Ninth Circuit Reaffirms the Standard of Review for Class Certification in Dukes v. Wal-Mart

Posted on: June 17th, 2010 by Steve Larson
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In Betty Dukes v. Wal-Mart, Inc., 603 F.3d 571 (9th Cir. 2010), the Ninth Circuit affirmed the certification of a class of female Wal-Mart employees who alleged that Wal-Mart discriminated against them in compensation and promotions.  The Dukes decision is newsworthy because it is the largest gender discrimination class ever certified.  Because of this, and because commentators suggest that there are substantial differences among the circuits, it is likely that the US Supreme Court will grant certiorari.

However, just because the class is large does not justify granting certiorari.  Wal-Mart is a huge employer, and just because it is a large employer should not qualify it for different treatment under the law.  Further, the purported split among the circuits is more imagined than real.  I agree with the Dukes court that consensus is rapidly emerging among the circuits, and that the statement that there are “substantial differences” in the circuits seems to create a distinction where none exists.  The majority in Dukes followed longstanding precedent when clarifying the standard trial courts must follow when considering class certification.  Although some suggest otherwise, the standard announced in Dukes is nothing really new.

The court made five main points regarding the standard.  First, the Ninth Circuit reiterated the longstanding statement from the US Supreme Court’s 1982 decision in Falcon that district courts must conduct a rigorous analysis of the class certification elements and go beyond the pleadings.

Second, the court also agreed with the Second Circuit in the IPO case, that there had been confusion at the trial courts because of language in a US Supreme Court decision in 1974 called Eisen, which some interpreted as eliminating any review of the merits.  The Dukes opinion makes it plain that district courts may consider the merits when those issues overlap with the Rule 23 inquiry, but not when the merits issues do not overlap with the Rule 23 inquiry.  The district court performs this analysis simply to determine that each of the Rule 23 requirements has been satisfied.

Third, courts must keep in mind that different parts of Rule 23 require different inquiries.  For example, what is required for the commonality inquiry is whether plaintiff establishes common questions of law and fact.  Answering those questions is the purpose of the merits inquiry, which is properly dealt with at summary judgment or at trial.

Fourth, district courts retain wide discretion to circumscribe discovery to avoid a mini-trial on the merits at the class certification stage.

Fifth, different types of cases will be handled differently at the class certification stage.

Some commentators suggest that the US Supreme Court should grant cert. because the Dukes decision is different than the Seventh Circuit’s decision in Am. Honda Motor Co. v. Allen, 600 F.3d 813 (7th Cir. Ill. 2010).  However, the Dukes decision is not inconsistent with the Am. Honda decision.  In Am. Honda, the 7th Cir. held that if there is a Daubert challenge to an expert opinion, and that opinion is critical to establishing commonality, then the trial court will need to resolve the Daubert challenge before certifying the class.

In Dukes, the en banc panel did not hold that the trial court does not need to resolve Daubert challenges prior to class certification.  The en banc panel said that Wal-Mart had not challenged the scientific reliability of the expert testimony, but rather its persuasiveness, which is not a proper Daubert reliability challenge.  Some may be confused because an early opinion by a three judge panel intimated that a full Daubert examination need not be conducted at the class certification stage.  However that opinion was withdrawn.   Dukes v. Wal-Mart, Inc., 509 F.3d 1168, 1174, 1179 (9th Cir.2007) (withdrawing and superceding prior opinion, 474 F.3d 1214, which held that full Daubert examination should not be conducted at class certification stage), reh’g granted, 556 F.3d 919 (9th Cir.2009);  Therefore, nothing in the Dukes en banc opinion suggests that a Daubert analysis at the class certification stage was inappropriate.

In short, I do not believe there is a significant difference between the circuits with respect to an analysis under Rule 23(a), and certification of the damages class was properly granted.

As to the analysis under 23(b)(2), which is a different type of class – an injunctive class, there is some disagreement among the circuits on how to analyze whether monetary relief predominates.  If monetary relief predominates, certification of an injunctive class under Rule 23(b)(2) is not appropriate.  In Dukes, plaintiffs seek backpay and punitive damages under the statute that allows for the entry of an injunction and the recovery of those remedies.  The Dukes majority stated that since the statute provided the plaintiffs could recover backpay and punitive damages along with the injunction, it would be contrary to the intent of Congress to rule that monetary relief predominated, just because someone sought the remedies provided by the statute.

The Dukes opinion also recognized that other circuits use different approaches for looking at the “predominates” issue.  It distinguished the Second Circuit’s “subjective” approach for determining predominance and the Fifth Circuit’s “objective” approach.  The majority adopted the predominance standard it concluded the Rule 23(b)(2)’s drafters straightforwardly indicated: “Rule 23(b)(2) certification is not appropriate where monetary relief is ‘predominant’ over injunctive relief or declaratory relief.”  It subsequently ruled that Wal-Mart’s evidence did not undermine the plaintiffs’ claims that injunctive and declaratory relief predominate because, in part, the plaintiffs’ request for backpay is an uncomplicated, make whole, determination.  Unsure whether the plaintiffs’ claims for punitive damages are appropriate under Rule 23(b)(2) or 23(b)(3), the majority remanded the issue back to the district court for further determination.  Likewise, it remanded the claims of putative class members who no longer worked for Wal-Mart when the complaint was filed so that the district court could consider whether to certify an additional class or classes under Rule 23(b)(3).

Again, as the Dukes court noted in its opinion, the different approaches in the circuit are not that important.  What is important is determining whether monetary relief predominates, and its opinion correctly dealt with that issue.

Wal-Mart has announced it will seek certiorari before the U.S.  Supreme Court.  However, I believe certiorari should be denied, because class certification was properly granted, the size of the class should not be a factor in whether certiorari is granted, and the purported split in the circuits is a distinction without a difference.

I will be monitoring the Dukes case, and will be updating this blog as the case proceeds, so stay tuned.  Presently, the trial court has entered an order staying the case until the earlier of September 30, 2010 and 30 days after the ruling on the certiorari petition.