[Excerpt] In the past, the notion of a large class action discrimination suit against a national retailer has been a true threat- a tool in the arsenal of the employees- to be feared by the employer. With the Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes, that arsenal has been significantly depleted and the large retailer now treads on somewhat new ground when thinking about discrimination lawsuits.
This paper will discuss some of the more recent class action discrimination suits against large U.S. retailers. It will then discuss the narrative behind the Dukes case, the way in which the opinion could potentially affect the substance of Title VII, and the consequences the Dukes decision holds for human resource departments at large retailers throughout the country

Pedersen, Natalie Bucciarelli

English

[Excerpt] In the past, the notion of a large class action discrimination suit against a national retailer has been a true threat- a tool in the arsenal of the employees- to be feared by the employer. With the Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes, that arsenal has been significantly depleted and the large retailer now treads on somewhat new ground when thinking about discrimination lawsuits. This paper will discuss some of the more recent class action discrimination suits against large U.S. retailers. It will then discuss the narrative behind the Dukes case, the way in which the opinion could potentially affect the substance of Title VII, and the consequences the Dukes decision holds for human resource departments at large retailers throughout the country.9_7_12_The_Impact_of_the__Dukes__Case_on_Retail_Employers.pdf: 150 downloads, before Oct. 1, 2020

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The Impact of the “Dukes” Case on Retail Employers

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Cornell HR Review 
9-7-2012 
The Impact of the “Dukes” Case on Retail Employers 
Natalie Bucciarelli Pedersen 
Earle Mack School of Law / Drexel University 
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The Impact of the “Dukes” Case on Retail Employers 
Abstract 
[Excerpt] In the past, the notion of a large class action discrimination suit against a national retailer has 
been a true threat- a tool in the arsenal of the employees- to be feared by the employer. With the Supreme 
Court decision in Wal-Mart Stores, Inc. v. Dukes, that arsenal has been significantly depleted and the large 
retailer now treads on somewhat new ground when thinking about discrimination lawsuits. 
This paper will discuss some of the more recent class action discrimination suits against large U.S. 
retailers. It will then discuss the narrative behind the Dukes case, the way in which the opinion could 
potentially affect the substance of Title VII, and the consequences the Dukes decision holds for human 
resource departments at large retailers throughout the country. 
Keywords 
HR Review, Human Resources, Human Capital, Discrimination, Litigation, Retail, Title VII, Diversity, Dukes 
Comments 
Suggested Citation 
Pendersen, N. (2012, September 7). The impact of the “Dukes” case on retail employers. Cornell HR 
Review. Retrieved [insert date] from Cornell University, ILR School site: 
http://digitalcommons.ilr.cornell.edu/chrr/37 
Required Publisher Statement 
Copyright by the Cornell HR Review. This article is reproduced here by special permission from the 
publisher. To view the original version of this article, and to see current articles, visit cornellhrreview.org 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/chrr/37 
CORNELL H R REVIEW 
THE IMPACT OF THE "DUKES" CASE ON RETAIL EMPLOYERS 
Natalie Bucciarelli Pedersen 
I. Introduction 
Large retailers are certainly not unfamiliar with discrimination lawsuits. Yet, any 
good human resources team seeks to avoid such suits as they can be costly, both in terms 
of money and reputational damages. Class action discrimination lawsuits alleging 
systemic discrimination are potentially even more damaging for the company. The very 
nature of such a suit -the fact that multiple employees are alleging discrimination by the 
company - makes them that much more powerful. No large retailer (or small retailer, for 
that matter) wants to face a suit alleging any type of discrimination by multiple former 
employees. Regardless of the merits of the case, in the court of public opinion, the 
existence of numerous plaintiffs is generally equated with wrongdoing on the part of the 
employer. When that "something wrong" is discrimination, the stakes are particularly 
high. 
In the past, the notion of a large class action discrimination suit against a national 
retailer has been a true threat- a tool in the arsenal of the employees- to be feared by the 
employer. With the Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes, that 
arsenal has been significantly depleted and the large retailer now treads on somewhat 
new ground when thinking about discrimination lawsuits. 
