Tag Archive for 'class action'Page 2 of 4

Walmart Gender Discrimination Lawsuit Starting Again at Square One

I blogged a few months ago about the Supreme Court, in a 5-4 decision, nixed a huge class action lawsuit against Walmart, alleging that the company engaged in discrimination against its female employees, passing them up for promotion in favor of men.

However, after several years of procedural wrangling (without ever touching on the merits of the lawsuit), the Supreme Court finally ruled earlier this year that a class action could not proceed, because the proposed class (all of Walmart’s female employees, as well as many former female employees. – about 1.5 million people) was too large, and would be completely unmanageable, considering the distinct factual and legal issues that each individual plaintiff might raise.

But as I said, the Court didn’t rule on the merits of the case. So, there’s nothing stopping the plaintiffs from filing a new, more narrowly-tailored lawsuit. With the same lead plaintiff, a new case has been filed in a federal court in California. This one has a much smaller class – it only covers Walmart’s California employees – about 45,000 people.

That’s still a very large class action, but it’s by no means the largest one that has ever been approved, and then been litigated to a final conclusion.

I think this is probably the better strategy for the plaintiffs to pursue. First of all, it’s far more manageable for the courts, which means it has a better chance of surviving motions to dismiss on the grounds that the proposed class is too large.

It also, in theory, allows the plaintiffs to do a more thorough job of vetting potential members of the class, ensuring that the issues they would raise are similar enough to warrant lumping their claims together. Furthermore, the media coverage of the case might focus more on the substantive issues this time around, rather than focusing on the record-breaking class size, and the resulting spectacle, of the previous one.

Also, by tailoring the plaintiff class more narrowly, and by region, it allows the plaintiffs to file multiple, simultaneous class-action lawsuits against Walmart across the country. Defending against several smaller class action lawsuits is probably more expensive and time-consuming than defending against just one, even if it is much larger. This might put more pressure on Walmart to settle these cases quickly, rather than take them to trial.

Of course, this says nothing about whether or not Walmart actually did discriminate against women, or if it still does. It’s worth noting that, since the first class action was filed several years ago, the company has instituted new policies designed to put more female employees on the management track, and changed its employee and manager training to make their policy against gender discrimination clearer. That’s very good news. However, if they did engage in discrimination in the past, they still can, and should, be held accountable.

For that reason, I hope that these class action lawsuits aren’t dismissed. Although we’ve made great strides in addressing gender and racial discrimination in recent years, we still have a long way to go.

Remedying this depends, in part, on holding employers who engage in discrimination accountable. And if the plaintiffs are able to prove that Walmart did, in fact, engage in discrimination, and a court holds the company liable, it will show that even the biggest corporations are not above the law. And given today’s political climate, where people on both the left and the right seem fed up with a lack of accountability, this would be a small but significant step in the right direction, and send a message to workers that at least one branch of government still cares about protecting their rights.

And, if the plaintiffs are unable to prove by a preponderance of the evidence that Walmart engaged in discrimination, the lawsuit will, and should, fail.

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Can You Sue Over a Credit Card Fee?

Over the last few years, the Supreme Court, under Chief Justice John Roberts has, without question, taken a hard turn to the right. This is not a condemnation or commendation; it’s simply a statement of fact. Whether you view this as a good or a bad thing depends largely on your political views.

However, critics of the current court have plenty to complain about lately, with some arguing that the Court is tripping over itself to make it as easy as possible for large corporations to ride roughshod over the rights of consumers. The court has held, in a few cases, that corporations can essentially contract themselves into immunity from certain consumer lawsuits, essentially by putting a provision saying “you can’t sue us” into their standard contracts or terms of use.

This case at issue involved a consumer lawsuit against a credit repair organization, which issued its customers a low-limit Visa card, as part of its strategy to help them rebuild a credit rating. However, the lawsuit alleged that the company charged hidden fees, which actually made their customers’ credit ratings worse than they were before, in some cases.

Under the terms of the 1996 Credit Repair Organizations Act, a federal law designed to protect consumers from fraud and/or exploitation by credit repair companies, consumers have a right to sue credit repair services that engage in deceptive practices. The law clearly states that the right to sue under those circumstances cannot be waived by the consumer, even if they sign an agreement purporting to waive that right.

