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DUKES v. WAL-MART STORES

June 21, 2004.

BETTY DUKES, PATRICIA SURGESON, CLEO PAGE, DEBORAH GUNTER, KAREN WILLIAMSON, CHRISTINE KWAPNOSKI, and EDITH ARANA, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
WAL-MART STORES, INC., Defendant.



The opinion of the court was delivered by: MARTIN JENKINS, District Judge

ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION
INTRODUCTION
Plaintiffs have filed a Third Amended Complaint, brought on behalf of six named plaintiffs and all others similarly situated, asserting a claim against Wal-Mart Stores, Inc. ("Wal-Mart") for sex discrimination under Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e et seq. ("Title VII"). Generally stated, plaintiffs allege that women employed in Wal-Mart stores (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer promotions to in-store management positions than do men, and those who are promoted must wait longer than their male counterparts to advance.

Plaintiffs assert that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart, and that the discrimination of which they complain is common to all women who work or have worked in Wal-Mart stores. Plaintiffs seek classwide injunctive and declaratory relief, lost pay, and punitive damages. They do not seek any compensatory damages on behalf of the class.

  Wal-Mart is the largest private employer in the world. See Defendant's Opposition to Motion for Class Certification ("Def.'s Opp'n") at 1. It operates approximately 3,400 stores in the United States and currently employs well over a million people. See Declaration of Christine Webber ("Webber Decl.") Ex. 70 at 3-5, 12. Wal-Mart is best known for its "Discount Stores," which offer a wide variety of discounted goods and services, and "Supercenters," which are similar to Discount Stores but also include full grocery departments. The company also operates "Sam's Clubs," which are membership-only stores that sell items in bulk or at deep discounts, and "Neighborhood Markets," which are smaller stores primarily selling food and drugs.*fn1 Currently before the Court is Plaintiffs' motion to certify a nation-wide class of women who have been subjected to Wal-Mart's allegedly discriminatory pay and promotions policies.*fn2 Specifically, plaintiffs propose that the Court certify the following class pursuant to Federal Rule of Civil Procedure 23(a) and 23(b)(2):
All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998 who have been or may be subjected to Wal-Mart's challenged pay and management track promotions policies and practices.
Plaintiffs' Motion for Class Certification ("Pls.' Mot.") at 37.*fn3 In preparation for this motion, the parties undertook extensive discovery. They also filed extensive briefing along with volumes of documentary and testimonial evidence. On September 24, 2003, the Court heard oral argument over the course of seven hours.

  Before proceeding further, the Court wishes to acknowledge Defendant's characterization of this motion as historic in nature. Defendant emphasizes that the proposed class covers at least 1.5 million women who have been employed over the past five years at roughly 3,400 stores, thus dwarfing other employment discrimination cases that have come before. In its view, these numbers alone make this case impossible. Certainly, the size of the putative class raises concerns regarding manageability which this Court must, and does, carefully consider. Title VII, however, contains no special exception for large employers. Enacted in 1964 during the height of the civil rights movement, this Act forbids gender and race-based discrimination in the American workplace. Two years later, federal class action rules were amended to facilitate the vindication of these rights on a broader basis. See In re Monumental Life Ins. Co., 365 F.3d 408, 417 n. 16 (5th Cir. 2004) (Fed.R.Civ.P. 23(b)(2) was added in 1966 primarily to facilitate the bringing of civil rights class actions). Insulating our nation's largest employers from allegations that they have engaged in a pattern and practice of gender or racial discrimination — simply because they are large — would seriously undermine these imperatives. Indeed, it is interesting to note, as a matter of historical perspective, that Plaintiffs' request for class certification is being ruled upon in a year that marks the 50th anniversary of the Supreme Court's decision in Brown v. Board of Education, 347 U.S. 483 (1954). This anniversary serves as a reminder of the importance of the courts in addressing the denial of equal treatment under the law wherever and by whomever it occurs. Id. at 495.

  Notions of historical import aside, the Court also takes this opportunity to acknowledge two important factors. First, the Court, by this motion, is not called upon to make any determination on the merits of Plaintiffs' allegations of gender discrimination; rather, only procedural questions are presented. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974). Thus, resolution of this motion for class certification should not be construed in any manner as a ruling on the merits or the probable outcome of the case. Second, in spite of Defendant's concerns regarding the historic nature of this motion, the Court does not encounter the issues raised herein on a barren legal landscape. Rather, this Court is satisfied that ample legal precedent is available to guide the Court in determining the propriety of Plaintiffs' request for class certification. Indeed, while the size of the proposed class is unique, the issues are not novel, and Plaintiffs' claims are relatively narrow in scope.*fn4

  Having fully analyzed the pleadings, evidence, and oral argument presented by the parties, and the entire record herein, the Court grants in part and denies in part Plaintiffs' motion for class certification. Specifically, and as explained in greater detail below, the Court rules as follows:

  1) With respect to Plaintiffs' claim for equal pay, Plaintiffs' motion is granted and the proposed class is certified with respect to issues of liability and all forms of requested relief;

  2) With respect to Plaintiffs' promotion claim, Plaintiffs' motion is granted in part and denied in part. Specifically, the Court certifies the proposed class with respect to issues of liability (including liability for punitive damages) and injunctive and declaratory relief. The Court finds, however, that with respect to the remedy of lost pay, it is manageable only with respect to those challenged promotions where objective data is available to document class member interest in the challenged promotion. Thus, the Court denies certification, on grounds of unmanageability, with respect to Plaintiffs' promotion claims for lost pay (and thus punitive damages) as to those class members for whom no such data is available.

