The Danger of the Walmart Class-Action Decision

DiversityInc CEO Luke Visconti's column on the Walmart decision.

Luke Visconti’s Ask the White Guy column is a top draw on Visconti, the founder and CEO of DiversityInc, is a nationally recognized leader in diversity management. In his popular column, readers who ask Visconti tough questions about race/culture, religion, gender, sexual orientation, disability and age can expect smart, direct and disarmingly frank answers.

I’ll start by saying that I think Walmart engineered the greatest diversity-management turnaround I’ve ever seen since I started publishing DiversityInc in 1998. I admire a lot of the people and their collective efforts there. I also find it incomprehensible that they still don’t offer medical partner benefits to their employees who are in same-sex relationships—and you won’t see them on any DiversityInc Top 50 list until they do.

That said, this Supreme Court decision has implications far beyond Walmart, and understanding them is very important. There is a danger lurking in this decision. This is from The New York Times:

“The court’s decision will not just make it harder to bring big, ambitious employment class-action cases asserting discrimination based on sex, race or other factors, legal experts said. In the majority opinion, the court set higher barriers for bringing several types of nationwide class actions against a large company with many branches.”

In its majority opinion, the court essentially said that if lawyers brought a nationwide class action against an employer, they would have to offer strong evidence of a nationwide practice or policy that hurt the class. In the Walmart case, the court wrote that the plaintiffs had not demonstrated that Walmart had any nationwide policies or practices that discriminated against women. The opinion, written by Justice Antonin Scalia, noted that Walmart’s official corporate policy opposed discrimination, while the company gave the managers at its more than 3,400 stores considerable discretion over pay and promotions.

“In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction,” Justice Scalia wrote (emphasis added).

I think that’s nonsense—is it also unbelievable that 99.995% of store managers won’t embezzle? Does everyone stock their shelves as they see fit at department stores? Or do they do it by the rulebook? Keep in mind, this isn’t about just Walmart. There are endless examples of large organizations that force their managers to exercise their discretion in a common way.

The absence of direction doesn’t absolve a company of guilt—but with this court decision, it will be far more difficult for people who are wronged as a group to fight as a group. I can imagine that amoral lawyers will advise companies with poor records and practices that rules unstated (or never made) are rules you don’t have to defend—in other words, this decision can be used as a way for a company with problems to not do anything.

Why? If a person is discriminated against, the individual, fighting alone, will have no negotiation power over huge companies—I know from experience that it costs hundreds of thousands of dollars to sue someone—and a malevolent corporation will use every legal trick in the book to stretch things out, thereby costing more money. There will be individual sexist managers who will use this case—and their corporation’s lack of internal controls, regulation, goals, standards and repercussions for not following them—to discriminate. The problem is even worse on a serendipitous level—people, left to their own devices, are prone to discriminate. This is normal human behavior. We’re tribal beings, and psychological tests show we are most likely to trust people who are just like us.

Here’s the problem—for shareholders, poor management destroys equity value. Diversity is a core element of managing human capital. By 2016, 70 percent of our nation’s workforce will be women and/or Black and Latino. Right now, only 3 percent of Fortune 500 company CEOs are women. Only 14 percent of Fortune 500 company board seats are held by women. Yet women have been getting more bachelor’s degrees than men since 1980, and practically speaking, women are numerically at parity with men in the college-educated and non-college-educated workforce. Misogynistic results are not limited to corporations; we are still waiting for the first woman president, only 12 percent of the members of Congress are women, etc.

You can see that women have been systemically denied opportunities to achieve their potential—and I don’t think anyone is really pleased with the direction or performance of either the stock market or the government.

That discrimination is damaging to business could not be better documented by Walmart. This is from their website regarding the decision: “Walmart has a long history of providing advancement opportunities for our female associates and over the years we have made tremendous strides in developing women throughout the organization. In fact, we have created specific training and mentoring programs to help prepare women for opportunities at all levels in our company. As a result of our efforts, Walmart is often recognized as a great place for women to work.”

