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Editor's Note :

The Supreme Court will release orders from the May 24 conference on Tuesday at 9:30 a.m. There is a possibility of opinions at 10 a.m. We will live-blog at this link.

Kevin Russell Contributor

Posted Fri, November 4th, 2011 8:43 am

Class actions in the aftermath of Wal-Mart v. Dukes

Last Term, in Wal-Mart v. Dukes, the Supreme Court overturned the certification of one of the largest employment discrimination class actions in history.  In so doing, it addressed a range of questions regarding class actions, some technical (regarding the differences between the requirements for various kinds of class actions and the relief they may seek) and some more general, including questions about when a class action may proceed on behalf of workers at different locations and with different supervisors.  In the months that followed the Court’s decision, lawyers for class-action plaintiffs and defendants have been scrambling to assess the impact of the Wal-Mart case and adjust their litigation strategies accordingly.  Recently, the plaintiffs’ attorneys in the Wal-Mart case began filing state-by-state class actions to revive their sex discrimination claims against the retailer, filing statewide class actions in Texas and California.

  • Kevin Russell – 0 Promoted Comments

    Do we know yet what implications the Wal-Mart decision is having on class actions nationwide? If so, what are they? Are the effects more pronounced for some kinds of cases than others?

    • Rae Vann – 1 Promoted Comment

      It may be some time before we know the full extent to which Dukes will alter nationwide class litigation. To be sure, Dukes will bring renewed rigor and discipline to Rule 23 class certification determinations, making it substantially more difficult for plaintiffs to construct “super” class actions as a means of forcing massive settlements, even of questionable claims. For companies that routinely make and implement millions of employment decisions each year, including hires, promotions, transfers, disciplinary actions, terminations, and other employment actions, the decision is sure to tamp down efforts to target them with the sort of broad-based class action rejected by the Court in this case.
      At the same time, employers should anticipate and be prepared for a potential increase in individual cases or smaller, more specific Title VII class actions. They also should bear in mind that Dukes will have little, if any, impact on state class action litigation brought under different procedural rules. Furthermore, the EEOC is not bound by Rule 23 at all, and presumably will continue to prosecute class-based claims in the public interest.
      Dukes is no panacea, and by no means signals an end to class litigation. Nevertheless, it will help to ensure robust application of Rule 23 so as to prevent future abuse of the class action vehicle.

    • Richard Samp – 1 Promoted Comment

      One particularly important important aspect of the Wal-Mart decision was its holding that Rule 23 entitles a class-action defendant to “individualized determinations” regarding individualized issues of fact. (In Wal-Mart, the issue was the amount of back pay to which each plaintiff might be entitled.) But defendants in many state-court class actions do not have the same right. The rationale of those state courts: the principal purpose of class actions (efficient adjudication of multiple claims raising similar fact patterns) would be undermined if individualized evidence had to be introduced for every member of the class. Thus, for example, in a number of class actions raising fraud claims, state supreme courts have held that class-wide reliance on the defendant’s misrepresentations can be presumed — at least where there is evidence of reliance by the class representatives. And while the Class Action Fairness Act permits defendants in many large class actions to remove their cases to federal court, CAFA removal is unavailable in many others.

      There is good reason to believe that the Fourteenth Amendment’s Due Process Clause does not permit state courts to deprive class-action defendants of a right to individualized factual determinations. Indeed, it appears to be only a matter of time before the U.S. Supreme Court agrees to hear the issue and extends its Wal-Mart ruling to state class actions. Last year, Justice Scalia granted a temporary stay in a Louisiana case that raised the issue (Philp Morris v. Scott), and the Court held onto the case for nearly a year before finally denying review. Just last week, the Court denied review in a California case (Thomas v. Alcoser) raising the issue. Yet another petition raising the issue (Farmers Ins. Co. of Oregon v. Strawn) is pending at the Court. Given the Court’s oft-repeated statement that due process requires that litigants be afforded “an opportunity to present every available defense” (see, e.g., Lindsey v. Normet), the Court is unlikely to condone state procedures that deny that opportunity to class-action defendants.

      • John Vail – 3 Promoted Comments

        I have to concur that the court is likely to address the due process issues Richard identifies. The sophisticated defense bar will have no trouble ordering from the menu Justice Scalia set out. I would sugggest that in many cases, though, the backpay determination will not be a significant practical concern. Backpay determinations typically are treated in the manner of equitable accountings (Justices Scalia and Ginsburg have differed about this). If so characterized, they do not raise an individual right to jury trial. There remains an individulized right to an accurate accounting, but when that is permissibly done by leaving open challenges to determinations made by administrative officers, an administrative scheme for resolution should provide all process that is due. That kind of scheme mirrors what happens when agencies sue and creating a court-monitored one as an adjunct to private litigation should be neither difficult nor impermissible.

    • Mary-Christine Sungaila – 1 Promoted Comment

      In the three months after the Wal-Mart decision was issued in June, it was cited in almost 90 district court cases and a handful of circuit court opinions. Many of those opinions decertified previously certified classes and denied certification of proposed classes in cases ranging from product liability to employment and consumer claims. Some state courts, too, have denied certification, citing Wal-Mart and noting that their state’s certification rule was substantially similar to the federal one. So it is safe to say Wal-Mart has had widespread impact across various jurisdictions and areas of law.

      Of particular interest now are the state-based and regional class action complaints being separately filed by various plaintiffs in the Dukes case, post-USSCT decision. Certainly, counsel will be watching what happens in those cases. However, it is unlikely that, under the same pattern or practice theory, storewide or regional class actions will survive the Supreme Court’s decision because the necessary “glue” between a company-directed practice or policy of discrimination and the individual discretionary decisions by store managers would be lacking.