  LEGAL STANDARD

  A party seeking to certify a class must demonstrate that it has met all four requirements of Federal Rule of Civil Procedure 23(a), and at least one of the requirements of Rule 23(b). Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(a) requires that all of the following four factors be met: "(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." In short, the class must satisfy the requirements of numerosity, commonality, typicality, and adequacy. Fed.R.Civ.P. 23(a).

  Rule 23(b) requires, in relevant part, that one of three additional requirements be met. Here, plaintiffs assert that this case falls within Rule 23(b)(2), which provides that the "party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2). Rule 23(c) allows a court to maintain a class action as to particular issues only or to divide a class into subclasses. Fed.R.Civ.P. 24(c)(4).

  The party seeking certification must provide facts sufficient to satisfy Rule 23(a) and (b) requirements. Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304, 1308-09 (9th Cir. 1977). In turn, the district court must conduct a rigorous analysis to determine that the prerequisites of Rule 23 have been met. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). If a court is not fully satisfied, certification should be refused. Id. Conditional certification is no longer proper. See Fed.R. Civ. P. 23, Advisory Committee Notes, 2003 Amendments.

  While the court's analysis must be rigorous, Rule 23 confers "broad discretion to determine whether a class should be certified, and to revisit that certification throughout the legal proceedings before the court." Armstrong v. Davis, 275 F.3d 849, 872, n. 28 (9th Cir. 2001); see also Knight v. Kenai Peninsula Borough Sch. Dist., 131 F.3d 807, 816 (9th Cir. 1997). "`Implicit in this deferential standard is recognition of the essentially factual basis of the certification inquiry and of the district court's inherent power to manage and control pending litigation.'" In re Monumental Life Ins. Co., 365 F.3d at 414 (citation omitted); see also Hartman v. Duffey, 19 F.3d 1459, 1471 (D.C. Cir. 1994) ("In light of the fact that trial courts have the primary responsibility of ensuring the `orderly management of litigation' and that the purpose of class actions lies in `advanc[ing] the efficiency and economy of multi-party litigation,' trial courts `are uniquely well situated to make class certification decisions.'") (citations omitted).

  In Falcon, the Court reiterated the well-recognized precept that "`the class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action.'" Falcon, 457 U.S. at 160 (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978)). Nevertheless, "[w]e find nothing in either the language or history of Rule 23 that gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action." Eisen, 417 U.S. at 177. Thus, "[a]lthough some inquiry into the substance of a case may be necessary to ascertain satisfaction of the commonality and typicality requirements of Rule 23(a), it is improper to advance a decision on the merits to the class certification stage." Moore v. Hughes Helicopters, Inc., 708 F.2d 475, 480 (9th Cir. 1983) (citation omitted); see also Nelson v. United States Steel Corp., 709 F.2d 675, 679-80 (11th Cir. 1983) (plaintiffs' burden at class certification "entails more than the simple assertion of [commonality and typicality] but less than a prima facie showing of liability") (citation omitted); Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 292 (2d Cir. 1999); Fed.R.Civ.P. 23, Advisory Committee Notes, 2003 Amendments (court review of the merits should be limited to those aspects relevant to making the certification decision on an informed basis).*fn5 With these principles in mind, the Court turns to the requirements of Rule 23(a).

  ANALYSIS

  I. Rule 23(a) Factors

  A. Numerosity

  Under the first Rule 23(a) factor, the class must be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1); Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003). Plaintiffs need not state the exact number of potential class members; nor is a specific minimum number of class members required. Arnold v. United Artists Theatre Circuit, Inc., 158 F.R.D. 439, 448 (N.D. Cal. 1994). Rather, whether joinder is impracticable depends on the facts and circumstances of each case. Id. Wal-Mart does not contest that numerosity is satisfied here, given that both parties estimate that the proposed class numbers over one million women. Indeed, it is beyond dispute that joinder would be impracticable in this case. Accordingly, the Court finds that this factor is satisfied. B. Commonality

  Rule 23(a)(2) requires that common questions of law or fact exist among class members. As the Supreme Court has explained, this requirement overlaps with the typicality requirement:
[T]he commonality and typicality requirements . . . tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.
Falcon, 457 U.S. at 157 n. 13. Nonetheless, each factor serves a discrete purpose — commonality focuses on the relationship of common facts and legal issues among class members, while typicality examines the relationship of facts and issues between the representatives and the class. See Conte & Newberg on Class Actions, Vol. I, at 411 (4th ed.) (hereafter "Newberg"). In other words, commonality refers to the group characteristics of the class as a whole, and typicality refers to the individual characteristics of the named plaintiffs in relation to the class. As such, the Court will address each factor separately.

