Decision of Interest: Ninth Circuit Applies Wal-Mart v. Dukes to Costco Class Action

Last week the Ninth Circuit issued its decision in Ellis v. Costco Wholesale Corp., No. 07-15838, ___ F.3d ___, 2011 WL 4336668 (9th Cir. Sept. 16, 2011). From the opinion by Judge N. Randy Smith:

This complicated case requires us to consider a number of issues relating to class certification. Several of these issues have recently been clarified by the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). Given this new precedent altering existing case law, we must remand to the district court. Specifically, we take the following actions: (1) Because at least one named Plaintiff (Sasaki) alleges a concrete injury that is both directly traceable to Costco’s allegedly discriminatory practices and is redressable by both injunctive relief and monetary damages, we affirm the district court’s ruling on standing. (2) We vacate and remand the district court’s ruling as to “commonality” under Rule 23(a) of the Federal Rules of Civil Procedure. The district court failed to conduct the required “rigorous analysis” to determine whether there were common questions of law or fact among the class members’ claims. Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 161 (1982). Instead it relied on the admissibility of Plaintiffs’ evidence to reach its conclusion on commonality. (3) We vacate the district court’s ruling as to “typicality” under Rule 23(a), because the district court failed to consider the effect that defenses unique to the named Plaintiffs’ claims have on that question.  (4) We affirm the district court’s ruling that Sasaki is an adequate class representative under Rule 23(a). As a current employee who continues to be denied promotion, Sasaki has incentive to vigorously pursue injunctive relief as well as monetary damages on behalf of all the class members. However, we vacate the district court’s finding that Ellis and Horstman could adequately represent the class, because they were former employees and had no incentive to pursue injunctive relief. (5) In light of Wal-Mart’s rejection of the “predominance” test, 131 S. Ct. at 2557-59, the district court must consider whether the claims for various forms of monetary relief will require individual determinations and are therefore only appropriate for a Rule 23(b)(3) class. Thus, we vacate the district court’s certification of the class under Rule 23(b)(2).

Hat Tip: Howard Bashman (How Appealing). Additional Coverage at Reuters, SCOTUSblog, Wall Street Journal.

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