The Court after Scalia: Leaving the class-action revolution hanging
on Sep 7, 2016 at 10:52 am
Scott Michelman is a senior staff attorney at the American Civil Liberties Union in Washington, D.C. He served as counsel for the plaintiffs in Tyson Foods v. Bouaphakeo.
In Wal-Mart Stores v. Dukes, the Supreme Court tightened the requirements for the certification of a class action under Federal Rule of Civil Procedure 23. Despite the attention that surrounded the decision and its persistent invocation in the following years by the defense bar in opposing the certification of classes, Wal-Mart left class action plaintiffs with a standard that, though narrowed, could often still be met. The power of Wal-Mart lay less in its holding than in its potential to beget further and more significant obstacles to certification. As one example, Justice Antonin Scalia’s majority opinion included dicta condemning class proceedings that amounted to “trial by formula” — an ambiguous phrase that had the potential to scuttle many types of class actions if “formula” were read expansively. Wal-Mart’s promise as a fountainhead of class action barriers has, however, remained largely unfulfilled in the five years since it was decided. Although Wal-Mart is unlikely to be overruled, a left-of-center replacement for Justice Scalia would likely end any reasonable chance that the Court would impose additional restrictions on class action plaintiffs.
Wal-Mart itself has proved a mostly surmountable obstacle. Its unusual factual context has rendered the decision distinguishable for many classes of plaintiffs. Few classes are as sprawling as the one in Wal-Mart, which covered the sex-discrimination claims of approximately 1.5 million employees in about 3,400 stores across the nation. Most class actions attack policies or practices that are more concrete than the one at issue in Wal-Mart, in which the plaintiffs challenged a practice of granting discretion to thousands of individual managers (as the Court put it, “just the opposite of a uniform employment practice”). And most classes need not answer a question as individualized as the one at the heart of each Wal-Mart plaintiff’s case: why, in the absence of a uniform policy or practice of sex discrimination, did a particular manager disfavor a particular female employee?
Unlike the ruling in Wal-Mart, many new restrictions proposed by the corporate defense bar and accepted by some lower courts could do far-reaching damage to the ability of workers, consumers, and others to band together to challenge unlawful practices like discrimination, fraud, and wage theft. For instance, corporate defendants have argued (and at least one district court agreed) that the Court’s 2013 decision in Comcast v. Behrend ruled out class certification in cases in which damages must be calculated on an individualized basis. As Judge Richard Posner has observed, forbidding class actions involving individualized damages calculations would “drive a stake through the heart of the class action device.” Such a rule would be particularly detrimental to wage-hour class actions, which often include workers who have worked different sets of hours at different rates of pay but have lost wages because of the same employer policy or practice.
Another significant threat to class certification is the heightened “ascertainability” rule that some courts of appeals now apply. In general, ascertainability refers to the requirement that a class is capable of objective definition so that its members can be identified. However, some courts apply a heightened version of ascertainability under which a class cannot be certified unless the plaintiffs can produce, before certification, a mechanism to identify class members through documentary proof rather than personal declarations. The effect of this rule is to scratch many consumer class actions that involve low-dollar purchases for which consumers are unlikely to have kept receipts. A heightened ascertainability requirement thus diminishes corporate accountability for engaging in fraudulent practices regarding low-cost items.
Additionally, some corporate defendants (with some support from a couple of court of appeals decisions) have argued that a class cannot be certified unless the plaintiffs can demonstrate that each putative class member sustained injury. This proposed barrier would be difficult for many classes to surmount because the identities of all class members are not usually known at the outset of the case. Additionally, because the presence of uninjured class members might not be revealed until discovery or later, the no-uninjured-members requirement has the potential to scuttle class actions long after they are certified — indeed, even after trial, as defense counsel have argued. Employment discrimination cases would be at particular risk of upheaval, because current pattern-or-practice jurisprudence permits employees to establish a discriminatory practice at an initial liability phase and then determine at a subsequent remedial phase which individual employees suffered harm and are therefore entitled to relief. Forcing employees to demonstrate injury at the outset would turn that procedure upside down and obstruct discrimination class actions.
In addition to adopting new doctrines percolating in the lower courts, a conservative majority on the Court could tighten Rule 23 in more incremental ways. For instance, Rule 23’s requirement that issues common to the members in a class action “predominate” over individual issues leaves much to the discretion of trial courts. Were the Supreme Court to affirm rulings holding that certain combinations of common and individual issues are insufficient, and reverse holdings that other combinations are sufficient, the Court could shape the predominance standard in such a way as to place certification out of reach for many plaintiff classes. Or consider “commonality” — the requirement that the class identify questions of law or fact that class members share in common. Wal-Mart described a “common question” for this purpose as a “common contention” whose “truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke” (emphasis added). How central is central? One could imagine a conservative Court clamping down on class actions by imposing a restrictive approach.
A moderate-to-liberal appointee to the vacant seat is likely to place five votes for new restrictions out of reach. Although not all hot-button legal issues divide predictably along ideological lines — the Fourth Amendment and federal sentencing law, for example, are two areas in which voting patterns on the Roberts Court have defied easy ideological classification — moderate-to-liberal jurists of both the Supreme Court and the federal courts of appeals have voted fairly consistently against erecting new obstacles to class-action certification in recent years.
If anything, the left wing of the Court is more unified on Rule 23 than the right, as some proposed restrictions have proved too extreme even for the Wal-Mart majority itself. For instance, this year in Tyson Foods v. Bouaphakeo, the Court rejected the company’s contention that any use of “representative” or aggregate proof in class actions violates Wal-Mart’s portentous prohibition on “trial by formula.” Instead, the Court held, representative proof is permissible in a class action where the substantive law at issue allows it. Thus, in Tyson Foods, a class of workers suing over unpaid wages at a pork-processing plant could infer the amount of time each member of the class worked based on a study that measured time worked by only a subset of workers, because substantive wage-and-hour law permits such inferential proof. Also in Tyson Foods, the Supreme Court suggested that it does not share the defense bar’s interpretation of Comcast as holding that cases requiring individualized damages calculations cannot be certified: “When one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members” (citations and internal quotation marks omitted, and emphasis added).
Would the Wal-Mart majority have adopted different proposed restrictions like heightened ascertainability or the no-uninjured-members rule had these issues been squarely presented to the Court? Perhaps. By contrast, a new moderate-to-liberal majority would be unlikely to vote to hamstring class-action plaintiffs.
In contrast to recent jurisprudence on voting rights, gun-control, and campaign finance, in which the Roberts Court has reshaped the law with boldly conservative decisions that a five-Justice liberal majority might be expected to repudiate, recent class action decisions are not likely to be on the chopping block for a reconstituted Court. Rather, the chief significance of a fifth vote for the moderate-liberal wing is that it would provide a bulwark against further obstacles to certifying a class. As a result, workers and consumers seeking to hold corporations accountable by invoking Rule 23 to sue on behalf of others will stand on firmer legal ground, and the corporate defense bar’s hopes for a revolution in class action law will remain unfulfilled.
[Disclosure: Goldstein & Russell, P.C., whose attorneys work for or contribute to this blog in various capacities, was among the counsel to the respondents in Comcast v. Behrend. The author of this post, however, is not affiliated with the firm.]