Wal-Mart.
How Not to Fight Discrimination
The EEOC joins a class-action effort against Wal-Mart.
The federal government reversed course last week and endorsed a new model for suing companies that could result in untold riches for trial lawyers at the expense of U.S. businesses, employees and consumers.
The Equal Employment and Opportunity Commission filed an amicus brief on Thursday in support of plaintiffs in a closely watched gender class action against Wal-Mart. The lawsuit was first filed by six women in 2001, and until now the agency had decided not to get involved. The retailer is accused of not promoting women and systematically paying them less than male counterparts.
Wal-Mart says the women who filed the suit are not representative of the 1.6 million current and former female Wal-Mart employees whom they seek to represent. But a U.S. District Court in San Francisco certified the lawsuit as a nationwide class action in 2004, ruling that statistical disparities in pay and promotion were enough to justify class treatment. The decision was upheld by a three-judge panel of the Ninth Circuit Court of Appeals. Wal-Mart asked for a rehearing, which was granted, and the full Ninth Circuit heard arguments Tuesday.
In its amicus brief, the federal government does not defend the trial court's class certification order in toto, which isn't surprising given that the judge's order conflicts with the decisions of many courts of appeal. But the EEOC brief does support the notion that a claim seeking billions of dollars in punitive damages and back pay may be decided on a class basis without individual hearings that would permit the company to defend itself. In other words, the Obama Administration is saying that it's appropriate to impose huge monetary damages on companies without allowing them to show that employees were treated fairly.
Wal-Mart says that not allowing it to defend against the women's claims on an individual basis is a violation of due process and would result in payouts to people who weren't harmed. Allowing the suit to proceed as a class action also conflicts with the Supreme Court's 1977 Teamsters ruling, which held that in cases alleging systemic discrimination, defendants have the right to challenge the claims of plaintiffs individually.
As startling, the EEOC's brief conflicts with the federal government's own defense against discrimination suits. The class action against Wal-Mart was certified under a provision of the law that allows for injunctive relief, not large money awards. Class claims for monetary relief must meet a higher standard to be certified. And one of Wal-Mart's arguments is that the plaintiffs are seeking billions in damages but never met the more rigorous threshold for class certification. The EEOC's amicus brief never mentions that the feds have successfully defended themselves in the past by making the same argument as Wal-Mart. Apparently, the EEOC would allow the government to play by a set of rules that are off limits to private companies trying to defend themselves against massive class actions.
The five-member EEOC is split evenly between Democrats and Republicans thanks to a vacancy caused by the recent departure of a Bush appointee. And we hope the brief against Wal-Mart doesn't mean we can expect a more radical agency under President Obama. If the plaintiffs prevail, companies will have every incentive to establish race and gender quotas for hiring, lest they be sued for statistical imbalances. The EEOC can play a useful role in combating discrimination, but not by urging courts to stack the deck against the accused.
The EEOC joins a class-action effort against Wal-Mart.
The federal government reversed course last week and endorsed a new model for suing companies that could result in untold riches for trial lawyers at the expense of U.S. businesses, employees and consumers.
The Equal Employment and Opportunity Commission filed an amicus brief on Thursday in support of plaintiffs in a closely watched gender class action against Wal-Mart. The lawsuit was first filed by six women in 2001, and until now the agency had decided not to get involved. The retailer is accused of not promoting women and systematically paying them less than male counterparts.
Wal-Mart says the women who filed the suit are not representative of the 1.6 million current and former female Wal-Mart employees whom they seek to represent. But a U.S. District Court in San Francisco certified the lawsuit as a nationwide class action in 2004, ruling that statistical disparities in pay and promotion were enough to justify class treatment. The decision was upheld by a three-judge panel of the Ninth Circuit Court of Appeals. Wal-Mart asked for a rehearing, which was granted, and the full Ninth Circuit heard arguments Tuesday.
In its amicus brief, the federal government does not defend the trial court's class certification order in toto, which isn't surprising given that the judge's order conflicts with the decisions of many courts of appeal. But the EEOC brief does support the notion that a claim seeking billions of dollars in punitive damages and back pay may be decided on a class basis without individual hearings that would permit the company to defend itself. In other words, the Obama Administration is saying that it's appropriate to impose huge monetary damages on companies without allowing them to show that employees were treated fairly.
Wal-Mart says that not allowing it to defend against the women's claims on an individual basis is a violation of due process and would result in payouts to people who weren't harmed. Allowing the suit to proceed as a class action also conflicts with the Supreme Court's 1977 Teamsters ruling, which held that in cases alleging systemic discrimination, defendants have the right to challenge the claims of plaintiffs individually.
As startling, the EEOC's brief conflicts with the federal government's own defense against discrimination suits. The class action against Wal-Mart was certified under a provision of the law that allows for injunctive relief, not large money awards. Class claims for monetary relief must meet a higher standard to be certified. And one of Wal-Mart's arguments is that the plaintiffs are seeking billions in damages but never met the more rigorous threshold for class certification. The EEOC's amicus brief never mentions that the feds have successfully defended themselves in the past by making the same argument as Wal-Mart. Apparently, the EEOC would allow the government to play by a set of rules that are off limits to private companies trying to defend themselves against massive class actions.
The five-member EEOC is split evenly between Democrats and Republicans thanks to a vacancy caused by the recent departure of a Bush appointee. And we hope the brief against Wal-Mart doesn't mean we can expect a more radical agency under President Obama. If the plaintiffs prevail, companies will have every incentive to establish race and gender quotas for hiring, lest they be sued for statistical imbalances. The EEOC can play a useful role in combating discrimination, but not by urging courts to stack the deck against the accused.
posted by KYJurisDoctor at 12:04 PM
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