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Walmart: Too Big To Sue

Walmart V Betty Dukes

First Posted: 06/20/11 09:33 PM ET Updated: 08/20/11 06:12 AM ET

As the Supreme Court on Monday derailed claims of gender discrimination by scores of women workers at Walmart stores, the American labor movement absorbed yet another substantial blow.

In recent years, class-action lawsuits have been employed by workers -- particularly lower-wage workers -- as a substitute for the force that collective bargaining once held in an era of broader union representation: By banding together in large-scale lawsuits, workers have effectively organized themselves into unified, powerful voices, gaining leverage in negotiations with management.

But as it decreed that the Walmart employees were not entitled to be treated as one class -- because they worked in so many different places under myriad bosses -- the Supreme Court effectively reinforced the advantages of corporate scale, said legal experts.

"Respondents wish to sue for millions of employment decisions at once," Justice Antonin Scalia wrote in the leading opinion for the court in the 5-4 decision denying claims that the workers amount to a unified class. "Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question."

In short, Walmart successfully immunized itself against legal action aimed at rectifying alleged abuses through the very same feature that makes it so powerful to begin with: its status as the largest retailer on earth, large enough to dictate the terms of commerce, say labor experts.

"In a sense the court has said, the banks we have were too big to fail, with Walmart we have too big to sue," said Ken Jacobs, the chair of the labor Center at University of California-Berkeley. "Basically if you're saying that the overall corporation is off the hook for what local managers are doing, that removes the incentive for corporate headquarters to really pay attention and to set up structures to make sure you do have the law being followed."

Walmart has denied any wrongdoing and emphasizes that its corporate policy forbids discrimination, encourages diversity and ensures fair treatment.

"Walmart has a policy: Their policy is not to discriminate," said Fatima Goss Graves, vice president for education and employment at the National Women's Law Center. "Anyone who has been in the modern workplace knows that most employers have policies that say don't discriminate. What matters is what's happening in practice."

The Walmart decision landed only three days after workers at a Target store outside New York City failed in their bid to gain the representation of the United Food and Commercial Workers Union. Labor advocates portrayed that effort as a crucial campaign in a larger attempt to organize workers in the growing -- and typically low-paying -- retail industry.

Together, the Supreme Court decision and the Target vote underscored the diminishing tools for employees to seek redress of their grievances and press for greater rewards for their work, say labor advocates.

"The class-action lawsuit was really a substitute for unionism," said Nelson Lichtenstein, a labor historian at the University of California, Santa Barbara who has written two books about Walmart. "By blunting that weapon, the Supreme Court has truly left millions of American workers without recourse."

He mentioned several key examples of workers gaining ground through class-action suits: In 1994, in what was at the time called the largest race discrimination case in civil rights history, Shoney's Nashville restaurant chain was forced to pay more than $134 million in a class-action suit brought by employees to settle race discrimination charges. In 1996, Microsoft paid $97 million to settle a class-action suit brought by workers who said they had been misclassified as temporary and freelance. In a 1997 class-action suit -- the first class-action sexual harassment lawsuit brought in the U.S. -- female employees working at a mine in Minnesota accused the company of discrimination and won.

Walmart employs 2.1 million workers worldwide and is one of the largest employers in the United States. Last year, the big-box retailer was the world's largest public corporation by revenue.

Class-action suits were previously the best tool a worker had to fight discrimination at work. While individual suits are expensive and can be exceedingly difficult to prove, a class-action vehicle allowed workers to band together to fight the corporate powers that be.

The Supreme Court's ruling doesn't prevent individuals -- or, say, a group of employees at a single store -- from suing their employers for discrimination. But low-wage workers employed by large corporations typically lack the resources required to pursue a lawsuit, making the class-action a particularly fruitful avenue.

"We're talking about access to the courts: Very few people other than the super rich can afford the costs of litigation," said John Coffee, a law professor at Columbia University who specializes in class-action suits. "There are other mechanisms to fight discrimination: unions or a tight job market which gives workers leverage. But the employer has all the leverage in today's weak job market, and unions aren't quite the same force they used to be."

The latest blow to the labor movement comes amid broad discontent over the widening gap in American economic fortunes, with the wealthiest people continuing to pull away from the rest of the population.

In the wake of the Great Recession, retail wages have remained stagnant, with a median hourly pay of $10.94 according to the labor Department. Meanwhile, corporate profits and CEO compensation have sharply rebounded.

Walmart has never been unionized. But the content of the women's complaints, Lichtenstein said, were once the bread and butter of union collective bargaining agreements: equal pay and equal raises for employees. Beginning in 2001, more than 100 female employees accused Walmart -- which pulled in $14.1 billion in profits last year despite lagging U.S. sales -- of paying its female employees less than men in equivalent positions and favoring men in promotions at 3,400 U.S. stores since late 1998.

"This ruling really ensures the continuation of a kind of slow grinding immiseration of the whole private service sector workforce," Lichtenstein said. "And it's it's very difficult to see any remedy."

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