However, the contract that consumers entered with the credit repair organization stated that consumers could not sue in court, and that any disputes arising from the contract would be resolved in private arbitration. Arbitration is a process by which two parties to a dispute agree to have a private entity (usually a professional arbitrator) resolve their dispute, as opposed to taking it through the judicial system. Arbitration is sometimes cheaper and less time-consuming than litigation in the courts. However, arbitration agreements often call for arbitration in a location that’s likely to be very inconvenient for the weaker party (in this case, the consumer) to get to. For example, if most of a company’s customers are in big cities on the West and East coasts, it might set the location for arbitration somewhere in the Midwest.

Furthermore, there are some concerns that arbitrators might be biased against consumers.

In this case, the credit repair company argued before the Supreme Court that their arbitration clause satisfied consumers’ right to sue for deceptive practices.

Judging by the oral arguments (summarized and linked to in the HuffPo article linked above), and the questions that the Justices asked the attorneys, it appears that a majority have already made up their mind, and they’re going to come out the side of the company, not the consumers.

Justice Ginsburg, long known as one of the more liberal Justices on the current Supreme Court, seemed to be the only one who indicated any sympathy to the arguments of the lawyer representing the consumers.

Recently, I blogged about another recent Supreme Court decision that would also seem to limit the rights of consumers who think they’ve been wronged by corporations to seek redress. In that case, the Court held that companies, through so-called “adhesion contracts,” can draft their way out of a class action lawsuit.

“Adhesion contracts” are contracts, generally between large companies and individual consumers, which are drafted by the party with the most bargaining power (usually the company), and presented to the consumer on a take-it-or-leave-it basis, with no real opportunity to negotiate the terms. Contracts for cellphone coverage are a prime example. The court held that a provision in such a contract that bars consumers from suing the company in a class action lawsuit, and instead directs them to individual arbitration, which would be far more expensive for an individual consumer.

The Supreme Court held that these provisions are perfectly valid.

In all of these cases, the court was not involved in constitutional interpretation. Instead, it was interpreting statutes that were passed by Congress. This means that if Congress disagrees with these rulings, it could change the law. And if they’re not inclined to do so, we can elect members of Congress who are.

Of course, whether or not that will actually happen depends largely on the willingness of consumers to educate themselves about these issues, and form informed opinions about them.

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Supreme Court Blocks Wal-Mart Class Action

The big news in the legal world recently came from the U.S. Supreme Court. Over the last several years, Wal-Mart has been involved in a class action lawsuit alleging that it discriminates against women in its hiring and promotion practices. The plaintiffs sought to consolidate a class of 1.5 million women – essentially all of Wal-Mart’s female employees. It was the largest employment discrimination lawsuit in the history of the United States.

It should be noted that this case has been going on for years, and no court has even ruled on the merits yet. Essentially, the dispute over the last several years has concerned whether or not such a large class of plaintiffs should be certified. So, no court has yet decided whether Wal-Mart actually discriminated against the women. It just decided that the lawsuit cannot proceed in its current form.

A class-action lawsuit is a procedure that allows a large number of individuals (the groups can range in size from a few dozen to over a million individuals) to sue a defendant, alleging that the defendant has engaged in some course of conduct that harmed all of them. Both a U.S. District Court and the 9th Circuit Court of Appeals agreed that the class should be certified, but the Supreme Court (in a unanimous opinion, I should note) has just overturned them both.

The decision to deny class certification in this case was unanimous, but there was some disagreement on the scope of the opinion, with 4 Justices dissenting in part. Essentially, what sunk the case was the fact that the plaintiff’s lawyer sought billions of dollars in back pay from the defendant, but in filing the case, used legal procedures that are designed for class actions in which monetary damages are not the primary relief sought.

However, on another, perhaps sticker issue, the court was far more divided: voting against the plaintiffs 5-4. One requirement, of several, for certifying a class is whether or not the cases of all the plaintiffs present a “common question of law or fact.” This essentially means that, by conducting a single trial, with a single body of evidence presented by both sides, the question of whether or not every single plaintiff in the class has suffered a legally-cognizable injury can be answered.

However, the plaintiffs’ attorneys made a crucial strategic error on that front: they did not allege that Wal-Mart had a uniform policy that discouraged the promotion of women. However, Wal-Mart has a policy that gives the managers of individual stores a great deal of discretion in hiring and promotion. The lawsuit alleges that this discretion allowed managers to engage in discrimination in hiring and promotion, and this created a male-dominated culture at the company, leading to a sort of unspoken policy of gender discrimination.

