THE IDEA that a bank may be “too big to fail” has, it seems, found favour in an analagous argument upheld on Monday by the US supreme court. A company may be too big to sue.
A landmark ruling by the court, applauded by business, dismissed a sex discrimination class action on behalf of 1.5 million women employees of the giant Wal-Mart chain on the grounds that their lawyers were unable to show the women had a sufficiently similar experience to be considered a “class”. In Dukes v Wal-Mart, the largest civil rights class suit in history, running through the lower courts for ten years, the plaintiffs are seeking billions of dollars in compensation.
The ruling is an important precedent. It sets a new higher standard for all class actions and is likely to increase the cost and risks of litigation in cases asserting discrimination based on sex, race or other factors. The plaintiffs will now have to band together in smaller homogenous groups or take on the firm individually.
Although the company insists it has a nationwide anti-discrimination policy, local managers have considerable discretion to hire and fire which they abuse widely, the plaintiffs say. Promotional patterns, differences between “male” and “female” departments – men selling electronics, women cosmetics, at different pay – and general pay patterns, they insist, reflect wide discrepancies between men and women in a chain long synonymous with low pay and benefits.
Justice Antonin Scalia, for the majority, said the women could not show that they would receive “a common answer to the crucial question ‘why was I disfavoured?’” The case involved “millions of employment decisions,” he wrote, and the plaintiffs had to point to “some glue holding the alleged reasons for all those decisions together.” Because of the numbers involved lawyers had relied to make their case on company-wide data and sociological analysis of women’s standing, supplemented by what Scalia dismissed as anecdotal evidence of a few cases. It’s a legal approach that will no longer suffice.
The decision, the first by the conservative-majority supreme court on class actions in a decade, saw it divide five-four along ideological lines on the key issue, fuelling liberal charges of a pro-business bias that echoed reaction to last year’s Citizens United case. It ruled then that corporations can be viewed as citizens and so share their right to free speech, specifically the right to spend their money on political campaigns without hindrance. The White House will be no more impressed this time.