Monday, April 26, 2010

Dukes v. Wal-Mart - Ninth Circuit En Banc Decision Issued Today

In a long awaited decision, the Ninth Circuit finally issued its en banc opinion in Dukes v. Wal-Mart Stores, Inc.  Although I haven't yet had a chance to read the 137 page opinion (though it does provide a nice diversion from exam grading), the Ninth Circuit affirmed class certification of the largest class action to date.  For a smattering of commentary, see here, here, and here.  For those interested in the decision, I've put together a panel at this year's Law and Society Annual meeting in Chicago, IL.  The panel will be on Sunday, May 30, and the topics range from procedural class certification aspects to substantive employment-discrimination aspects.

Update: After an admittedly quick skim, here are a few things about the class-certification standard in the opinion worth noting:

After giving what it sees as a spectrum of circuit court opinions (p. 6156-62) on the inquiry into and resolution of mixed questions of law and fact, the Ninth Circuit observes that "A district court must sometimes resolve factual issues related to the merits to properly satisfy itself that Rule 23's requirements are met, but the purpose of the district court's inquiry at this stage remains focused on, for example, common questions of law or fact under Rule 23(a)(2), or predominance under Rule 23(b)(3), not the proof of answers to those questions or the likelihood of success on the merits." (Op. at 6169).  The Ninth Circuit then notes that the greater willingness to inquire into the facts during certification has evolved largely through securities class actions, in particular, in fraud-on-the-market cases.  Based, in part, on that observation, the court then clarified its standard as follows:

1. "[W]hen considering a class certification under Rule 23, district courts are not only at liberty to, but must, perform a rigorous analysis to ensure that the prerequisites of Rule 23 have been satisfied, and this analysis will often, though not always, require looking behind the pleadings to issues overlapping with the merits and underlying claims." (Op. at 6176-77).

2. "[D]istrict courts may not analyze any portion of the merits of a claim that do not overlap with the Rule 23 requirements.  Relatedly, a district court performs this analysis for the purpose of determining that each of the Rule 23 requirements has been satisfied."  (Op. at 6177).

3. "[C]ourts must keep in mind that different parts of Rule 23 require different inquiries.  For example, what must be satisfied for the commonality inquiry under Rule 23(a)(2) is that plaintiffs establish common questions of law and fact, and answering those questions is the purpose of the merits inquiry, which can be addressed at trial and summary judgment." (Op. at 6177).

4. "[D]istrict courts retain wide discretion in class certification decisions, including the ability to cut off discovery to avoid a mini-trial on the merits at the certification stage." (Op. at 6177).

5. "[D]ifferent types of cases will result in diverging frequencies with which the district court will properly invoke its discretion to abrogate discovery." (Op. at 6177).

As to the Daubert issue, i.e., whether courts should subject experts to a Daubert examination when their testimony speaks to class-certification issues, the Ninth Circuit seems to apply a full Daubert standard to Dr. Bielby, one of the plaintiffs' experts.  It notes that Wal-Mart challenged only whether inferences could be drawn from the expert's data.  "But because Daubert does not require a court to admit or exclude evidence based on its persuasiveness, but rather requires a court to admit or exclude evidence based on its scientific reliability and relevance . . . testing Dr. Bielby's testimony for 'Daubert reliability' would not have addressed Wal-Mart's objections." (Op. at 6191).  Consequently, it concludes that Wal-Mart's argument for excluding that testimony during class certification wasn't warranted because the argument was misplaced.  Thus, "[a]t the class certification stage, it is enough that Dr. Bielby presented scientifically reliable evidence tending to show that a common question of fact . . . exists."  (Op. at 6193).

If you're principally interested in the Rule 23(b)(2) issues, you might start at page 6214.  I'll try to provide a better overview once I've had a chance to read the opinion in more detail.

ECB

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