How The Supreme Court Decision In Favor Of AT&T And A Positive Ruling For Wal-Mart Benefit Companies, Employees And Consumers
May 19, 2011
CHICAGO, IL (Law Firm Newswire) May 19, 2011 – DRI – The Voice of the Defense Bar supplied comments for two recent cases before the U.S. Supreme Court. The organization, which represents 22,000 defense attorneys, filed amicus briefs on behalf of AT&T in AT&T Mobility v. Concepcion, and Wal-Mart v. Dukes. Recently, the Supreme Court ruled in favor of AT&T. A determination on Wal-Mart v. Dukes is expected in June.
The lawsuit was brought by a couple, the Concepcions, who in 2006 filed a complaint in federal district court against AT&T alleging that the company defrauded consumers by charging sales tax (about $30) on phones advertised as free. The case was consolidated with a class action suit. The Concepcions signed an AT&T contract that had a clause requiring them to settle disputes through individual arbitration. Instead the Concepcions sued and a federal appeals court sided with their position that it was unfair under California law for contracts to ban class action litigation. However, the Supreme Court overturned that decision, ruling that a federal law, the Federal Arbitration Act, governs in this situation.
“The Supreme Court ruling in this case is not only a win for AT&T, it’s a win for company employees and consumers around the country,” stated Diane B. Bratvold of Briggs and Morgan PA in Minneapolis, who is the vice chair of DRI’s Amicus Committee and an appellate lawyer with expertise on a wide range of issues, including constitutional law, employment law and tort liability. “When companies have to pay out on class action litigations it costs a considerable amount in legal fees and in the final amount paid to the litigants, although the litigants themselves rarely realize any significant amount of financial compensation,” Bratvold explained. In the AT&T case, had the Concepcions pursued the arbitration path as their contract required and won, they would have received greater financial compensation.
The same is true of the Wal-Mart case, Wal-Mart v. Dukes, in which the Supreme Court is expected to issue a ruling next month. The case originated as a sexual discrimination case by Wal-Mart employee Betty Dukes and some other female employees and grew into a class action case with 1.5 million plaintiffs. The Supreme Court will rule on the class action mechanism itself, not the merits of the respondents’ grievances. In the class action, all Wal-Mart female employees were included whether or not they wanted to participate and whether or not they had a grievance with the company.
DRI—The Voice of the Defense Bar filed an amicus brief in favor of Wal-Mart. “Allowing hundreds of thousands (and now over a million) of individuals to file a singular, overly generalized claim clearly disregards the requirement of individualized proof,” stated R. Matthew Cairns, President of DRI. “While we hope justice is served for anyone who faces discrimination, this enormous aggregation of truly disparate claims could not result in any kind of just and fair ruling.”
Class action lawsuits hurt companies, their employees and consumers as each entity winds up bearing the cost of the suits, which typically award small compensation to the plaintiffs. “Companies and corporations that find themselves caught in a class action suit end up with increased insurance premiums and costs that they then have to pass on to consumers and their employees so that they can continue to be able to afford to do business,” added Mark Fahleson, chair of DRI’s Employment Law Committee. “Class action threatens true judicial process,” Fahleson said. “It typically does not remedy the situation and does not effectively compensate those who have been wronged. Conversely, it has the potential to negatively impact the plaintiffs in a class action suit, the company or corporation being sued and consumers at-large.”
For companies such as Wal-Mart, finding themselves having to pay all of the 1.5 million plaintiffs, plus attorneys’ fees and all of the associated costs (insurance, etc.) could cause the company to hold layoffs and raise the prices of consumer goods to cover the financial loss.
“Rulings in favor of large class action suits may seem like a victory when, in fact, they are a loss for all of us,” stated Fahleson.
The Supreme Court ruling on the case Wal-Mart vs. Dukes is expected in June 2011.
About DRI – The Voice of the Defense Bar
DRI – The Voice of the Defense Bar is an international organization of defense attorneys and corporate counsel that is recognized as a thought leader and an advocate for the defense bar at the national and state level, as well as in Europe. With 22,000 members, DRI provides members and their clients with access to world-class education, legal resources and numerous marketing and networking opportunities that facilitate career and law firm growth. For more information log on to www.dri.org.
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