. Thinking the calls were coming from the City, several citizens complained about rudeness and threats. The City met with the union officials who signed the contract and warned them that they would be fired if the City received any more complaints. The City did not ask the union to cancel the fundraiser. The union cancelled the telemarketing contract and then renewed the contract, but with a revised script. When the City received additional complaints, it put a letter of reprimand in the union officer’s file. After the union and the officer filed suit for violation of First Amendment rights, the trial court denied the City’s motions for summary judgment and judgment as a matter of law and the jury found against the City. On appeal, the Sixth Circuit concluded the trial court erred in examining the totality of the circumstances (i.e., the content of the telemarketing calls and the intended uses for the funds). Instead, the only conduct at issue was the signing of the telemarketing contract and that conduct was commercial, not protected political, speech. “As a matter of law, the conduct in question — i.e., the act of contracting with a third party to make telemarketing calls — did not touch on a matter of public concern.”

“When a plaintiff is a public employee who is claiming retaliation by his employer (the government) for his speech or his associations, his speech or association is protected only if (1) it touches on a matter of public concern and (2) there is no overriding state interest that would be undermined by the employee’s speech or association.”

The only activity that is relevant in this case is the Plaintiffs’ act of contracting with a third-party telemarketing organization to make fundraising phone calls. In their summary judgment pleadings, the Plaintiffs conceded that they allege retaliation by the City solely because of their involvement with the phone calls. There is absolutely no evidence in the record that the Plaintiffs were targeted because of their membership in the union or because of the union’s other community activities. Rather, all the evidence shows that they were targeted because they were in charge of this particular fundraising activity.
. . .
This was a business transaction, and the conduct had a commercial focus. Furthermore, the subject of the contract, making phone calls, was also commercial in nature. Doherty testified at trial that the purpose of the phone calls was to sell a product—tickets to a concert. The act of signing a business contract does not fall within traditional understandings of matters constituting a public concern

Although courts “evaluate several factors to determine whether speech is a matter of public concern, including “the focus of the speech; the point of the speech in question; to what purpose the employee spoke; the intent of the speech; or the communicative purpose of the speaker,” the Court found the trial court erred:

by examining a much broader array of activity; it looked at everything that the union did in the community, as well as the contract with FireCo and the phone calls that FireCo made. The district court further erred by suggesting that the Plaintiffs may have been disciplined for the positive aspects of the phone calls (as opposed to the threatening and misleading aspects). Local 4053’s activity, other than the act of contracting with FireCo, is irrelevant to the retaliation claim at hand.

. . .

The Plaintiffs argue that because the phone calls aimed to raise money for the union’s broad activities, some of which are matters of public concern, the act of contracting with a telemarketer to make those phone calls is also a matter of public concern. Even if we were to ignore the attenuated nature of the link between the contract and potential issues of public concern, the fact that the purpose of the FireCo contract was to raise money for union activities does not change the nature of the contract itself. “[A]n employee’s speech, activity, or association, merely because it is union related, does not touch on a matter of public concern as a matter of law.” . . . Similarly, FireCo’s passing references during the calls to some of the union’s protected activities do not transform the nature of the calls (much less the contract to make the calls). We have held that “the proper inquiry is not what might be incidentally conveyed by the speech, and that passing or fleeting references to an arguably public matter do not elevate the speech to a matter of public concern where the focus or point of the speech advances only a private interest.”

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court Recognizes Retaliatory Discharge Claim Before Employee Files Worker’s Compensation Claim

This morning, a majority of the Ohio Supreme Court agreed that an employee who reports a workplace accident to management is protected from retaliatory discharge by Ohio Revised Code § 4123.90 as soon as the report is made even though he has not yet formally initiated a worker's compensation claim or testified in a worker's compensation proceeding. Sutton v. Tomco Machining, Inc., Slip Opinion No. 2011-Ohio-2723. "Ohio recognizes a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after injury on the job but before the employee files a workers' compensation claim or institutes or pursues a workers' compensation proceeding." In Sutton, the employee was injured while disassembling a chop saw as part of his job and immediately reported the accident and injury to the employer's president. Within an hour, he was discharged without any explanation (although he was assured that it was not because of his performance, compliance with rules or work ethic).

