Monday, June 20, 2011

Wal-Mart v. Dukes Recap: Rule 23(a)'s Commonality Requirement

As covered earlier here, the Supreme Court decided Wal-Mart Stores, Inc. v. Dukes today. The opinions cover two distinct issues: (1) whether the class action satisfied Rule 23(a)(2)’s requirement that “there are questions of law or fact common to the class”; and (2) whether the class members’ claims for backpay were properly certified under Rule 23(b)(2). This post recaps the decision on the first issue, on which the Court splits 5-4. Justice Scalia, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito, concludes in Part II of the opinion that the plaintiffs “have not established the existence of any common question.” [Slip Op. 19]. Justice Ginsburg writes a dissenting opinion on this issue, joined by Justices Breyer, Sotomayor, and Kagan. There’s a lot going on with respect to the commonality issue in both opinions, so these excerpts (by definition) won’t be able to cover everything.

From Justice Scalia’s majority opinion [Slip Op. 8-10]:

The crux of this case is commonality—the rule requiring a plaintiff to show that “there are questions of law or fact common to the class.” Rule 23(a)(2). That language is easy to misread, since “[a]ny competently crafted class complaint literally raises common ‘questions.’” Nagareda, Class Certification in the Age of Aggregate Proof, 84 N. Y. U. L. Rev. 97, 131–132 (2009). For example: Do all of us plaintiffs indeed work for Wal-Mart? Do our managers have discretion over pay? Is that an unlawful employment practice? What remedies should we get? Reciting these questions is not sufficient to obtain class certification. Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. Title VII, for example, can be violated in many ways—by intentional discrimination, or by hiring and promotion criteria that result in disparate impact, and by the use of these practices on the part of many different superiors in a single company. Quite obviously, the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. “What matters to class certification . . . is not the raising of common ‘questions’—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.” Nagareda, supra, at 132.

Justice Scalia then turns to what one might call the burden of proof on a party seeking class certification [Slip Op. 10-12]:

A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc. We recognized in Falcon that “sometimes it may be necessary for the court to probe behind the pleadings before coming to rest on the certification question,” 457 U. S., at 160, and that certification is proper only if “the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied,” id., at 161; see id., at 160 (“[A]ctual, not presumed, conformance with Rule 23(a) remains . . . indispensable”). Frequently that “rigorous analysis” will entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be helped. . . .

In this case, proof of commonality necessarily overlaps with respondents’ merits contention that Wal-Mart engages in a pattern or practice of discrimination. That is so because, in resolving an individual’s Title VII claim, the crux of the inquiry is “the reason for a particular employment decision,” Cooper v. Federal Reserve Bank of Richmond, 467 U. S. 867, 876 (1984). Here respondents wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.

Quoting Falcon, 457 U.S. at 159 n.15, Justice Scalia indicates that given the facts of this case, the plaintiffs were required to provide “‘significant proof’ that Wal-Mart ‘operated under a general policy of discrimination’”; he concludes: “That is entirely absent here.” [Slip Op. 12-13]. Justice Scalia explains [Slip Op. 14-15]: 

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters. . . .  To be sure, we have recognized that, “in appropriate cases,” giving discretion to lower-level supervisors can be the basis of Title VII liability under a disparate-impact theory—since “an employer’s undisciplined system of subjective decisionmaking [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination.” But the recognition that this type of Title VII claim “can” exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common.

Justice Ginsburg’s opinion concurring in part and dissenting in part disagrees with the majority’s commonality holding. She writes [at pp.2-3]:

[Rule 23(a)(2)] “does not require that all questions of law or fact raised in the litigation be common,” 1 H. Newberg & A. Conte, Newberg on Class Actions §3.10, pp. 3–48 to 3–49 (3d ed. 1992); indeed,“[e]ven a single question of law or fact common to the members of the class will satisfy the commonality requirement,” Nagareda, The Preexistence Principle and the Structure of the Class Action, 103 Colum. L. Rev. 149, 176, n. 110 (2003). See Advisory Committee’s 1937 Notes on Fed. Rule Civ. Proc. 23, 28 U. S. C. App., p. 138 (citing with approval cases in which “there was only a question of law or fact common to” the class members).

