"Wal-Mart Wins, Trial Lawyers Lose"
Sydney M. Williams
Good ideas are sometimes corrupted by greed. Unions, in my opinion are examples of ones that have been, a subject I have often written about. Class action suits are another. Advantages to class action suits include the increased efficiencies and lower costs that aggregation allows, and the fact that small monetary recoveries do not provide proper incentives to lawyers. Class action suits can also be a means of purposefully changing, in a good way, the behavior of a group of people; i.e. schools which had been discriminating on the basis of race, or doctors who may not have been reporting instances of child abuse. Additionally a class action ensures that all plaintiffs, regardless of who they are and when they filed, be treated equitably.
English and American laws have long embedded the concept of class action suits. The term “group litigation” was common in medieval England. In the United States, the earliest predecessor to class action was Equity Rule 48, which allowed for representative suits in situations where there were too many individual parties. In 1966, a major revision to the Federal Rules of Civil Procedure (FRCP) made the opt-out class action the standard option and gave birth to modern class action.
But class action suits have their share of imperfections. Tort lawyers, in particular, have taken advantage of the enormous sums certain settlements bring, and then have used that financial clout to keep “friendly” politicians (usually Democrats) in office. There are courts (known as “judicial hellholes”) that regularly side with plaintiffs, preventing defendants from being able to adequately defend themselves. Secondly, legal fees often consume too large a percentage of the settlement. In fact, one might argue, in too many cases the fees have become the casus belli for the suit. The American Enterprise Institute notes a case involving an Alabama state court in a class action suit against the Bank of Boston. Court-approved attorney fees exceeded the minimal recovery available for the plaintiffs!
Too many salivating trial lawyers have come to view class action suits as a feeding trough. Tobacco cases were notable in generating hundreds of millions of dollars to a handful of lawyers, while providing very little to the plaintiffs.
Two Supreme Court decisions were handed down Monday in respect to a ten-year old case involving Wal-Mart. Six women sued Wal-Mart alleging discriminations in terms of salaries and promotions. Their lawyers chose to turn the suit into a class action. In a 9-0 decision, the Court ruled that the 9th District Court had improperly certified the class action suit in its current form. In a separate vote, the Court voted 5-4 along ideological lines, saying there were too many women (1,500,000) in too many jobs at Wal-Mart to conform to a single lawsuit. The company employs 2.1 million people in 8000 stores in fifteen countries. The Company contended and the Court agreed, that trying to defend the treatment of 1.5 million women employees, regardless of the jobs they held or where they work is unfair. Defendants, even when they are businesses, have rights as well as plaintiffs.
The importance of the decision should not be dismissed. Class action suits have become increasingly frivolous and cost businesses billions of dollars. The 9-0 decision regarding certification sends a message that courts cannot bend rules and undercut constitutional rights in order to make a class certification fit. Not surprisingly, the New York Times rued the decision, writing that “the court has made fact-finding a major part of certification, increasing the cost and stakes of starting a class action.” I, for one, never realized that facts were not important in legal matters!
The country is in financial straits. Over the past ten years, ten million people have been added to the employment roles, yet only 1.8 million jobs have been added. Jobs come from the private sector; to the extent that government, unions and regulators hamstring the ability of business to expand and grow, the effect is negative for economic growth. We all suffer.
This is not to excuse Wal-Mart. The company is no paragon of virtue. While Hillary Clinton served as a member of their board of directors from 1986 to 1992 when her husband was elected President, there are still only three women directors today out of a board of fifteen. And, worse, only one of twelve senior officers listed in their 2010 annual report is a woman. Women have made far more strides in Congress than at Wal-Mart. In 1980, eighteen women served in Congress; today there are ninety-two. Regardless, I defend their right to survive.
In an op-ed in today’s New York Times, Nelson Lichtenstein, a professor of history at the University of California, Santa Barbara, bemoans the Court’s decision suggesting that it “leaves millions of service-sector workers with few avenues to escape the grinding work life and limited opportunities so many face.” That may or may not be true. But what is true is that we live in a world in which competition is global and that to survive our companies must consider the needs of all their constituents – employees, the community, their customers and the shareholders who own the business. Wal-Mart appears a perfect fat-cat target for tort lawyers looking to add to their bank balances. The company generates over $400 billion in revenues from more than 8000 stores in fifteen countries. It employs 2.1 million people, most of them in this country. Yet, demonstrating that shareholders have suffered, the price of its stock is at the same level it was twelve years ago. Tort lawyers have no interest in the survivability of a firm like Wal-Mart. Their interest is only in what they can extract from the business today.
It is not the workers who are the losers, as the Times would have one believe, it is the trial lawyers. Nothing in this life is forever. We are not an island. We are part of a world that has been shrinking in terms of its global competitiveness. To survive, a company like Wal-Mart must remain competitive. As long as they stay in business they will continue to offer opportunities for those who want to work. Killing the goose is not the answer.