However, the majority opinion noted that this fact made a class action, let alone one involving every female employee of a very large company, an inappropriate tool for relief, because the answer to the question of “why was I not promoted?” as to one employee does not answer that question as to the rest. Therefore, according to Justice Scalia, the plaintiffs do not present a common question of law or fact, and employees who believe they’ve been discriminated against would have to sue individually, or in smaller class actions.

In this session, the Supreme Court has not been kind to class action lawsuits, handing down at least two decisions that might end up severely limiting the viability of the class action as a device to vindicate the rights of consumers and employees. I’m referring to another recent decision essentially holding that companies that regularly enter into service contracts with their customers (such as phone and Internet companies) can make themselves immune to class action lawsuits brought by their customers, by placing a clause in their contract that essentially says “you can’t file a class action lawsuit against us.”

While it’s hard to predict how these decisions will affect class action lawsuits in the future, the Roberts Court seems fairly determined to steer America’s jurisprudence as far to the right as possible, perhaps to counter a perceived move to the left by Congress and the executive branch.

Whatever the reasons for the court’s shift to the right, I don’t think it’s a good idea to use consumers and employees as a punching bag in the fight. The class action lawsuit is an absolutely vital tool for consumers, employees, and others to vindicate their legal rights, when large groups of people have been wronged.

In many cases, when a legal wrong has taken place, the actual harm to individual victims is not nearly large enough to justify the cost of bringing a lawsuit individually. However, if people who have been wronged in the same way, by the same defendant, band together and file a lawsuit, the individual cost to each plaintiff, in terms of money and effort, is fairly low, which significantly alters the cost/benefit calculus.

If the class action did not exist, large companies would be able to commit “small” legal wrongs against individuals with near-impunity, knowing that few (if any) people would bother to bring a lawsuit to vindicate their rights. The class action serves as a very strong deterrent to wrongdoing.

I don’t know how these decisions will affect class actions in the future. This will depend largely on how lower courts, and eventually the Supreme Court, construe their scope and meaning. Perhaps more importantly, the future of the class action lawsuit will also hinge on whether or not Congress passes legislation making a few minor alterations to the class action procedure, to reverse the effects of these decisions.

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Best Buy Not Likely to Deliver On Settlement Promises

Although Best Buy recently settled a class-action lawsuit, what the company hopes to achieve in the next few years is not likely to be possible.

Class actions lawsuits against employers are not uncommon.  Best Buy workers sued the company due to the company’s practice of denying jobs and promotions to African Americans, Latinos, and women.

Best Buy has spent the past four years implementing “affirmative relief addressing the hiring, assignment, promotion, and exempt compensation claims.”  Basically Best Buy wants to improve diversity by ensuring that more African Americans, Latinos and women will be hired as a part of the Best Buy team.  “Someone” will be in charge of making sure this happens.

On the one hand it is good that major corporations are striving to promote diversity in management, non-discrimination, and anti-harassment measures.  However it is also important to implement effective procedures to do so.  Thus far, Best Buy has failed to implement effectual measures.

For example, the article states that “someone” will be in charge of ensuring the company’s team is more diverse.  Best Buy is a huge corporation with many locations.  More than one person would be needed to ensure diversity.  Perhaps the creation of an “internal affairs” team where individuals would ensure that the staff is diverse and that there is no discrimination or harassment going on would be a better solution.  Creation of such a team would increase employment, ensure affectivity, and legitimize Best Buy’s efforts to hinder any further lawsuits.

Also, displaying anti-harassment, anti-discrimination and anti-retaliation policies on an internal company website is fine for legal purposes because Best Buy’s efforts are legitimized.  However, an effective solution would be to have workshops, either monthly or once every six months, for employees regarding these issues.  The workshops could serve to educate employees on the consequences of such unprofessional conduct and the overall harm such conduct brings about for everyone.

Solutions such as these would achieve the goal that Best Buy is working towards.  It can be argued that such ideas may be in the works, and that Best Buy has not verbalized these plans.  That may well be.  However given that they just settled a class-action suit and are looking to create a more public-friendly image, verbalizing such ideas would have been a top strategy.

It is likely that the company has not thought of such solutions, does not want to implement such long-term procedures, or is just looking to fool the public into thinking they are changing their ways, when in fact they do not plan to.  Either way, future trips to Best Buy should be interesting.  I will definitely be looking out to see how much more diversity the company has brought in, as well as any other procedures implemented to achieve Best Buy’s goals.