  Rule 23(a)(2) does not require that all questions of law or fact be common. The test is qualitative rather than quantitative — one significant issue common to the class may be sufficient to warrant certification. Savino v. Computer Credit, Inc., 173 F.R.D. 346, 352 (E.D.N.Y. 1997), aff'd, 164 F.3d 81 (2d Cir. 1998); Newberg, Vol. I, at 272-74. Indeed, the necessary showing to satisfy commonality is "minimal." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). Specifically, plaintiffs may demonstrate commonality by showing that class members have shared legal issues but divergent facts or that they share a common core of facts but base their claims for relief on different legal theories. Id. at 1019.

  Plaintiffs present extensive evidence to support their contention that there are significant factual and legal questions common to all class members with respect to whether Wal-Mart has engaged in company-wide discrimination against female in-store employees in pay and promotions. This evidence can be grouped into three major categories: (1) facts and expert opinion supporting the existence of company-wide policies and practices; (2) expert statistical evidence of class-wide gender disparities attributable to discrimination; and (3) anecdotal evidence from class members around the country of discriminatory attitudes held or tolerated by management. The Court concludes that this evidence more than satisfies plaintiffs' burden to demonstrate commonality under Rule 23(a)(2). Each category is discussed in detail below.

  1. Company-Wide Policies and Practices

  This first category can be further divided into two discrete areas. First, Plaintiffs present evidence that Wal-Mart's policies governing compensation and promotions are similar across all stores, and build in a common feature of excessive subjectivity which provides a conduit for gender bias that affects all class members in a similar fashion. Second, Plaintiffs submit evidence that Wal-Mart cultivates and maintains a strong corporate culture which includes gender stereotyping. While the parties vigorously dispute certain aspects of this evidence, and certainly draw different inferences therefrom, it is sufficient at this juncture to support Plaintiffs' claim that there are common issues as to whether Wal-Mart engages in discriminatory policies and practices that affect putative class members in a similar manner.

  a. Policies and Practices Governing Compensation and Promotion

  Defendant argues that it utilizes a myriad of distinct systems for compensating and promoting in-store employees depending on the position and type of store (or store department), and that these differences preclude any finding of commonality. It further argues that decisions regarding pay and promotions are too decentralized to create any questions common to the class. As discussed below, however, while some variations exist, there is a basic organizational structure that is consistent across store types and throughout the company's domestic stores in important respects. Furthermore, the policies governing in-store compensation and promotions uniformly provide for managers to exercise significant subjectivity in making pay and promotion decisions. Indeed, although the parties disagree about many of the fine points, they essentially agree that Wal-Mart managers make pay and promotion decisions for in-store employees in a largely subjective manner. (1) Overview of Wal-Mart Store Structure

  As noted above, Wal-Mart operates four different types of stores: Discount Stores, Supercenters, Neighborhood Markets, and Sam's Clubs. Wal-Mart considers the first three to be part of a single operation, while Sam's Club operates as a separate division. All stores (except Sam's Clubs) are divided into six divisions, for a total of seven divisions including Sam's Clubs. Each division in turn is divided into regions for a total of 41 regions nationwide. Each region contains roughly 80-85 stores. K. Harper Depo. at 177, 215 (Webber Decl. Ex. 1); Butler Depo. at 39 (Webber Decl. Ex. 4).

  Merchandise sold in the stores is generally segregated in up to 40-53 separate departments (e.g. apparel, jewelry, hardware).*fn6 Certain departments are designated "specialty departments" and are considered to operate as semi-autonomous units within the stores. The eight speciality departments are One-Hour Photo, Optical, Pharmacy, Shoes, Jewelry, Tire & Lube Express, Hearing, and Wireless Services. Grocery sections in the Supercenters also are considered to be semi-autonomous units within the stores. K. Harper Depo. at 90, 155-56 (Webber Decl. Ex. 1).

  While the size and inventory of Wal-Mart stores vary, the evidence indicates that the personnel structure within each store operates in a basically similar fashion using similar job categories, job descriptions, and management hierarchies.*fn7 At the top of the in-store management structure are the salaried positions beginning with the Store Manager. See K. Harper Depo. at 152 (Webber Decl. Ex. 1). In certain larger stores, there are Co-Managers who report to the Store Manager and often oversee the grocery departments. See id. at 35-36, 155-56; Haworth Decl. ¶ 50. Next in line are the Assistant Managers, with several per store, depending on store size. Specialty Department Managers report directly to District Managers as well as the Store Manager.

  In order to transition into a salaried management position, employees must generally go through a four-to-five month training program as a "Management Trainee." See Def.'s Opp'n at 40. The Management Trainees are considered as being in a limbo phase between the hourly and salaried ranks, although they are paid on an hourly basis.

  With respect to the hourly positions, the highest is that of Support Manager, which is considered a feeder into the Management Trainee position. Below Support Manager are the Department Managers and Customer Service Managers, who serve as lower-level hourly supervisors. At the bottom rung are the entry level Cashiers, Sales Associates, Stockers, and others.

