Supreme Court Case

Decision in Wal-Mart case a blow to class actions

WASHINGTON (AP) — Mounting a large-scale bias claim against a huge company will be more difficult in light of a Supreme Court decision that found no convincing proof of discrimination on which to allow a class action against retail giant Wal-Mart on behalf of as many as 1.6 million women.

All the justices agreed in the decision released Monday that the case couldn't proceed as a class action in its current form, reversing a decision by the 9th U.S. Circuit Court of Appeals in San Francisco. By a 5-4 vote along ideological lines, the court also said there were too many women in too many jobs at Wal-Mart to wrap into one lawsuit.

While individuals could still pursue their own cases, they would continue with the prospect of costly legal fees and long time frames and ultimately lack the power that would have accompanied the largest sex-discrimination lawsuit in U.S. history.

Two of the named plaintiffs, Christine Kwapnoski and Betty Dukes, vowed to continue their fight, even as they expressed disappointment about the ruling.

"We still are determined to go forward to present our case in court. We believe we will prevail there," said Dukes, a greeter at the Wal-Mart in Pittsburg, Calif.

"All I have to say is when I go back to work tomorrow, I'm going to let them know we are still fighting," said Kwapnoski, an assistant manager at a Sam's Club in Concord, Calif. Both women spoke on a conference call with reporters.

The women's lawyers said they were considering filing thousands of discrimination claims against Wal-Mart, but they acknowledged that the court had dealt a fatal blow to their initial plan.

In a statement, Wal-Mart said, "The court today unanimously rejected class certification and, as the majority made clear, the plaintiffs' claims were worlds away from showing a companywide discriminatory pay and promotion policy."

Those with opposing perspectives of the merits of the case agreed that companies came out ahead with the decision. Companies as varied as the Wall Street firm Goldman-Sachs & Co., electronics giant Toshiba America Inc. and Cigna Healthcare Inc. also face class-action claims from women they employ.

"This is an extremely important victory not just for Wal-Mart, but for all companies that do business in the United States," said Theodore Boutrous Jr., Wal-Mart's lawyer. The U.S. Chamber of Commerce said the court had set a high bar in ruling that "mega-class actions such as this one are completely inconsistent with federal law.

Supreme Court Case Limits the Ability of Shareholders to Sue ...

In a 5-4 decision, the Supreme Court ruled that Janus could not be held liable for false statements made in the prospectus of the mutual funds that it advised.  Shareholders of certain Janus funds brought a class-action securities fraud suit against Janus after Janus became embroiled in a market-timing scandal in 2003. The New York attorney general sued Janus for allegedly inflating the Janus funds’ share prices through delays in fund valuation.  Shareholders of the Janus funds followed with a lawsuit alleging that the funds’ disclosure documents stated that Janus would curb harmful late trading strategies based on through policies described in the prospectuses.

The case addressed the  issue of whether Janus could be held liable for the misstatements in the Janus funds’ prospectuses and thus be charged with violating rules under the Securities Act of 1933 prohibiting “any person, directly or indirectly” from “mak[ing] any untrue statement of material fact” in connection with buying or selling securities.

Justice Clarence Thomas, in the majority’s opinion, ruled that only the Janus funds themselves and not their investment advisers could be held liable.  In focusing on the word “make,” Justice Thomas stated:

One who prepares or publishes a statement on behalf of another is not its maker … Even when a speechwriter drafts a speech, the content is entirely within the control of the person who delivers it.

The Court held that fund shareholders cannot sue Janus for assisting with writing the allegedly misleading prospectuses for the Janus funds. In the Court’s view, the Janus funds are separate legal entities and that the Janus funds, not Janus, as the adviser, were responsible for the prospectuses.

Click here to access the decision.

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