ARGUMENT OF THEODORE BOUTROS, REPRESENTING WAL-MART:
JUSTICE ROBERTS: [S]o, they've got thousands of stores, and, you know, every week they get a report from another store saying that, you know, there's an allegation of gender discrimination. At some point, can't they conclude that it is their policy of decentralizing decisionmaking that is causing or permitting that discrimination to take place?
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JUSTICE GINSBURG: Did -
JUSTICE KENNEDY: The Chief Justice's question reminds me somewhat of our rule in Monell under 1983: A city is not liable for a -- a constitutional violation unless it has a policy. Would you think that we could use that as an analogue to determine whether or not there is a common question here?
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JUSTICE GINSBURG: Is there any responsibility if you -- the numbers are what has been left out so far. The company gets reports month after month showing that women are disproportionately passed over for promotion, and there is a pay gap between men and women doing the same job. It happens not once, but twice. Isn't there some responsibility on the company to say, is gender discrimination at work, and if it is, isn't there an obligation to stop it?
MR. BOUTROUS: Your Honor, yes, there is an obligation to ensure -- for a company to do its best to ensure there are not wage gaps and discrimination. But here, for example, if one looks at the aggregated statistics that the plaintiffs have pointed to, it points to a completely different issue. It does not show that there were gender gaps at the stores among comparable people. That's really the fundamental flaw in their case.
Their argument is that individual decisionmakers throughout the country were making stereotyped decisions and that that had a common effect, but they just added everything together. They haven't shown a pattern across the map. They've added all the data together and pointed to disparities, some of which mirror some of the -- the statistics that --
JUSTICE SOTOMAYOR: Counsel, I thought their expert didn't aggregate them together. He did it regionally, not store by store, as your expert did, number one; and, number two, that he performed, as accepted by the district court, and affirmed by the circuit court, any number of controlled variable comparisons, including job history, job ratings, and other things, and found that the disparity could not be explained on any of the normal variables that one would expect and that the disparity was significantly much higher than the competitors of Wal-Mart and what they were paying their labor force. So, what is speculative about that, number one? And, two, why is that kind of statistical analysis inadequate to show that a policy of some sort exists?
MR. BOUTROUS: Justice Sotomayor, first, plaintiffs' expert did a national regression and the simply estimated the regional results. He did not do a regional regression. But even if he had, these statistics go more to the merits. We think we have strong arguments on the merits responding to those statistical arguments --
JUSTICE SOTOMAYOR: Well, that begs the legal question, which is -- you're right. Ultimately, you may win and prove to a factfinder that this analysis is fatally flawed, but what the district court concluded was that on the basis of your expert, whom he discounted because your expert was -- was basing analysis on -- on premises that the court found not acceptable, that there was enough here after a rigorous analysis. What's the standard that the court should use in upsetting that factual conclusion?
MR. BOUTROUS: Your Honor, the district judge did not discount Wal-Mart's expert. The district court found that it wasn't the stage at which to make a determination between the two. The standard that we think would govern would be the standard that the Second Circuit adopted in the IPO case, which says there needs to be a choice.
JUSTICE ALITO: What do you think is the difference between the standard that the district court was required to apply at the certification stage on the question whether there was a company-wide policy and the -- the standard that would be applied on the merits?
MR. BOUTROUS: At the certification stage, Justice Alito, the plaintiffs did not have to prove that there was an actual policy of discrimination and that that was the company's policy, but they at least needed to point to a policy that was common and that linked all of these disparate individuals and disparate locations and different people together. And -- and one -- their argument is that the common policy is giving tens of thousands of individuals discretion to do whatever they want. That is not commonality. It's the opposite.
JUSTICE KAGAN: I don't think that's quite fair, Mr. Boutrous. I think their argument was that the common policy was one of complete subjectivity, was one of using factors that allowed gender discrimination to come into all employment decisions. And in Watson, we suggested that that was a policy, a policy of using subjective factors only, when making employment decisions. That's exactly the policy that was alleged here.
