Supreme Court wrestles with sheer size of suit against Wal-Mart

Supreme Court justices ask: How can you determine damages for each woman in the class-action suit against Wal-Mart? Some 1.5 million women are suing Wal-Mart on sex-discrimination claims.

Members of the US Supreme Court waded into a thick, muddy morass of litigation on Tuesday and confronted a novel question.

Is a computerized formula a better guarantor of justice than an old-fashioned hearing with live testimony in a courtroom with a judge?

The issue arose in the historic gender discrimination case against the nation’s largest private employer, Wal-Mart.

At issue during oral argument was whether the lower courts properly allowed the case to move forward as a single, massive class-action lawsuit rather than breaking it up into smaller lawsuits, or dismissing it altogether.

The complaint was filed in 2001 on behalf of more than 1.5 million current and former women employees who were allegedly paid less and promoted less often than their male counterparts at Wal-Mart.

The case is being closely watched because the high court will likely use it as a way to bring clarity and certainty to an area of the law (class-action lawsuits) that is becoming increasingly swamp-like.

Class-action lawsuits are an essential feature of the US legal system, allowing individual victims to band together and have a fighting chance in court.

The average claim for a female employee at Wal-Mart is estimated at $1,100. An individual worker is unlikely to hire a lawyer to pursue such a case. But if lawyers are able to identify a pattern of discrimination that affects a larger number of workers, a class-action lawsuit will provide greater legal clout against a corporate giant like Wal-Mart.

The computerized-formula debate

That’s just half the case. On the other side, is the issue of how the courts can guarantee that Wal-Mart will receive a fair opportunity to defend itself while facing more than a million plaintiffs seeking billions of dollars in back pay and punitive damages.

That’s the issue that arose about halfway through the hour-long oral argument on Tuesday.

It came with a question by Justice Ruth Bader Ginsburg – who prior to joining the high court was a pioneer in the fight for women’s rights.

“What seems to me is a very serious problem in this case is: How do you work out the back pay?” Justice Ginsburg asked Joseph Sellers, the lawyer for Wal-Mart’s women employees.

In an individual case of discrimination, a judge would determine back pay by holding a hearing and taking testimony from a range of managers and workers.

In a class action lawsuit where plaintiffs share a common injury, courts are asked to fashion a remedy for all class members. Because of the large numbers of women in the Wal-Mart case and their differing circumstances, individual hearings pose substantial obstacles.

Mr. Sellers said that instead of individual hearings, the trial judge would rely on the plaintiff’s computerized formula and analysis of each female employee. The formula would take into account job performance, seniority, and other variables and calculate an appropriate level of back pay owed by Wal-Mart.

Sellers said the plaintiffs’ formula would produce a “very precise comparison, in a way that having individual hearings relying on hazy memories, post hoc rationalizations, doesn’t.”

Justice Elena Kagan, echoing Justice Ginsburg’s concern, repeated Ginsburg’s question in a slightly different way. “When is the formula approach right and when is the individual-hearings approach right?”

Sellers said the trial judge in the case had commented that “the sheer number of class members would make the administration of individual hearings difficult.”

Ginsburg shot back: “I thought he said ‘impossible.’ “

“He may have said ‘impossible,’ ” Sellers conceded. The lawyer added that the trial judge had determined that “the use of a formula would be more reliable than individualized hearings.”

Defending against a formula?

Justice Sonia Sotomayor asked how, if no individualized hearings were to be held, would Wal-Mart defend itself against a computerized formula?

“Wal-Mart will have ample opportunity through the arguments over which variables to use [in the computerized formula],” Sellers said.

Justice Sotomayor responded: “What you’re saying is we’re going to preclude them from doing anything but offering a mathematical model.”

Justice Antonin Scalia asked if a computerized formula would be more reliable than a hearing.

“I think it is,” Sellers responded. In a hearing, Wal-Mart managers would be called to testify and “speculate about what they did 10 years earlier, with no records to cross examine them on,” he said.

“That is not the model for a reliable adjudication,” Sellers said.

Justice Scalia wondered aloud, sarcastically, whether computerized models might not be the best way to try old cases.

“Is this really due process,” he asked.

In his rebuttal, Wal-Mart’s lawyer, Theodore Boutrous, said that if the court embraced Sellers’ view of a case based on computerized formulas rather than hearings, Wal-Mart would never have a chance to prove that it didn’t discriminate against a woman who was seeking back pay.

“That is not a process known to our jurisprudence,” he said. “It doesn’t comport with due process.”

The case is Wal-Mart Stores, Inc., v. Betty Dukes. A decision is expected by the end of June.