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Wal-Mart Class Action Defense Case-Dukes v. Wal-Mart: Ninth Circuit Again Upholds Class Action Certification Order In Nationwide Sex Discrimination Lawsuit Against Wal-Mart Finding Class Action With 1.5 Million Members Was Nonetheless Manageable

Ninth Circuit Reaffirms that District Court did not Abuse its “Broad Discretion” in Certifying Nationwide Sex Discrimination Class Action Against Wal-Mart Creating “the Largest Certified Class in History”

In June 2001, plaintiffs filed a putative class action against Wal-Mart in the San Francisco federal court alleging sex discrimination in the payment of wages and in promotions. In April 2003, plaintiffs moved to certify a nationwide class action on behalf of 1.5 million former and present female employees “employed in a range of Wal-Mart positions – from part-time, entry-level, hourly employees to salaried managers.” Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. 2007). Defense attorneys argued that the requirements of Rule 23 had not been satisfied, stressing in particular several problems inherent in litigating a class of record size. More than a year later, in an 84-page decision handed down in June 2004, the district court rejected all but one of the defense arguments and, save for that one point, certified the class action as requested by plaintiffs. Both sides appealed and on February 6, 2007 the Ninth Circuit affirmed the district court order in all respects; our article discussing that opinion may be found here .Defense attorneys asked the Panel to reconsider its decision, and on December 11, 2007 the Ninth Circuit again affirmed class action treatment of the claims against Wal-Mart. Dukes v. Wal-Mart, Inc., ___ F.3d ___ (9th Cir. December 11, 2007) [Slip Opn., at 16207 et seq.] The Panel denied rehearing, withdrew its February 6, 2007 opinion, and filed a new Opinion and Dissent affirming the class action order. Id., at 16212.

Plaintiffs’ motion sought certification of a nationwide class action on behalf of “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Dukes, at 16213. Wal-Mart stressed the “‘historic’ nature of Plaintiffs’ motion, inasmuch as it concerns a class of approximately 1.5 million women who work or worked in one or more of Wal-Mart’s 3,400 stores in 41 regions at any time since 1998.” Id., at 16214. The district court recognized Wal-Mart’s concerns but concluded that “while the class size was large, the issues were not unusual.” Id. The Ninth Circuit summarized the district court’s order at page 16214 as follows:

On June 21, 2004, the district court issued an eighty-four-page order granting in part and denying in part Plaintiffs’ motion for class certification. [Citation.] With respect to Plaintiffs’ claims for equal pay, the district court granted Plaintiffs’ motion as to issues of alleged discrimination and all forms of requested relief. With respect to Plaintiffs’ promotion claim, the court’s finding was mixed. The court certified the proposed class with respect to issues of alleged discrimination (including liability for punitive damages, as well as injunctive and declaratory relief); however, the court rejected the proposed class with respect to the request for back pay because data relating to challenged promotions were not available for all class members.

On appeal, Wal-Mart focused its attack on three points: (1) that the commonality and typicality requirements of Rule 23(a) had not been satisfied, (2) that the class action complaint primarily sought monetary relief thus barring certification under Rule 23(b)(2), and (3) that the district court order prejudiced its ability to respond to individual claims. Dukes, at 16214. Plaintiffs, in turn, argued that the district court erred in limiting backpay relief. Id., at 16215. The Ninth Circuit held that the district court did not abuse its discretion in certifying the nationwide class.

Preliminarily, the Circuit Court stressed that its review of the lower court’s decision was “very limited” and that “[it] will be reversed ‘only upon a strong showing that the district court’s decision was a clear abuse of discretion.'” Dukes, at 16215 (citations omitted). The Court explained that “review is limited to whether the district court correctly selected and applied Rule 23’s criteria.” Id., at 16216 (citations omitted).

Turning to the merits, the Ninth Circuit quoted at page 16219 the district court’s findings concerning evidence establishing common questions of fact and law:

Plaintiffs have exceeded the permissive and minimal burden of establishing commonality by providing: (1) significant evidence of company-wide corporate practices and policies, which include (a) excessive subjectivity in personnel decisions, (b) gender stereotyping, and (c) maintenance of a strong corporate culture; (2) statistical evidence of gender disparities caused by discrimination; and (3) anecdotal evidence of gender bias. Together, this evidence raises an inference that Wal-Mart engages in discriminatory practices in compensation and promotion that affect all plaintiffs in a common manner.