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JUSTICE GINSBURG: Mr. Boutrous, there was a case, it was in the '70s, and it was a class action against AT&T for, I think, promotion into middle management. What was at issue there was a part -- a test, part objective, but then in the end, the final step was a so-called total person test, and women disproportionately flunked at that total person. And the idea wasn't at all complicated. It was that most people prefer themselves; and so, a decisionmaker, all other things being equal, would prefer someone that looked like him. And that was found, that total -- the application of that total person concept was found to be a violation of Title VII.
This sounds quite similar. I mean, it's not just -- it's not subjective. You have an expert -- I know you have some questions about that expert -- but the expert saying that gender bias can creep into a system like that simply because of the natural phenomenon that people tend to feel comfortable with people like themselves.
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JUSTICE KAGAN: Mr. Boutrous, I think that that suggests that the plaintiffs would have to demonstrate discrimination in every individual case, and that's never been the law. All that the plaintiffs have to demonstrate and, especially at this stage in the proceedings, is that there is a practice, a policy of subjectivity that on the whole results in discrimination against women, not that each one of these women in the class were themselves discriminated against.
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JUSTICE SOTOMAYOR: So, would you address the -- address them separately for me, and tell me why a (b)(2) class couldn't exist only on injunctive relief? And if it can, if you're conceding it can, then is your attack merely that the monetary component of this, the back pay -- which, you know, I know the dispute on whether that's equitable relief or compensatory relief or not -- why that just can't be separated out and put into the (b)(3) claim?
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ARGUMENT OF JOSEPH SELLERS, REPRESENTING DUKES:
JUSTICE KENNEDY: It's not clear to me: What is the unlawful policy that Wal-Mart has adopted, under your theory of the case?
MR. SELLERS: Justice Kennedy, our theory is that Wal-Mart provided to its managers unchecked discretion in the way that this Court's Watson decision addressed that was used to pay women less than men who were doing the same work...
JUSTICE KENNEDY: It's -- it's hard for me to see that the -- your complaint faces in two directions. Number one, you said this is a culture where Arkansas knows, the headquarters knows, everything that's going on. 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.
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JUSTICE SCALIA: I don't -- I'm getting whipsawed here. On the one hand, you say the problem is that they were utterly subjective, and on the other hand you say there is a -- a strong corporate culture that guides all of this. Well, which is it? It's either the individual supervisors are left on their own, or else there is a strong corporate culture that tells them what to do.
MR. SELLERS: Well, Justice Scalia, there is this broad discretion given the managers.
JUSTICE SCALIA: Right.
MR. SELLERS: But they do not make these decisions in a vacuum. They make the decisions within a company where they are heavily --
JUSTICE SCALIA: So, there's no discretion; is that what you're saying?
MR. SELLERS: No, I'm not. I'm suggesting they are given this discretion, but they are informed by the company about how to exercise that discretion. So, it's effectively saying --
JUSTICE SCALIA: If somebody tells you how to exercise discretion, you don't have discretion.
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JUSTICE SCALIA: Have you sufficiently shown -- despite the fact of an explicit written central policy of no discrimination against women, do you think you've adequately shown that that policy is a fraud, and that what's really going on is that there is a central -- a central policy that promotes discrimination against women? Do you really think --
MR. SELLERS: We -- we have testimony in the record from the vice president of the company that that policy was lip service at the company. We have testimony from -- from the expert in this case --
JUSTICE GINSBURG: Isn't this something that would be -- I mean, this -- we're not just talking about getting your foot in the door. We're talking about certifying the class, and you may well lose on every one of these points, but -- but the 23(a) standards, they're not supposed to be very difficult to overcome. It's just a common question of fact --
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JUSTICE GINSBURG: But what seems to me is a very serious problem in this case is: How do you work out the back pay? You say -- we get through the 23(a) threshold. We got class certified under 23(b)(2). And the judge says, there's no way I could possibly try each of these individuals. So, we're going to do it how? How are they going to calculate the back pay?
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JUSTICE BREYER: Is the -- is the common question of law or fact whether, given the training which central management knew --
MR. SELLERS: Right.
JUSTICE BREYER: -- given the facts about what people say and how they behave, many of which central management knew, and given the results which central management knew or should have known, should central management under the law have withdrawn some of the subjective discretion in order to stop these results?
MR. SELLERS: That -- that is a fair way to put it.
