At High Court, Wall Street Whips Main Street—Not Once but Twice

As the term nears its end, the Supreme Court rules in favor of corporate powerhouses

The United States Supreme Court Monday decided two of the most anticipated decisions of its current term. Each case generated some degree of unanimity among the justices. In each instance, the Court handed an important victory to corporate interests. And, in both rulings, the majority justified its result by asserting that the law does not easily allow a plaintiff--whether a person or a state, whether for monetary damages or to save the planet--to choose the means and manner of litigation. Monday surely was not a good day for the little guy on the American legal scene.

In Walmart v. Dukes, the Court ruled that a huge class action lawsuit against Walmart--based upon allegations of employment discrimination against female employees-- could not proceed in its broad current form. The claims against the company were too diverse and the questioned policies by Walmart's managers too disparate, Justice Antonin Scalia wrote for the Court's majority, to establish the "commonality" required for "class" status under the Federal Rules of Civil Procedure.

In American Elec. Power v. Connecticut, the closely-watched global warming case, the Court ruled that the Clean Air Act and environmental regulations precluded a so-called "public nuisance" lawsuit brought by several states to limit carbon dioxide emissions from huge power plants and the Tennessee Valley Authority. When Congress clearly creates a means to reduce such emissions, and when there is a regulatory scheme in place as well, Justice Ruth Bader Ginsburg wrote for the majority, "we see no room for a parallel track" based upon federal common law.

To Connecticut and the other states which had sought to use the courts to force the power companies to reduce their emissions, Justice Ginsburg said: "No, you have to fight this battle on Capitol Hill, through legislation, or through the rough and tumble of administrative law at the Environmental Protection Agency." To the 1.5 million potential Walmart plaintiffs, all of them women, Justice Scalia said: "No, you have to fight this battle on your own, individually and based upon your own specific allegations, and you cannot band together against the retail giant." Walmart had fought for this very result in this very case for 10 years.

It's hard to predict precisely how the Dukes opinion will impact class action litigation going forward--not every company is Walmart, of course--but it's clear that the Court's ruling will not help future plaintiffs when they try to join together to litigate their claims against corporate powerhouses. You could tell that by the gleeful emails sent out by tribunes of the corporate defense bar after Dukes was announced. Indeed, for general counsels all over the nation, you would have thought Monday was like Christmas and the Fourth of July wrapped into one.

For example, what's not to stop other big companies from formally de-centralizing their employment decisions so as to try to make them "class-action proof"? All they have to do is cite the following language from Justice Scalia's opinion:

The only corporate policy that the plaintiffs' evidence convincingly establishes is Wal-Mart's "policy" of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.

It was on this curious point--the anti-policy policy--that Justice Ginsburg parted company with her pal and fellow opera lover. Although she (and the rest of the Court) signed on to part of Justice Scalia's ruling, the Court's progressive wing was unwilling to completely scuttle the class-action case brought by the women of Walmart. For Justice Ginsburg, the "discretion" of mid-level managers didn't exempt the company from a class-action case. Instead, it provided convenient legal cover for discriminatory practices. She wrote:

The practice of delegating to supervisors large discretion, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex and are steeped in a corporate culture that perpetuates gender stereotypes.

Justice Ginsburg would have remanded the case back down to the lower courts for a review of another portion of the class-action rules. So would the other two female justices on the Court. Each of them, and Justice Stephen Breyer, contended that Justice Scalia and company decided more than they had to in dismissing the class-action status of the case; they reached further than they had to for the sake of the company.

It is impossible therefore to view the Dukes decision--and the conflicting opinions it generated from two of the most senior justices on the Court--without sensing the impact of the continuing gender gulf in America. It exists still on the Court, it inhabits still the nooks and crannies of the law, and there is little doubt, even short of a class-action trial, that it's a part of the atmosphere at Walmart ("senior management often refer to female associates as 'Little Janie Qs,'" Justice Ginsburg noted among the allegations). Maybe that is the legacy of this Dukes case; it doesn't tell us how far we've come in addressing gender bias in the law, it tells us how much further we have to go.

Meanwhile, it is far easier to predict how the Court's American Elec. Power opinion will impact the conflict over global warming. In law and in fact, it was never really a close call. And by ceding the field of battle here to the other two branches, the justices have signaled they want to be involved only after the fighting is done and a "winner"- the prevailing policy, whatever it turns out to be--emerges. Justice Ginsburg wrote: "EPA's judgment, we hasten to add, would not escape judicial review." But I'll give you even-money odds today Justice Ginsburg will be long gone from the Court if and when that review occurs.

Image: Phil Roeder