The Circuit Court agreed with the district court that defense challenges to the evidence referenced above went not to the issue of commonality but to “the ultimate merits of the case and ‘thus should properly be addressed by a jury considering the merit’ rather than a judge considering class certification.” Dukes, at 16219. The Court addressed Wal-Mart’s challenges in detail, see id., at 16219-30. Along the way, the Ninth Circuit held that Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), which requires that district courts act as “gatekeepers” concerning the admissibility of evidence – does not apply at the class certification stage. Id., at 16221-23. The Ninth Circuit ultimately concluded at page 16230:

Plaintiffs’ factual evidence, expert opinions, statistical evidence, and anecdotal evidence demonstrate that Wal-Mart’s female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII. Evidence of Wal-Mart’s subjective decision-making policies provide further evidence of a common practice of discrimination…. Accordingly, we conclude that the district court did not abuse its discretion in holding that the “commonality” prerequisite to class certification was satisfied.

The Ninth Circuit next concluded that the typicality requirement of Rule 23(a) had been satisfied. Dukes, at 16232. The Court’s analysis of this factor is brief, see id., at 16230-32, and concluded that “because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal,” id., at 16232 (citations omitted). The Circuit Court also held that Rule 23(a)(4)’s adequacy of representation test had been met because “courts need not deny certification of an employment class simply because the class includes both supervisory and non-supervisory employees.” Id., at 16233 (citations omitted).

Next, the Circuit Court addressed whether the class action failed Rule 23(b)(2) because it sought substantial damages. Dukes, at 16233 et seq. Wal-Mart argued “claims for monetary relief predominate over claims for injunctive and declaratory relief.” Id., at 16234. Indeed, Wal-Mart estimated that the damages could run into the billions of dollars, id., at 16235. The Ninth Circuit acknowledged that the class action prayed for substantial sums but held that the appellate court must examine each case on its facts “focusing predominantly on the plaintiffs’ intent in bringing the suit.” Id., at 16234 (citations omitted). In part the Circuit Court held that the fact Wal-Mart’s damages may amount to billions of dollars was “principally a function of Wal-Mart’s size, and the predominance test turns on the primary goal of the litigation – not the theoretical or possible size of the damage award,” id., at 16235 (italics in original), and that the prayer for back pay does not defeat Rule 23(b)(2) certification because backpay is “an equitable, make-whole remedy in employment class actions notwithstanding its monetary nature,” id., at 16236 (citation omitted).

The Ninth Circuit agreed with defense counsel that class action redress of injunctive and declaratory relief is unavailable to former employees and thus “cannot possibly predominate over monetary relief for purposes of certifying this class [action] under Rule 23(b)(2).” Dukes, at 16239-40. However, it concluded that this did not mean class certification should have been denied for the entire class because injunctive and declaratory relief is available to class members that are currently employed by Wal-Mart. Id., at 16230. Accordingly, as to this issue the Circuit Court remanded that matter “for a determination of the appropriate scope of the class.” Id., at 16241.

Finally, the Court addressed whether certification of the nationwide class action deprived Wal-Mart of its right to defend itself. Dukes, at 16242. The Ninth Circuit held that it did not, believing that Wal-Mart’s objections were more appropriate for the merits stage, id., at 16243, and that “there exists at least one method of managing this large class action that, albeit somewhat imperfect, nonetheless protects the due process rights of all involved parties.” Id., at 16246 (footnote omitted).

The Ninth Circuit concluded “that the district court acted within its broad discretion in concluding that it would be better to handle this case as a class action instead of clogging the federal courts with innumerable individual suits litigating the same issues repeatedly.” Dukes, at 16247. Accordingly, it affirmed the district court order in all respects, including denial of the cross-appeal. Id., at 16248.

NOTE: As before, the Ninth Circuit decision was not unanimous. One circuit judge dissented, stating that the “new opinion does not solve the problems of [the] previous opinion” and opining that certification of the class action “still violates Rule 23, likely deprives many women who have been discriminated against of the money they are entitled to, and deprives Wal-Mart of its constitutional rights to jury trial and due process of law.” Dukes, at 16248 (Kleinfield, Circuit Judge, dissenting). We do not here summarize the dissenting opinion, id., at 16248-60, but it is well worth reading and may be found at the link below.

Download PDF file of Dukes v. Wal-Mart