JUSTICE BREYER: If that is a fair way to put it, is that a question that every one of the women in this class shares in common?
MR. SELLERS: I -- I believe so, Justice Breyer, because they've all been the subject in every one of these stores to this very broad discretion.
JUSTICE GINSBURG: The district judge didn't think so. Didn't the district judge say that in awarding back pay some would get a windfall and others would be uncompensated?
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JUSTICE SCALIA: Can I just say something here? Doesn't your class include both those women who were underpaid and both -- and those women who weren't underpaid? ... Doesn't your class include both? ... Is that commonality?
MR. SELLERS: As every class does, Justice Scalia. Every class has some portion of its members who are not harmed by the discrimination. As the Teamsters case recognized, what is common about them is they were all subject to the same highly discretionary decisionmaking, even if some of them weren't harmed by it. That still presents a question common to the class.
JUSTICE KENNEDY: Well, correct me if I'm wrong, I thought the Teamsters case was an action by the government that wasn't a class action case.
MR. SELLERS: That -- that is correct, but it -- it -- it is the paradigm we use for determining what you need to establish a pattern or practice of discrimination.
JUSTICE KENNEDY: Pattern or practice, that's correct.
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JUSTICE SOTOMAYOR: Counsel, I'm -- I'm a little confused, all right?
MR. SELLERS: Okay.
JUSTICE SOTOMAYOR: Because you're saying an individualized hearing is impossible, but that's exactly what you're saying you're going to do, only through statistics.
MR. SELLERS: That's --
JUSTICE SOTOMAYOR: You're going to say through my statistical model, I will be able to identify those women in the class who are deserving of pay raises. What that doesn't answer is when in this process is the defendant going to be given an opportunity to defend against that finding?
MR. SELLERS: Right.
JUSTICE SOTOMAYOR: Because you're -- are you suggesting that the district court would appropriately bar a defendant where there's no proof of intentionality with respect to not keeping records, that it was intended to stop these women from collecting money, et cetera? When are they going to get a chance?
MR. SELLERS: Well --
JUSTICE SOTOMAYOR: And if they're going to get a chance, isn't that an individualized hearing?
MR. SELLERS: Yes. Effectively Wal-Mart will have ample opportunity through the arguments over which variables which to use....
JUSTICE SOTOMAYOR: No, no, no. That sounds like you're saying their only opportunity will be on the model.... They will be precluded from attempting to show any particular evidence that a particular decision was not made?
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MR. SELLERS: I -- I'm -- let me answer you directly. I'm not saying that. Wal-Mart has an opportunity to make the case that with whatever showing it wishes to make it can reconstruct these decisions more reliably, and in an entirely subjective environment, and if it does, it can offer evidence in certain circumstances; but it hasn't done so; and I don't submit it's going to be able to do so here.
JUSTICE SCALIA: This -- this takes evidence, to establish that -- that it's more reliable to have a hearing with evidence on the particular promotion or dismissal of the individual, that that is more reliable than using -- I don't care how admirable a statistical guess you make; I mean is that really a question?
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JUSTICE SCALIA: We should use that in jury trials, too, for really old cases. We should just put a statistical model before the jury and say, you know, this stuff is too old; so, we'll -- ... -- we'll do it on the basis of -- is this really due process?
MR. SELLERS: I -- Justice Scalia, I submit it is; and the circuits that have been considering this for 40 years have so held. In the narrow set of circumstances that we have here, where there are standardless, recordless decisions at issue.
JUSTICE KENNEDY: Well, if it's standardless and -- and recordless, then why is there commonality? It seems to me that what you -- your answer that you just gave really is a -- shows a flaw in your case on commonality.
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REBUTTAL ARGUMENT OF MR. BOUTROS FOR WAL-MART:
JUSTICE BREYER: If you just spend one second, remember my question. We've got a common issue. Why isn't that enough at least to support a (b)(2) injunctive action?
MR. BOUTROUS: Your Honor, the -- the scenario you outline -- there's no dispute about the policies that existed at the time, that there were --
JUSTICE BREYER: That sounds like the merits you're getting to. His point, remember, is this is just certification. So, my question is: Assuming they can support it with evidence, why can't they have their 12 (b)(2) class, at least on an injunctive relief?
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