Wal-Mart Stores v. Dukes (2011)

Today (June 20, 2011) the Court released the much anticipated decision in Wal-Mart Stores v. Dukes.  The case presents, what would have been, the largest class action lawsuit in our country's history with more than 1.6 million people included in the class.  Unfortunately, the court threw out the certification on procedural grounds.  The plaintiffs may still bring their individual cases, or may attempt to certify smaller classes.  Here's what you need to know:


BACKGROUND

Respondents (Plaintiffs in the original case), current and former employees, claim that they were discriminated against by Wal-Mart Stores, Inc.  They claim that they were paid less than their male counterparts in the same positions and that they were denied promotion/raises because of gender bias.  Wal-Mart has a policy of allowing their managers almost complete discretion in hiring and promotion.  The only requirements that Wal-Mart has for promotion to a management training position is "above-average performance evaluations, one year's tenure at their current position, and a willingness to relocate."  Respondents claim that this discretion was applied in a gender biased manner, and that bias was pervasive in the corporate culture of Wal-Mart.  They DO NOT claim that Wal-Mart has an official policy of discrimination (Wal-Mart has an expressed policy of gender neutrality and claims to punish discrimination when applied in hiring/promotion), rather they claim that the application of discretion leads to a "disparate impact" (a.k.a. unequal treatment).

In support of their claim the three named parties put forward their own stories.  Respondent, Dukes, claims that she was brought up on disciplinary charges in retaliation for invoking internal complaint procedures (she was demoted from support management to "greeter").  Respondent, Kwapnoski, claims her manager "told her to 'doll up,' wear some makeup, and dress a little better."  Respondent, Arana, requested management training on a number of occasions, but was brushed off.  After initiating internal procedures, she was told to apply to the district manager if she thought her manager was being unfair.  She chose not to.  They also put forward a study which found that disparities in hiring, promotion, and pay could be explained only be gender discrimination.


PROCEDURAL HISTORY
The U.S. District Court for the Northern District of California certified a class of all current and former female employees of Wal-Mart Stores, Inc.  The U.S. Court of Appeals for the Ninth Circuit affirmed (but slightly limited) the class certification.  Defendent, Wal-Mart, appealed for certiorari to the U.S. Supreme Court, and the court granted the appeal in 2010.


APPLICABLE LAW
Rule 23 (Class Actions)


Rule 23 creates four types of class action.  The types of class action relevant to this case are 23(b)(2) and 23(b)(3).
23(b)(2) classes include any class that is seeking injunctive relief (such as an injunction, declaratory relief, specific performance, etc.).
23(b)(3) classes are those where the class is seeking monetary damages.


In order to be certified as a class you have to meet the four criteria of 23(a).
(1) The class must be so numerous as to make joinder impractical.
(2) he claims must present a common question of law and fact.
(3) The claims of the representatives must be typical of the claims of the entire class.
(4) The representatives must adequately represent the interests of the entire class.
There criteria are referred to by the Court as "numerosity, commonality, typicality, and adequate representation."


Rule 23(b)(3) is more stringently policed by the court, so it requires two additional criteria.
(1) The common claim must "predominate" over all other claims.
(2) A Class Action must be the "superior" form of adjudication (i.e. it must be better than adjudicating each claim individually).


ISSUE
The court answered two questions in this case (Parts II and III of the opinion)
(Part II) Has the certification met the criteria of 23(a)?
(Part III) Can claims for monetary damages by certified under 23(b)(2) when they are attached to a claim for injunctive relief?


HOLDING
Part II (5-4): No, the class certification was inappropriate because the class failed the "commonality" element of Rule 23(a).
Part III (Unanimous): No, claims for damages may NOT be certified under 23(b)(2) unless they are "incidental" to the claim for injunctive relief.


OPINION (Scalia, joined by Roberts, Alito, Thomas, and Kennedy)

Justice Scalia and the Conservative block reason that the claims of the respondents are too dissimilar to be considered "common."  The court cautions that "demonstrating the invalidity of one manager's use of discretion will do nothing to demonstrate the invalidity of another's."  As such Scalia finds that the element of commonality is not met because it would be impossible to prove that the discretion of the representatives' managers was common to the discretion applied across the class.


In the second holding (Part III), the court unanimously holds that Rule 23(b)(2) cannot be used to certify claims for monetary damages unless they are incidental to the injunctive relief requested.  In this case the court found that the claims for damages were related to, but distinct from the request for injunctive relief. granting an injunction would not automatically lead to monetary damages, thus the monetary damages were sufficiently distinct to be certified separately under the more stringent Rule 23(b)(3).  The court therefore, held that those claims must be certified under 23(b)(3) if at all.


DISSENT (Ginsburg, joined by Breyer, Sotomayor, and Kegan)

Justice Ginsburg and the liberal block of the court agreed that monetary damages should not be certified under 23(b)(2) and concurred with Part III.  However, the liberal block took issue with the courts expansion of the "commonality" requirement.  Ginsburg claimed that the court's emphasis on how the claims of the class members were dissimilar lead to a "dissimilarity test" rather than a commonality test.  She claims that the commonality requirement was meant to join cases that have similarities.  This change, she claims, would drastically narrow certifications since any differences would now be grounds for denial of certification.


Ginsburg also claimed that the use of dissimilarity was an attempt by the court to integrate the Rule 23(b)(3) requirements into the 23(a) requirements, thus making it more difficult to certify all classes, not just those for monetary damages.  This, Ginsburg reasoned, was inappropriate.


CONCLUDING THOUGHTS
I know that most non-legally-trained individuals see this as a case of discrimination, but it's not.  The issue that came before the court was all about procedure, even though the overarching case was about discrimination.  Personally, I like the fact that the court is limiting class action certifications.  However, the court fails to recognize that there is a difference between class actions for injunction and those for money.  I find that classes for injunction are usually less dangerous than those for money.  Consider the difference between telling a company "no, you may not do X" and "you now have to pay $X billions of dollars."  The former generally won't be very dangerous to the company, while the latter could be devastating.  Thus, I agree with the Dissent, in so far as I think that importing additional requirements for injunction classes is probably unnecessary and detrimental.  It provides unnecessary protections for businesses whose practices may be discriminatory, even when the plaintiff is not seeking monetary relief.  We don't need to protect company policies from injunctions in the same stringent manner as we protect them from potentially devastating monetary damages.


Common Sense