Tuesday, June 22, 2004

Economics and Law: The Class Action Suit as Backdoor Collective Bargaining?

A Judge certifies a class-action lawsuit against Walmart. (MSNBC)

A federal judge on Tuesday approved class-action status for a sex-discrimination lawsuit against Wal-Mart Stores Inc. that has become the largest private civil rights case in U.S. history.

It could represent as many as 1.6 million current and former female employees of the retailing giant.

The suit alleges Wal-Mart created a system that frequently pays its female workers less than their male counterparts for comparable jobs and bypasses women for key promotions.

Wal-Mart, the nation’s largest private employer, sought to limit the scope of the lawsuit that was filed three years ago.

Wal-Mart spokeswoman Mona Williams told The Associated Press earlier Tuesday that the Bentonville, Ark.-based company will appeal the ruling and is confident that it does not discriminate against women employees.

On the merits I'm not sure what basis the judge would have had for denying the lawsuit. The class action faq states:
Class actions serve several important functions in our legal system. Of primary importance, class actions enable a large group of people injured by similar misconduct or a defective product to have their claims joined together in a single lawsuit. This is critical in situations involving hundreds or thousands of class members, where individual damages maybe small compared to the cost of a lawsuit so that no one individual would bring a claim because it does not make economic sense for them to do so. In this regard, a class action provides a way for persons and businesses with relatively small claims that would not, by themselves, justify hiring an attorney, to pool their claims against an alleged wrongdoer.

This pooling of claims levels the playing field against a typically larger and more well capitalized wrongdoer by leveraging all of the smaller claims into one large claim to be handled in a single case. The class of claimants gain "strength in numbers" in making their claim that they would not otherwise have when making an individual claim. This ability to form and bring a class action consolidating the claims of many claimants into one serves an important function of deterring harmful or damaging behavior by persons or entities who have a responsibility to deal fairly and reasonably with the public.

A class action further serves to save time and money to our system of judicial administration. By allowing similar claims to be lumped together in one case, a class action relieves the extreme burden on our court system that comes from having jury after jury seated to listen to thousands of cases, all involving the same claims.

And lastly, the class action procedure also provides persons and businesses who cannot otherwise afford legal representation with access to qualified and experienced legal counsel who will represent them and the class as a whole with regard to their meritorious claims.

Walmart has been very successful at keeping labor unions out of their workplaces. Fair enough, I don't like labor unions either. However this brings out the question what venue do persons have in order to settle systematic employer discrimination or unfairness issues? Well the legal answer to that question is the class-action suit. I'm not sure however if Walmart likes that answer. Walmart could have headed off this suit by making concessions, promoting women, encouraging gender fairness in its training and rules, etc. However they seem to have been pretty adamant about not making concessions. I'm not in favor of large class action suits generally myself, but when large corporations have obstructed other means toward settlements who can they blame but themselves for taking things to this point?


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