This paper will discuss some of the more recent class action discrimination suits 
against large U.S. retailers. It will then discuss the narrative behind the Dukes case, the 
way in which the opinion could potentially affect the substance of Title VII, and the 
consequences the Dukes decision holds for human resource departments at large retailers 
throughout the country. 
H. Recent Systemic Discrimination Claims 
A quick search of employment discrimination class action and systemic suits over the 
last 10 years yields far too many results to discuss here. However, sorting through the 
results of the search, it becomes clear that the class action suit which alleges systemic 
discrimination has been a powerful weapon for employees in combating perceived 
discrimination in the workplace. A few such cases will be discussed in more detail. 
© 2011 CornellHRReview 
In 2002, Target was sued by the EEOC for racial discrimination against African-
Americans in entry-level hiring. The suit focused on 11 different stores in the Midwest 
and alleged that African-American employees were not given interviews while white 
employees with similar resumes were and that Target employees "routinely destroyed 
applications of African-Americans..." The case eventually ended in 2007 with a consent 
decree whereby Target agreed to pay a total of $510,000 to the plaintiffs. "As part of the 
decree, Target also agreed to revise its document retention policies; provide training to 
supervisors on employment discrimination and record-keeping; report on hiring 
decisions; and post a notice about the consent decree to employees in its District 110 
stores and offices." 
In 2005, Abercrombie and Fitch settled a race and sex discrimination lawsuit 
involving over 10,000 class members. The consent decree includes provisions about 
benchmarks for hiring and promotion of women and certain racial minorities, advertising 
available employment positions in publications targeting minorities of both genders, the 
creation of anew Office and Vice President of Diversity, diversity training for all 
employees with hiring authority, and the hiring of 25 recruiters to seek out women and 
minority employees. 
More recently, Best Buy agreed to settle a class-action race and sex discrimination 
lawsuit, stemming from allegations by multiple plaintiffs that the company denied 
desirable job assignments and promotions and transfers to African American, Latino, and 
female employees. Under the terms of the consent decree, the electronics retail giant not 
only has to pay a $200,000 to the nine named plaintiffs—on top of the $10 million in 
legal fees and costs—but also has agreed "to implement comprehensive affirmative relief 
addressing the hiring assignment, promotion, and exempt compensation claims." 
Most recently, Menards, a "home-improvement retail giant" settled a$ l million class 
action lawsuit which alleged racial discrimination against as many as 700 former 
employees in several of its retail stores. The settlement also included an agreement by 
Menards to change its promotion processes. 
These are just a handful among the many systemic employment discrimination cases 
filed each year. But while each of these cases was won by the employees, future wins 
may be harder to come by. This is because the way in which these cases can be framed 
and litigated may change given the Supreme Court's recent decision in Dukes. 
HI. The History of Dukes 
In June 2001, seven named plaintiffs, including Betty Dukes, filed a class action 
lawsuit against Wal-Mart alleging sex discrimination in violation of Title VII of the Civil 
Rights Act of 1964, 42U.S.C. § 2000-e-l et seq. The named plaintiffs sought to 
represent a class of "all women employed at any Wal-Mart domestic retail store at any 
time since December 26, 1998 who have been or may have been subjected to Wal-Mart's 
challenged pay and management track promotions and policies practices." 
Specifically, the plaintiffs alleged that women employed in Wal-Mart stores are paid 
less than men, even though the women have more seniority and higher performance 
ratings. Plaintiffs also alleged that women employees received fewer promotions to in-
store management positions than did men, and even when women were promoted, they 
had to wait longer than their male counterparts for such advancement. 
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© 2011 CornellHRReview 
Importantly, the plaintiffs' discrimination claims did not rest on any express policy of 
Wal-Mart; rather, they claimed that Wal-Mart delegated decision-making authority for 
pay and promotion decisions to local managers, who disproportionately used this 
discretion to favor men. This delegation of authority formed the basis for plaintiffs' 
disparate impact claim, while Wal-Mart's refusal to constrain such discretion, despite the 
corporation's awareness of its discriminatory effect, formed the basis of their disparate 
treatment claim. 
