May 14, 2013

Is the Roberts Court pro-business?

By Christina M. Martin Attorney

A recent New York Times article reports that many scholars believe the Roberts Court is more pro-business than its predecessors. To support this claim, they point mostly to procedural decisions, especially limits the Court has put on class action lawsuits. It is bizarre to call this Court more “pro-business” than its predecessors simply because it has maintained the rules adopted by the earlier (presumably anti-business) Courts.

Indeed, it takes a perspective hostile to business to imagine – as the Times article does – that the Court’s ruling in Wal-Mart Stores v. Dukes proves a “pro-business” bias. That case was the largest class action lawsuit in history, brought on behalf of more than 1.5 million present and former Wal-Mart employees. The lawsuit claimed that since women received on average fewer promotions and less compensation than men, the only cause could be a “culture of discrimination” subtly at work within Wal-Mart. Yet the plaintiffs could not prove the existence of any actual discriminatory policy, since Wal-Mart had no such company-wide policy. It left hiring, pay, and promotion decisions to local managers.  The only company-wide policy Wal-Mart had was a policy prohibiting discrimination. That and the many significant differences between members of the purported class persuaded the Supreme Court that there was no way to logically tie 1.5 million claims together with a common source of injury. Thus it correctly ruled that the class action could not be maintained. That decision—important parts of which were joined by the Court’s liberal wing—hardly proves a pro-business bias.

Neither does AT&T Mobility v. Concepcion. In that case, the company required customers to sign contracts in which they agreed not to bring class action lawsuits, but instead to submit any possible contract disputes to arbitration. Federal law encourages arbitration as an efficient, effective, and cheap alternative to litigation. The costs of class actions are exorbitant, and lead to higher prices that hurt consumers and the economy. That’s only one reason that consumers prefer arbitration, according to the Manhattan Institute. They also like that arbitration is faster and usually offers better remedies for everyone—except, of course, trial lawyers. Nevertheless, a lower court declared that contract provision “unconscionable” and unenforceable. The Supreme Court reversed that decision, holding that federal law preempted a state prohibition on class action waivers in arbitration contracts.

Concepcion and Dukes should have never required intervention by the Supreme Court. Rather than asking whether the Supreme Court is “pro-business” for maintaining the status quo, we should consider whether lower courts – gatekeepers for class actions and frivolous lawsuits – are more anti-business or pro-litigation than their predecessors.

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