Reports of the death of class-action lawsuits are greatly exaggerated.
Yes, a unanimous Supreme Court on Monday blocked a mammoth case against Wal-Mart Stores, in which lawyers claimed to represent roughly 1.5 million former and current female employees suing the retailer for alleged sex discrimination. All nine justices gave Wal-Mart and other corporate defendants a victory by ruling that they must be allowed to beat back individual monetary claims and not be bound by statistical models pushed by the plaintiffs. In an opinion joined by five justices, the court adopted standards that will make it harder for plaintiffs to prevail.
But these changes are largely sensible and likely to lead to some welcome developments, including smaller (although not necessarily small) and more cohesive class-action suits.
The federal rules that govern class actions require members of the class to share “questions of law or fact”; they also require that “the representative parties will fairly and adequately protect the interests of the class.” It was always hard to imagine how the disparate group of Wal-Mart employees could meet that test. As Justice Antonin Scalia reiterated in the majority opinion, the Wal-Mart employees “held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors, subject to a variety of regional policies that all differed.”
The women had argued that the unifying factor in all of their cases was Wal-Mart’s policy of allowing managers almost complete discretion in hiring and promotion decisions; that discretion, the women argued, led to discriminatory abuses. But if this discretion is nearly absolute, how could the company itself be accountable for an allegedly discriminatory nationwide policy?
In the future, class members will have to show a stronger link between the harm they say they have experienced and the purportedly discriminatory policies of the employer.