Posted by wlansden |
Filed under general, news and comments, class action suits, supreme court
By James Bowden
After the American Civil War and the passage of the Civil War Amendments (i.e. the Thirteenth, Fourteenth, and Fifteenth Amendments), instances of discrimination and denials of individual civil rights continued to be institutional practices in the former Confederacy. Victims of these abuses faced a difficult problem: they didn’t generally have access to the assistance of an attorney for assistance. Why not? Attorneys couldn’t afford to take the cases and still feed themselves; the plaintiffs were more often than not penniless and the only legal remedy available was injunctive relief, which meant less than a hill of beans of an economic recovery following even egregious violations of civil rights.
The fix Congress came up with was to pass a statute that changed the economic playing field as part of the Civil Rights Act of 1871. The specific statute, now codified at 42 U.S.C. §1983, allowed plaintiffs to pursue equitable remedies (specifically monetary damages), and the corresponding 42 U.S.C. §1988 allowed for collection of reasonable attorneys’ fees. All of a sudden, taking civil rights plaintiff work made good economic sense.
The case of Wal-Mart Stores, Inc. v. Dukes et al., 564 U.S. ___ (2011), decided June 20th, centers around a similar tweak to the economics of litigation included in the Federal Rules of Civil Procedure - class action suits as allowed by Rule 23. Class action suits are ideally suited for situations where a person or entity with a disproportionate amount of power (or wealth) injures a large number of generally less powerful (or less wealthy) people and entities, even just a little bit. Instead of requiring each individual to file separately and seek to join a single case, or even litigate an entire claim separately, the class action suit allows a representative or representatives of the class to prosecute the case. The class representatives (and their attorneys, who are most often on a contingency fee arrangement) are rewarded with a percentage of the total settlement and the remainder is doled out to the other class members. While each individual injury probably doesn’t produce an economically viable claim to litigate, aggregating the claims into a single suit allows even minor injustices to yield sufficient enough claims to support the often significant cost of litigation.
The plaintiffs in the Dukes case are three female former employees of Wal-Mart purporting to represent as many as 1.5 million other women who are current and former employees of Wal-Mart, alleging that Wal-Mart has discriminated against them on the basis of their sex. The numbers are staggering, and not just the number of potential plaintiffs: women represent a full 70% of the hourly wage earners employed by Wal-Mart, but only 33% of management, and statistics show female employees as being paid less than men in every region, with the salary gap widening over the course of employment even for men and women hired to perform the same job at the same time. Wal-Mart has an anti-discrimination policy but gives relatively broad latitude to local managers as far as promotion and raises. The plaintiffs claim that the statistical evidence produced indicates that the system of delegated discretion runs afoul of Title VII of the Civil Rights Act of 1964 which bans, among other things, employment discrimination based on sex.
Interestingly, the majority opinion written by Justice Scalia and joined by Chief Justice Roberts and Justices Kennedy, Alito, and Thomas and the dissent written by Justice Ginsburg and joined by Justices Stevens, Sotomayor, and Kagan draw heavily from the life work of Vanderbilt’s own Professor Richard Nagareda, and come to different conclusions. The core holding of the majority opinion reverses the opinion of the District Court, upheld by the Ninth Circuit Court of Appeals, that the plaintiffs did not meet the requirement that their grievance share commonality as required by Rule 23(a) essentially because their expert witness could not confirm whether 0.5% or 95 percent of the employment decisions at Wal-Mart were the product of stereotyped thinking – and essentially holds that even though some or many of the individual decisions resulting in the disparities noted may be the product of discrimination, some may not, so the commonality of the class is insufficient for certification under Rule 23. The dissent, which is styled as a concurrence but refuses to join the essential holding, briefly points out that the majority opinion substantially limits the “disparate impact” approach to Title VII claims. It really is an opinion worth reading.
The impact of the Dukes on the economics of class action litigation is difficult to discern. In a sense, it is a narrow decision – the majority seems mostly unwilling to allow such a large, nation-wide class to be certified while allowing that Title VII would support such a class-action claim, if the commonality requirement of Rule 23(a) were more concretely apparent. Cases where the commonality of the class is objectively apparent – shareholder suits with all of their strange economic incentives come to mind – will carry on, business as usual. But the impact on this particular type of case – in which no explicit policy of discrimination can be pointed to, but the statistical evidence of discrimination is substantial – may be catastrophic. Putative plaintiffs are bringing such cases more and more frequently, using sociologic studies and regression analysis in an attempt to link institutionalized but unofficial discrimination to its observable effects. The majority opinion requires that the analysis of a putative class of litigants include speculation by the court as to how each individual’s claim may have been affected by different influences – what the concurrence (dissent) calls a “dissimilarities” inquiry. The holding is a powerful tool for any defendant to use to parse apart the scope of a class of plaintiffs, and reduce the economic advantage that Rule 23 provides in suits alleging discrimination.
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