With last week’s denial of the plaintiffs’ request for a full panel rehearing in Wang v. Chinese Daily News [here], the Ninth Circuit reminds us that the Supreme Court’s ruling in Walmart v. Dukes provides valuable ammunition against wage and hour class actions of all sizes.
In March 2004, three employees of the Chinese Daily News filed claims for unpaid overtime, meal and rest break violations, and wage statement penalties. They sought collective action certification under the FLSA and class action certification under Rule 23(b)(2) (i.e., a class seeking injunctive relief) or, in the alternative, 23(b)(3) (i.e., a class seeking money damages). The district court certified an FLSA collective and a 200-person injunctive relief class (or, in the alternative, a 23(b)(3) class).
The newspaper’s bid to decertify the classes failed and, following a jury trial in 2007, the district court entered a $5.2 million judgment against the newspaper. In 2010, before the Supreme Court had even agreed to hear Dukes, the Ninth Circuit affirmed the district court’s class certification decision and final judgment.
A year later, in the midst of the newspaper’s bid for Supreme Court review, Justice Scalia penned the Court’s landmark decision in Dukes [here]. Dukes clarified the commonality standard that all plaintiffs must satisfy under Rule 23 and articulated due process concerns raised by the lack of individualized determinations regarding each employee’s eligibility to recover backpay.
Following Dukes, the Supreme Court vacated and remanded Wang to the Ninth Circuit for reconsideration. The Ninth Circuit followed suit, as we predicted [here], and sent the class certification decision back to the district court for reconsideration in light of Dukes. The plaintiffs then sought permission to contest that remand decision.
Last Tuesday, in an opinion reiterating the standard in Dukes, the Ninth Circuit unanimously rejected the plaintiffs’ bid to contest remand. The opinion confirms that even relatively small wage and hour class actions, like Wang, must satisfy the post-Dukes “commonality” standard, showing that common questions central to each class member’s right to recover have common answers. The court noted that, even with just 200 members, there were “potentially significant differences” among the class members.
Also, while the Ninth Circuit declined to address the calculation of damages (instead giving the district court the opportunity to do so if need be), it confirmed that plaintiffs seeking money damages cannot avoid Rule 23(b)(3)’s “predominance” analysis by pursuing a 23(b)(2) injunctive relief class. The predominance analysis, the Ninth Circuit explained, requires a balance between common and individual issues. In cases challenging the exempt status classification of employees, many plaintiffs attempt to rely exclusively upon the existence of a common job title and a uniform exemption policy. This opinion rightly rejects that approach, as it fails to account for individual issues among exempt employees that could make class treatment difficult, if not impossible.
In addition to telling the district court to redo its class certification analysis post-Dukes, the Ninth Circuit instructed the court to consider predominance in light of the California Supreme Court’s meal and rest break ruling in Brinker. In Brinker, the California Supreme Court voiced some skepticism as to the utility of resolving individual employees’ claims for wage and hour violations through a class action.
While the Ninth Circuit’s opinion does not guarantee a different result for the defendant in Wang, it surely adds another weapon to every employer’s arsenal for class certification battles, both big and small.