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Member, Beacon International Group, Ltd.
BE HAPPY, but don't relax, is the message to firms as a result of last week's Supreme Court ruling in the massive Wal-Mart litigation, in which the court rejected the idea of forming a class of some 1.5 million plaintiffs.
Even on the face of it, the idea of having such a big class of plaintiffs strained credulity. Fortunately, the high court saw it that way in ruling that plaintiffs had failed to demonstrate that all those people have enough in common to form a class.
Furthermore, the court ruled, plaintiffs' suggestion that awards to all class members should be based statistically on the experiences of just a few in a “trial by formula” would have been just plain unfair to Wal-Mart Stores Inc.
But the ruling goes far beyond Wal-Mart. It also was a sharp warning to lower courts that they should proceed cautiously in granting class certification, keeping in mind that it is supposed to be the exception, not the rule. And courts also should make sure that plaintiffs have substantial evidence to back their claims of a common class, not just weak and unpersuasive statistical, sociological or anecdotal data.
All this is good news for firms as they face their own battles on the issue of class certification. But complacency would be highly premature. As experts pointed out, attempts to form class actions are far from over. They will just be more narrowly focused and targeted.
That means companies still must be on their toes and follow sound practices of making sure that their policies do not reflect any bias, that their managers and supervisors are adequately trained, and that there are good complaint procedures in place.