Courts Shouldn't Ignore Due Process To Create Class Actions

Wal-Mart v. Dukes, a case claiming job discrimination against at least 1.5 million women, reached the Supreme Court last week after the Ninth Circuit Court of Appeals in San Francisco agreed, in a 6-5 vote, to permit the case to go forward as a single class-action. The press is portraying this as a dispute over how “large” a class action can be, but that is incorrect. There is nothing inherently wrong with a large class action.

A class action is simply a procedural device meant to aggregate similar claims for purposes of efficiency. Thus, while it may not make sense for a single individual to bring a lawsuit about an illegal $20 overcharge in a phone bill, if you bring together 2 million people with identical phone contracts and overcharges subject to the same law, one can try the claims in a single case.

The trial over Amy’s phone bill will be the same as the trial of Zachary’s phone bill, so it’s possible to have a single trial to resolve the issues of all 2 million phone bills, with the class represented by a handful of representative plaintiffs. A class of 2 million would be even a larger class than that of the Dukes case, but it wouldn’t be any more controversial than any other class action.

One can even imagine an appropriate employment class action as large as Dukes. For example, if Wal-Mart had a nationwide policy that it would always pay women 20% less than men doing the same job, women would be equally affected by that policy, and it would be a simple matter to try the case: there was an illegal policy, X number of women were affected by it identically (so what was true for the representative plaintiff would be true for all the other class members), and they suffered Y damages.

But the theory of the Dukes lawsuit is exactly the opposite: the plaintiffs claimed that Wal-Mart’s central office did not exercise enough authority over each of its 3,400 stores; each of the individual managers’ discretionary employment or promotion decisions--whether made by male or female managers--was, on average, discriminatory; and thus Wal-Mart was responsible for a policy that “fosters or facilitates” discrimination.

Wal-Mart says that women have fewer management jobs because fewer women apply. Only an illegal quota would block such a legal theory if courts let it go forward.

One can quickly see why this does not work as a class action. In the words of Professor Richard Epstein, the procedural tail is wagging the substantive dog.

The discrimination laws permit Wal-Mart to defend itself by demonstrating that the challenged job decision was made for a reason other than gender. For example, looking at Betty Dukes, the named plaintiff, alone, we learn that she had a female manager and that she was repeatedly disciplined for returning late from lunch breaks.

Yet if a court ties together claims that are not alike, it will have trouble trying the case as a single class action--unless it pretends that the parts that are not alike are not part of the lawsuit. Wal-Mart is stripped of its defense because the individualized defense would be inconvenient to trying the case as a class action.

But that is precisely backwards. If there are too many individualized issues to permit a defendant to defend itself adequately in a class action, that means the correct ruling is not to have a class action.

If the Supreme Court rules in Wal-Mart’s favor later this year, it will not be to protect business, but to protect due process.

This piece originally appeared in Washington Examiner

This piece originally appeared in Washington Examiner