By  on March 30, 2011

WASHINGTON — The Supreme Court on Tuesday considered the legal grounds for class action certification in what could be the largest gender discrimination lawsuit in U.S. history, pitting Wal-Mart Stores Inc. against a small group of female employees who allege the world’s largest retailer favored men over women in pay and promotions.

The justices wrestled with lower-court decisions allowing the class action lawsuit against Wal-Mart to move forward; the suit could affect more than one million current and former female employees of the store. Several of the justices focused on the underlying allegations in the suit, although the legal question before the court was whether the case can proceed as a class action.

Wal-Mart, in its appeal to the Supreme Court, contends that the women’s case does not fulfill the legal requirements for class action certification. The company’s appeal stems from a lawsuit filed in 2001 by Betty Dukes and five other female employees alleging the company’s corporate structure discriminated against women regarding pay and promotions, among other accusations.

Wal-Mart argues that it has a strict company-wide policy that bars discrimination.

In 2004, the U.S. District Court for Northern California conferred class action status in the case to current and former female Wal-Mart employees dating back to 1998. A sharply divided U.S. Ninth Circuit Court of Appeals in San Francisco ruled in April 2010 that the gender discrimination complaint could go to trial as a class action. The ruling affirmed the lower court’s certification and also allowed members to seek back pay and an injunction.

During arguments, Justices Anthony Kennedy, Samuel Alito and Antonin Scalia were particularly skeptical of the class action suit.

“It’s not clear to me: What is the unlawful policy that Wal-Mart has adopted, under your theory of the case?” Kennedy asked Joseph Sellers, an attorney for the women.

Sellers argued that Wal-Mart provided its managers with “unchecked discretion” in pay and promotion matters, claiming it was this broad discretion that led Wal-Mart to “pay women less than men who were doing the same work in the same…facilities at the same time, even though…those women had more seniority and higher performance, and provided fewer opportunities for promotion than women because of sex.”

But Kennedy argued that the women’s complaint “faces in two directions.”

“Number one, you said this is a culture where…the headquarters knows everything that’s going on,” Kennedy said. “Then in the next breath, you say, well, now these supervisors have too much discretion. It seems to me there’s an inconsistency there and I’m just not sure what the unlawful policy is.”

Sellers said Wal-Mart’s management training program poses a question to trainees about why women are underrepresented in management and gives the response that men are more aggressive in seeking advancement — a stereotype he claimed influences their pay and promotion decisions.

“How could that possibly cause them to intentionally discriminate on the basis of sex?” Scalia asked.

Sellers said it is a written policy, “not the policy that was effectively communicated to managers.”

Chief Justice John Roberts, also expressing some skepticism about the case, said there are often “bad apples” in a company, which makes it difficult to determine whether discrimination “flows from the policy rather than from bad actors.”

Ultimately, the court will decide the narrow question of whether the case meets the standards to move forward as a class action.

Justice Stephen Breyer asked Theodore J. Boutrous Jr., Wal-Mart’s attorney, why the case should not proceed as a class action certification at least in terms of injunctive relief.

“These plaintiffs are not typical and they are not arguing that everyone was affected the same way by the common policy [a standard of commonality must be met under class certification rules],” Boutrous said. “Many women thrived. Maybe some women stereotyped or some women stereotyped the other direction — 544 of the plaintiffs are female store managers. So it’s impossible to make these sweeping generalizations, which, of course, is what stereotyping is supposed to prevent.”

Sellers argued that they have satisfied the certification requirements relating to all three standards because “there are disparities adverse to women” across the company and shared by all women.

A decision could come by this summer on whether the case can go forward as a class action.

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