Oral argument: Mar. 29, 2011
Appealed from: United States Court of Appeals for the Ninth Circuit (Apr. 26, 2010)
PROCEDURE, CLASS ACTIONS, DISCRIMINATION, MONETARY RELIEF
Respondent Betty Dukes and other women have brought a Title VII employment discrimination case against Petitioner Wal-Mart Stores. The United States District Court for the Northern District of California certified a class action comprised of all women employed at any Wal-Mart store since December 26, 1998 who may have been or will be subjected to Wal-Mart’s allegedly discriminatory practices and policies. Wal-Mart appealed, challenging the class certification, but the United States Court of Appeals for the Ninth Circuit affirmed the district court’s ruling. Wal-Mart now appeals to the Supreme Court, arguing that the class certification does not meet the requirements of Federal Rule of Civil Procedure 23(a). Wal-Mart also claims that class certification was improper under Federal Rule of Civil Procedure 23(b)(2) because the employees primarily seek monetary compensation in the form of back pay, and Rule 23(b)(2) does not authorize certification of claims seeking monetary relief. On the other hand, the employees assert that they meet the requirements for class certification under Rule 23(a) because all female employees face the same Wal-Mart policies and share the common issue of discriminatory treatment under those policies. The employees further argue that class actions certified under Rule 23(b)(2) are not precluded from seeking monetary relief, and deny that back pay is a form of monetary compensation. The Supreme Court’s decision will affect the evidence required to bring an employment discrimination class action suit, the relief available to plaintiffs in a class action, and employers’ willingness to settle to avoid liability in class actions.
1. Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2) - which by its terms is limited to injunctive or corresponding declaratory relief - and, if so, under what circumstances.
2. Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).
1. Can a court certify a class action lawsuit under Federal Rule of Civil Procedure 23(b)(2) where the class action members bring claims for back pay?
2. Does the class defined by the district court meet all the requirements of Federal Rule of Civil Procedure 23(a)?
Petitioner Wal-Mart Stores, Inc. opened its first store in Rogers, Arkansas in 1962. See Walmart.com, About Us. The company now boasts nearly 9,000 retail locations in 15 countries and employs over two million people. See id.
Respondent Betty Dukes and several other Wal-Mart employees have sued the company for sex discrimination pursuant to Title VII of the 1964 Civil Rights Act. See Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 577 (9th Cir. 2010). These employees claim that women working at Wal-Mart receive less pay and find fewer and less frequent opportunities for promotion than their male colleagues. See id. The employees believe that Wal-Mart's corporate structure and culture is a principal factor in creating and perpetuating these discriminatory practices. See id. at 577–78.
The employees requested that the United States District Court for the Northern District of California certify a class which would include “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.” See Dukes, 603 F.3d at 578. Although Wal-Mart objected to the massive size of this proposed class of plaintiffs, the district court granted the employees' motion and approved the class. See id.
In response, Wal-Mart filed an appeal, challenging the class certification’s validity. See Dukes, 603 F.3d at 578–79. The United States Court of Appeals for the Ninth Circuit ruled for the employees on this issue, concluding that it was within the district court’s discretion to decide that a class action would be more desirable than multiple individual lawsuits. See id. at 628. The Ninth Circuit reasoned that the sheer size of the class was not enough to prevent its proceeding, and that the district court would be free to take appropriate future steps if the case ever became unmanageable. See id. The Ninth Circuit also rejected Wal-Mart's argument that the employees' claim for back pay predominated over their claims for injunctive and declaratory relief, which might have invalidated the class. See id. at 618–20. Wal-Mart appealed, and the Supreme Court granted certiorari on December 6, 2010. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 795 (2010).
