On Monday, the Supreme Court agreed to decide whether all the women who claim that Walmart (WMT) discriminated against them in employment can sue the company as one giant class or not. And if they can, the court will decide whether they can sue for back pay under the class their lawyers have chosen, or only for judicial orders to force the world's largest retailer to change its behavior.
The issues are a little tricky, because various types of classes can be certified in a class action, and the justices will be ruling only on the class type that the plaintiffs are currently seeking. Thus, even if the women lose, they could in theory start over, seeking to sue as a different kind of class. Or, each employee could sue individually. However, given that nine years and many millions of dollars have been spent bringing the case this far, it's hard to see the plaintiffs starting from scratch.
Because the issues are how an appropriate class is defined and what it can sue for, the court's ultimate ruling should have an immediate impact on pending cases and shape future ones. Several large employers, among them Intel (INTC) and a group headed by Altria (MO), filed amicus briefs on Walmart's side, urging the court to hear the case.
Up until now, the women have been winning on the issue -- at trial, on appeal and on rehearing of that appeal -- so they must be frustrated that the justices agreed to hear the case, particularly since the Supreme Court rules against the prior winner most of the time. Nonetheless, that doesn't mean the plaintiffs will lose.
Preliminary Issue May Decide the Whole Outcome
If the women win this round in the Supreme Court, Walmart will likely be forced to negotiate a settlement with the largest group of plaintiffs ever, and -- out of appeals -- it will have relatively little bargaining power. Still, Walmart may chose to bet that it can win the actual case at trial in San Francisco District Court. Win or lose, if it fights, Walmart would make the trial long and costly, and appeal any verdict favoring the plaintiffs for as long as possible. That said, one of the main arguments in Intel's amicus brief is that classes like the women in this case have "blackmail" settlement potential.
If Walmart wins this round, however, its leverage would be overwhelming. The women's attorneys have surely sunk many millions into the case on contingency, hoping to recoup their investment with a settlement or a victory. If they're unable to keep class-action status for their clients, recovering that investment -- much less profiting from it -- would be difficult. Similarly, because the case is at such an early stage -- the issue of whether or not Walmart actually discriminated against the women hasn't been addressed yet -- much work would remain before any nonsettlement payday could arrive.
So, the Supreme Court's decision, even though it's on a preliminary issue, will likely drive the outcome for the millions of women who believe Walmart discriminated against them, regardless of how strong their claims are. The court will probably hear arguments in the case this spring.
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