The plaintiffs moved for class certification before the United States District Court 
for the Northern District of California. The proposed class covered at least 1.5 million 
women who had been employed at approximately 3,400 stores. The District Court 
granted plaintiffs' motion with respect to their claims for equal pay and granted, in part, 
plaintiffs' motion with respect to the promotion claims, narrowing the class a bit for 
certain putative class members seeking lost pay. The District Court found that all four 
requirements of class certification pursuant to Federal Rule of Civil Procedure 23(a) -
numerosity, commonality, typicality and adequacy— were met. 
Significantly, the District Court accepted Plaintiffs' commonality evidence that 
focused on Wal-Mart's pay and promotion policies across stores, writing: 
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 there 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. 
The District Court's ruling was affirmed by the United States Court of Appeals for the 
Ninth Circuit. The Ninth Circuit noted, "[i]t is well-established that subjective decision-
making is a 'ready-mechanism for discrimination' and that courts should scrutinize it 
carefully... Indeed, courts from around the country have found '[ajllegations of similar 
discriminatory employment practices, such as the use of entirely subjective personnel 
processes that operate to discriminate, [sufficient to] satisfy the commonality and 
typicality requirements ofRule 23(a)." 
On appeal, the United States Supreme Court, in a breathtakingly sweeping 
opinion, reversed the Ninth Circuit's holding that class certification was appropriate. The 
Supreme Court, noting that "[t]he crux of this case is commonality" ultimately decided 
that commonality was lacking because Plaintiffs could not demonstrate that they had all 
suffered the same injury and not merely a violation of their rights under the same law. 
The Court appeared to require common policy or practice behind the injury and did not 
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© 2011 CornellHRReview 
find that the delegation of subjective decision-making authority to store managers 
qualifies. 
IV. How Dukes Changes the Disparate Impact Analysis 
Dukes has the potential to disable the aggregation of claims based on delegation 
of subjective decision-making authority to individual supervisors. This is a stunning 
reversal of the Supreme Court's traditional approach to such disparate impact cases— 
such as the Watson v. Fort Worth Bank and Trust Supreme Court case involving the 
promotion standards for bank tellers. In that case, the bank did not have precise criteria 
for evaluating candidates for promotion, but instead relied on "the subjective judgment of 
supervisors who were acquainted with the candidates and with the nature of the jobs to be 
filled." The Court held that the class action could proceed based on the disparate impact 
theory of liability. Specifically, the Court noted that the employer's practice of 
delegating subjective decision-making authority to its supervisors is no less susceptible to 
disparate impact analysis than objective employer practice, such as requiring a high 
school diploma and the passage of written tests. In fact, the Court was quite emphatic 
about the potential evasion of the anti-discriminatory effects of the disparate impact 
theory of litigation should such subjective practices be deemed not to be cognizable 
under Title VII. 
Strikingly, in Dukes, the Court, although purportedly focusing on class 
certification, takes aim at disparate impact as applied to the delegation of decision-
making authority. The Court ultimately holds that commonality does not exist because a 
finding of commonality based upon such subjective decision-making "requires significant 
proof that Wal-Mart operated under a general policy of discrimination." According to the 
Court, this is lacking here because "Wal-Mart's announced policy forbids sex 
discrimination." 
The Court explains that Wal-Mart's policy of allowing local supervisors to 
exercise discretion in pay and promotion decisions is not really a policy at all; rather, the 
Court reasons that this is "a policy against having a policy." Therefore, from the Court's 
perspective, this practice can never serve to provide the commonality needed for a class 
action. 
From the perspective of human resources managers at large retail chains with 
many stores located throughout the nation, this is potentially game-changing. Somewhat 
reminiscent of the affirmative defense recognized by the Supreme Court in sexual 
harassment cases, this notion, if carried over into substantive Title VII case law, 
translates into protection for large employers from disparate impact suits based on 
delegation of authority as long as the employer has a written policy against 
discrimination. This seemingly would serve as proof that the retailer does not operate 
under a general policy of discrimination and would negate any contention that the 
delegation of supervisorial decision-making authority has discriminatory effects by mere 
reference to the stores' written anti-discrimination policy. 