  In general, roughly 65 percent of hourly employees are women, while roughly 33 percent of management employees are women. Drogin Decl. ¶ 19. The approximate percentages of women in specific hourly and salaried management positions are as follows:
Salaried Positions
Store Manager — 14% Co-Manager (only in larger stores) — 23% Assistant Manager — 36%
Hourly Positions
Management Trainee — 42% Support Manager — 50% Department Manager — 78% Customer Service Manager — 85-90% Other hourly positions — 70%*fn8
See Drogin Decl. ¶ 23, Table 7. (2) Policies Governing Compensation
(a) Hourly Employees
  All hourly employees at every Wal-Mart store are compensated pursuant to the same general pay structure. Each store has a minimum starting wage for each class of hourly jobs that is set by the Wal-Mart Home Office in Arkansas (hereafter "Home Office"). Beyond that, Store Managers are granted substantial discretion in making salary decisions for hourly employees in their respective stores. Specifically, they are allowed to depart from the minimum start rates, within a two dollar per hour range, without being constrained by objective criteria and with limited oversight. See Def.'s Opp'n at 5-6 & n. 4. Indeed, "[i]n setting pay, a Store Manager makes the call based on his or her needs." Id. at 15; Haworth Decl. ¶ 4 ("This is a company that relies on its Store Managers to set the specific wage rates of each store's employees."). Given that hourly workers typically earn approximately $18,000 per year (based on 2001 wages), see Drogin Decl. ¶ 19, the two dollar per hour discretionary range is significant. Store Managers also are allowed to increase pay for exceptional performance, again with limited guidance or oversight.

  As a partial constraint on this local control Wal-Mart utilizes a system of oversight known as "management by exception." Under this system, District Managers and Specialty Group Regional Managers receive "exception reports" if Store Managers set an employee's pay rate at more than six percent above the minimum rate set by the Home Office, and must approve such rates. Defendant's national pay structure also specifies a 25 cent-per-hour gap between start rates in consecutive pay classes. See Drogin Reply Decl. ¶ 23; Webber Decl., Exhs. 93-94. This limited oversight, however, still leaves individual Store Managers with substantial discretion in setting pay rates for in-store employees. As one Store Manager explained, "There's [a presumptive limit of two dollars above the base], but I can do what I want. I mean, if I start throwing money around, I mean, eventually the phone is going to ring. But the store manager has the flexibility to do what he needs to do to run the building." Shatz Depo. at 66 (Weber Decl. Ex. 46). (b) Salaried Employees

  All types of Wal-Mart stores also compensate their salaried in-store management employees pursuant to common policies and practices. These decisions are made primarily by District Managers (the first level in the management hierarchy above Store Managers) and their superiors, the Regional Managers.

  (1) Assistant Managers: For these lowest level salaried managers, Wal-Mart's Exempt Associate Pay Guidelines establish a broad salary range within which District Managers have discretion to set pay rates with little guidance and limited oversight. Assistant Managers receive a base salary and are eligible to receive annual performance and merit increases and a bonus. See Haworth Decl. ¶ 221; Def.'s Opp'n at 35 n. 21. Those working in areas with a high cost of living receive Geographical Assistance Pay (GAP). See Arnold Decl. ¶ 9. The base salary range for Assistant Managers starts at $29,500 and goes to between $42,000 to $47,000 depending on store size. See Haworth Decl. ¶ 222.*fn9

  (2) Co-Managers: Similarly, Co-Manager pay rates are set by District Managers who exercise complete discretion, with little guidance and limited oversight, to set salaries within a base salary range from $42,000 to $47,000 (with GAP adjustments). Co-Managers are also eligible to participate in an incentive plan based on store profitability. They do not receive merit or performance increases. Id. at ¶ 225.*fn10

  (3) Specialty Departments: Specialty Department Managers also have similar, albeit not identical, pay structures. Defendant's expert, Dr. Joan Haworth, states that each Specialty Department has a "different compensation plan," but she only identifies four of the eight departments (Tire & Lube Express [TLE], Photo, Optical, and Pharmacy). Among those, all have base salaries in broad ranges (spanning from $24,000 to over $40,000 at the top, with GAP adjustments), all are eligible for incentive plans, and all are eligible for merit and performance increases. Id. at ¶¶ 241-45. Again, these managers' pay rates are set by higher level managers with complete discretion within the relevant range, with limited guidance or oversight.

  (4) Store Managers: Store Managers are paid a base salary determined by store size, ranging from $44,000 to $50,000, with GAP adjustments. They also are eligible to receive incentives based on store size and profitability. Id. at ¶ 227. Again, their base salaries are determined by upper level managers with broad discretion within the established range.