A few months after being terminated, the employee filed suit alleging both a statutory violation of O.R.C. §4123.90 and a tort for wrongful discharge in violation of public policy. He alleged that he was terminated immediately after the accident in order to prevent him from claiming employment status when he initiated a formal worker's compensation claim. The employer moved dismiss/judgment on the pleadings, which was granted by the trial court. The Court of Appeals affirmed in part and reversed in part. It concluded that there was no valid statutory claim because the employee had been fired before he initiated a worker's compensation claim. However, it also concluded that his termination was in violation of the public policy reflected in the same statute. In confronting this issue, the Supreme Court noted:

R.C. 4123.90 provides: "No employer shall discharge, demote, reassign, or take any punitive action against any employee because the employee filed a claim or instituted, pursued or testified in any proceedings under the workers' compensation act for an injury or occupational disease which occurred in the course of and arising out of his employment with that employer."

{¶ 14} R.C. 4123.90 does not expressly prohibit retaliation against injured employees who have not yet filed, instituted, or pursued a workers' compensation claim. But it does expressly prohibit retaliation against injured workers who have filed, instituted, or pursued a workers' compensation claim. Essentially, a gap exists in the language of the statute for conduct that occurs between the time immediately following injury and the time in which a claim is filed, instituted, or pursued. Sutton's firing occurred in that gap. The parties disagree as to whether the public policy underlying R.C. 4123.90 justifies the creation of an exception to the
employment-at-will doctrine to protect such employees.

Interestingly, the Court had previously rejected a similar claim before it recognized the wrongful discharge in violation of public policy exception to the employment at will doctrine:

Although we have never before directly addressed whether the public policy underlying R.C. 4123.90 protects such employees, we have addressed whether the statute itself protected a similarly situated employee. In Bryant v. Dayton Casket Co. (1982), 69 Ohio St.2d 367, 23 O.O.3d 341, 433 N.E.2d 142, we addressed whether an employee's expression of an intent to pursue a workers' compensation claim was sufficient to satisfy R.C. 4123.90's requirement that an employee "institute" or "pursue" a proceeding and whether the employee was therefore protected by the statute against retaliation. Id. at 370. The relevant facts are that the employee, Bryant, cut his finger with a saw during his second day of employment with Dayton Casket Company, informed someone within the company of the injury, and was thereafter fired. Id. at 368. At the time of his dismissal, no workers' compensation proceedings had actually been pursued or instituted. Id. at 369. The employee sued and alleged that his firing was in retaliation for his pursuit of a workers' compensation claim. Id. at 368. He argued that his informing someone within the company of the injury was sufficient to satisfy the R.C. 4123.90 requirement that he pursue a claim. Id. at 370. We held that a mere expression of an intention to pursue a claim is not "pursuit" of a claim and, therefore, Bryant was not protected from retaliatory firing under the statute. (emphasis added).

However, since the 1982 decision, the Court now recognizes exceptions to the employment at will doctrine, and also found room to fix gaps in legislation when it determined that the gap was not intended to create an absurd result:

We find that the General Assembly did not intend to leave a gap in protection during which time employers are permitted to retaliate against employees who might pursue workers' compensation benefits. The alternative interpretation—that the legislature intentionally left the gap—is at odds with the basic purpose of the antiretaliation provision, which is "to enable employees to freely exercise their rights without fear of retribution from their employers." Coolidge v. Riverdale Local School Dist., 100 Ohio St.3d 141, 2003-Ohio-5357, 797 N.E.2d 61, ¶ 43. The General Assembly certainly did not intend to create the foot race cautioned against in Roseborough, 10 Ohio St.3d at 143, 462 N.E.2d 384, which would effectively authorize retaliatory employment action and render any purported protection under the antiretaliation provision wholly illusory. Therefore, it is not the public policy of Ohio to permit retaliatory employment action against injured employees in the time between injury and filing, instituting, or pursuing workers' compensation claims. Rather, R.C. 4123.90 expresses a clear public policy prohibiting retaliatory employment action against injured employees, including injured employees who have not filed, instituted, or pursued a workers' compensation claim. (emphasis added).

