Walmart Woes

Erik Hayden at The Atlantic with a round-up.

SCOTUSBlog:

The Supreme Court stepped into two major controversies on Monday, agreeing to sort out when a class-action lawsuit may be filed when employees are seeking back pay for alleged workplace discrimination, and to clarify whether companies claimed to be a major source of global warming can be sued under the law of nuisance.  The first issue is raised in an appeal by the discount retailer, Wal-Mart Stores; the second an appeal by four large  electric generating companies that have been sued by a group of state governments.  The cases are likely to be heard in March or April.

A federal judge in San Francisco has cleared the way for a class of at least 500,000, and perhaps as many as 1.5 million, present and former women employees of Wal-Mart to sue the huge chain over alleged sex bias throughout its 3,400 stores in the U.S.   The Court agreed to hear one issue raised by the company, and added a question of its own.  The outcome will not decide whether the company did engage in  discrimination, but only whether the lawsuit may proceed as a class-action.  Potentially, billions of dollars are at stake.

The first question will be whether, under Federal court Rule 23, a lawsuit may seek a money verdict — in this case, a claim for back pay — when the class was created under a provision that limits remedies to corrective court orders, not money.   Besides agreeing to hear that, the Court told the parties to file briefs and prepare to argue on a second question — whether the class was a proper one, under Rule 23, when it was cleared to go forward under Rule 23(b)(2).   It is unclear whether the Court, if it answered that second question in the negative, would be signaling that the class case might still proceed under a different part of Rule 23 — part (b)(3), which does allow money claims.

Wal-Mart’s petition had raised a second question that embraced the broader argument that no class should have been approved at all, since the claims made by the women employees were so disparate and so diffuse that they really had nothing in common, and that, as a result, Wal-Mart would not have been able to mount a defense to such claims.   The Court rewrote Wal-Mart’s second question, without making it clear exactly what arguments the lawyers should now be making in addition to whether a money claim could be made in this case.

Dahlia Lithwick at the XX Factor:

The six plaintiffs in the suit claim that despite the enormous size of the class, Wal-Mart’s decision-makers determine pay and promotion based on a rigid and highly centralized “strong corporate culture that includes gender stereotyping.” Their claim is that women constitute more than 70 percent of Wal-Mart’s hourly workforce but less than one-third of salaried management. They seek back pay, punitive damages, and changes to Wal-Mart’s hiring and promotions policies. Wal-Mart’s liability may be in the billions of dollars. Aside from the size of the class, Wal-Mart argues that the lower courts used the wrong standards to certify the class.

This is a high-stakes appeal that has elicited strong responses from the Chamber of Commerce on one hand, and those who worry about the need for class-action suits to protect worker rights on the other. It’s going to garner an enormous amount of interest from those who contend that big business never loses at the Roberts court and that workers can’t catch a break. It may also prove an early litmus test for whether the presence of three women at the high court will in any way shape the debate about gender discrimination.

Marcia Coyle at The Blog Of Legal Times:

The merits of the case, however, are not before the justices. Instead, the Court will focus on whether the class was properly certified.

“We welcome the Supreme Court’s limited review of the class certification decision in this case. As that decision was based on a vast body of evidence, we are confident that the decision to certify the class was sound,” said the plaintiffs’ lead co-counsel Joseph Sellers, partner in Washington’s Cohen Milstein Sellers & Toll, in a statement. “We believe the Court will reach the same decision after reviewing the record before the U.S. District Court for the Northern District of California, where class certification was granted in June 2004.”

Wal-Mart has lost the class action issue four times in lower court rulings, noted Sellers.

Wal-Mart, represented by a team of lawyers from Gibson, Dunn & Crutcher, led by partner Theodore Boutrous, contends that the class was improperly certified, both as to its size and type. It argues that the plaintiffs, who are seeking back pay, were certified under Federal Rule of Civil Procedure 23(b)(2), used for classes seeking injunctive relief and, instead, should have been required to meet the tougher standards for classes seeking damages.

In the grant of review Monday, the justices ask the parties to address whether claims for money damages can be certified under 23(b)(2) as well as whether certification under that rule was consistent with the certification requirements of Rule 23(a).

Carrie Lukas at The Corner:

It will be interesting how this plays out. Walmart claims that its employment practices “expressly bar discrimination and promote diversity,” and it is hard to imagine that the official employment practices would do the opposite. The crux of this case will likely be the outcomes of that employment system: If, on average, women have ended up earning less than men with similar job titles, that will be evidence of discrimination.

Those familiar with debates about the so-called wage gap (the difference between the earnings of the median working man and working woman) know that there are many reasons other than discrimination why women sometimes end up earning less than men do. As a report for the Department of Labor (conducted using data from the Current Population Survey) concluded:

Although additional research in this area is clearly needed, this study leads to the unambiguous conclusion that the differences in the compensation of men and women are the result of a multitude of factors and that the raw wage gap should not be used as the basis to justify corrective action. Indeed, there may be nothing to correct. The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.

It’s an important fact to keep in mind: Even if statistics show that men and women earn different amounts, discrimination isn’t necessarily to blame.

Monica Potts at Tapped:

I’m not expecting the current court to side against Wal-Mart, however. At every opportunity, the Roberts Court has expanded the rights of corporations. Moreover, as Tiku points out, the issue might even split Obama’s two appointees. Wal-Mart twice cited Justice Elena Kagan, who wrote an influential law-review note on class certification while she was a student at Harvard.

But class-action suits are important ways for a discriminated class of people to be compensated. If Wal-Mart as an institution discriminates against women, it seems perfectly reasonable that those affected stretch across the country and through the entire corporate hierarchy. Women already have a hard time seeking redress against discrimination; it’s disappointing to consider that it’s about to get even harder.

Don Suber:

For years, conservatives have called for tort reform. Legislating tort reform is difficult because so many lawyers like it (including the defense attorneys for businesses) and really the courts do not like to be told what to do.

The class-action lawsuit is the biggest paid. It always seem the lawyers get millions while the “victims” get coupons for prices off on their next purchase from the maker of the defective product.

Walmart may help end that abuse.

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