Wal-Mart Case: Another Loss for Trial Lawyers

No one will be happier to see the Supreme Court begin its summer vacation than the nation's trial lawyers. The justices received plenty of attention on June 20 when they threw out a class-action suit filed against Wal-Mart Stores (WMT) on behalf of more than a million female workers. The court ruled that the employees failed to show they were common victims of a company policy of gender discrimination. Less noticed—except within certain corners of the legal profession—was that the Wal-Mart case is only the latest in a string of decisions in which the court has smacked down lawsuit-happy trial lawyers.

The ruling follows an Apr. 27 decision involving AT&T Mobility (T) that lets companies force customers and employees to take any disputes to an arbitrator, rather than a court, without the possibility of bundling complaints into a class action. You know those ubiquitous customer and employee "agreement" forms you're often asked to sign—or click on—before you buy a product or start a new job? They often contain a tiny-type paragraph that says you agree to settle any disputes with the company individually in arbitration. The court said the company can hold you to that, even in places where state law makes class actions a required option. The decision has already sparked new interest in arbitration, says Alan S. Kaplinsky, a financial-services attorney at Ballard Spahr in Philadelphia. He says he's now hearing from pension plans, insurers, and real estate brokers who want to craft customer agreements to shield them from lawsuits.