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Monday, January 3, 2011

Can a Corporation Be Too Big to Be Sued?

The Los Angles Times today highlighted one of the most potentially wide-ranging cases on the Corporate Court’s docket, Wal-Mart v. Dukes. The editorial provides an excellent overview of the pro-corporate legal argument the Supreme Court would have to adopt in order to rule in favor of Wal-Mart, namely, that the group of women alleging discrimination is too big to form a class action.

The case involves a class-action lawsuit against Wal-Mart, alleging that it systematically paid women less and promoted them less often than men. Wal-Mart has argued that the hundreds of thousands of women who have joined together cannot bring a class action because the class is too big and the women do not have enough in common. But the plaintiffs allege that Wal-Mart’s company-wide discriminatory systems of compensating and promoting employees makes a class action appropriate.

The LA Times calls Wal-Mart's argument a "bold attempt to persuade a conservative Supreme Court to dramatically narrow the criteria for determining what a class is" and warns that "[i]f Wal-Mart succeeds, victims of discrimination in future cases will find it much more difficult to pursue justice."

A majority of the U.S. 9th Circuit Court of Appeals found that it was reasonable in this case to regard all female employees as a class. Writing for the majority, Judge Michael Daly Hawkins cited a finding by a lower court that Wal-Mart's system for compensating and promoting employees was sufficiently similar across regions and stores to raise issues "common to all class members." The dissenters ridiculed that notion, with Chief Judge Alex Kozinski saying that members of the proposed class "have little in common but their sex and this lawsuit."

But the majority got it right. Referring to the court's estimate of 500,000 female Wal-Mart employees, Judge Susan P. Graber wrote in a concurring opinion: "If the employer had 500 female employees, I doubt that any of my colleagues would question the certification of such a class." In other words, Wal-Mart's size shouldn't immunize it to a lawsuit that otherwise meets legal standards.

Underlying the dispute about the contours of a class is a more general question: Should civil rights laws be interpreted liberally, or should courts adopt narrow interpretations that close the courthouse door to victims of bias? A victory for Wal-Mart would represent the triumph of the latter view.
The full editorial is available here.

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