Wal-Mart v. Dukes Redux: The Future Of The Sprawling Class Action

Reproduced by permission. ©2011 Colorado Bar Association, 40 The Colorado Lawyer 53 (September 2011). All rights reserved.

This article analyzes the U.S. Supreme Court's watershed decision in Wal-Mart Stores, Inc. v. Dukes in light of previously unsettled questions under the federal class action device. It suggests how the Court's resolution of evidentiary and interpretative issues will render nationwide employment discrimination class actions far less successful, and even less desirable, than in the pre-Dukes era.

On June 20, 2011, the U.S. Supreme Court handed down its most highly anticipated employment law decision in a decade.1 The Court's first major pronouncement on Federal Rule of Civil Procedure (Rule) 23 prerequisites in twelve years, Wal-Mart Stores, Inc. v. Dukes, rejected a proposed class of 1.5 million employees alleging widespread sex discrimination at Wal- Mart stores.2 The Court rejected this class as too unwieldy to satisfy the Rule 23(a)(2) requirement of "commonality."3 The Court also curtailed the types of relief available under Rule 23(b)(2) class actions, effectively mandating that all future employment class action plaintiffs must proceed under a far more rigorous section of Rule 23.4

As the authors of this article presented in a May 2011 The Colorado Lawyer article, Dukes exemplified a growing trend toward high-profile, high-stakes litigation brought against large U.S. companies. 5 Indeed, the number of class actions filed against U.S. companies— and particularly those filed under Rule 23(b)(2)—has recently grown apace.6 Nonetheless, the Supreme Court's decision has reinvigorated the Rule 23(a) and (b) prerequisites, and arguably halted the advance of nationwide employment class actions. In short, Dukes's effect on employers can hardly be overstated.

This article analyzes Dukes in light of previously unsettled questions under the federal class action device and describes the decision's anticipated effects on employers and class action litigators. The article answers many questions the authors identified in their May 2011 article. It suggests that future employment class actions— even those sought to be certified under Rule 23(b)(3)— may prove far less successful, and even less desirable, than many plaintiffs' attorneys currently anticipate.

Overview

Dukes involved "one of the most expansive class actions ever."7 Betty Dukes and six other plaintiffs sought to represent a class of around 1.5 million women who were current and former Wal- Mart employees working at stores throughout the United States.8 Wal-Mart is the country's largest private employer, and it operates Discount Stores, Supercenters, Neighborhood Markets, and Sam's Clubs in seven nationwide divisions.9 The divisions comprise forty-one regions, and each region contains eighty to eighty-five stores.10 Each store has as many as fifty-three departments and 500 employees.11

Plaintiffs' Theory and the Certification Motion

Local Wal-Mart store managers enjoy broad discretion over pay and promotion decisions, although they must act within broad guidelines and defined salary bands.12 Dukes and the other named plaintiffs filed suit in 2001, alleging that Wal-Mart's delegation of discretion to local store managers resulted in widespread pay and promotion discrimination against women.13 Specifically, they alleged that local managers' discretion was exercised disproportionately in favor of men, resulting in disparate treatment under Title VII of the Civil Rights Act of 1964 (Title VII).14 They also alleged that Wal-Mart was aware of this effect, and that its refusal to cabin managers' discretion constituted disparate treatment.15 Notably, plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women.16

In 2003, the Dukes plaintiffs sought an order certifying a Rule 23(b)(2) class of all women employed by the company since 1998 who may have been subjected to alleged discriminatory practices.17 They sought injunctive and declaratory relief, punitive damages, and backpay, but did not request compensatory damages.18To satisfy Rule 23(a)(2)'s commonality requirement, the plaintiffs relied principally on three types of evidence. First, they invoked statistical evidence regarding pay and promotion disparities between men and women at Wal-Mart.19 Second, they offered anecdotal reports of alleged discrimination from approximately 120 Wal-Mart employees. 20 Third, they relied on a "social framework analysis" of Wal-Mart's "culture," which concluded that the company was "vulnerable" to sexism.21

Class Certification and Appeal

In 2004, the district court certified the plaintiffs' proposed class with minor variations not relevant here.22 In 2007, a Ninth Circuit panel twice affirmed the district court's order, albeit while remanding for consideration of whether technical standing issues barred certain plaintiffs from pursuing injunctive or declaratory relief.23 After agreeing to hear the case en banc in 2009, the Ninth Circuit issued a long-awaited decision in 2010, again substantially affirming the class certification.24 As indicated below, the Ninth Circuit nonetheless reached controversial conclusions regarding Rule 23's evidentiary standard, Rule 23(a)(2)'s commonality requirement, the types of relief available under Rule 23(b)(2), and how to determine monetary damages in a Title VII class action.

In 2010, the Supreme Court granted a petition for certiorari, agreeing to decide whether claims for monetary relief could be certified under Rule 23(b)(2) and, if so, under what circumstances.25 The Court also enigmatically ordered the parties to brief whether "the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)."26 As the authors of this article noted in their previous article, this ambiguous direction provided a "virtually blank slate" on which the Supreme Court could "write the future of the Rule 23 class action device."27 The Court did not disappoint.

Rule 23 Evidentiary Standard

As discussed in the authors' previous article, federal courts long have been flummoxed by the appropriate evidentiary standard for class certification, disagreeing about whether allegations in class complaints must be accepted as true; whether courts may consider merits issues in ruling on certification questions; and whether courts may weigh, or perhaps even bar, parties' proffered expert testimony. 28 Indeed, the district court in Dukes declined to resolve a Daubert 29 challenge to the plaintiffs' proffered social framework analysis testimony, and the Ninth Circuit effectively declined to resolve various merits issues that it felt were coterminous with Rule 23(a)(2)'s commonality requirement.30 The Supreme Court's June 20, 2011 decision resolved many of these uncertainties.

Pleading Standard Versus Proof

As presented in the May 2011 article, the Supreme Court's pre- Dukes jurisprudence long had been torn between Eisen v. Carlisle and Jacquelin, which suggested that courts had no "authority to conduct a preliminary inquiry into the merits of a suit," and General Telephone Company of the Southwest v. Falcon, which suggested that courts must conduct a "rigorous analysis" at the class certification stage.31 The Tenth Circuit has exhibited a variety of this judicial uncertainty, alternately holding that class action plaintiffs bear a "strict burden of proof " at the certification stage, and that courts must "accept the substantive allegations of the complaint as true."32 The Dukes decision conclusively resolved this dispute. The Court unambiguously held that Rule 23 does not provide a "mere pleading standard," but instead requires putative class action plaintiffs to be "prepared to prove" all the elements required for class certification. 33 Moreover, the Court expressly reaffirmed Falcon's "rigor ous analysis" requirement, dismissing Eisen's contrary pronouncement as "the purest dictum."34

In short, Supreme Court jurisprudence is now fully aligned with certain vanguard cases from recent years holding that putative class action plaintiffs must prove all Rule 23 elements by a preponderance of the evidence.35 The Dukes decision thus completes an evolution toward a more searching class certification inquiry that was facilitated by the 2003 amendments to the federal rules, which both eliminated conditional...