NU Online News Service, June 27, 1:39 p.m. EDT
Rating agency Moody’s says a recent Supreme Court ruling in favor of Wal-Mart—and the high burden of proof it puts on future plaintiffs—is credit positive for corporate America, including insurers of corporate liability.
In its weekly credit outlook Moody’s says the decision to deny class-action status to a group of current and former female Wal-Mart employees alleging gender discrimination will also be positive for employment practices, errors and omissions, and general liability insurers.
The class of about 1.5 million women would have been the largest in U.S. history if it had been certified.
“Under the certification rules articulated by the high court, pursuit of class actions on the scale of Wal-Mart will become far more difficult, substantially reducing the specter of huge settlement or judgment costs for large employers and their insurers,” Moody’s says.
Moreover, due to the interpretations and clarifications made by the Supreme Court, it could be more difficult to bring securities fraud or product liability cases before the court.
The Supreme Court says plaintiffs must prove merits of the case before certification and it has to be “convincing.”
The female employees of Wal-Mart can still pursue legal action individually or in smaller class actions, but Moody’s expects “such alternate litigation paths will ultimately be less costly for both defendants and their insurers.”
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