The issue before the Supreme Court concerns whether the class certification was proper and, if so, whether the Wal-Mart employees are entitled to monetary relief. A decision in favor of Respondents Betty Dukes and other Wal-Mart employees could potentially open the door for similar class action lawsuits representing record numbers of litigants. Certainly this is a concern of Petitioner Wal-Mart, which argues that “aggregation for its own sake” sacrifices fairness and efficiency. See Brief for Petitioner, Wal-Mart Stores, Inc. at 57. The employees, on the other hand, believe class actions are the most judicially efficient way to handle matters of this scope, and that the trial court is best suited to determine whether a class action may proceed. See Brief for Respondents, Betty Dukes, et al. at 62, 66–67. This case may have far-reaching procedural implications, not only for employment discrimination cases, but also class action litigation as a whole.
Several amici support Wal-Mart’s position on the ground that permitting massive class action suits to proceed in federal court will be economically damaging to business interests. Leading the way is the U.S. Chamber of Commerce, which worries that “populist” judges may allow “gargantuan verdicts” against American corporations, leading to stock devaluation and perhaps even bankruptcy. See Brief of Amicus Curiae The Chamber of Commerce of the United States of America in Support of Petitioner at 21. The Chamber believes these high stakes encourage plaintiffs to file meritless class actions and "blackmail" companies into settling quickly rather than incurring the costs of a difficult trial. See id. at 22.
Twenty corporations, including General Electric, Microsoft, PepsiCo, and Dole Food Company, have come to Wal-Mart's defense. In their view, the Ninth Circuit's opinion relied too heavily on Wal-Mart's "company-wide policies" as a ground for upholding the class certification. See Brief of Amici Curiae Altria Group, Inc., et al. in Support of Petitioner at 31–32. These firms see this precedent as leading to further "blackmail" and "substantial costs [to a business] irrespective of the merits." See id. at 32. They therefore argue that a victory for the employees would undermine a company's ability to make company-wide decisions necessary to forge a strong internal culture, and this disruption could "mean the difference between a thriving business . . . and a corporate train wreck." See id. at 30–31.
Also in support of Wal-Mart, the Equal Employment Advisory Council contends that employment discrimination suits of this scale actually frustrate Title VII’s goal of avoiding litigation. See Brief of Amicus Curiae The Equal Employment Advisory Council in Support of Petitioner at 19. The EEAC argues that the allure of massive class action litigation involving potentially vast settlement sums will discourage more informal means of resolving workplace discrimination disputes. See id. at 19–20.
Other amici, led by the U.S. Women’s Chamber of Commerce, support the employees. They argue that protecting victims of workplace sex discrimination serves the larger goal of gender diversity, which in turn enhances a corporation’s bottom line. See Brief of Amici Curiae U.S. Women’s Chamber of Commerce, et al. in Support of Respondents at 6–7. But disallowing the employees' class action in this case, they contend, threatens to undercut the gains that women have made in the workplace since Title VII became law. See id. at 10–11. Drawing an analogy between working women's struggles for equality and civil rights cases such as Brown v. Board of Education of Topeka, the Women's Chamber sees class actions as a valuable vehicle for beneficial social change. See id. at 13–15.
Also taking the employees’ side are several economists and statisticians, who worry that a victory for Wal-Mart would doom all class actions seeking to prove a pattern or practice of employment discrimination. See Brief of Amici Curiae Labor Economists and Statisticians in Support of Respondents at 7. They further take issue with Wal-Mart's argument that analyses of discriminatory practices are only proper at the managerial level; the economists and statisticians argue that Wal-Mart's sample sizes are too small to conduct a proper statistical inquiry. See id. at 10–11.
The Supreme Court's decision in this case may have a significant impact on the requirements for launching class action suits, how corporations and employees resolve discrimination disputes, and the way businesses make company-wide decisions.
