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Dukes v. Wal-Mart Class Action Defense Case: Ninth Circuit Upholds Certification Of Nationwide Sex Discrimination Class Action Creating Largest Class Ever Agreeing With District Court That Class Action Was Nonetheless Manageable

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” Ninth Circuit Holds

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. February 06, 2007) [Slip Opn., at 1340]. 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, but the Ninth Circuit affirmed the district court order in all respects.

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 1340. 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. 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 1341 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 as it related to issues of alleged discrimination (including liability for punitive damages) as well as injunctive and declaratory relief. However, the court denied Plaintiffs’ request for certification with respect to backpay 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 1341. Plaintiffs, in turn, argued that the district court erred in limiting backpay relief. Id. 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 1342 (citations omitted). The Court explained that “review is limited to whether the district court correctly selected and applied Rule 23’s criteria.” Id., at 1343 (citations omitted).

Turning to the merits, the Ninth Circuit quoted at page 1345 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 “to the weight of the evidence, rather than its validity, and thus should be addressed by a jury at the merits phase.” Dukes, at 1346 (italics in original). The Court addressed Wal-Mart’s challenges in detail, see id., at 1346-56. 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 1348-49. The Court also rejected Wal-Mart’s claim that plaintiffs’ expert was required “to quantify with certainty the level of alleged discrimination,” id., at 1349, and held with respect to defense arguments concerning plaintiffs’ experts that “it was appropriate for the [district] court to avoid resolving ‘the battle of the experts’ at this stage of the proceedings,” id., at 1352-53. The Ninth Circuit ultimately concluded at pages 1356 and 1357:

Plaintiffs’ expert opinions, factual evidence, statistical evidence, and anecdotal evidence present significant proof of a corporate policy of discrimination and support Plaintiffs’ contention that female employees nationwide were subjected to a common pattern and practice of discrimination. Evidence of Wal-Mart’s subjective decision-making policy raises an inference of discrimination and provides further evidence of a common practice. Accordingly, we conclude that the district court did not abuse its discretion in holding that Plaintiffs satisfied the commonality factor.

The Ninth Circuit next concluded that the typicality requirement of Rule 23(a) had been satisfied. Dukes, at 1357. The Court’s analysis of this factor is quite brief, see id., at 1357-59, which is surprising in light of factual details supplied in the dissenting opinion. Suffice it to say that the Circuit Court held that “‘[t]he test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same conduct,’” id., at 1358 (citation omitted), and that even though all but one of the class representatives were hourly employees “the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal because all females employees faced the same discrimination,” id.

Next, the Circuit Court addressed whether the class action failed Rule 23(b)(2) because it sought substantial damages. Dukes, at 1360. Wal-Mart argued “claims for monetary relief predominate over claims for injunctive and declaratory relief.” Id., at 1361. Indeed, Wal-Mart estimated that the damages could run into the billions of dollars, id., at 1363. 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 1361 (citations omitted). The Circuit Court proceeded to conclude: (1) that former employees may still desire as their primary goal the injunctive and declaratory relief sought by the lawsuit, id., at 1362-63; (2) 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 1364 (italics in original); (3) that the prayer for punitive damages does not automatically defeat certification under Rule 23(b)(2), id., at 1364-66; and (4) that the prayer for backpay does not defeat Rule 23(b)(2) certification because “backpay is an equitable, make-whole remedy under Title VII that is fully consistent with Rule 23(b)(2), notwithstanding its monetary nature,” id., at 1366 (citations omitted). With respect to this last factor, the Ninth Circuit’s belief that the scope of its review is severely limited is evidenced by its holding that even if the district court erroneously interpreted plaintiffs’ backpay request “that finding does not require reversal because the district court did not rely on improper factors, omit consideration of important factors, or clearly err in assaying factors.” Id., at 1368.

Finally, the Court addressed whether certification of the nationwide class action deprived Wal-Mart of its right to defend itself. Dukes, at 1368. The Ninth Circuit held that it did not, believing that Wal-Mart’s objections were “more appropriate for the merits stage,” id., and that federal law “[does not] afford Wal-Mart the opportunity to present individualized defenses” to the claims of the class members, id., at 1370, 1375-77.

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 1379. Accordingly, it affirmed the district court order in all respects, including denial of the cross-appeal. Id.

NOTE: The Ninth Circuit decision was not unanimous. One circuit judge dissented, opining that certification of the class action “violates the Rule 23 class action certification criteria and deprives Wal-Mart of due process of law.” Dukes, at 1379 (Kleinfield, Circuit Judge, dissenting). We do not here summarize the dissenting opinion, id., at 1379-88, but it is well worth reading and may be found at the link below. We also do not discuss here plaintiffs’ cross-appeal: that discussion may be found at pages 1377-1379.

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