  • Kevin Russell – 0 Promoted Comments

    What steps are plaintiffs taking, or thinking about taking, to minimize the effects of the decision? How is the defense bar responding or thinking about responding?

    • Lenora Lapidus – 1 Promoted Comment

      Plaintiffs are responding in two fairly predictable ways. First, they are reframing class actions to cover a narrower group of class members than the original Wal-Mart nationwide class, and they are focusing on defendants’ actions in particular areas. The best example of this is Betty Dukes and her co-plaintiffs in the Wal-Mart litigation itself. They have filed a new complaint targeting what they allege are Wal-Mart’s discriminatory pay and promotion practices in its California region, instead of nationwide. They cite the same stereotypes that we described in our amicus brief to the Supreme Court — for example, they allege that the company’s leadership told California managers that the key to success was a singular focus on getting the job done, and that men were better at this than women. They repeat the same allegations that men’s raises were justified because they had families to support, even though women plaintiffs were supporting children as well. So Wal-Mart and other large institutions cannot necessarily escape these kinds of allegations, even though it succeeded in forcing the plaintiffs to tackle them in smaller lawsuits.
      Second, plaintiffs are distinguishing the Wal-Mart case and pointing out that the class that the Court rejected there was an outlier in terms of its size. We are amici in another employment discrimination class action, Davis v. Cintas, in the Sixth Circuit. After the Wal-Mart decision came down, the plaintiffs in that case argued to the court that the Wal-Mart decision supports certification of their class which, they argue, is more narrowly defined, because it challenges allegedly discriminatory discretionary hiring for a single job, and doesn’t cover pay and promotions.

      That said, there is no question that plaintiffs who want to challenge large employers’ use of subjective personnel practices face even more of an uphill battle than they already did, even when they are armed, as the Wal-Mart plaintiffs are, with many instances of managers appearing to rely overtly on sex stereotypes in making decisions.

  • Kevin Russell – 0 Promoted Comments

    Should Congress overrule or limit the Wal-Mart decision? Should it act to restrict class actions even further?

    • John Vail – 3 Promoted Comments

      The Advisory Committee on Federal Rules will meet Monday and Tuesday in Washington and one of its agenda items is whether the committee should revise Rule 23. The committee’s memorandum on the topic can be found here, http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Agenda%20Books/Civil/CV2011-11.pdf, at Tab IX. Under the Rules Enabling Act, revising the rules is generally the turf of the committee, not Congress.

      Should the committee revise the rule? Consider the 1950s, an era of American industrial might. In 1955 the top ten companies in the Fortune 500 included industrial giants like General Motors, Chrysler, U.S. Steel, and General Electric. Wal-Mart, today, employs more people than all ten of 1955 Fortune top ten combined. One of the purposes of the civil justice system is to check private power. I may have a tin ear, but I think I hear a swath of America from the Tea Party to Occupy Wall Street saying that private power is a tad too un-checked. Even conservative commentators, like the late Richard Nagareda, whose work was cited in the Wal-Mart decision, assert that class actions are a necessary tool for policing gargantuan organizations. Rule 23 should vest federal judges with sufficient discretion to manage large class actions. If we don’t tame the beast, it will eat us.

  • Timothy Sandefur – 2 Promoted Comments

    What does Wal-Mart v. Dukes tell us about class actions as a vehicle for vindicating social justice issues?

  • Timothy Sandefur – 2 Promoted Comments

    in Dukes, the plaintiffs were trying to use the class action lawsuit as a means of challenging what they perceived as discrimination, but which came from not conscious discriminatory act—just from the allegedly entrenched sexism in American society. In my briefs, I argued that there is no such thing as “social justice” and that the class action lawsuit should not be used to pursue general allegations that American society or capitalism are inherently discriminatory.

    In my brief (http://www.americanbar.org/content/dam/aba/publishing/previewbriefs/10_277_brief_updates/10-277_PetitionerAmCuPLF.authcheckdam.pdf), I argued that what the plaintiffs were attempting was an argument that Wal-Mart committed a discriminatory act precisely by not having a hiring or promotion policy. Instead, those decisions were made by local managers, who are in the best position to know the skills of their employees and needs of their customers. According to the Plaintiffs, this policy of not having a policy was a discriminatory policy, because it allowed social attitudes (which are sexist) to creep into the decisions made by local managers, and thereby fostered the differential treatment of women and men. My argument was that this was essentially an indictment of all decentralized, bottom-up decision-making processes—that is to say, of capitalism itself, since decisions are made in a free market through the decentralized process of “spontaneous order.” In short, if the lack of a policy was a discriminatory policy, the result would be that a central, top-down policy of hiring and promotion quotas would be legally required. In addition, the basic principle of the plaintiffs’ justice argument—that equal outcomes are mandated by principles of justice—rests on the assumption that there is such a thing as “social justice,” a concept that is actually devoid of meaning and incapable of application. Instead, justice is simply the result of any transaction to which the parties themselves consent.

    • John Vail – 3 Promoted Comments

      But the plaintiffs allegations were not about an abstract notion of social justice; they were about whether Title VII was violated. And the question presented to the Supreme Court was not about Title VII; the question was about Rule 23. What about Rule 23 precluded adjudication, on a class basis, the question of whether such a policy violated Title VII? That is a question of procedure, not of substantive law. Class-based adjudication of such a global issue advances dispute resolution and deprives a defendant of no individualized defense.

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