Monday, June 20, 2011

Wal-Mart v. Dukes - (b)2 is not to be.

As Erichson writes below, the Wal-Mart employment discrimination class action was decided today.   Here are some preliminary thoughts on two surprising things about the decision.

Most suprising.The thing I found most suprising about the decision was the unanimous agreement on limiting the scope of Rule 23(b)(2).  As our loyal readers know, two commonly used types of class actions were at issue in the case: injunctive class actions (brought under FRCP 23(b)(2)) and money damages class actions (brought under FRCP 23(b)(3)).  Because getting a class action certified under the money damages part of the rule - (b)(3) - is harder and more costly than the injunctive part - (b)(2) - it matters which one the plaintiffs are allowed to seek.  Here 9 agreed that claims for back pay need to be certified as a (b)(3).  This means that they need to meet the hightened requirements of superiority and predominance, which are exactly what they sound like - is the class action superior to individual actions? Do the common issues predominate over individual ones?

Title VII class actions seeking certification as injunctive actions and also asking for back pay are common.  Does every Title VII class action seeking pack pay now need to be certified as a money damages class action and meet these additional requirements? I am not sure. On the one hand, the Court wrote that a b(2) class action is not appropriate where plaintiffs seek an "individualized award of monetary damages." (Slip Op at 21).  Since all back pay awards are somewhat individualized, even if easily calculated, this would argue in favor of requiring (b)(3) certification of all back pay claims.  On the other hand, the Court left open the possibility of money damages in a b)(2) class action where money damages as "incidental".  Here the Court was particularly concerned about the fact that some class members for the back pay claims are no longer class members for the injuctive claim because they have left Wal-Mart's employment.  The Court explained that continually reevaluating the class to see who was still in Wal-Mart's employ & therefore entitled to both an injunction and back pay was inefficient.  Might it be then that a class could be structured so that every member of the class was still entitled to back pay and an injunction? What if the back pay was really small? 

The implication of the Court's rejection of "trial by fomula" (Slip Op at 27) in this case is very important for the survival of (b)(3) back pay claims. If the back pay claims are individualized and require individual hearings, then no class action will lie because these claims won't be certified as a b(3) either.  And this would have a genuine negative impact on persons entitled to back pay who would have had their claims vindicated in the class context.  The people who would suffer most under this would be people with legitimate claims for smaller amounts of back pay - in the $2,500 like the Dukes plaintiffs - because they would readily meet the superiority requirement (the only way they will be vindicated is through a class action mechanism) but are unlikely to meet the heightened predominance requirement. 

Second surprise & one for the academy. The majority relied heavily on the work of the late Richard Nagareda. It was good to see Richard's work recognized in this way, if sad to know that he is not alive to appreciate the compliment.  It was also interesting in light of the recent bruhaha over C.J. Robert's statements, in sum and substance, that the academy adds nothing to the practice of law or the work of judges. 

More on the applicability of Richard's work and where I disagree with him, as well as the implications of the Court's rejection of "trial by formula" for mass torts, a bit later. 


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