This case considers whether the United States District Court for the Northern District of California properly certified the employees as a class under Federal Rule of Civil Procedure 23(a), and whether the employees can assert claims for monetary relief under Rule 23(b)(2). Petitioner Wal-Mart contends that the certified class does not meet the requirements under Rule 23(a) because the class members’ claims did not involve common facts or issues; the named plaintiffs’ claims are not typical of situations faced by female Wal-Mart employees; and the named plaintiffs’ claims are not adequate to represent the interests of the class as a whole. See Brief for Petitioner, Wal-Mart Stores, Inc. at 10–12. Wal-Mart further argues that class certification under Rule 23(b)(2) is improper because the employees sought monetary relief. See id. at 14. On the other hand, the employees assert that class certification was proper. See Brief for Respondents, Betty Dukes et. al at 4–5. The employees reason that, because Wal-Mart’s employment policies affect all employees, the employees’ claims involve common facts and issues. See id. In addition, the employees argue that Rule 23(b)(2) permits the certification of class actions that seek monetary relief. See id. at 8–9.
Did the employees meet the requirements for certification as a class action under Rule 23(a)?
The district court defined the class as all women employed at any Wal-Mart store since December 26, 1998 who have been or may be subjected to Wal-Mart’s challenged pay and management promotion policies and practices. See Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 577 (9th Cir. 2010). A group of plaintiffs can only be certified as a class action if (1) the class is so large that joinder of all claims would be impractical; (2) there are common issues among the class; (3) the named plaintiffs’ claims are representative of the claims of the other members of the class; and (4) the named plaintiffs will adequately represent the interests of the class. See Fed. R. Civ. P. 23(a). Wal-Mart concedes that the employees have proven the first requirement but maintain that the employees have not established the other three requirements for class action certification. See Brief for Petitioner at 10–12. Wal-Mart argues that to establish that there are common issues among the class, the employees must provide “significant proof” that Wal-Mart had a general policy of discrimination, or that Wal-Mart implemented its policies in a way that was discriminatory to female employees. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982); Brief for Petitioner at 19–20. Wal-Mart maintains that the employees’ statistical, sociological, and anecdotal evidence is inadequate to meet this requirement of “significant proof” because the evidence only showed that discrimination might occur as a result of Wal-Mart’s pay and promotion practices, not that every female Wal-Mart employee actually faced discrimination. See id. at 24–31.
Wal-Mart further asserts that the named plaintiffs’ claims are not typical of the claims of other class members. See Brief for Petitioner at 33. Wal-Mart argues that the named plaintiffs claim intentional discrimination, and Wal-Mart maintains that it could not have intentionally discriminated against every single female employee. See id. Furthermore, Wal-Mart contends that the named parties do not adequately represent the interests of the class because the class includes both supervisory and non-supervisory employees, who have different interests and seek different relief. See id. at 35.
The employees argue that the employees’ claims raise common questions because all Wal-Mart stores are operated uniformly, and therefore class certification is proper. See Brief for Respondent at 15–18. The employees also contend that Wal-Mart erroneously interprets Falcon as requiring a higher burden of proof than is required in Rule 23. See id. at 25–26. The employees argue in the alternative that Falcon is inapplicable because in Falcon, the class included both job applicants and employees, whereas this case concerns only employees. See id. The employees further assert that they do not have to prove specific instances of discrimination. See id. at 31. The employees contend that their statistical, sociological, and anecdotal evidence is sufficient to prove a pattern of discriminatory decision-making by Wal-Mart managers. See id. at 31–36.
The employees argue that the claims of the named plaintiffs do not need to be identical to the claims of the other class members in order to be typical of the class as a whole. See id. at 37–38. The employees further argue that the named plaintiffs’ claims are representative of the claims of the entire class because all female employees were harmed by the same pay and promotion policies. See id. at 38.
Does Rule 23(b)(2) authorize certification of class actions seeking monetary relief?
