Supreme Court's Landmark Wal-Mart v. Dukes Ruling And Its Impact On Employment Class Actions

This article originally appeared in Nassau Lawyer, September 2011.

On June 20, 2011, the U.S. Supreme Court reversed the lower courts' certification of a class of approximately 1.5 million current and former female Wal-Mart employees who alleged sex discrimination. In its decision, the Supreme Court raised the bar for plaintiffs seeking class certification, forcing plaintiffs to narrowly define the class when alleging discrimination, and arguably any other legal violation.1 Writing for the majority, Justice Antonin Scalia ruled Plaintiffs did not meet the "commonality" threshold for class certification under Federal Rule of Civil Procedure 23(a)(2) because they could not demonstrate all class members were subject to the same discriminatory employment policy. While Justices Ginsburg, Breyer, Sotomayor and Kagan disagreed with the application of Rule 23(a)(2), all nine justices agreed that Plaintiffs' backpay claims were improperly certified under Rule 23(b)(2).

Factual and Procedural Background

Plaintiffs asserted claims against Wal-Mart Stores, Inc. ("Wal-Mart") for sex discrimination under Title VII of the Civil Rights Act of 1964. Plaintiffs alleged women employed in Wal-Mart stores were paid less and received fewer promotions than men as a result of Wal-Mart's corporate culture of gender bias, and practice of giving local managers discretion to make pay and promotion decisions. Plaintiffs sought to certify a nationwide class of women who had been subjected to these allegedly discriminatory pay and promotion policies. The class sought injunctive and declaratory relief, punitive damages, and backpay.

The U.S. District Court for the Northern District of California certified the class, finding Plaintiffs satisfied the requirements of Rule 23(a)(2) and 23(b)(2).2 Defendant Wal-Mart appealed, arguing: (1) the putative class did not meet Rule 23(a)'s commonality and typicality requirements; (2) certification of the putative class would eliminate Wal-Mart's ability to respond to Plaintiffs' individual discrimination claims; and (3) class certification under 23(b)(2) was improper because Plaintiffs' individual claims for monetary relief (backpay and compensatory damages) predominated over their claims for injunctive or declaratory remedies.

Reviewing the decision en banc, a divided Ninth Circuit substantially affirmed the District Court's certification, concluding (1) Plaintiffs met Rule 23(a)(2)'s commonality and typicality requirements; (2) their backpay claims were properly certified under Rule 23(b)(2) because those claims did not predominate over the declaratory and injunctive relief claims;3 and (3) the class action could be manageably tried without depriving Wal-Mart of its right to present its statutory defenses if the District Court selected a random set of claims for valuation and then extrapolated the validity and value of the untested claims from the sample set.4

On June 20, 2011, the Supreme Court reversed the Ninth Circuit's decision and held class certification was...