LAWSUITS arising out of the workplace are one of the fastest growing areas of litigation in the country today. The U.S. Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes (1) was anticipated bring the growth of class actions in the employment context under control. In the immediate aftermath of Dukes, commentators predicted that the decision would result in a significant, drastic reduction in employee driven class-action claims, (2) and Dukes unquestionably "raise[d] the bar for plaintiffs seeking class certification and, accordingly, constitute[d] a win for employers," because plaintiffs' attorneys now face, "much greater obstacles when pursuing class actions." (3)
The limitations to class action claims of discrimination provided in Dukes have had far-reaching implications for Title VII claims and class action lawsuits brought under Federal Rule of Civil Procedure 23. But the landmark decision "has not led to the demise of the class action, or even a reduction in employment class actions." (4) Instead, the employment class action case has merely taken on a new face. Following Dukes, employment class actions are now comprised of a smaller, regional class and are framed more narrowly, "in terms of a single policy or practice that applies to the entire class." (5)
This article reviews Dukes and the circuit court employment class certification decisions that have evolved from it and other landmark Supreme Court decisions impacting employment related class actions. While the trend remains favorable to employers, four years after Dukes, plaintiffs attorneys have begun to have success with new tactics. As a result, the ultimate legacy of Dukes in the employment law context remains uncertain.
Dukes and its Predecessors
General Telephone Co. of Southwest v. Falcon (6)
In the post -Dukes era of class-action jurisprudence and analysis, it is nearly impossible to find an opinion or article that does not use the phrase "rigorous analysis," a phrase many lawyers associate with Dukes. Despite the spike in popularity of the phrase post-Dukes, it was not introduced by the Court in that decision, but was first coined more than twenty years earlier in General Telephone Co. of Southwest v. Falcon. In Falcon, the Court held, "a Title VII class action, like any other class action, may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." (7)
In Falcon, like Dukes, the trial court certified an employment discrimination class action. The class included some members who were denied promotion allegedly because they were Mexican-American. Other members of the class were denied being hired altogether allegedly because of their race. All members were included in the same class based on an "across the board" rule that a named plaintiff employee complaining of one allegedly discriminatory practice could represent class members complaining of a different practice. (8) This across the board rule was based on a presumption that all the class claims were fairly encompassed within the named plaintiff's claim, satisfying Rule 23(a)(3) typicality. The Supreme Court rejected the rule and its presumption of discrimination. In reversing the Fifth Circuit's affirmation of class certification, the Court made clear that when considering class certification, "[a]ctual, not presumed, conformance with Rule 23(a) remains ... indispensable," and that "a Title VII class action, like any other class action, may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." (10) The Court noted that in carrying out this mandate it "may be necessary for the court to probe behind the pleadings before coming to rest on the certification question." (11)
The Court's opinion in Falcon signaled the potential for a shift in the Court's treatment of class certification. Unlike Dukes, Falcon did not have the impact on lower federal courts that its recent decisions indicate the Supreme Court intended, driven largely by a concern that courts would be too willing to decide questions of certification with an eye to the underlying merits of the case. In the years between Falcon and Dukes, class counsel and courts alike often relied on language in an earlier Supreme Court decision, Eisen v. Carlisle & Jacquelin, (12) to avoid reaching the merits at the class certification stage. In Eisen, the Court ruled that "nothing in either the language or history of Rule 23 ... gives a court any authority to conduct a preliminary inquiry into the merits of a suit in order to determine whether it may be maintained as a class action." (13) This language in Eisen "quickly came to stand for a general rule prohibiting any preliminary investigation of the merits at the certification stage," (14) despite the Court's seemingly contradictory directive in Falcon. (15)
Wal-Mart Stores v. Dukes
Members of both the plaintiffs' and defense bars recognized that Dukes would have a significant impact on employment related class action claims. Prior to the publication of the Court's decision in Dukes, plaintiffs' attorneys predicted that the court's decision would be a vindication of the use of the class action process to secure women's rights for equal treatment on the job. Defense counsel had high hopes that Dukes would rein in the rapid growth of class action claims. Dukes provided an important test case because the purported class consisted of more than a million Wal-Mart employees across 3,400 stores. The size of the class and factual differences raised serious questions about the commonality element required to establish a class.
The putative class in Dukes was represented by seven named female plaintiffs, each of whom alleged that members of Wal-Mart's management had discriminated against her. Their discrimination claims ranged from sexual harassment to failure to promote. (16) Each of the plaintiffs' claims varied to a greater or lesser degree. As a result, the putative class that may have been impacted by the claims of any one class representative were extraordinarily large. A class this size presented a significant threat to Wal-Mart, but the risks to the purported class in Dukes were equally high. If class representatives lost at trial, they could doom the hopes of absent class members with stronger, perhaps more valid claims. In this respect, the named plaintiffs faced the significant hurdle of demonstrating that they were typical of the class and shared common issues with all other class members, as required by Rule 23(b) of the Federal Rules of Civil Procedure.
The District Court, which accepted plaintiffs' argument that the class shared commonality under Rule 23(b)(2), focused on two of the plaintiffs' commonality arguments in its ruling. First, all other things being equal, women were paid less than men in comparable positions. (17) Second, women received fewer promotions to management positions than men. (18) The court found that the plaintiffs presented evidence showing that each of these facts raised issues that were common. The statistical evidence plaintiffs presented demonstrated that there were common compensation and promotion policies affecting all women; a strong Wal-Mart corporate culture, which included gender stereotyping; and most importantly, a common feature of excessive subjectivity, which provided a conduit for gender bias that affected all members of a class in a similar fashion. (19)
Both a three-judge panel of the Ninth Circuit and later the Ninth Circuit sitting en banc affirmed the district court's certification order. (20) Like the district court, the panel found that the plaintiffs' corporate culture evidence provided a nexus between the subjective decision-making of Wal-Mart managers and the evidence of pay and promotion disparity. The en banc court also found that plaintiffs showed a common pattern of discrimination resulting from a uniform management structure, a strong centralized corporate culture, and gender disparity in every domestic region of Wal-Mart. (21) The Ninth Circuit also held that a Daubert inquiry at the class certification stage was premature, and therefore it would avoid resolving the battle of the experts by employing a lower Daubert standard at the class certification stage of the proceeding. (22)
With regard to Rule 23(b)(2), the Ninth Circuit concluded that the trial court retained the discretion to grant certification under Rule 23(b)(2). (23) The court was not persuaded by Wal-Mart's argument that certification would be improper because much of the putative class seeking injunctive relief could not in fact benefit from the injunction. (24) While the panel agreed with Wal-Mart that those individuals no longer employed by WalMart when the complaint was filed lacked standing, the court did not find that fact fatal to class certification. (25)
By the time the Dukes case had proceeded through the district court and the Ninth Circuit, the effective decisions in place were:
Under the right circumstances, plaintiff could certify a class for monetary damages under Rule 23(b)(2) even though the text of that subsection only provided for injunctive or declaratory relief;
Plaintiffs could satisfy Rule 23(a)(2) commonality requirements by alleging that a corporate culture or collective managerial decisions resulted in pervasive discrimination;
A full Daubert inquiry was not necessary at the certification stage or, in the alternative, a challenge to whether an expert's conclusion properly arose from his method was not itself a Daubert challenge; and,
Trial-by-statistics did not violate due process, even if it precluded defenses that due process would require in an individual trial on the same subject.
The Supreme Court's Decision
The Supreme Court held in a unanimous decision that Rule 23(b)(2) could not be used to certify a class seeking primarily money...