V. How Dukes Changes Systemic Disparate Treatment Cases 
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© 2011 CornellHRReview 
In examining the Dukes opinion, it becomes clear that it will likely also affect 
systemic disparate treatment cases brought under Title VII. 
^International Brotherhood of Teamsters v. United States, the Supreme Court first 
developed the framework for a cause of action for systemic disparate treatment. In the 
case, the Court was called on to interpret the statutory language prohibiting any "pattern 
or practice of resistance to the full enjoyment of any of the rights secured by [Title VII 
when] the pattern or practice is of such a nature and is intended to deny the full exercise 
of rights...". 
The Court stated that the "ultimate factual issues are thus simply whether there was a 
pattern or practice of such disparate treatment and, if so, whether the differences were 
racially premised." The Court made clear that the Government bore the burden of 
proving "more than the mere occurrence of isolated or accidental or sporadic 
discriminatory acts. It had to establish by a preponderance of the evidence that racial 
discrimination was the company's standard operating procedure—the regular rather than 
the unusual practice." 
In discussing how the Government could meet this burden of proof, the Court put 
heavy emphasis on statistics—specifically, the Government needed to, and did, provided 
statistics showing the wide disparity between the number of African Americans and 
Hispanics in the disputed position as compared to those in the relevant qualified 
population. The Court stated, "[0]ur cases make it unmistakably clear that statistical 
analyses have served and will continue to serve an important role in cases in which the 
existence of discrimination is a disputed issue." In general, in systemic disparate 
treatment cases, courts are trying to envision the racial composition of the company's 
workforce absent discrimination; statistics are a powerful way to do this. 
In examining class certification based on plaintiffs' disparate treatment claims, the 
majority rejects the contention that Wal-Mart's pay and promotion systems resulted from 
a pattern or practice of discrimination because plaintiffs' "claims must depend on a 
common contention - for example, the assertion of discriminatory bias on the part of the 
same supervisor... Here, respondents wish to sue about literally millions of employment 
decisions at once. Without some glue holding the alleged reasons for all those decisions 
together, it will be impossible to say that examination of all the class members' claims for 
relief will produce a common answer to the crucial question why was I disfavored'' The 
Court reasons that since Wal-Mart has no policy of discrimination, but rather has a 
specific policy forbidding discrimination, the plaintiffs cannot meet their burden. 
The language of Dukes possesses the potential to insulate large retailers from 
systemic discrimination suits based on supervisorial decisions with the crafting of a 
thorough anti-discrimination policy that explicitly advises supervisors against allowing 
discriminatory influences to infiltrate their decision-making process. Again, the Court's 
demand for a policy leading to a common injury has broad implications for human 
resources managers at large retail chains. For, simply ignoring the known discriminatory 
effect of individual supervisor's decisions is not sufficient to make out a case of systemic 
disparate treatment. Rather, the discrimination has to be embodied in some formal policy 
of the employer. Therefore, as noted above, a well-developed anti-discrimination policy 
specifically focusing on the ways in which supervisors can avoid allowing discrimination 
to influence their decision-making would seem to go a long way towards defeating any 
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© 2011 CornellHRReview 
type of systemic disparate treatment claim based on delegation of authority to 
supervisors. N 
Natalie Bucciarelli Pedersen is currently a Professor in the Earle Mack School of Law at 
Drexel University. Before coming to the law school, Professor Pederson practiced with 
Ballard, Spahr, Andrews & Ingersoll, LLP in Philadelphia. She clerked for Judge 
Marjorie Rendell on the United States Court of Appeals for the Third Circuit. She 
received her J.D., cum laude, from Harvard Law School, where she was executive editor 
of Harvard Women's Law Journal and co-chairperson of the Women's Law Association. 
She also served as staff member for the Harvard Negotiations Law Review. Her research 
interests focus on employment law and employment discrimination. 
6 


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