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business newsThe Wal-Mart Hearing: How Will It Affect Corporate America?
Why is the Supreme Court decision so monumental to Wal-Mart, and more broadly, Big Business?
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Should our nation’s highest court allow the case to proceed, 1.5 million women who have worked for Walmart over the past 13 years, and are claiming systematically unequal pay and promotion practices, will become the precedent-setting en masse plaintiff in a case worth potentially billions in damages.
The case has been regarded as the most significant business dispute of the court’s term -- its “800-pound gorilla” -- in the words of Robin Conrad, vice president of the National Chamber of Commerce Litigation Center. Twenty corporations including Microsoft (MSFT), Bank of America (BAC), General Electric (GE) and female-led PepsiCo (PEP) filed a brief to the court to stop the suit. Among the Wal-Mart supporters with perhaps the most immediately at stake are Costco (COST) with its own sex discrimination suit pending the decision and Altria Group, Inc. (MO) which is challenging a court-ordered $270 million smoking cessation program.
So why is this Supreme Court decision so monumental to Wal-Mart, and more broadly, Big Business? In order to answer that question, we’ll pose a few more:
What will the Supreme Court case decide?
The Supreme Court will not rule on Wal-Mart’s culpability of employment discrimination but, rather, whether Betty Dukes has enough in common with the million and a half other female Wal-Mart workers to represent them in a collective lawsuit. The outcome could narrow the criteria for establishing “class,” begetting a total redefinition of discrimination law in the US for years to come.
See the court filing, here.
What will happen if Wal-Mart wins?
A ruling in favor of Wal-Mart would be a crucial victory for corporations, making it harder for alleged victims of job bias to secure class-action status and then be awarded large settlements. Broad-scope legal practices would be limited, forcing plaintiffs to try their cases piecemeal. Low-wage workers who individually sue giant corporations would be much less likely to have the resources to hire commensurable legal counsel, let alone win.
What happens if Wal-Mart loses?
Judicial approval of class certification would widen the net of proof for job discrimination based on, not only gender, but minority and disability status. A defeat would not only be a massive blow to Wal-Mart, which, if later convicted, stands to be on the hook for tens of billions of dollars, but to the corporate world in general.
“When you’re able to proceed together as a class there’s a host of benefits that flow from that,” said Fatima Graves, vice president for education and employment at the National Women’s Law Center. Not only does a collective of employees afford better representation, it provides protection from retaliation and easier access to company data.
As the Wall Street Journal reported, Wal-Mart’s corporate supporters claim “a class action lawsuit would ‘open the floodgates’ for similar suits and force big firms to settle ‘even meritless claims because the potential exposure is too high.’"
Will a ruling against Wal-Mart affect its bottom line?
Not likely. Worst case scenario, a billion-dollar settlement wouldn’t hinder the long-term growth potential of the behemoth retailer, which saw net sales of $405 billion in 2010. When Wal-Mart settled a $382 million 63-person class action lawsuit in 2008, it “barely caused a blip.” In fact, in September of that year, Wal-Mart’s stock hit a five-year peak at 63.85.
Will people stop shopping at Wal-Mart?
Widespread customer loyalty is rarely swayed by “human interest” events. The general public bases its buying decisions on economics. Throughout its myriad public relations blunders, Wal-Mart has never been edged out of corporate America’s upper echelon.
Which way will it go?
Hard to say. Although this is the first time in our history that three women have presided over the Supreme Court during a sexual discrimination hearing, five of the nine justices have voted unfavorably with respect to class action lawsuits.
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