  As the above reflects, there is a basic compensation structure that applies similarly to all in-store salaried management positions across all types of Wal-Mart stores, in that the computation begins with a base salary within a range set by the corporation (with an allowance for GAP), with adjustments allowed for profit incentives and/or merit increases. While certain differences exist — e.g., some positions allow for profit incentives while others build in merit incentives or both — they do not fundamentally alter the common nature of the positions. Most importantly, all of the in-store salaried positions — like all of the hourly positions — share the common feature that there is a broad range of discretion built into the compensation structure for each position. As discussed further infra, this feature also provides a potential conduit for gender discrimination that is common to all class members. At this point, however, it suffices to say that Defendant's policies governing compensation of hourly and salaried employees do not preclude a finding of commonality; on the contrary, the evidence indicates that there is significant uniformity across stores, and that Defendant's policies all contain a common feature of subjectivity that is relevant to Plaintiffs' claims of class-wide gender discrimination thus supporting the existence of questions common to the class.

  (3) Policies Governing Promotions

  As with salary decisions, the parties agree that subjectivity is a primary feature of promotion decisions for in-store employees. In the words of Wal-Mart President and CEO Thomas Coughlin, "We push down to the manager of the facility level, [sic.] the responsibility to run those stores right." Haworth Decl. ¶ 7. The subjectivity in promotion decisions occurs in two fundamental ways: (a) a largely subjective selection practice hindered by only minimal objective criteria, combined with (b) a failure to post a large proportion of promotional opportunities.

  (a) Subjectivity in the Selection Practice

  The first promotion category challenged by Plaintiffs — the Support Manager position — is the primary feeder for the Management Training Program. It is undisputed that Wal-Mart allows Store Managers to apply their own subjective criteria when selecting candidates for the Support Manager position. Decisions regarding advancement into the Management Training Program are made by District and Regional Managers. Wal-Mart has minimum corporate guidelines for promotion into these positions, which include requirements that candidates have an "above average" evaluation, have at least one year in their current position, be current on training, not be in a "high shrink" department or store, be on the company's "Rising Star" list, and be willing to relocate. However, since the guidelines set forth only the minimum requirements for advancement, the decisions as to who will actually be selected for the Management Training Program are based largely on subjective criteria, resulting in what is fairly characterized as a "tap on the shoulder" process. See Butler Depo. at 135:4-11 (Webber Decl. Ex. 4) ("Each District Manager kind of has their own way of identifying talent within their district for development."); Kintzele Depo. at 86:20-23 (Webber Decl. Exh. 13) (explaining that Store Managers nominate candidates for promotion); M. Miller Depo. at 65:2-13 (Webber Decl. Ex. 54); June 27, 2002 E-mail from Jarrells-Porter (Webber Decl. Ex. 100) (statement of Senior Vice President that Wal-Mart "[does] not have a poster, brochure, nothing that I am aware of" to inform hourly workers "how to get promoted into the management training program"); Bielby Decl. ¶ 22 (citing testimony of Wal-Mart managers that promotions to in-store management positions are made based on largely discretionary criteria). Decisions regarding advancement to the highest in-store positions — Assistant Manager, Co-Manager, and Store Manager — are similarly based on subjective assessments beyond adherence to corporate minimum guidelines. See, e.g., Kintzele Depo. 130:10, 133:9-135:16, 165:22-167:1 (Webber Decl. Ex. 13); Bielby Decl. ¶ 37. The subjective nature of Defendant's promotion practices is further compounded by the fact that the company does not monitor the promotion decisions being made or otherwise systematically review the grounds on which candidates are selected for promotion. Bielby Decl. ¶¶ 37-38 & n. 53 (citing testimony of numerous Wal-Mart executives and managers).

  (b) Failure to Post Promotional Opportunities

  It is undisputed that, until January 2003, Wal-Mart did not post job vacancies for its Assistant Management Training Program, and it posted only a small number of vacancies for the Co-Manager position. See Def.'s Opp'n at 40 ("Wal-Mart does not have applicant flow data for the Trainee position before 2003"); Drogin Decl. ¶ 46 & Table 20.*fn11 Also, despite a stated policy to post hourly Support Manager positions, roughly 80 percent of these openings were not in fact posted. Drogin Decl. ¶ 44 & Table 19. Because most positions were not posted, class members had no ability to apply for, or otherwise formally express their interest in, openings as they arose. As a result, Managers did not have to consider all interested and qualified candidates, thus further intensifying the subjective nature of the promotion process.*fn12

  Wal-Mart did post openings for Store Manager positions during the relevant class period. This was not, however, an "open" application process; rather, candidates were required to obtain permission from their District Manager before being allowed to apply. In selecting who could apply, such managers have been free to rely upon subjective criteria beyond the minimum corporate guidelines. Thus the posting of Store Manager positions did not fully ameliorate the subjective nature of the promotion process for these positions. (4) Whether Defendant's Compensation and Promotion Policies Support a Finding of Commonality

  Having reviewed the extensive evidence submitted by the parties, this Court is satisfied that Wal-Mart's systems for compensating and promoting in-store employees are sufficiently similar across regions and stores to support a finding that the manner in which these systems affect the class raises issues that are common to all class members. Moreover, the fact that Wal-Mart's compensation and promotion policies consistently permit managers to utilize a great deal of subjectivity further supports a finding of commonality.

