Management Alert
The Supreme Court Accepts Certiorari
In Dukes v. Wal-Mart And Will Decide Key Class
Certification Issues In 2011
At 10 a.m. EST today, the U.S. Supreme Court announced its decision to accept review of Wal-Mart’s petition for certiorari
in Dukes, et al. v. Wal-Mart Stores, Inc. The 6 to 5 en banc decision of the U.S. Court of Appeals for the Ninth Circuit in San
Francisco – reported at 603 F.3d 571 (9th Cir. 2010) – affirmed an earlier class certification order in the largest employment
discrimination class action ever certified. The Ninth Circuit upheld an earlier panel decision certifying a class action gender
discrimination lawsuit challenging Wal-Mart’s pay and promotions practices. The full Ninth Circuit ruled that the U.S.
District Court for the Northern District of California did not abuse its discretion in finding that the large and diverse class –
encompassing approximately 1.5 million female employees, both salaried and hourly with a range of positions, who are or
were employed at one or more of company’s 3,400 stores across the country – was united by a complex of company-wide
discriminatory practices against women where plaintiffs presented expert opinions, factual evidence, statistical evidence,
and anecdotal evidence showing a corporate policy and common pattern of discrimination imposed on female employees
nationwide.
The petition by Wal-Mart to the Supreme Court sought review of the following questions: (1) Whether claims for monetary
relief can be certified under Federal Rule of Civil Procedure 23(b)(2) and, if so, under what circumstances; and (2) whether
the order certifying a class conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the
Rules Enabling Act, and Federal Rule of Civil Procedure 23. In granting the petition, the Supreme Court accepted review of
the first question, declined review of the second question, and directed the parties to address the issue of “whether the class
certification ordered under Rule 23 (b)(2) was consistent with Rule 23 (a).” While not unprecedented, the Supreme Court’s
direction to address this issue likely signals that it intends to review the underpinnings of the expansive class certified in the
Dukes case and the extent to which the pursuit of punitive damages impact the certification calculus.
Given a typical schedule for briefing and argument at the Supreme Court, a ruling on these issues is likely by June of 2011.
In the meantime, the 9th Circuit decision is significant for employers on many levels.
Dukes Provides A Roadmap For Future Class Actions
The Ninth Circuit’s decision changed the landscape for employment class actions and provides a roadmap for the plaintiffs’
bar to file colossal employment class actions. Employers are therefore challenged to review and reinforce (or implement)
creative policies and practices (in addition to litigation strategies) to position themselves against class certification
challenging a company’s pay and promotion and other employment practices.
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December 6, 2010
Management Alert
The Supreme Will Likely Clarify The Legal Standards For Certification
Of Employment Discrimination Class Actions
The Supreme Court’s decision to review Dukes means that employers can expect clarification of Rule 23 certification
standards in employment discrimination class actions overall. In addition, Dukes could harmonize the Supreme Court’s
decision in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974) (prohibiting a “preliminary inquiry into the merits of a suit
to determine whether it may be maintained as a class action”) with Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161
(1982) (requiring a “rigorous analysis” to ensure that the prerequisites of Rule 23(a) have been satisfied). The key difference
between Eisen and Falcon is the purpose for which a District Court analyzes the underlying facts in deciding whether to
certify a class action – whether to resolve a merits issue unnecessarily, or to determine whether, for example, plaintiffs have
demonstrated questions of law or fact common to their proposed class.
The Issues Of Class-Wide Punitive Damages Theories
The Ninth Circuit’s decision in Dukes remanded to the District Court the issue of whether certification under Rule 23(b)(2)
or Rule 23(b)(3) is appropriate for punitive damages claims. While Dukes did not rule on the merits of plaintiffs’ claim for
punitive damages, it provided guidance for analyzing the propriety of such claims under Rule 23(b)(2), and noted that hybrid
certification of Rule 23(b)(2) and Rule 23(b)(3) sub-classes in a single action “is worth consideration.” This issue is far from
theoretical, however, because punitive damages affect leverage and exposure for employers subject to a class action.
Due Process Rights In Class Actions And The Role Of Experts
The Ninth Circuit in Dukes noted a range of permissible means to manage a class-action trial in accordance with due
process and determined that neither Title VII nor due process mandates individual damages proceedings. This is an
important holding for employers. It eliminates individual-by-individual defenses stemming from personnel decision-making
by employers and turns class actions into statistical exercises. It is also significant because the Ninth Circuit in Dukes
rejected the notion that a full Daubert analysis – from Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993) – is
required at class certification, suggesting that Daubert does not have the same application at class certification as it does at
trial. If it were required, a District Court would need to resolve challenges to an expert’s qualifications, as well as the reliability
of testimony provided by the expert, to determine whether it relevant to establishing any of the Rule 23 requirements for class
certification.
The net effect is that plaintiffs are able to certify more cases, and gain the leverage that comes with a certification order.
The Supreme Court’s disposition of this issue has enormous consequences for employers in approaching the defense and
litigation of class action claims.
Management Alert
The Bottom Line
Employers will hear much more about the Dukes case in the weeks and months ahead. The Supreme Court’s ruling may well
be one of the most important employment discrimination class action decisions in decades, and may change the workplace
class action landscape permanently.
For a thorough analysis of the Ninth Circuit’s decision in Dukes, view the BNA article from the Class Action Reporter.
For more information, please contact the Seyfarth attorney with whom you work, or any Labor and Employment attorney on our
website.
www.seyfarth.com
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