This 6-5 en banc decision, substantially affirming Judge Jenkins’ class certification in this Title VII sex discrimination case, casts the Ninth Circuit judges in the role of advocates: the majority underplaying the significance of their decision, the dissent howling in outrage. Both groups of judges are playing to the probable, final arbiter (barring a settlement): the U.S. Supreme Court.
Dukes v. Wal-Mart Stores Inc., No. 04-16688 (9th Cir. Apr. 26, 2010): The majority summarizes the claims —
“Plaintiffs’ Third Amended Complaint, brought on behalf of certain named plaintiffs and those similarly situated, asserts claims against Wal-Mart for sex discrimination under Title VII of the 1964 Civil Rights Act. Plaintiffs allege that women employed in Wal-Mart stores: (1) are paid less than men in comparable positions, despite having higher performance ratings and greater seniority; and (2) receive fewer-and wait longer for-promotions to in-store management positions than men. Plaintiffs contend that Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.”
The district court held in 2004 that the case met the requirements of Fed. R. Civ. P. 23 and certified a class 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.” Since that time, the case has been pending on appeal before the Ninth Circuit, through two 2-1 panel decisions and rehearing before the en banc panel.
The six-judge majority crafts an opinion that corrals and restates the evolution of class action law in the years since Fed. R. Civ. P. 23(f) permitted courts of appeal to take interlocutory appeals of class action certification decisions. It also attempts to clean up intracircuit disputes about Rule 23 (so practitioners in that circuit will want to be particularly attentive about what the panel says about a host of familiar precedents).
The majority writes to bring Judge Jenkins’ opinion in line with the law in other circuits, possibly minimizing the Supreme Court’s interest in reviewing the case. I will not try to summarize the full 137-page opinion (majority, dissent, and two brief separate opinions), but here I summarize a few of the salient holdings:
1. With other circuits, it interprets Rule 23 as requiring the district court to make findings on each of the elements of Rules 23(a) and (b), even if such findings necessarily overlap the merits. It offers this explanation —
“[T]he distinguishing features of [the Supreme Court precedents] Falcon and Eisen are the purposes for which the certifying court is using the underlying facts – whether to address a merits issue unnecessarily or to determine whether, for example, the plaintiffs have demonstrated questions of law or fact common to their proposed class. . . . An easy way to understand this distinction is to analogize to a familiar dispute over the admissibility of alleged hearsay evidence. Offered for the truth of the matter asserted, an out-of-court statement by someone not testifying is, of course, inadmissible hearsay. However, that same evidence used to impeach a witness may be properly admitted. So, too, with inquiries into facts overlapping with merits issues in the Rule 23 context. It is whether courts are using the facts to probe the plaintiffs’ claims of compliance with Rule 23, or to hear either parties’ claims directed to stand-alone merits issues, that renders a court’s use of the facts proper or improper. Courts have thus strayed from Falcon when they have myopically invoked Eisen to avoid considering facts properly relevant to the Rule 23 determination because the facts happen to be relevant to the later merits inquiry as well.”
Nevertheless, it remains the law that the district court is to steer clear of deciding the case proper at this preliminary stage:
“The district court must analyze underlying facts and legal issues going to the certification questions regardless of any overlap with the merits. However, this does not mean a district court should put the actual resolution of the merits cart before the motion to dismiss, summary judgment, and trial horses by reaching out to decide issues unnecessary to the Rule 23requirements.”
2. District courts maintain the discretion to regulate pre-trial procedures to avoid having the certification stage run off the rails:
“District courts must maintain the ability to cut off discovery to avoid either party bootstrapping a trial or summary judgment motion into the certification stage. Nearly every circuit to consider the issue, including our own, has recognized the practical importance of the certification decision as leverage for settlement, yet Rule 23 gives neither party the right to turn the certification decision into a trial.”
* * * *
“[D]ifferent types of cases will result in diverging frequencies with which the district court will properly invoke its discretion to abrogate discovery. As just one example, we would expect a district court to circumscribe discovery more often in a Title VII case than in a securities class action resting on a fraud-on-the-market theory, because the statistical disputes typical to Title VII cases often encompass the basic merits inquiry and need not be proved to raise common questions and demonstrate the appropriateness of class resolution. Plaintiffs pleading fraud-on-the-market, on the other hand, may have to establish an efficient market to even raise common
questions or show predominance.”
3. Disputes over the validity of statistics in Title VII cases may, or may not, constitute class-certification issues that must be resolved at the certification stage:
“[D]isputes over whose statistics are more persuasive are often not disputes about whether the plaintiffs raise common issues or questions, but are really arguments going to proof of the merits. See Nagareda, Class Actions, supra, at 619-20 (‘Nowhere is this [disputed statistics] problem more acute than in employment discrimination class actions centered on statistical analysis of an aggregate nature.’). Of course, if one party argued that the other party’s statistics were unreliable or based on an unaccepted method, this may be an issue the district court would have to resolve to determine whether the potentially problematic statistics were even capable of raising a common question.”