  While some level of subjectivity is inherent in, and in fact a useful part of, personnel decisions, courts have long recognized that the deliberate and routine use of excessive subjectivity is an "employment practice" that is susceptible to being infected by discriminatory animus. See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 990-91 (1988) (subjective decision-making is a "practice" subject to challenge under Title VII); Falcon, 457 U.S. at 159 n. 15; Sengupta v. Morrison-Knudsen Co., 804 F.2d 1072, 1075 (9th Cir. 1986) (citation omitted); Casillas v. United States Navy, 735 F.2d 338, 345 (9th Cir. 1984) (citation omitted). In the same vein, a general practice of not posting promotional opportunities also supports a finding of commonality. See Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1187 n. 17 (9th Cir. 2002) ("Failure to post vacancies and the use of subjective promotions practices . . . may be evidence of discrimination").

  And while the presence of excessive subjectivity, alone, does not necessarily create a common question of fact, where, as here, such subjectivity is part of a consistent corporate policy and supported by other evidence giving rise to an inference of discrimination, courts have not hesitated to find that commonality is satisfied. See e.g., Shipes v. Trinity Industries, 987 F.2d 311, 316 (5th Cir. 1993) ("Allegations of similar discriminatory employment practices, such as the use of entirely subjective personnel processes that operate to discriminate, satisfy the commonality and typicality requirements of Rule 23(a).") (citation omitted); Caridad, 191 F.3d at 292; Beckmann v. CBS, 192 F.R.D. 608, 613 (D. Minn. 2000); Shores v. Publix Super Markets Inc., 1996 WL 407850, at *6 (M.D. Fla. Mar. 12, 1996) (defendant's "policy of delegating hiring and promotion decisions to managers, who make those decisions on the basis of subjective criteria, is a common course of conduct . . . adequate to meet the commonality requirement of Rule 23").*fn13

  The situation here is similar to Morgan v. United Parcel Service, Inc., 169 F.R.D. 349 (E.D. Mo. 1996), in which the parties agreed that United Parcel Service had a subjective, decentralized decision-making process for promotions. The defendant claimed that this process should defeat commonality because individualized decisions are made at the local level, whereas plaintiffs argued that the policy of giving local managers unfettered authority was part of a nation-wide corporate policy to which all employees were subjected and which resulted in racial discrimination. Id. at 356. The court agreed with plaintiffs that the subjective decision-making practice was sufficient to satisfy the commonality requirement. Id.

  Wal-Mart similarly argues that the fact that pay and promotion decisions are made locally by individual Store Managers necessarily defeats a finding of commonality. To support this argument, it attempts to align itself with those cases in which courts have denied certification based on geographically diverse corporations with localized decision-making. In the principal case relied on by Defendant, Reid v. Lockheed Martin Aeronautics Co., 205 F.R.D. 655 (N.D. Ga. 2001), the court held that because the challenged employment practices were highly localized among many facilities, plaintiffs could not establish commonality. While Reid recognized that subjective decision-making may give rise to an inference of discrimination, it determined on the facts of the case that there was no evidence to provide a nexus between the subjective decision-making and discrimination. Id. at 670-72. Here, in contrast, plaintiffs have presented evidence of such a nexus by presenting evidence of gender stereotyping and a corporate culture of uniformity (discussed in greater detail below). Furthermore, Reid emphasized that all of the named plaintiffs in that case worked at the same facility, thereby leaving the court without any basis upon which to conclude that similar practices existed among diverse facilities. Id. Here, in contrast, the named plaintiffs work in different stores and Plaintiffs have submitted over a hundred declarations by designated class members showing common subjective practices across the country. The Court therefore finds Reid distinguishable.*fn14

  The Court also rejects Wal-Mart's suggestion that its practice of giving managers substantial discretion in making pay and promotion decisions should defeat commonality because it would embroil the court or jury in an endless series of individual fact scenarios regarding each pay or promotion decision. As discussed in section II.B.1, Plaintiffs' task at the liability stage of the trial is to prove a pattern and practice of discrimination. To do so, they will need to show sufficient evidence of excessive subjectivity to convince a jury that it is a wide-scale practice, which along with other evidence, is sufficient to create an inference of, and ultimately prove, discrimination. Because the focal point will be the practice of utilizing excessive subjectivity, rather than the facts concerning each individual decision, the Court is satisfied that the subjective nature of Defendant's personnel practices does not defeat commonality in this case.

  b. Corporate Culture

  Plaintiffs also present evidence that Wal-Mart has developed and continually reinforces a strong, centralized corporate culture. This evidence, taken together with evidence concerning Wal-Mart's company-wide subjective compensation and promotion practices discussed above, provides a further indicator of commonality. Specifically, Plaintiffs present evidence that Wal-Mart corporate culture includes two principal common aspects relevant to this case: (1) a strong emphasis on building and maintaining a uniform culture, and (2) an environment that may include gender stereotyping.

