Can a Class Action be Too Large?

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That is the question that was posed and answered in an interesting article in yesterday’s New York Times. The article refers to the WalMart sex discrimination class action case. The Supreme Court heard arguments in the case last week. The issue before the court was not whether WalMart had discriminated against its female employees in pay and promotions but whether the case was too large, or rather there were too many plaintiffs, to lump them together in one case.

The numbers are huge. There are approximately 500,000 plaintiffs already in the case, and the class (or group of people who would all be suing WalMart) could grow to as large as 1.5 million female WalMart employees.

The criticism of class actions, and especially class actions that are this large, is whether there is truly justice and fairness for both parties. For the plaintiffs, each person must lump her claims with others meaning that some might get less than deserved. It also means that plaintiffs as a whole get less than they deserve, since much of any recovery goes to attorneys for their fees. If a plaintiff doesn’t want to be part of the class and instead wants to sue on her own, she would be precluded from doing so because of the class action. That isn’t fair.

For defendants, class actions aren’t always fair as well. Defendant have a pressing incentive to settle a class action case given the costs of defending one and also the potentially astronomically high settlements. That isn’t fair and isn’t justice either.

Supports of class actions (which by the way are unique to the US judicial system) say that it is the only way to hold wrong-doers accountable for their actions, as the cost of individual suits is too high to make it feasible for most people to bring a claim. When deciding to take a case or not, plaintiffs’ attorneys inevitably base that decision on the plaintiff’s earnings as high wage earners, with high potential losses, make better plaintiffs since it means that there will be damages that the attorneys can take their fees from. Low wage earners = low damages and low attorney’s fees since most fees are based on a percentage of the total recovery.

I think the Supreme Court should not allow the class to continue. I agree with the defendants (and I can’t believe that I agree with WalMart on employment matters!) that the class is just too large. It risks being unfair and denying justice to both sides.

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