Thought of the Day
“Wal-Mart Wins, Trial Lawyers Lose”
June 22, 2011Good ideas are sometimes corrupted by greed. Unions, in my opinion are examples of ones that have been, a subject I have often written about. Class action suits are another. Advantages to class action suits include the increased efficiencies and lower costs that aggregation allows, and the fact that small monetary recoveries do not provide proper incentives to lawyers. Class action suits can also be a means of purposefully changing, in a good way, the behavior of a group of people; i.e. schools which had been discriminating on the basis of race, or doctors who may not have been reporting instances of child abuse. Additionally a class action ensures that all plaintiffs, regardless of who they are and when they filed, be treated equitably.
English and American laws have long embedded the concept of class action suits. The term “group litigation” was common in medieval England. In the United States, the earliest predecessor to class action was Equity Rule 48, which allowed for representative suits in situations where there were too many individual parties. In 1966, a major revision to the Federal Rules of Civil Procedure (FRCP) made the opt-out class action the standard option and gave birth to modern class action.
But class action suits have their share of imperfections. Tort lawyers, in particular, have taken advantage of the enormous sums certain settlements bring, and then have used that financial clout to keep “friendly” politicians (usually Democrats) in office. There are courts (known as “judicial hellholes”) that regularly side with plaintiffs, preventing defendants from being able to adequately defend themselves. Secondly, legal fees often consume too large a percentage of the settlement. In fact, one might argue, in too many cases the fees have become the casus belli for the suit. The American Enterprise Institute notes a case involving an Alabama state court in a class action suit against the Bank of Boston. Court-approved attorney fees exceeded the minimal recovery available for the plaintiffs!
Too many salivating trial lawyers have come to view class action suits as a feeding trough. Tobacco cases were notable in generating hundreds of millions of dollars to a handful of lawyers, while providing very little to the plaintiffs.
Two Supreme Court decisions were handed down Monday in respect to a ten-year old case involving Wal-Mart. Six women sued Wal-Mart alleging discriminations in terms of salaries and promotions. Their lawyers chose to turn the suit into a class action. In a 9-0 decision, the Court ruled that the 9th District Court had improperly certified the class action suit in its current form. In a separate vote, the Court voted 5-4 along ideological lines, saying there were too many women (1,500,000) in too many jobs at Wal-Mart to conform to a single lawsuit. The company employs 2.1 million people in 8000 stores in fifteen countries. The Company contended and the Court agreed, that trying to defend the treatment of 1.5 million women employees, regardless of the jobs they held or where they work is unfair. Defendants, even when they are businesses, have rights as well as plaintiffs.
The importance of the decision should not be dismissed. Class action suits have become increasingly frivolous and cost businesses billions of dollars. The 9-0 decision regarding certification sends a message that courts cannot bend rules and undercut constitutional rights in order to make a class certification fit. Not surprisingly, the New York Times rued the decision, writing that “the court has made fact-finding a major part of certification, increasing the cost and stakes of starting a class action.” I, for one, never realized that facts were not important in legal matters!
The country is in financial straits. Over the past ten years, ten million people have been added to the employment roles, yet only 1.8 million jobs have been added. Jobs come from the private sector; to the extent that government, unions and regulators hamstring the ability of business to expand and grow, the effect is negative for economic growth. We all suffer.
This is not to excuse Wal-Mart. The company is no paragon of virtue. While Hillary Clinton served as a member of their board of directors from 1986 to 1992 when her husband was elected President, there are still only three women directors today out of a board of fifteen. And, worse, only one of twelve senior officers listed in their 2010 annual report is a woman. Women have made far more strides in Congress than at Wal-Mart. In 1980, eighteen women served in Congress; today there are ninety-two. Regardless, I defend their right to survive.
In an op-ed in today’s New York Times, Nelson Lichtenstein, a professor of history at the University of California, Santa Barbara, bemoans the Court’s decision suggesting that it “leaves millions of service-sector workers with few avenues to escape the grinding work life and limited opportunities so many face.” That may or may not be true. But what is true is that we live in a world in which competition is global and that to survive our companies must consider the needs of all their constituents – employees, the community, their customers and the shareholders who own the business. Wal-Mart appears a perfect fat-cat target for tort lawyers looking to add to their bank balances. The company generates over $400 billion in revenues from more than 8000 stores in fifteen countries. It employs 2.1 million people, most of them in this country. Yet, demonstrating that shareholders have suffered, the price of its stock is at the same level it was twelve years ago. Tort lawyers have no interest in the survivability of a firm like Wal-Mart. Their interest is only in what they can extract from the business today.
It is not the workers who are the losers, as the Times would have one believe, it is the trial lawyers. Nothing in this life is forever. We are not an island. We are part of a world that has been shrinking in terms of its global competitiveness. To survive, a company like Wal-Mart must remain competitive. As long as they stay in business they will continue to offer opportunities for those who want to work. Killing the goose is not the answer.
Labels: TOTD
posted by Thought of the Day @ 5:45 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home