Thanks, Supremes! Wal-Mart v. Dukes roundup
In my opinion, the Supreme Court's decision issued Monday in Wal-Mart v. Dukes is fantastic for employers. Not all class action litigation is a racket, but much of it is, and plaintiffs' lawyers have been known to use the threat of financial devastation resulting from nationwide class suits to pressure employers into paying large settlements.
(No, really? You don't say!)
The Supreme Court has taken some of the wind out of those sails by requiring that claims based on disparate employment decisions be litigated individually (or, at least, as multi-plaintiff non-class claims, which also require individualized proof).
Not only that, but individualized claims for relief (including damages and injunctions) must also be tried under a procedural rule* that allows putative class members to "opt out" and provides more extensive safeguards for defendants' rights. The Court also said that plaintiffs cannot bypass this requirement by using a random sampling and mathematical formula to calculate class members' individual damages.
*Law geeks can scroll down to compare Rule 23(b)(2) with Rule 23(b)(3).
I was quoted yesterday in Law 360 about the case, and on Tuesday the publication quoted my colleague, Joe Murray, who will have an article on this subject next week in BNA. (No links to Law360 because subscriptions are required.) There has been a lot of good commentary around the internet, including (but not limited to, as we lawyers like to say) by Daniel Schwartz, Walter Olson, the New York Times (log-in required), Mark Toth, and Constangy's own Mike Maslanka. From the plaintiffs' side was a good piece by Donna Ballman (by the way, I agree with Donna that this decision will not affect the vast majority of plaintiffs' cases), and an interesting feminist perspective from Jezebel. (I report, you decide.)
The latest controversy over the decision has been exactly how much the plaintiffs' lead firm has lost in this case. The firm says $7 million, but PointOfLaw is skeptical, and makes a pretty strong argument that the firm's estimate should be taken with an enormous grain of salt.
What do you think about the decision? Was it a wise one? Do you think it will protect employers? Do you think it will hurt plaintiffs? No matter whom it hurts or helps, do you think it was fair? Do you think, like Walter Olson, that the decision will be legislatively overruled in a couple of years? Do you think same principles can be used to defeat certification of collective actions under the Fair Labor Standards Act?
Do tell!
Comments (2)
Read through and enter the discussion by using the form at the endGreg - June 24, 2011 9:14 AM
You're a little bit off on some of your assumptions. You argue that plaintiff's lawyers try and leverage big settlement by threatening to companies. Typically, class action firms have a very small fraction of the resources of their defendants. But that's not even the real point. The point of class actions is that the certification of a class creates efficiencies that would not have been otherwise realized. In doing so, the government does not need to spend resources because the action is between private parties.
Robin E. Shea - June 29, 2011 11:28 AM
Greg, I have to call 'em as I see 'em. I understand the rationale for class actions, and do believe that it is an appropriate way to litigate some cases. However, my experience with these has left me a bit cynical. Generally (again, speaking only of my experience), the plaintiffs' firms file the lawsuits and immediately propose that the company settle to avoid devastating jury awards and legal fees -- in other words, it looks a lot like a shakedown to me. It is especially frustrating when the corporate policy and training, and the actual practice of 99% of management, is to comply with the applicable law -- which means that if the law was being violated, it was by "rogue" supervisors and not being done on a systemic basis. If I've understood correctly, Dukes puts the kibosh on litigating this kind of situation as a "class action," and that's a good thing. And it certainly does nothing to preclude plaintiffs from filing individual or multi-plaintiff lawsuits based on the actions of the "rogues."
(By the way, we were having technical difficulties on our blog site, so I apologize for the delayed posting of your comment and my response. Thanks for commenting!)