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| | Wal-Mart stood to benefit from class-action bill
Sunday, Jul 11, 2004 By Alison Vekshin Stephens Washington Bureau WASHINGTON -- Wal-Mart Stores, Inc., suffered a blow last week when the Senate shelved a bill that would have made it more difficult for customers and employees to pursue costly class-action lawsuits against businesses. The Bentonville-based retail giant, a frequent target of such lawsuits including a record one now being contested in California, had joined business coalitions in supporting changes to legal procedures controlling class actions. The bill was most likely killed for the year after senators failed to resolve a procedural fight on Thursday. "We're just disappointed," said Erik Winborn, Wal-Mart's vice president of national government relations. "We'll just be patient." Besides the California case, at least 18 other certified and uncertified class-action lawsuits are pending against Wal-Mart in state and federal courts, according to the company's latest annual report. But Winborn said the bill would have had the biggest impact on the retailer's suppliers. "We have a number of suppliers who have been subject to class-action suits and have had to pay egregious amounts of settlements," he said. "If one of our suppliers incurs increased costs because of litigation, those costs are passed on to Wal-Mart and then to the consumer." Richard Seymour, a partner with class-action firm Lieff, Cabraser, Heimann & Bernstein, LLP, said Wal-Mart had a lot at stake. "They wouldn't spend millions of dollars lobbying on this issue if it benefited their suppliers," Seymour said. "Wal-Mart is a bottom-line company. They're not going to do it for altruism." Seymour is involved in two pending class-action lawsuits dealing with wage and hour issues filed against Wal-Mart in Washington and New York states. The legislation, sponsored by Sen. Charles Grassley, R-Iowa, would have revised rules governing class-action lawsuits. It would have required most such suits to be filed in federal courts instead of state courts. Opponents, including consumer groups and trial attorneys, said the change would have made it more difficult for aggrieved customers and workers to secure class-action certification of their claims since federal courts apply a more stringent standard and are too overburdened to certify class-action lawsuits. Business groups said the bill would have blocked plaintiff's attorneys from "forum shopping" for sympathetic state judges and juries likely to impose ruinous verdicts. Proponents of the change said it would have discouraged plaintiff attorneys, who they charge often secure big fees while their clients win insignificant settlements that often come in the form of coupons. Winborn said consumers would have benefited by getting "a much fairer settlement in federal court." The legislation failed Thursday night when Republicans fell 16 votes short of the 60 votes needed to curtail debate and force a vote on the measure. Although the bill itself had enough support to pass, it became bogged down when Democrats and Republicans could not agree on whether unrelated amendments should be added. Lawmakers said the bill is unlikely to come up again this year, with Congress rushing to complete must-pass bills before the Nov. 2 election. Wal-Mart is currently the subject of a massive class-action, gender-discrimination lawsuit representing about 1.6 million female employees that was certified by a federal judge in the U.S. District Court for the Northern District of California last month. Wal-Mart has since filed an appeal of the certification in what is said to be the largest civil rights class action ever certified against a private employer. Winborn said the bill would have no impact on that case since it is already in federal court. Seymour called the Grassley legislation "an amnesty bill for business." "Nobody can effectively challenge big business if all the cases are dumped into the federal courts, which then break under the weight," he said. Matt Webb, vice president of legal reform policy at the U.S. Chamber Institute for Legal Reform, an offshoot of the U.S. Chamber of Commerce, said the bill would have the effect of balancing lawyers' fees with consumer settlements. "There are a number of judges that certify things at the drop of a hat" in state court, Webb said. "Lawyers have it down to the courthouse and the judge. There is a lot of jockeying around in trying to make sure those cases go to those judges." He added that federal courts are better equipped to handle cases involving millions of people. The bill's opponents also argue that plaintiffs seeking small settlements would be discouraged from filing their lawsuits individually if class-action certification is harder to attain. If a lawsuit filed in federal court is denied class-action certification, every worker involved in the suit would have to file an individual lawsuit, said Jackson Williams, legislative counsel for Public Citizen's Congress Watch, a government watchdog group. "Obviously, if you are challenging the nation's largest employer, you don't want to file your own lawsuit," he said. "Class action allows people to act collectively and gives them anonymity. It's a big deal, especially for a non-union company." Sens. Blanche Lincoln and Mark Pryor, both D-Ark., voted to delay the bill. "I am disappointed that instead of using this legislation as a vehicle where senators could work together to strengthen our nation's class-action process, we voted on a bill that unnecessarily restricts the ability of average citizens to seek redress for legitimate claims," Pryor said. -- 30 -- |