  (1) Wal-Mart's Emphasis on Uniform Culture

  There is no genuine dispute that Wal-Mart has carefully constructed and actively fosters a strong and distinctive, centrally controlled, corporate culture.*fn15 See, e.g., R. Harper Depo. at 121 (Webber Decl. Ex. 36) (describing Wal-Mart culture as a "very tight, deep culture" and "a very closed culture from a total corporation standpoint"). This culture, labeled by Defendant as the "Wal-Mart Way," promotes and sustains uniformity of operational and personnel practices. This is important in the Rule 23 commonality analysis because, as Plaintiffs' expert, Dr. William Bielby, states, "[a] strong and widely shared organizational culture promotes uniformity of practices throughout an organization." Bielby Decl. ¶ 18.

  Every new employee nation-wide goes through the same orientation process and, as part of that process, is trained about the Wal-Mart culture. Thereafter, employees at Wal-Mart stores attend a daily meeting held at shift changes, where managers discuss the company culture and employees do the Wal-Mart cheer. See Muzingo Depo. at 85-86 (Webber Decl. Ex. 32). Employees also receive weekly training on culture topics at mandatory store meetings.*fn16 Wal-Mart Store Managers are provided with a detailed schedule of corporate culture lessons and accompanying training materials to present at these weekly meetings. The same Computer-Based Learning Modules are used in all stores, including required training on culture topics. Culture is also an integral part of all management training programs. Home Office managers also attend a meeting each Saturday morning which is dedicated once a month to presenting one of the company's culture lessons. See Muzingo Depo. 135-36 (Webber Decl. Ex. 32). In short, the inculcation of Wal-Mart culture is an ongoing process for all employees regardless of seniority; as one manager puts it, the company has a "continual process of learning culture." See Swanson Depo. at 141 (Webber Decl. Ex. 14).

  Additionally, Wal-Mart has a strong policy of "promoting from within," so that the culture lessons learned by junior-level employees contribute to building a foundation of common understanding and practice among the management team. See Peterson Depo. at 72:2-6 (Webber Decl. Ex. 16). The company also regularly moves store level managers from one retail facility to another, often from one state to another, and between Wal-Mart and Sam's Club divisions. On the average, each Store Manager is transferred to a different store 3.6 times after achieving that title. A majority of these transfers are into different districts and are often into different regions. See Drogin Decl. ¶ 35; Drogin Reply Decl. ¶ 24. This degree of mobility could only be efficient in a company with a high degree of store-to-store uniformity. These practices also help ensure that a uniform Wal-Mart Way culture operates consistently throughout all stores.

  Wal-Mart also has a very advanced information technology system which allows managers in the Home Office to monitor the operations in each of its retail stores on a close and constant basis. For example, the Home Office is connected through a real-time computer link (called "Managers' Workbench") to every Store Manager throughout the country. The company uses the same Computer-Based Learning Modules in all stores, it broadcasts "Wal-Mart TV" into all stores, and employs a number of other uniform communications tools. Centralization at Wal-Mart extends to the point where the Home Office controls the temperature and music in each store throughout the country.

  Finally, plaintiffs present evidence from Dr. Bielby, a sociologist, to buttress their claim that Wal-Mart has a strong corporate culture. After undertaking an extensive review of the depositions of Defendant's managers, Wal-Mart policies, and the professional research and literature in the field, Dr. Bielby gives the following opinion:
In sum, consistent with the organizational research on this topic, Wal-Mart's distinctive corporate culture is sustained by focused efforts of the firm through on-going training and socialization, communication specifically designed to reinforce its distinctive elements, promotion from within and relocating managers from store to store, and shared experiences among employees that build commitment to shared beliefs and values. As a result of these efforts, employees achieve a common understanding of the company's ways of conducting business.
Bielby Decl. ¶ 21.*fn17

  Wal-Mart counters the suggestion that its strong corporate culture creates any commonality among class members in disparate locations by arguing that each of its stores is a virtual "main street" of stores within a store, all run by independent managers. See Def.'s Opp'n at 13. It also contends that each division of stores has its own unique hierarchical structure of reporting and supervision. Id. at 14. While it is true that the terminology and some details vary from division to division, and within store departments, there does not appear to be a significant difference in actual function. Rather, as discussed supra, Plaintiffs have presented evidence that the basic operational structure and staffing patterns of stores are quite uniform, and each individual store is subject to oversight from the company's Home Office, where all regional and higher level managers are based.

  The Court recognizes that there is a tension inherent in characterizing a system as having both excessive subjectivity at the local level and centralized control. To clarify, the evidence indicates that in-store pay and promotion decisions are largely subjective and made within a substantial range of discretion by store or district level managers, and that this is a common feature which provides a wide enough conduit for gender bias to potentially seep into the system. These subjective decisions are not, however, made totally in isolation. Rather, the company maintains centralized corporate policies that provide some constraint on the degree of managerial discretion over in-store personnel decisions. The evidence suggests that the company relies also on its strongly imbued culture to guide managers in the exercise of their discretion. It would be premature and inappropriate for the Court to determine the precise degree to which the forms of centralized control at Wal-Mart keep managerial discretion in check. See Eisen, 417 U.S. at 177; Orlowski v. Dominick's Finer Foods, Inc., 172 F.R.D. 370, 373-74 (N.D. Ill. 1997) (court found commonality in promotion process where degree of centralized decision-making could not be definitively determined without performing full merits inquiry). It is clear, however, that given the evidence regarding strong uniform culture and policies, the degree and impact of this practice is a significant question of fact common to the class as a whole. See Morgan, 169 F.R.D. at 356 (commonality requirement can be met where company combines "subjective, decentralized system of decisionmaking" with personnel policies that are "uniform throughout the country and are promulgated by the national corporate office").

