2011 will surely go down as the Year of the Class Action in the Supreme Court of the United States. If you were surprised at the potential effects of Concepcion v. AT&T Mobility LLC for consumer class actions (unlike many observers, I didn’t see it as their end), then you might want to sit down before reading the Court’s decision in Walmart v. Dukes — which has far greater implications for employment discrimination class actions.
In my first entry on this blog back in April, I wondered where the Court was going with Dukes. Was it looking to address when (if ever) the easier-to-satisfy Rule 23(b)(2) can be used to certify a class seeking monetary relief? Plaintiffs’ burden of proof in showing that a class satisfies the requirements of Rule 23? Or was the Court bothered by an issue specific to Title VII class actions only — the theory that allowing “excessive subjectivity” in hiring decisions can be a “pattern or practice” that may be actionable in an employment discrimination suit if the plaintiffs show a disparate impact on women?
And correspondingly, would the decision’s effects extend to: (a) only civil right cases; (b) all (b)(2) classes; or (c) all class actions? While many think the answer is all of the above, I think the decision is for the most part confined to (a) and (b).
The Basics of the Decision
The thrust of the Dukes decision can be gleaned from this comment by J. Russell Jackson (who makes his living defending corporations against class actions) on his blog Consumer Class Actions and Mass Torts: “”it’s like an 8-year-old’s Christmas morning in my office!”
Lawyers on the plaintiffs’ side, on the other hand, must feel like they found coal in their stockings, despite what they told the National Law Journal when it called for their reactions.
A description of the background, facts, and procedural hisory of the case can be found in my earlier post, so I’ll focus on the holding.
The Court was unanimous in rejecting the court of appeals’ conclusion that Rule 23(b)(2) certification was appropriate. The Court also addressed Rule 23(a), with a 5-4 majority rejecting the 9th Circuit’s finding that the class members shared “common issues of law or fact” satisfying Rule 23(a)(2)’s “commonality” requirement.
Either holding would have been sufficient to reverse the decision on appeal, and appellate courts generally try to confine their analyses to what is necessary to decide the case before the court, so it’s somewhat surprising that the Court addressed both points. Perhaps it did so to ensure that the case wouldn’t wind up back before the Court if the plaintiffs tried another route to certification on remand. Then again, the Court may have simply felt that since the issues were already teed up, it would be more efficient to decide them now than to wait for them to be brought up again in some future case.
Defense lawyer Jackson goes on to say that the Court fulfilled 5 of the 8 wishes on his wishlist. I personally think he overstates it a bit. At least 2 of his wishes — that courts must perform a rigorous analysis at class certification, and can’t use Rule 23 to abridge substantive rights — had been granted by the Court long ago. And the courts of appeals had already unanimously endorsed another of his wishes: that courts must decide merits issues where necessary to the Rule 23 analysis.
That said, it’s hard to argue with the notion that Dukes embraces many positions advanced by class action defense lawyers. And I think the decision has the potential to all but eliminate private enforcement class actions under Title VII, as well as the use of Rule 23(b)(2) in cases involving monetary claims (i.e., it will not be used in most cases brought by for-profit law firms).
What About Other Types of Class Actions?
The impact on class actions that don’t involve civil rights is not as clear to me. Many commentators are saying that the Court’s description of commonality will impact all class actions. But I’m not so sure.
Cases Like Dukes Are Highly Individualized
One thing to remember when reading appellate decisions is this: context always matters. And that is particularly true in Dukes. As in many Title VII class actions, Dukes is an effort to try very individualized legal claims through representative plaintiffs. In the absence of an explicit written policy to discriminate or a test designed to achieve the same goal, decisions to hire or promote an employee are extremely individualized. They’re based not only on an applicant’s qualifications and performance, but also on the qualifications and performance of competing applicants.
So proving that a particular hiring or promotion decision was unlawful is often inseparable from the individual circumstances of that decision. The “excessive subjectivity” theory was an attempt to get around that problem through statistics. But statistics in such a case may tell you something about the employer’s overall hiring, but they still can’t say with certainty whether any particular person was adversely impacted.
I’ve always felt that plaintiffs in Title VII cases were held to a lesser standard than in other class actions. That was likely attributable to the the historical bond between class actions and civil rights actions — Brown v. Board of Education is probably the most famous class action to this day — as well as the understanding that Rule 23’s drafters had civil rights class actions in mind.
After Dukes, forget the Advisory Committee Notes to Rule 23(b). They may say that provision is meant to apply to “various actions in the civil-rights field where a party is charged with discriminating unlawfully against a class…” But the text of the rule specifically refers to cases involving “declaratory or injunctive relief.”
So courts’ traditional understanding that Rule 23(b) also encompassed other forms of “equitable relief” in civil rights cases (i.e., backpay) even though monetary in nature, was misgurided, according to the Court. But in a nod to Brown, perhaps, the Court clarified that when the Advisory Committee notes speak of civil rights cases, they are referring to desegregation cases and the like, where only non-monetary relief is at issue.
So I think one major lesson of Dukes is that civil rights cases are to be treated the same as any other class action.
The Court’s Rule 23(a)(2) Analysis Is Not A Major Change
Which brings us back to the principle that context always matters. In my view, the Court’s discussion of commonality is inseparable from its rejection of the “excessive subjectivity” theory. And the Court’s finding that the class didn’t satisfy commonality loses much of its significance when removed from that context.
So I don’t think that the Court’s analysis of the requirement of commonality under Rule 23(a)(2) will have quite the impact on other types of cases that many are predicting. In fact, I don’t think the Court really changed the standard that generally applies in determining whether the class members share common issues of law or fact. To satisfy commonality, the Court said:
[The class members’] claims must depend upon a common contention…That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.
What’s new about that? In the types of cases that I’ve always understood to be good candidates for class action treatment, which is to say where the substantive claims are defendant-centered, that commonality standard would appear to be satisfied.
Take, for example, a price-fixing case. A “common contention” that is “central to the validity of each one of the claims” is the existence of a price-fixing scheme among the defendants. And if one plaintiff proves that such a scheme existed, it generally will have resolved that contention class-wide, “in one stroke.”
The same is true in a 10b-5 securities case. When a plaintiff resolves the central issue of whether the defendants made false or misleading statements, that issue is resolved class-wide. So too in an Enron-style ERISA cases alleging imprudent investment in an employer’s stock. When a plaintiff resolves the central contention that it was imprudent for plan managers to invest plan assets in the investment vehicle at issue, the validity of that contention is established class-wide, “in a single stroke.”
The Court’s Rule 23(b)(2) Holding is Significant, But Mostly for Title VII Cases
There’s no denying that the Court severely restricted the use of the Rule 23(b)(2) accross the board. The Court nominally left open the possibility that (b)(2) might be used where monetary relief is “incidental to requested injunctive or declaratory relief” and “damages…flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief,” as the 5th Circuit held in Allison v. Citgo Petroleum Corp.
But at the same time, the court strongly implied that allowing a non-opt-out class to pursue monetary relief violates due process. So I wouldn’t expect to see any such classes certified anytime soon. Nor are many plaintiffs likely to request it, as the Court made it as difficult to certify a (b)(2) class as a (b)(3) class, in concluding that (b)(2) applies only when “predominance and superiority are self-evident.”
Yet, again, this holding would seem to primarily impact class actions brought under Title VII and other civil rights statutes. Plaintiffs in most other cases seek monetary relief and certification under Rule 23(b)(3). Courts, after all, have rarely found that injunctive and declaratory relief predominated in a case where plaintiffs also sought monetary relief. Outside of the civil rights context, at least.