The Supreme Court shows corporate America how to screw over its customers and employees without breaking the law.

The law, lawyers, and the court.
July 1 2011 5:21 PM

Operating Instructions

The Supreme Court shows corporate America how to screw over its customers and employees without breaking the law.

Was the Supreme Court's Wal-Mart case a bellwether? Or an instruction manual? Click image to expand.
Was the Supreme Court's Wal-Mart case a bellwether? Or an instruction manual?

Depending on how you count "big cases," the Supreme Court has just finished off either a great (according to the U.S. Chamber of Commerce) or spectacularly great (according to a new study by the Constitutional Accountability Center) term for big business. The measure of success here isn't just the win-loss record of the Chamber of Commerce, although that's certainly part of the story. Nor is it news that—in keeping with a recent trend—the court is systematically closing the courthouse doors to everyday litigants, though that's a tale that always bears retelling. The reason the Roberts Court has proven to be Christmas in July for big business is this: Slowly but surely, the Supreme Court is giving corporate America a handbook on how to engage in misconduct. In case after case, it seems big companies are being given the playbook on how to win even bigger the next time.

Dahlia Lithwick Dahlia Lithwick

Dahlia Lithwick writes about the courts and the law for Slate. Follow her on Twitter.

Start with one of the most important cases of the term, the recently deceased class-action suit filed by a million and a half women employed by Wal-Mart. The headlines—including mine—contended that the import of the court's decision lay in the ways class-action suits would be severely limited in the future. But dig a little deeper. In his majority opinion on behalf of the five conservatives on the court, Justice Antonin Scalia found that Wal-Mart could not be held accountable for discrimination in pay and promotions because the plaintiffs lacked "convincing proof of a companywide discriminatory pay and promotion policy." Then Scalia went one further and offered Wal-Mart, the largest private employer in the country, a virtual guidebook on how to discriminate better: Do it in bulk up and down the chain of command, and make certain to do it at every possible level. As SCOTUSblog's Lyle Denniston pointed out almost immediately after the decision came down:

For large companies in general, the ruling in Wal-Mart … offered a second message: the bigger the company, the more varied and decentralized its job practices, the less likely it will have to face a class-action claim. Only workers who have a truly common legal claim may sue as a group, the Court majority made clear—and, even that claim will require rigorous proof that every single worker suffered from exactly the same sort of bias. Sample statistics and anecdotes won't do.

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The greatest impact of the Wal-Mart decision isn't the blow dealt to class-action suits. It's the guidance it provides employers: Immunize yourself from claims of gender discrimination with a written policy that says "we don't discriminate"and a system of decentralized decision-making. The decision doesn't discourage future corporate discrimination. It just makes it harder to identify and prove it.

The same is true for the court's remarkable 5-4 holding in AT&T Mobility v. Concepcion. In that decision, the court read a federal statute to mean that consumers may not participate in class action suits if their contract—in this case, with a cell phone company—contains an arbitration agreement (by which, I promise you, you are currently bound). In AT&T, a class of California plaintiffs tried to bundle together their claims alleging that AT&T had engaged in false advertising and fraud by charging sales tax on phones it had promoted as free. California law provided that the mandatory arbitration provision was not enforceable and that the parties should be allowed to litigate as a class. But the court—Scalia writing again—determined that the California rule was pre-empted by the Federal Arbitration Act. "It was important [for the court] to protect defendants, such as corporations, from the 'in terrorem' effects of class actions, which pressure them into settlements," writes Erwin Chemerinsky, dean of the UC-Irvine School of Law. "In fact, the Court went further and said that the Federal Arbitration Act requires that claims be arbitrated on an individual basis and that class arbitration is not allowed."

Yes, the AT&T case will make class-action suits vastly less likely, as Justice Stephen Breyer pointed out in his dissent: "What rational lawyer would have signed on to represent the Concepcions in litigation for the possibility of fees stemming from a $30.22 claim? The realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30." Even more important, however, the case provides corporate America with another useful tip on how to avoid costly litigation: If you haven't already done so, rush to lock your customers and /or employees into invisible mandatory arbitration agreements that will bar them from challenging your misconduct in a class-action suit. As Nan Aron at Alliance for Justice explained when the AT&T case first came down, the real winner here was not "justice":

Corporations will now be able to decide on their own which civil rights and consumer protections they want to obey, knowing that there will be no effective means available to their victims to find redress. Even worse, not only has the radical conservative majority damaged the ability of consumers or employees to find justice, it has effectively removed any incentive for corporations to behave within the law in the first place. Why act lawfully if your victims are helpless, especially in cases like this when the harm to each individual is small but the potential for profit is huge?