On January 27, 2011, ten amicus briefs were filed with the U.S. Supreme Court in support of the Defendant in the Dukes, et al. v. Wal-Mart. Seyfarth Shaw submitted amicus briefs on behalf of Costco Wholesale Corporation [click to link to Costco brief], and the Society of Human Resource Management and the HR Policy Association [click to link to SHRM brief].
While briefs filed by amicus curiae are not unusual in Supreme Court appeals, the number of amicus briefs filed in the Dukes case is unusual, and manifests the high stakes confronted by employers and the plaintiffs' class action bar in this litigation.
Amicus Filings Challenge The Ninth Circuit’s Rule 23 Analysis
Combined, the ten amicus briefs filed on behalf of the defense present a broad brush attack on the Ninth Circuit's interpretation of Rule 23 in the six-to-five en banc decision of the Ninth Circuit Court of Appeals (San Francisco) – reported at 603 F.3d 571 (9th Cir. 2010) (view ruling) - which affirmed an earlier class certification order in the largest employment discrimination class action ever certified. The Ninth Circuit upheld an earlier panel decision certifying a class action gender discrimination lawsuit challenging Wal-Mart’s pay and promotions practices. The full Ninth Circuit ruled that the U.S. District Court for the Northern District of California did not abuse its discretion in finding that the large and diverse class – encompassing approximately 1.5 million female employees, both salaried and hourly with a range of positions, who are or were employed at one or more of company’s 3,400 stores across the country – was united by a complex of company-wide discriminatory practices against women where plaintiffs presented expert opinions, factual evidence, statistical evidence, and anecdotal evidence showing a corporate policy and common pattern of discrimination imposed on female employees nationwide.
The amicus briefs assert that as to certain issues relative to plaintiffs' claims against Wal-Mart, the Ninth Circuit's Rule 23 class certification analysis erred. They also highlight several key issues for the Supreme Court’s review of Rule 23 certification standards in employment discrimination class actions.
Flawed Evidence Supporting Commonality Under Rule 23(a)
The amicus filings address issues related to the “commonality” finding by the Ninth Circuit under Rule 23(a). Amici curiae highlight that the Ninth Circuit in Dukes relied on four categories of evidence: (i) companywide policies that allow subjective decision-making, (ii) a sociological expert opinion that such decision-making is vulnerable to gender stereotyping, (iii) a statistical expert opinion that identifies gender disparities in promotion and pay outcomes when they are aggregated at levels above those where decisionmaking actually occurs, and (iv) declarations reciting anecdotes of various managers holding or tolerating discriminatory attitudes.
Dukes upheld a finding of Rule 23(a) commonality based on this evidence, despite the absence of any evidence that discriminatory decision-making has affected the class generally. In doing so, among other issues, amici curie argue that the statistical analysis relied upon by the Ninth Circuit was flawed because (1) the analysis improperly aggregated of the results of decisions by numerous, independent decision-makers that obscured unbiased promotion and pay decisions of many, or perhaps most, decision-makers; and (2) the analysis focused on external labor markets, despite the fact that Wal-Mart promotes from within.
Amici curie also challenged the Ninth Circuit’s reliance in Dukes on a sociological theory of causation - that delegating decision-making to local managers created a conduit for unconscious bias. The amicus briefs argue that, just as plaintiffs’ aggregate statistical analysis conceals the absence of evidence that women suffered disproportionately from local decision-making, plaintiffs’ sociological theory of causation does not indicate whether subjectivity allowed stereotypic decisions by local decision-makers to harm women in a pervasive manner. According to the defense side amicus briefs, a centralized decision to allow decentralized decision-making is, by itself, neither evidence of causation nor a basis for finding commonality. This is especially true where, in Dukes, the expert opinion did not rely on independent analysis of Wal-Mart ’s actual practices, and instead, on independent analysis.
Overall, amici curie argue that the analysis in Dukes opens the door to Title VII class actions challenging the promotion and pay practices of virtually all large decentralized employers, who necessarily rely on individual judgments by local decision-makers regarding which candidates to promote into higher management. This is the result because, under Dukes, plaintiffs need only offer generalized opinions by a statistician and a sociologist to establish the requisite “commonality” under Rule 23(a), without needing to link those opinions to workplace realities.
The Issues Of Class-Wide Damages Under Rule 23(b)(2)
One of the more controversial aspect in Dukes is plaintiffs' request to certify a class under Rule 23(b)(2). Rule 23(b)(2) requires that a defendant’s conduct “apply generally to the class, so that final injunctive relief … is appropriate respecting the class as a whole.” FED. R. CIV. P. 23(b)(2). Plaintiffs argued that their claims for injunctive relief predominated over claims for monetary relief, and therefore certification under Rule 23(b)(20 was proper. Wal-Mart argued to the contrary, given the million of putative class members at issues and plaintiffs likely request for billions of dollars in damages.
Amicus curie note that, in examining this issue in Dukes, the Ninth Circuit overruled its previous precedent - Molski v. Gleich, 318 F. 3d. 937 (9th Cir. 2003) and rejected an “incidental damages standard” used by other circuits. In doing so, the Ninth Circuit articulated a multi-factored approach that, according to amici, allows money damages where plaintiffs have merely alleged but cannot show that stereotypic decisions affected all class members in a similar way. They argue that a standard this loose would encourage plaintiffs to seek Rule 23(b)(2) certification not only for claims of backpay and punitive damages, but even for inherently individualized claims of emotional distress damages.
Next Steps In The Dukes U.S. Supreme Court Litigation
Plaintiffs’ merits brief is due on February 21, 2011. Oral argument is now set for March 29, 2011.
Pending further developments, as set forth in the amicus filings, employers should stay aware that decentralizing decision-making does not necessarily block the certification of a class action involving discrimination claims. Pending further clarification from the Supreme Court, this presents a difficult challenge for employers, most of which rely on informed individualized judgment by supervisors to make promotion, pay and other employment decisions, and some in conjunction with promulgation of programs aimed at increasing diversity and preventing discrimination in the workplace.
For these reasons, it is important for employers to review HR practices related to pay and promotion decisions - subjective or not - on a regular basis to determine whether the company practices, policies or procedures are adversely impacting any classification of employee. Employers and human resources professionals should also expect guidance from the Supreme Court about whether and how employers should formulate and implement processes to address decisions that most often rely on subjective decision making, including the performance review processes, hiring and pay decisions. In addition, the Supreme Court should reconcile the Ninth Circuit’s decision by offering guidance to aid in the successful development and implementation of corporate diversity and inclusion programs, whether and how employers can lawfully to impose policies and/or practices that require decentralized control of certain employer decisions, and when employers should require centralized or strictly objective decision making.