The Death of the Class-Action Lawsuit?

The Death of the Class-Action Lawsuit?

The Death of the Class-Action Lawsuit?

Class actions were the weapon of the people—until the Roberts Court made it nearly impossible to file one.

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It’s always David and Goliath when ordinary people take on giant businesses. These days, however, the Goliaths usually beat the Davids, thanks to the current Supreme Court majority. In particular, two far-reaching decisions of the 2010–11 term have made it very difficult for the victims of today’s harsh capitalism to band together against mammoth corporations.

In Wal-Mart v. Dukes, the Court’s five right-wing justices, led by Antonin Scalia, threw out a nationwide class-action suit concerning pay and promotion discrimination that affected 1.5 million female Wal-Mart workers. In another class action, AT&T Mobility v. Concepcion, the same five justices forced AT&T cell-phone customers who had been promised a free phone if they signed up for service, but were charged a $30.22 sales tax, to fight the company individually and in an arbitration proceeding, where most of the protections of a judicial proceeding are unavailable.

These rulings effectively keep victims of business wrongdoing from obtaining justice, either by making it difficult for them to satisfy the rules for a class action—often the only financially feasible vehicle for enforcing their rights—or by forcing them into individual arbitrations. They are just two of the many decisions that the Roberts Court has issued to further reduce access to the courts and promote the interests of big business.

English and American courts created the class-action suit to cope with disputes that affect very large numbers of people. In a class action, one or more plaintiffs represent the many people not before the court who were hurt the same way. After federal rule changes facilitated their use in 1966, class actions proliferated.

Wal-Mart v. Dukes seemed just the kind of case for which class actions are designed. It involved a class of current and former female employees who charged Wal-Mart with creating a corporate culture that fostered gender stereotypes, and allowing these stereotypes to determine pay and promotion decisions by giving its nearly all-male local managers total discretion in these matters. The lower federal courts found that the company disproportionately favored men, which raised an inference that it had violated Title VII of the Civil Rights Act of 1964. Concluding that Wal-Mart acted “on grounds that apply generally” to all the women in the proposed class, those courts allowed the class action to proceed.

Such findings are usually accepted by higher courts. Not this time. Relying on Wal-Mart’s boilerplate announcement of a policy against discrimination, Justice Scalia wrote that the company’s decision to give its local managers almost total discretion over employment practices did not foster discrimination. He brushed aside evidence that 1.5 million women at Wal-Mart “are paid less than men in every region” and that, while women fill 70 percent of the hourly jobs in the company’s stores, they make up only 33 percent of management employees. He also dismissed expert testimony that these disparities can be explained only by gender discrimination. As Scalia saw it, “left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral performance-based criteria for hiring and promotion that produce no actionable disparity at all.”

Justice Felix Frankfurter once said that “there comes a point where this Court should not be ignorant as judges of what we know as men.” It appears that Justice Scalia and his right-wing colleagues haven’t yet reached that point. As Justice Ruth Bader Ginsburg pointed out in her dissent on this issue, “Managers, like all humankind, may be prey to biases of which they are unaware…[especially] when those managers are predominately of one sex, and [as the lower court found] are steeped in a corporate culture that perpetuates gender stereotypes,” as at Wal-Mart.

Within six months, judges in hundreds of cases cited the Wal-Mart decision, with two-thirds of them denying class certifications. The top 10 settlements in employment-discrimination cases in 2012 totaled $48.65 million—significantly lower than in 2010, the year before the ruling, when the total was $346.4 million. A 2015 survey of defense counsel for major corporations found that Wal-Mart still has “the greatest influence on class-action management,” and that later Supreme Court rulings also “benefit[ed] class-action defendants.”

As for the Wal-Mart women, they were forced to file separate regional suits. All but one are still in litigation.

While Wal-Mart helps defendants after a class action is filed, AT&T Mobility v. Concepcion prevents class actions from being filed at all. This is because the fine print in many arrangements for goods and services, employment, or financial transactions requires the consumer or employee to “agree” not to file or join in any class action; in many of these contracts, the companies also require that all claims against them be arbitrated. Few people who sign such contracts are aware of these provisions.

In Concepcion, the lower federal courts had refused to enforce the class-action waiver in this contract, finding it “unconscionable” under California law because enforcing the waiver would encourage wrongdoing that would produce small individual injury, but to a great many people. Scalia, writing for the majority, simply dismissed the California law and enforced both the arbitration clause and the class-action waiver, adding that, in his mind, class actions should have no place in arbitration.

The 2015 defense-counsel survey found that since Concepcion, “the percentage of companies that address class actions in their arbitration clauses has more than doubled (from 21.4 to 45.8 percent), with most of those companies now using clauses that explicitly preclude class actions” in any kind of proceeding. This spring, the Consumer Financial Protection Bureau reported that tens of millions of contracts for consumer financial products and services are subject to mandatory arbitration clauses, and that over 85 percent of them include class-action waivers.

A capitalist society inevitably produces many victims. A just society provides redress for them when these injuries have been wrongly inflicted. With the Wal-Mart and Concepcion decisions, the “1 Percent Court” has made itself the judicial arm of the Chamber of Commerce. The chamber now has a very good friend at court.

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