A “question” is ordinarily understood to be “[a] subject or point open to controversy.” American Heritage Dictionary 1483 (3d ed. 1992). See also Black’s Law Dictionary 1366 (9th ed. 2009) (defining “question of fact” as “[a]disputed issue to be resolved . . . [at] trial” and “question of law” as “[a]n issue to be decided by the judge”). Thus, a “question” “common to the class” must be a dispute, either of fact or of law, the resolution of which will advance the determination of the class members’ claims.

The District Court, recognizing that “one significant issue common to the class may be sufficient to warrant certification,” 222 F. R. D. 137, 145 (ND Cal. 2004), found that the plaintiffs easily met that test. Absent an error of law or an abuse of discretion, an appellate tribunal has no warrant to upset the District Court’s finding of commonality.

Justice Ginsburg explains [at p.6]:

The District Court’s identification of a common question, whether Wal-Mart’s pay and promotions policies gave rise to unlawful discrimination, was hardly infirm. The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware. The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.

Responding to the majority opinion, Justice Ginsburg writes [at 8-10]:

The Court gives no credence to the key dispute common to the class: whether Wal-Mart’s discretionary pay and promotion policies are discriminatory. See ante, at 9 (“Reciting” questions like “Is [giving managers discretion overpay] an unlawful employment practice?” “is not sufficient to obtain class certification.”). “What matters,” the Court asserts, “is not the raising of common ‘questions,’” but whether there are “[d]issimilarities within the proposed class” that “have the potential to impede the generation of common answers.” Ante, at 9–10 (quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N. Y. U. L. Rev. 97, 132 (2009); some internal quotation marks omitted).

The Court blends Rule 23(a)(2)’s threshold criterion with the more demanding criteria of Rule 23(b)(3), and thereby elevates the (a)(2) inquiry so that it is no longer “easily satisfied,” 5 J. Moore et al., Moore’s Federal Practice §23.23[2], p. 23–72 (3d ed. 2011). . . . The Court’s emphasis on differences between class members mimics the Rule 23(b)(3) inquiry into whether common questions “predominate” over individual issues. And by asking whether the individual differences “impede” common adjudication, ante, at 10 (internal quotation marks omitted), the Court duplicates 23(b)(3)’s question whether “a class action is superior” to other modes of adjudication. Indeed, Professor Nagareda, whose “dissimilarities” inquiry the Court endorses, developed his position in the context of Rule 23(b)(3). See 84 N. Y. U. L. Rev., at 131 (Rule 23(b)(3) requires “some decisive degree of similarity across the proposed class” because it “speaks of common ‘questions’ that ‘predominate’ over individual ones”). “The Rule 23(b)(3) predominance inquiry” is meant to “tes[t] whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Products, Inc. v. Windsor, 521 U. S. 591, 623 (1997). If courts must conduct a “dissimilarities” analysis at the Rule 23(a)(2) stage, no mission remains for Rule 23(b)(3).

Justice Ginsburg concludes [at 11]:

Wal-Mart’s delegation of discretion over pay and promotions is a policy uniform throughout all stores. The very nature of discretion is that people will exercise it in various ways. A system of delegated discretion, Watson held, is a practice actionable under Title VII when it produces discriminatory outcomes. 487 U. S., at 990–991; see supra, at 7–8. A finding that Wal-Mart’s pay and promotions practices in fact violate the law would be the first step in the usual order of proof for plaintiffs seeking individual remedies for company-wide discrimination. Teamsters v. United States, 431 U. S. 324, 359 (1977); see Albemarle Paper Co. v. Moody, 422 U. S. 405, 415–423 (1975). That each individual employee’s unique circumstances will ultimately determine whether she is entitled to backpay or damages, §2000e–5(g)(2)(A) (barring backpay if a plaintiff “was refused . . . advancement . . . for any reason other than discrimination”), should not factor into the Rule 23(a)(2) determination.

--A

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