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Has the Supreme Court Killed Consumer Class Actions?

The U.S. Supreme Court just issued a long-awaited ruling in an AT&T lawsuit involving consumer class-actions. The background is a bit complicated, but this article does a good job of summarizing it.

Here’s the short version: a group of plaintiffs sued AT&T, alleging that they engaged in deceptive trade practices because it advertised that it was selling cellular phones at a discount, but charged sales tax on the full, non-discounted, retail price. The amount of money per phone at stake in this lawsuit is very small; about $30. For that reason, it made no sense for the plaintiffs or their attorneys to file a lawsuit individually. So, they filed a class-action on behalf of everybody who bought a phone from AT&T within a specified period.

However, AT&T’s service agreement has a clause stating that all disputes between AT&T and the buyer have to be resolved in private arbitration, and specifically barred any type of class action in that arbitration. Every customer had to agree to this before they bought the phone. A state court ruled that, although arbitration agreements are generally enforceable, this provision was unenforceable because it was extremely one-sided and unfair.

However, a federal law, called the Federal Arbitration Act (FAA), makes arbitration agreements more difficult to be declared unenforceable than the laws of many states. AT&T argued that this federal law pre-empted the state law (under the constitution, federal laws generally trump contradictory state laws). The Supreme Court agreed.

So, what does this mean for consumer class actions? It will be difficult to tell. But, there’s no denying that it’s now much, much easier for large businesses to contract their way out of class-action lawsuits. Congress can, if it so desires, amend the FAA to nullify this decision (remember, the court was simply interpreting a federal law, not ruling on its constitutionality. Congress can change the law to clarify its intent, if it thinks the court interpreted it incorrectly). But, with Congress being what it is, who knows when this will happen, if ever.

So, for the foreseeable future, it appears that businesses will be able to place arbitration agreements in their contracts, effectively doing away with the right of consumers to file class-action lawsuits.

Although it may not sound like it, this is a very big deal. The class action was created about 40 years ago. Since then, it has become one of the most effective tools that consumers have at their disposal to vindicate their rights. It has been used in cases where relatively small amounts of money are at stake, but where important legal rights had to be vindicated. It has been successfully used to fight employment discrimination, unfair trade practices, and fraud.

Many cases such as this involve companies nickel-and-diming their customers to death. Obviously, when something like $100 is at stake, it’s not worth a person’s time to go to court over it, and there are few, if any, lawyers who would take the case. However, a class action lawsuit can spread the cost around, and make any recovery large enough that it’s worth a lawyer’s time to pursue.

Without the class-action, companies would be able to commit these small, but real, legal wrongs, with near-impunity. Obviously, this would be a bad thing, since a lot of little wrongs can eventually add up, and cause significant harm, in the long run, which consumers may not even be aware of. After all, when a series of small costs add up to a large amount of wasted money over time, it’s easy to overlook it (like how buying a few cups of coffee per day costs you thousands of dollars per year). That doesn’t make the losses any less real, however.

As with many laws that rely on a private right of action as their primary means of enforcement, the threat of a large class-action lawsuit served as a deterrent against corporations breaking the law. Without such a deterrent, it’s tough to say what companies will attempt to pull on consumers, shareholders, and employees, knowing that they can simply contract their way out of the threat of a class-action lawsuit.

While I doubt much of it will be earth-shattering (there are lots of other protections available to consumers, employees, and shareholders, even with this new decision), I also doubt that much of it will be good for anyone but the corporation writing the contract.

The Roberts court definitely seems to have moved in a very conservative, very pro-business direction over the last few years. Obviously, Supreme Court justices all have their preferred interpretations of the Constitution which, shockingly, seem to lead to policy results which they also favor.

The Roberts Court seems to be far less timid about using its position (and its 5-4 majority) to advance a conservative political agenda. Again, I know that this is simply how the game is played. In a common-law system (like ours), judges sometimes make law. There’s nothing wrong with this, and we should stop pretending otherwise.

However, every Supreme Court justice in recent memory has gone before the Senate for their confirmation hearing, and said with a straight face that judges don’t make law, knowing full well that it’s false. At some point, we just decided that that we don’t like the idea of unelected judges making law, and that we should pretend that they don’t.

Whenever an appeals court reverses a long-standing precedent, or sets a precedent that some people don’t like, they’re accused of “legislating from the bench.” And, sadly, this criticism usually comes from people who know better.

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