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Mass class actions are dead — or are they?

Supreme Court decision on Wal-Mart doesn’t concern some local plaintiffs’ lawyers

Christine Simmons//June 26, 2011//

Mass class actions are dead — or are they?

Supreme Court decision on Wal-Mart doesn’t concern some local plaintiffs’ lawyers

Christine Simmons//June 26, 2011//

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Corporate executives across the U.S. may have breathed a sigh of relief after the U.S. Supreme Court found for Wal-Mart in a sex discrimination case, but some plaintiffs’ lawyers weren’t convinced it would hurt their clients’ cases. Other attorneys disagreed.

Many Wal-Mart Stores Inc. workers around the country say local managers made sexist decisions about promotions and pay, and top officials did nothing to stop them, but the U.S. Supreme Court ruled last week that those allegations do not warrant a class-action suit of unprecedented size. Bloomberg News file photo

The high court ruled last week that a lawsuit against the largest private employer in the U.S. could not go forward as a class action. The lawsuit was filed on behalf of about 1.5 million Wal-Mart workers.

The justices said the lawyers for the women failed to point to a common corporate policy that led to gender discrimination against workers at thousands of Wal-Mart and Sam’s Club stores across the country. The justices were unanimous on some aspects of the opinion and divided on others.

More than 20 companies supported Wal-Mart at the Supreme Court, including Intel Corp., Altria Group Inc., Bank of America Corp., Microsoft Corp. and General Electric Co.  

Still, the court’s decision reiterated class action standards already put forth in an earlier decision, said Russ Riggan, who focuses on employment and discrimination claims for plaintiffs at the Riggan Law Firm in St. Louis.

“To me, it’s more of a question of how does that already-developed law and the legal analysis cover the case,” he said.

In his opinion, he said, the Supreme Court ruling won’t change standards for establishing class actions.

The suit necessarily brought up questions of whether a class action status is possible based on the decisions of managers in thousands of stores, said Norman Siegel, of Stueve Siegel Hanson in Kansas City.

“Most class action lawyers would say that it’s an uphill climb,” he said.

He said the ruling is a reminder that courts need to rigorously apply the rules that establish conditions for class certification.

“I don’t think it’s a change from what the courts have been doing,” he said.

“Our firm’s perspective is that we have a very conservative view on what cases to bring as class actions,” Siegel said. “In terms of our practice, it will have a minimal or no [effect].”

John Campbell, of The Simon Law Firm in St. Louis, said it was “surprisingly not an earth-shattering case.”

“Here it came down to the facts and not the law,” he said.

He said the plaintiffs didn’t prove well enough that all class members were tied to common policy with common evidence.

“It seems to be that it’s the same rules we’ve all been playing by,” said Campbell, who is manager of his law firm’s class action department.

‘Remarkably naive’

Meanwhile, others believed the high court’s ruling may have a big impact.

“Like banks that are too big to fail, now the Supreme Court has held Wal-Mart is too big to have discriminated,” said Jerome Schlichter, of the Schlichter, Bogard & Denton plaintiff’s law firm in St. Louis.  “They said as long as there is a statement in their corporate policy that they prohibit gender discrimination, no mangers would ever discriminate under the basis of sex or gender. That’s remarkably naive.”

The ruling means that some employment discrimination cases against large employers that would have been filed in the past now won’t be brought to court, he said. He said one of his previous cases in which he helped represent the plaintiffs — a $47 million settlement with Rent-A-Center Inc. in 2002 that brought about company changes in hiring women — could have had a different ending.

For him, Monday’s ruling “raises serious questions about bringing any employment discrimination cases against large employers,” he said.

“This is a big victory for companies,” said St. Louis defense lawyer Frank Neuner, of Spencer Fane Britt & Browne.

“It provides them some measure of hope in this arena where the prospect of class certification itself can be potentially crippling because of the costs associated with litigating that,” he said. “The court here is really emphasizing the need for plaintiffs to show commonality, and they just can’t really rely on statistics suggesting that discretion could result in discrimination.”

He said the ruling could have potentially wide-ranging effects outside employment law for other discrimination claims.

The ruling provides a couple big takeaways, said Brian Pezza, a management-side employment lawyer for Lewis Rice & Fingersh in St. Louis.

The court’s opinion further emphasizes that corporations should have a companywide nondiscrimination policy, as Wal-Mart did, Pezza said. The ruling also “really validates employers’ use of a decentralized decision-making process,” he said.

“Employers are not opening themselves to [class action] liability by delegating decision making to managers of different locations throughout the company,” he said.

If the Supreme Court ruled in reverse, “it would have made major changes by really expanding what potentially liabilities could be out there, particularly for back pay,” Pezza said.

Filed in 2001, the suit aimed to cover every woman who worked at the retailer’s Wal-Mart and Sam’s Club’s stores at any point since December 1998, including those not hired until years after the suit was filed.

The women pressing the suit claimed they and colleagues across the country were victimized by Wal-Mart’s practice of letting local managers make subjective decisions about pay and promotions.

A federal appeals court had let the suit go forward on behalf of women who were working at Wal-Mart at the time the suit was filed.

The case is Wal-Mart Stores v. Dukes, 10-277.

 Bloomberg News contributed to this report.

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