4. The requirements of Rule 23(b)(3) likely require a more searching review than the threshold requirements of Rule 23(b)(2):
“Thus, we would expect that cases in which the parties are contesting facts underlying the Rule 23(b)(3) determination may often require more determinations by the district court than those in which Rule 23(a)(2) is the primarily contested issue. Rule 23(a)(2) is about invoking common questions, see Falcon, 457 U.S. at 158, whereas Rule 23(b)(3) requires a district court to formulate ‘some prediction as to how specific issues will play out in order to determine whether common or individual issues predominate in a given case,’ New Motor Vehicles, 522 F.3d at 20 (internal quotation marks omitted). We thus should not be surprised that a district court will have to make more precise factual determinations under Rule 23(b)(3) than under Rule 23(a)(2). This insight does not apply a procedural rule differently in two like contexts; it applies the text of Rule 23 itself to the district court’s task.”
Applying the restated standards to Judge Jenkins’ opinion, the majority finds that the district court scrupulously observed the duties and strictures of Rule 23. “Unlike some other district courts, which have assumed facts in a complaint, the district court here spent significant effort explaining a nuanced standard that clearly comprehended the need to look well beyond the pleadings in the case.”
5. Under Rule 23(a)(2), “The commonality test is ‘qualitative rather than quantitative’-one significant issue common to the class may be sufficient to warrant certification.” Here, the district court judge found commonality in a record that included “(1) facts supporting the existence of company-wide policies and practices that, in part through their subjectivity, provide a potential conduit for discrimination; (2) expert opinions supporting the existence of company-wide policies and practices that likely include a culture of gender stereotyping; (3) expert statistical evidence of class-wide gender disparities attributable to discrimination; and (4) anecdotal evidence from class members throughout the country of discriminatory attitudes held or tolerated by management.”
6. The district court did not abuse its discretion in admitting (over a Fed. R. Evid. 703 challenge) the expert testimony of Dr. William Bielby on “social framework analysis,” the foundation for proving a corporate backdrop of gender stereotyping and bias. the majority likewise affirms the admission of a statistical expert, Dr. Richard Drogin, despite defendant’s objections to his methodology. The majority specifically refrains from deciding whether Fed. R. Evid. 703 standards apply equally at the class-certification stage and at trial on the merits. The district court also did not abuse its discretion in crediting the plaintiffs’ expert evidence over the defendant’s evidence.
7. A common practice of delegating discretionary decisions to manager may constitute a “common practice” worthy of certification in a Title VII case.
8. Variations in promotion and pay experience did not deprive the class of “typicality” with the named plaintiffs: “Even though individual employees in different stores with different managers may have received different levels of pay or may have been denied promotion or promoted at different rates, because the discrimination they claim to have suffered occurred through alleged common practices-e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping-the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3).”
9. A class back pay remedy in this case was manageable: “We also affirm the district court’s conclusion that a back pay remedy for promotion claims would be manageable only ‘with respect to those positions for which objective applicant data is available to document class member interest.’ Dukes, 222 F.R.D. at 183. Wal-Mart’s extensive database containing information on each employee individually with respect to job history, seniority, job review ratings, and many other factors, see id. at 183-85, would enable a determination of each class member’s qualifications for promotion without the need for potentially unmanageable individualized hearings.”
10. Rule 23(b)(2) can furnish a proper basis for certification of a Title VII back pay class: “we adopt instead
the standard that 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. To determine whether monetary relief predominates, a district court should consider, on a case-by-case basis, the objective ‘effect of the relief sought’ on the litigation. See Allison, 416 F.3d at 416. Factors such as whether the monetary relief sought determines the key procedures that will be used, whether it introduces new and significant legal and factual issues, whether it requires individualized hearings, and whether its size and nature-as measured by recovery per class member-raise particular due process and manageability concerns would all be relevant, though no single factor would be determinative. * * * * We find this reasoning persuasive and therefore join the consensus view that a request for back pay in a Title VII case is fully consistent with the certification of a Rule 23(b)(2) class action.”
11. Nevertheless, the district court abused its discretion when it certified a punitive-damage class under Rule 23(b)(2) without considering whether it was more appropriately handled unset Rule 23(b)(3): “Notwithstanding its decision to require notice and an opportunity for opt-out, the district court abused its discretion by certifying the punitive damages claims under Rule 23(b)(2) without first undertaking an analysis of whether certification of the claim for punitive damages (in addition to injunctive and declaratory relief as well as back pay) rendered the final relief ‘predominantly’ related to monetary damages. See Fed. R. Civ. P. 23(b)(2), advisory committee’s note to 1996 amends., 39 F.R.D. at 102. Although notice and an opportunity for Plaintiffs to opt-out of the punitive damages claims alleviated some of the concerns regarding cohesiveness and due process that substantial punitive damages claims potentially raise, requiring these procedures does not remove the district court’s obligation to determine whether each of the requirements of certification under either Rule 23(b)(2) or (b)(3) is met.”
12. Plaintiffs who were not Wal-Mart employees at the time the complaint was filed lack standing to bring a suit for injunctive and declaratory relief.
The majority, finally, put in a kind word for the many amicus writers on all sides of the issues: “[fn. 50] The court was favored with an extraordinary variety of amicus briefs that were both thoughtful and helpful to it in its deliberations.”