In Dukes v. Wal-Mart, Inc., the U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) recently affirmed the decision of the Northern District Court of California to certify a class of women in a sex discrimination class action, estimated to cover an unprecedented 1.5 million class members. The class includes women formerly and presently employed with the retailer in both management and non-management roles at all Wal-Mart locations in the United States.
One of Wal-Mart’s main challenges to class certification was the lack of commonality and typicality necessary to certify a class under the Federal Rule of Civil Procedure (FRCP) 23(a). Wal-Mart asserted that the class did not have the requisite commonality of facts and legal issues for certification purposes because the plaintiffs held different types of positions while employed at Wal-Mart, and they worked at different locations of the retailer nationwide, making their factual issues distinct. The Ninth Circuit rejected this challenge because the plaintiffs showed sufficient evidence to support the theory that Wal-Mart’s centralized operating structure had overreaching involvement in local store operations, lending itself to a uniform promotion and compensation process across all Wal-Mart locations. Such a centralized structure set the foundation for all women formerly and presently employed with the retailer to have common failure-to-promote claims.
With respect to the typicality finding, the Ninth Circuit found that the named plaintiffs’ claims were typical of those of the class at large because all female employees faced the same hurdles to promotion, whether or not they were managers, because of Wal-Mart’s centralized corporate structure. According to the Ninth Circuit, the lenient, "excessively" subjective decision-making employed by the retailer for promotion and compensation processes was a uniform practice at each location, making the named plaintiffs’ claims typical of the rest of the class members.
Turning to the FRCP 23(b) determination of the predominant form of relief for the class, Wal-Mart unsuccessfully contended that the class members’ claims for monetary damages predominated over their injunctive and declaratory relief claims because the class included former employees who would have no interest in seeing Wal-Mart change its policies. The Ninth Circuit disagreed with the retailer, finding that former employees would be interested in seeing Wal-Mart change its policies because such a change would ensure that current and future female employees would not be subjected to discrimination that they may have experienced in the past. Moreover, the court found that the plaintiffs’ primary goal of litigation was, in fact, injunctive and declaratory relief. While the potential for large monetary damages and punitive damages was a realistic concern for the retailer, the court found that neither the size of the class nor the retailer’s business should be determinative in finding that monetary relief predominates over injunctive and declaratory relief, making class certification proper. Further, because the plaintiffs sought back pay, which the court found was, in essence, "equitable" relief, such back pay would be all the more reason to find that injunctive and declaratory relief predominate.
Finally, the court rejected Wal-Mart’s theory that it would be deprived of due process if the plaintiffs prevailed at the liability stage. Wal-Mart argued that it would not be able to rebut each plaintiff’s individualized injuries and punitive damages claims given the sheer size of the class. The Ninth Circuit reasoned that reliable formulas for calculating punitive damages and back pay would be preferable to clogging the federal courts with individual claims for years to come.
Of note, the Ninth Circuit’s decision, which is being challenged by Wal-Mart, is inconsistent with the recent holdings of other U.S. courts. We will continue to monitor the Ninth Circuit for any further actions taken with regard to this decision.