These programs didn’t come about from nothing; they came about from a series of shocks about 10 years ago—a run of very bad press, court cases and internal arguments. Top management took control over the situation and hired dozens of people to staff their (very diverse) diversity department—including some people I know. And I know them to personally be stand-up and righteous men and women. Walmart now does things that would never have happened 10 years ago, including a robust and cutting-edge supplier-diversity program. I believe they’ll eventually get on board with partner benefits—because it is only just to treat their employees equitably and to not deny a benefit that could make the difference between life and death by judging people on whom they love.

What is the individual to do? In my opinion, this case makes it all the more important for everyone to truly inspect the companies they do business with and work for. Make sure they follow your values—because in the case of diversity management, it has a direct bottom-line result, even if you were to limit your measurement to productivity. That means that everyone—including white, heterosexual, Christian men with no ADA-defined disabilities—has better prospects at companies that manage diversity well.

Look at the corporate websites. Look for the diversity section; check out the corporate management and board for diversity; see if the CEO has a statement that makes sense to you. Check out lists like the DiversityInc Top 50; make sure you understand where companies stand. Because now that Justice Scalia has written a free pass to corporate management, you’re on your own if you don’t.

See also: Our Guide to Coverage of the Walmart Court Decision.

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  • They can file an EEO complaint with EEOC or a state EEO office if their state has one.

  • I agree wholeheartedly with this article. It is a shame that this is the reality of today. The struggle still continues…

  • A very interesting article from a social engineering perspective. Unfortunately, it missed the point of the appeal from the decisioni by the Ninth Circuit, a noriously left-leaning court. It also ignores the signficance of SCOTUS decision — it was unanimous. Even Ginsburg was not persuaded by the arguments. This was a weak case from its inception. A stronger case, supported by facts and not innuendo, might have had a better chance.

  • I think this is a veriation on “too big to fail”,wherein the High Court has chosen to NOT open Pandora’s Box for the litany of similar lawsuits that might have followed, if allowed. Viewed another way, it is perhaps yet another example of the courts potentially allowing violators to “escape” (still no prosecutions for the last Stock Market debacle), or, (in another example), declaring corporations to be “individuals” who can then make unlimited contributions to political campaigns. Certainly, the Court’s position will serve as an impediment to people bringing large-scale class action suits.

    It appears that the protections that have been hard-won for the “little man” over the past 50 to 75 years are rapidly eroding. At the rate we are retrograding, it’s conceivable that a person in her or his 60s will licve to see a country with fewer freedoms and protections that her or his parents enjoyed…

  • Governement by the Corporation an for the corporation – the message from the Supreme court, notice the Female Supremes dissented

  • I agree this is an excellent example of how Walmart is too big, so they can’t possibly manage all their stores and their manager’s actions! Excellent point that somehow I can walk in to 90% of Walmart’s and know where to find what because they are laid out much the same. THAT they can apparently get right. The decision really hurts many people where the corporate culture dictates what happens in promotion.

  • The problem is with the continued uphill battle faced by the little guy with few legal resources when he goes up against the big company with a huge legal department stocked with highly paid lawyers. The problem is not with the Wal Mart decision; the court was correct not to destroy the definition of “Class” in an effort to impose some measure of justice unrelated to the issue before the court.

  • So what if individual plaintiffs have to file individual claims of discrimination? Wouldn’t the “shock” from repeated adverse rulings in those sorts of cases reform corporate behavior, if indeed the complainants’ claims had validity?

    This was all about attorney money, pure and simple. A sleazebag class action attorney identified a wealthy target, found some alleged victims, and tried to make himself a multi-multi-millionaire. Is it any coincidence this suit was filed in the most notoriously left-leaning court in the country?

    I’m sure Wal-Mart has some instances where it has discriminated. Any corporation with hundreds of thousands of employees will have a few who have gone rogue. Individual complaints will handle those and provide resolution.

    This country increasingly tries to penalize success. More and more people dedicate their life to fighting over the existing pie, instead of trying to enlarge the pie.

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