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Supreme Court: Wal-Mart 'Too Big to Sue'

Published on 06/25/2011 -

Supreme Court: Wal-Mart "Too Big to Sue"

The U.S. Supreme Court ruled this week that a class-action gender discrimination case against retail giant Wal-Mart cannot go to trial. The 5-4 decision could have significant impact on the future of class-action lawsuits.

Here's a look at the situation and why it might be bad news for groups facing discrimination in the workplace.

The Lawsuit

  • Lawyers brought a class-action lawsuit against Wal-Mart on behalf of 1.6 million current and former female employees.
  • The case alleged that Wal-Mart discriminated against women, passing them over for promotions and management positions.
  • The numbers supporting the suit are striking: while 70 percent of Wal-Mart's hourly employees are female, women comprise less than 10 percent of store managers and less than four percent of regional managers.
  • The Supreme Court this week overturned a lower court's decision allowing the group to sue altogether. The court's reasoning was that the diversity among the plaintiffs (that is, of all the women involved) was too great to make a single ruling possible.

What the decision boils down to is this: the Supreme Court has raised the bar for plaintiffs in class action suits. In other words, groups interested in suing an employer over discriminatory behavior now have to jump a higher evidence hurdle.

What's Next in Discrimination Suits?

The Wal-Mart case raises some interesting legal questions about discrimination cases. Legal scholars and commentators are talking about the following.

  • How big is too big? In this case, Wal-Mart's massive size (more than 4,000 retail locations nationwide) effectively made it too big to prosecute. Because so many different managers make day-to-day decisions at each branch, the court reasoned, trends can be attributed to individual bias or error rather than overriding corporate policy.
  • What types of evidence will count? Lawyers for the women suing thought that the widespread nature of gender disparity at Wal-Mart locations would have worked in their favor: after all, if a trend is consistent across the country and the years, doesn't that suggest it's at least somewhat intentional?
  • Who will be able to sue in the future? The decision may have businesses breathing a sigh of relief - after all, they more or less dodged a bullet. A different ruling by the High Court could have left them open for similar (costly) cases in the future. But groups of employees facing discrimination in the workplace will likely have the opposite response. Some critics see the decision as just one more in a series of moves that confers more power to businesses and less to individuals (think the overturning of campaign finance laws in 2010).

As for the women of WalMart? They may still be able to sue the company in smaller groups, but the cost would likely be higher and the reward smaller.

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