Wal-Mart argues that Federal Rule Civil Procedure 23(b)(2) only authorizes the certification of a class action if the class is seeking injunctive or declaratory relief. See Brief for Petitioner at 46. Wal-Mart contends that class certification in this case is inappropriate because the majority of the class members are in fact seeking monetary relief through their claims for back pay. See id. at 51–53. Wal-Mart also asserts that because back pay claims vary for each individual, they are not applicable to the entire class and thus make the case ineligible for certification. See id. at 53–54. Wal-Mart further argues that the plaintiffs’ claims for punitive damages make the case ineligible for class action certification under Rule 23(b)(2) because punitive damages require proof of harm to individual employees, not the class as a whole. See id. at 56–57.
The employees contend that Rule 23(b)(2) does not limit certification to actions that only seek injunctive or declaratory relief. See Brief for Respondent at 49. The employees argue that, in Title VII cases, back pay awards are considered equitable remedies, which renders the back pay award more similar to injunctive or declaratory relief than to monetary relief. See id. at 57. The employees further assert that the back pay claims are applicable to the entire class because all class members share a common interest in obtaining back pay if the court finds that discrimination occurred. See id. at 59.The employees also claim that punitive damages are permissible because class members have a common interest in ensuring that Wal-Mart be punished for its conduct, and the award of punitive damages depends on facts that are common to the entire class. See id. at 65.
Does the district court’s certification of this case as a class action relieve the employees of their burden to prove their claims and deprive Wal-Mart of an opportunity to present its defenses?
Wal-Mart contends that the district court’s certification of this case as a class action violates the Rules Enabling Act because it relieves the employees of their burden to prove their claims. See Brief for Petitioner at 38–39. Wal-Mart asserts that, because the district court did not find that Wal-Mart had a discriminatory employment policy, the employees must prove that individual store managers exercised their discretion in a manner that discriminated against female employees. See id. at 39. Wal-Mart further argues that requiring the employees to prove each instance of discrimination would make the case ineligible for class certification because of a lack of facts or issues common to the entire class. See id. According to Wal-Mart, the district court relieved the plaintiffs of their burden to prove instances of individual discrimination to certify the case as a class action. See id. at 39–40. Wal-Mart also argues it was entitled to rebut each individual class member’s discrimination claim at a hearing. See id. at 40–41. Wal-Mart contends that the district court deprived the company of its opportunity defend against each individual claim in order to establish the common interests required for class action certification. See id. at 41–42.
The employees reject Wal-Mart’s contention that the certification of this case relieves the employees of their burden to prove their claims. See Brief for Respondent at 41. The employees argue that in a Title VII case alleging a pattern or practice of discrimination, they are not required to prove individual instances of discrimination. See id. at 42. The employees contend that they can adequately prove the existence of the employer’s discriminatory policy through statistical evidence. See id. at 42–43. The employees also assert that hearings are not required to determine each class member’s claim if the employer does not have records of specific occasions of employment discrimination. See id. at 46.
In this case, the Supreme Court will decide whether the district court properly certified the class of all Wal-Mart female employees who have faced or will be subjected to Wal-Mart’s allegedly discriminatory employment practices and policies. Wal-Mart argues that class certification under Federal Rule of Civil Procedure 23(a) was improper because the class members do not share a common interest. Wal-Mart also contends that class certification under Federal Rule of Civil Procedure 23(b)(2) is inappropriate where the class members make claims for monetary relief in the form of back pay. On the other hand, the employees assert that the class shares a common interest because all employees are subjected to the same employment policies. The employees also argue that class certification is permitted when parties seek monetary relief, and contend that back pay is not monetary compensation. This decision will affect the evidence necessary to bring a class action suit for employment discrimination, the relief available to plaintiffs in a class action, and employers’ willingness to settle to avoid liability in class actions.
Edited by: Joanna Chen
· Wex: Class Actions
· N.Y. Times, Adam Liptak and Steven Greenhouse: Supreme Court Agrees to Hear Wal-Mart Appeal (Dec. 6, 2010)
· Summary Judgments, Michael Waterstone: The Future of Employment Discrimination Class Actions (Jan. 10, 2011)