That being said, the Court declined to permit employees who are unlawfully discharged in violation of the public policy reflected in O.R.C. §4123.90 to recover the same unlimited damages available to other wrongful discharge plaintiffs. Instead, the Court decided that because the General Assembly intended to limit the monetary recovery of successful plaintiffs under O.R.C. §4123.90, that public policy tort plaintiffs should similarly be restricted: "Accordingly, we hold that Ohio's public policy as established by the legislature is to limit remedies for retaliatory employment actions against injured employees to those listed in R.C. 4123.90." Otherwise, plaintiffs who were fired before they brought worker's compensation claims would recover more than plaintiffs who were fired after they initiated worker's compensation claims even though, ultimately, both plaintiffs were relying on O.R.C. §4123.90 as the basis for their recoveries.

It would be nonsensical to acknowledge a tort in violation of public policy but fail to tailor the remedies in conformance with that public policy. We therefore hold that the remedies available for wrongful discharge in violation of the public policy against retaliatory employment actions as expressed in R.C. 4123.90 are limited to those listed in R.C. 4123.90.

For these reasons, we recognize a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after an injury but before he or she files, institutes, or pursues a workers' compensation claim. To establish causation, a plaintiff who alleges wrongful discharge in violation of public policy as expressed in R.C. 4123.90 must prove that the adverse employment action was retaliatory, which requires proof of a nexus between the adverse employment action and the potential workers' compensation claim. We further hold that the remedies available for the tort are limited to those provided by R.C. 4123.90.

Three justices dissented.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

It’s Baaaackkk! Dohme Again Makes it to Oral Arguments Before Ohio Supreme Court

Yesterday was déjà vu all over again at the Ohio Supreme Court as the Dohme case had its second appearance before the Court in oral argument. As previously reported here in February 2008, “the Ohio Supreme Court heard oral argument about whether public policy wrongful discharge claims should be recognized when the employee did not “blow the whistle” to either a government agency or management about safety concerns, but rather, complained to a private sector insurance auditor about his paranoia of being set up to be fired in a document of fire alarm inspections.”

A law school classmate, Todd Penny, again argued the case for the employer. According to the 2007 opinion of the Montgomery County Court of Appeals, the employer’s insurance company was conducting a risk assessment in connection with developing a price quote. As had been done in the past, the employer informed staff about the inspection and directed that only certain designated employees were to communicate with the insurance company employee. (It later explained that this was to ensure that the insurance company only received information from staff who were up to date with accurate information). There was some confusion about one of the employer’s staff not coming to work that day, however, and the plaintiff ultimately greeted the insurance representative and spoke to him about a missing report which he believed would be blamed on him. The employer pointed out that the plaintiff never mentioned any safety concerns to the insurance company employee. During oral argument, it was explained that the plaintiff then told another employee at the employer that he had told the insurance employee about the missing report so that he could not be blamed for its disappearance. The plaintiff was then terminated for violating a work directive.

The Court of Appeals concluded that even though the plaintiff did not specifically mention a concern with workplace place safety to the insurance representative, the issue raised related to workplace safety. It also found inherently suspicious the employer’s direction to limit communication with the insurance representative. However, Justice O’Connor was troubled by this “leap” and suggested that it might be suspicious if only the plaintiff had been directed to not communicate with the insurance representative.

The plaintiff’s attorney attempted to argue that evidence of causation cannot be limited to simply this single conversation with the insurance representative, but argued that the Court should look back at the plaintiff’s history – going back to 2001 -- of being perceived as a safety troublemaker. Justice Lanzinger then asked how long an employee should be protected after engaging in protected whistleblowing. In response, his attorney admitted that it would typically be no more than 6 months, but that it would be longer in this case in light of the protracted disputes over fire safety at the plant.

In short, the employer argued that this case should be dismissed on summary judgment because (1) the plaintiff never mentioned a concern with workplace safety to the insurance representative (but only a concern with workplace paranoia) and (2) never complained to a government agency or internal management about any safety concerns. Otherwise, the possibility exists that an employee would be able to claim whistleblower protection just by mentioning an issue to a spouse, neighbor, drinking buddy, etc. This time around, the Court did not seem to entertain the same acceptance of the plaintiff’s case.

As mentioned, the case was previously argued before the Supreme Court, which remanded it for lack of a final and appealable order (in that the plaintiff had attempted to create an appealable order by voluntarily dismissing without prejudice a overtime wage claim). On remand, the plaintiff dismissed that claim with prejudice and the trial court reinstated his prior summary judgment in favor of the employer. Without writing a new opinion, the Court of Appeals, again, reversed and the employer, again, appealed to the Supreme Court.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.