  (2) Gender Stereotyping

  Plaintiffs also rely on the expert testimony of Dr. Bielby to support their contention that gender stereotyping is likely to exist at Wal-Mart, and that it persists to the present day. Dr. Bielby notes that there are many reasons why men and women can have different career trajectories, some of which are not generally considered discriminatory, such as differing job-related skill requirements. See Bielby Decl. ¶ 28. Employers create gender barriers, however, when they allow stereotypes to affect personnel decisions. Id. at ¶ 28-29.*fn18

  Dr. Bielby opines that the social science research demonstrates that gender stereotypes are especially likely to influence personnel decisions when they are based on subjective factors, because substantial decision-maker discretion tends to allow people to "seek out and retain stereotyping-confirming information and ignore or minimize information that defies stereotypes." Id. at ¶ 34. With respect to Wal-Mart in particular, Dr. Bielby confirms that managers make decisions with considerable discretion and little oversight. Id. at ¶¶ 37-41. He concludes that subjective decisions such as these, as well as discretionary wage decisions, are likely to be biased "unless they are assessed in a systematic and valid manner, with clear criteria and careful attention to the integrity of the decision-making process." Id. at ¶ 39. Dr. Bielby further concludes that these systematic elements are missing from Wal-Mart's decision-making process. Id. Dr. Bielby also notes that the company's practice of requiring relocation across stores for salaried managers, which generally creates a greater burden for women, makes the promotion process "especially vulnerable to gender stereotyping." Id. at ¶ 45.

  Lastly, Dr. Bielby reviewed Wal-Mart's diversity and equal opportunity policies, many of which have been implemented in just the last few years. He concluded that they have identifiable weaknesses that limit their effectiveness for identifying and eliminating discriminatory barriers. Id. at ¶ 62. For example, while Wal-Mart regularly compiles statistics on the gender composition of its workforce, it has not undertaken a systematic assessment to identify possible barriers to women's advancement. Id. at ¶ 52. As another example, while Wal-Mart sets diversity goals for female representation in management, the goals appear to be largely ad hoc. Rather than setting the goals based on an understanding of the number of qualified and interested women available for a given position, many of the managers simply make their own subjective determinations or set their goals as incremental improvements over the prior year. Id. at ¶¶ 54-55. On the whole, Dr. Bielby recognizes that Wal-Mart has increased its emphasis on diversity issues in the past few years, but because the company has not translated that emphasis into practical and effective measures, there has been little actual impact on gender differentials in pay and promotion. Id. at ¶¶ 56-57 (citing former Vice President's view that by failing to tie diversity achievement to manager's incentive pay, the company's diversity efforts remain "lip service"). Additionally, although Wal-Mart regularly surveys its employees on a number of job-related issues (through its "Grass Roots" personnel program), it has never performed any kind of survey addressing diversity or gender issues. Id. at ¶ 61.

  Defendant contests the accusation of gender stereotyping on the facts and by challenging Dr. Bielby's opinions. As a factual matter, Defendant points out a number of ways in which Wal-Mart culture promotes diversity. Wal-Mart has earned national diversity awards and its executives discuss diversity and include it in the company handbooks and trainings. See Porter Decl. ¶¶ 5-22. The company also has diversity goals, performance assessments, and penalties for EEO violations. See Def.'s Opp'n at 20. Defendant also challenges Dr. Bielby's opinions as unfounded and imprecise. It is true that Dr. Bielby's opinions have a built-in degree of conjecture. He does not present a quantifiable analysis; rather, he combines the understanding of the scientific community with evidence of Defendant's policies and practices, and concludes that Wal-Mart is "vulnerable" to gender bias. See Bielby Decl. ¶ 63. Defendant rightly points out that Dr. Bielby cannot definitively state how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart. See Def.'s Opp'n at 20:25-28. However, this is the nature of this particular field of science. See Fed.R.Evid. 702 (allowing "scientific, technical, or other specialized knowledge [that] will assist the trier of fact to understand the evidence") (emphasis added).

  The appropriate question at this stage of the litigation is not whether Dr. Bielby can make a conclusive determination, but whether it could add probative value to the inference of discrimination that plaintiffs allege. Here, Dr. Bielby presents enough of a basis, both in his review of the scientific literature and on the facts of the case, to provide a foundation for his opinions. See Price Waterhouse v. Hopkins, 490 U.S. 228, 250-51 (1989) (considering similar evidence by expert social psychologist). Whether those opinions, if presented to a jury, are ultimately worthy of belief will be for a jury to ...


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