The U.S. Supreme Court decision Monday in a case alleging sex-discrimination at Wal-Mart prompted a predictable reaction over the course of the week: Big business won, workers lost.
Not so. The ruling will restore the integrity of the class-action legal system, but it will not deny wronged workers their day in court.
This case revolved around a massive lawsuit brought on behalf of up to 1.6 million women who have worked at the giant retailer since 1998. The suit accused local Wal-Mart managers across the nation of using their discretion over pay and promotions to favor men. Wal-Mart disputed that there was a systemic policy of discrimination that led to unfair treatment. A California court had certified the case as a class action, and the Ninth Circuit Court of Appeals upheld that ruling.
The Supreme Court said, not so fast: Combining the disparate claims into one case would not do justice, either for the company or the allegedly wronged employees.
The court ruled that a class-action case requires more evidence of systemic conduct that harmed a broad group of people. Moreover, a class-action judgment in this case would improperly lead to a one-size-fits-all remedy. If some women were seriously wronged, they might deserve significantly more compensation than others, the court said. For the sake of expediency — and for a massive payday? — plaintiff’s attorneys gave short shrift to those differences and pursued this mass class action.
The majority set a high, and welcome, bar for the certification of class actions. In his majority opinion, Justice Antonin Scalia ridiculed the idea that misconduct by various managers at various times show that Wal-Mart “operates under a general policy of discrimination.”
Keep this in mind as you read harsh criticism of this decision: The court did not determine whether women who worked for Wal-Mart faced discrimination in hiring or promotions. Rather, it determined that this case over-reached in pooling a broad class of alleged victims.
That leaves a legal path for smaller groups of women who, say, worked in the same store, to bring litigation over alleged discrimination. The court still says it’s OK to unite plaintiffs who have common interests. It is not OK to lump together every woman who has worked at Wal-Mart since 1998. The attorneys who brought the case say they will continue to pursue some cases.
Class-action litigation is a legitimate means to protect people who have been victimized and to police corporate conduct. When a business has engaged in harmful conduct with a number of victims, the class-action system can provide an orderly process to remedy that wrong. Class-action lawsuits have been used legitimately to promote health and safety, defend civil rights and protect consumers from small-scale rip-offs. Businesses often complain about the class-action system, but the truth is they use it themselves to seek remedies.
But the class-action system has been abused. It has been turned into an extortion racket, creating a dangerous system of jackpot justice. Get lucky — find the right venue, the right judge — and get rich. Sometimes it’s only the lawyers who get rich — the victims get awards of little value. The lawyers collect millions, the victims collect $5 off coupons good for their next oil change.
The Wal-Mart decision will help to restore some sanity here. It will not deny justice to anyone.
