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Supreme Court Blocks Wal-Mart Class Action

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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

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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?

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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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The Fukushima Nuclear Power Plant: Just Another Massive Toxic Tort Waiting To Happen

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It really is a testament to how many problems there are in this world of ours when a report about Japan’s nuclear regulator raising the severity level of the Fukushima nuclear power plant from 5 to 7 gets swept off the front pages in only a day.  Call me crazy, but for some reason I just think that the potential that we could possibly suffer another nuclear meltdown on par with the Chernobyl disaster deserves a little bit more follow up than what we’re usually given in a 24-hour news cycle.  I only say this because, though I’m not an expert in nuclear physics, it seems pretty likely that if the Fukushima plant were to blow, I’m pretty sure the subsequent fallout would affect more than those poor folks in Japan.  It’s also important because it would also probably start a surge of lawsuits on par with modern day asbestos litigation.

I know, pretty bold statement, huh?  However, unlike Glenn Beck and the other hosts over at Fox News, these words actually have a sound basis behind them (oh snap).  In this case, for America anyway, it’s the doctrine of toxic (also known as environmental) torts that will likely be the basis for all these potential lawsuits.

Toxic torts is an area of law that allows for recovery of medical and other damages related to the release of hazardous chemicals or substances into the environment that cause immediate or eventual health related illnesses.  In essence, they are akin to a product liability lawsuit.  Some person or company accidentally releases a product under their care which causes harm to everyone who comes in contact with it.

Applying this concept on a more massive scale, such as a potential Fukushima meltdown, may seem very complex.  And of course it is.  Should the unfortunate happen and the plant’s core actually explode, experts in the field of nuclear science estimate that the environmental damages could be immeasurable and last for many years to come.  To give some sense of the scale of harm, the Chernobyl meltdown occurred in April 1986.  Nearly 25 years later, the Ukrainian government still has in effect a 19-mile exclusion zone at the site of the accident due to nuclear contamination.  In addition, like asbestos litigation, lawsuits regarding potential victims of Chernobyl’s fallout are still being litigated in European courts to this day.

But why is potential damage from Fukushima different and, in many ways, much worst than Chernobyl?  Because unlike Chernobyl, which occurred in an inland country, Fukushima is located in a Japanese coastal city.  The plant’s proximity to the Pacific Ocean makes a meltdown all that much more devastating as it would not only affect Japan’s ecosystem, but that of the world through the spread of contaminated water.  Elevated levels of radiation-contaminated water have already been detected in Canada due to the run off water used to cool Fukushima’s core.  A total meltdown, it would seem, would probably produce even higher elevated levels of contamination.

Furthermore, food and other imports from Japan would likely be contaminated, as well.  Fisheries would face massive liability from the seafood they catch in the Pacific Ocean as some could be contaminated, too.

Thankfully, reports indicate that a total meltdown at the Fukushima plant is unlikely to happen.  But if the worst were to occur, the devastation that would follow likely won’t only be limited to damage to the environment and peoples of the world, but also to the judiciaries the world over due to the massive influx of toxic tort lawsuits.

And I hope it never comes to this.  Because as Cormac McCarthy has taught me, money isn’t worth anything in an ecologically devastated planet.

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Why The Walmart Sex Discrimination Class Action Lawsuit Is Already Dead

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Is it just me or do you guys out there also cringe at the idea of class action lawsuits?  For some reason, since I was a kid I always thought of them as frivolous suits lacking any credibility.  I think it’s because for me, they play into the whole greedy lawyer stereotype since it always seemed like the huge award judgments always ended up going mostly to the attorneys.  That and what kind of lawyer would ever be altruistic enough to want to sue on behalf of anyone out of the goodness of their hearts simply because they want to correct a wrong?

Well, apparently that’s what the lawyers in the Walmart sex discrimination class action lawsuit are trying to get the US Supreme Court to believe.  Or rather more specifically, they’re just trying to get their foot in the door first.

In case, dear reader, you happen to be like most people and are bored out of your mind by news stories revolving entirely around legal intricacies, let me give you the short version of this Walmart debacle.

Essentially, the big box retailer has been accused by its female employees of discrimination against its women workers.  Among the allegations are that Walmart pays its female employees less compare to males in the same position, denies promotions to qualified female employees, and a host of other gender-based discriminatory employment practices.  Though these same accusations can arguably be applied to all American businesses in general, what sets the Walmart case apart is that the plaintiffs allege the company actively employed these discriminatory practices as part of its regular corporate policies.  That and the number of plaintiffs in this class action suit clocks in at over 1.5 million female employees.

Still not impressed?  What if I told you that if this case is allowed to go forward it would be the biggest class action lawsuit ever and could potentially change how class action lawsuits are litigated?  Still not enough, huh?  How about if I told you it could also mean it would make it a lot easier for you to line your pockets with some green?

Oh, now you’re all interested.  Hmph… Well maybe I suddenly don’t feel like telling you more about this stuff.  Wait, wait, don’t go.  I’m just joking.  Please stay and placate my need for attention…

Anyway, personal abandonment issues aside, if the US Supreme Court certifies the Walmart plaintiffs as a class and allows the lawsuit to go forward, it would be the largest class action lawsuit ever litigated.  The reason this can mean big bucks for everyone else is because it would set a precedent that would make pursuing class action lawsuits much easier. This means that if more lawyers can bring these types of suits for indiscriminately large classes of plaintiff’s, there’s a higher chance that a lot more people can be included in these types of suits and recover some money.

However, the problem is that the Walmart class action lawsuit has no way in hell of going forward.

Why?  It’s not just because the class action is too big.  After all, Federal Rules of Civil Procedure 23, which governs class actions in federal courts, is designed to allow a lot of people to sue as a group regardless of their size.

The issue is getting certified as a class, which is the problem that the Supreme Court is now reviewing for the Walmart case.

Unlike normal lawsuits where one or multiple individuals hire an attorney to sue on their behalf, in class actions a lawyer brings a lawsuit on behalf of a group of people without being hired.  In order to do this however, the plaintiffs must be certified as a class, or in other words, the court must determine that these plaintiffs are all sufficiently similar to each other and suffer similar harm arising from the same defendant.  The legal term for this is that the plaintiffs must be “similarly situated.”

Now, on the surface the plaintiffs in the Walmart case appear to meet this similarly situated requirement since they are all women and claim to have suffered gender discrimination.  However, the way the class action certification process operates is a bit more involved than this because it is designed to narrow down a class using a number of factors.  Without getting too bogged down in each one, the process essentially would split the plaintiffs into smaller groups since not all the female employees are of the same age or employment level.  Thus this seemingly simple class certification process becomes all the more complicated and as it stands cannot go forward.

And though this may sound like a bad thing since it could potentially deprive you of money, it actually isn’t because this precedent would make class action lawsuits way too easy to start and in turn, bog down our justice system in needless litigation.  And we can all agree unnecessary litigation is the bane of our country’s existence, right?

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