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The Class Action Lawsuit Against Wal-Mart is as Meritless as it is Massive

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The Class Action Lawsuit Against Wal-Mart is as Meritless as it is Massive

As a lawyer who used to bring class-action discrimination lawsuits for a living, I am puzzled by press sympathy for the massive, meritless class-action lawsuit against Wal-Mart. In it, six female employees are suing for billions of dollars in a San Francisco court in the name of at least 500,000 other female employees across the nation whom they have never met and share little in common with other than gender (many of whom are perfectly happy with Wal-Mart). 

The Supreme Court heard arguments this morning in the case, expressing skepticism about whether the case should be litigated as a class-action, rather than in individual lawsuits by those employee who allege discrimination.

The Justices should be skeptical: the case is being brought as a class-action not because it needs to be brought as a class action to give workers a fair shot, but rather as an excuse to let a liberal San Francisco jury hold Wal-Mart liable for discrimination when most courts in America would dismiss the lawsuit as baseless (and even if they didn’t, a jury in most regions in America would probably rule in favor of Wal-Mart). This lawsuit was filed in San Francisco, which is widely understood to be one of the most anti-employer, anti-business areas of the country, where courts have found employers guilty of discrimination based on junk science.

Lawsuits over discrimination are usually brought on an individual basis, because even victims of discrimination at a big company often have little in common with each other. They  work in different stores under different managers, and have different jobs and salaries. Even if one manager is racist or sexist, managers in different stores may be totally fair and unbiased. By contrast, class-actions are supposed to be brought on the basis of a company-wide policy, and the employees are supposed to have a lot in common with each other.

In the Wal-Mart case, there is no company-wide policy of discrimination. In fact, Wal-Mart has written policies against discrimination. 

The lawyers for the employees suing Wal-Mart don’t deny that, but claim that it has a practice of giving “discretion” to individual managers about who to hire. But that’s just a fancy way of saying it doesn’t have a policy: that “discretion” is the result of an absence of a comprehensive company policy on how to hire and promote (other than to avoid discrimination). 

They also claim that the company has a “strong corporate culture” that, according to a sociologist hired by the lawyers, somehow leads to discrimination (this claim reflects the sociologist's peculiar, racially-offensive  "theory that white men have an unconscious bias against women" that leads them to discriminate against women given the chance). That’s just psychobabble designed to hide the fact that there is no Wal-Mart company policy of discrimination. The sociologist’s report is so conclusory, and so lacking in logic, that it should have been ruled inadmissible, rather than being used by the trial judge to justify a multibillion dollar lawsuit by a class of more than a million employees.

Wal-Mart’s hundreds of thousands of female employees have little in common with each other, legally speaking. As Judge Alex Kozinski noted in his dissent against a lower-court ruling allowing this class-action: "The half-million members of the majority's approved class held a multitude of jobs … in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed depending on each class member's job, location and period of employment. … They have little in common but their sex and this lawsuit." (He was dissenting against a 6-to-5 ruling by the Ninth Circuit Court of Appeals that allowed the class-action lawsuit to proceed against Wal-Mart. Three of the six “lead plaintiffs” whose claims are supposedly typical of women at Wal-Mart longer even work there, and two others have been disciplined for alleged misconduct).

Why, then, is the suit being brought as a national class-action?

Because it opens the door to lucrative forum-shopping. When a discrimination lawsuit is filed as a national class-action against a company, it can be brought almost anywhere in the country, wherever the lawyers prefer – as long as they pick as their “lead plaintiffs” residents of the region they prefer (even if most of the alleged victims live elsewhere, and the company’s headquarters is located thousands of miles away).

This lawsuit was filed in San Francisco, where juries are notoriously unsympathetic to employers, and court rulings have often been hostile to employers. It was based on junk science, not sound statistical evidence.  Statistical “evidence” of discrimination that would be deemed inadmissible junk science according to federal appeals courts located in places like Richmond or Chicago, is deemed sufficient to send a case to a jury in San Francisco, under rulings of the liberal, San-Francisco-based Ninth Circuit Court of Appeals. That court has ignored the Supreme Court’s warning in its Bazemore decision that statistics alleging discrimination must take into account all “major” factors or risk being inadmissible junk science.

One argument frequently trotted out in support of this class-action lawsuit   – that it is not economical to bring individual lawsuits against a company as opposed to doing them on a class-action basis – is pure bunk, especially given the fact that federal law lets workers collect their attorneys’ fees if they win, not just damages.  Thousands of lawsuits are successfully brought every year against employers by individual employees suing over just a single employer action – like a lost job, lost promotion, diminished pay, or harassment.  (Many other cases are settled before trial for substantial amounts of money).

Discrimination cases are perfectly viable to bring on an individual basis. The reason for this is that even if an employee winds up winning less in damages than it costs to bringing such a lawsuit, the employee still comes out ahead, because the employee doesn’t have to pay her own attorney’s fees if she wins: those attorney fees are paid for by the employer. Under the so-called Christiansburg Garmentrule, the employer pays the worker’s attorneys fees if the employer loses the lawsuit – but if the employer wins the lawsuit, the worker seldom has to pay the employer’s attorneys fees. 

In discrimination cases, there have been instances where the employee hardly suffered any injury at all, but still collected thousands in attorneys fees, like in Brandau v. Kansas, where the plaintiff suffered just $1 in damages, but collected thousands in attorneys fees anyway.

Class actions are really only needed where a company has a common policy that causes relatively little damages per injured party (like where it sells a $5 product that people would only have paid $3 for if they knew about its defects).

Where damages are potentially big (as they have been in employment cases ever since 1991, when damages were dramatically increased by the 1991 Civil Rights Act), class-actions aren’t usually needed or  appropriate (since class actions are supposed to be based on common issues, not ones that vary, and damages vary a lot from employee to employee, given their different positions, salaries, time until retirement, responses to discrimination, ability to find alternative work, etc.). 

Strangely, although the lawsuit against Wal-Mart seeks billions of dollars in damages, it wasn’t even certified as a class action under the rule that permits class actions over damages (Rule 23(b)(3), since it obviously flunks the requirements of that rule. 

Instead, it was certified as a class action under a rule that is supposed to provide injunctive relief (Rule 23(b)(2)), not damages. This makes no sense, but the lower courts in the Wal-Mart case did it anyway, getting around those limits by saying that the courts could issue an injunction against Wal-Mart discriminating in the future, and that the billions of dollars in damages the lawyers are seeking are just secondary to that. That’s like the tail wagging the dog. 

To justify this ruling, the plaintiffs’ lawyers have said the case isn’t really about the money, despite the billions they are seeking.  When lawyers tell you a case isn’t really about the money, don’t believe them.  For PR reasons, lawyers say this all the time, especially when a case is all about the money.