Dukes v. Wal-Mart Stores, Inc.
603 F.3d 571, 2010 U.S. App. LEXIS 8576, 76 Fed. R. Serv. 3d 928 (2010)
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Rule of Law:
For a class to be certified, a court must conduct a rigorous analysis and find that the requirements of Rule 23 are met, even if this requires examining issues that overlap with the merits. A class seeking monetary relief may be certified under Rule 23(b)(2) if the monetary relief sought does not predominate over the requested injunctive or declaratory relief.
Facts:
- Wal-Mart is the largest private employer in the United States, operating approximately 3,400 retail stores nationwide with a highly centralized corporate structure and strong corporate culture.
- Plaintiffs were a group of women employed in various positions at Wal-Mart's domestic retail stores.
- Wal-Mart's corporate policy granted local store managers substantial discretion in making decisions regarding employee compensation and promotions.
- The exercise of this discretion was subject to minimal corporate oversight and was not guided by objective criteria.
- Plaintiffs alleged that this policy of subjective decision-making resulted in female employees being paid less than their male counterparts in comparable positions.
- Plaintiffs also alleged that female employees received fewer promotions to management positions and had to wait longer for such promotions than similarly situated male employees.
Procedural Posture:
- Plaintiffs, including Betty Dukes, filed a class action lawsuit against Wal-Mart Stores, Inc. in the U.S. District Court for the Northern District of California.
- The complaint alleged sex discrimination in pay and promotions in violation of Title VII of the Civil Rights Act of 1964.
- Plaintiffs moved to certify a nationwide class of all women employed at any Wal-Mart domestic retail store since December 26, 1998.
- The district court granted in part the motion, certifying a class under Federal Rule of Civil Procedure 23(b)(2) for claims seeking injunctive relief, declaratory relief, and back pay.
- The district court also certified a separate opt-out class for punitive damages and limited back pay relief for promotion claims to positions where objective data was available.
- Wal-Mart, the defendant, appealed the district court's certification order to the U.S. Court of Appeals for the Ninth Circuit.
- Plaintiffs cross-appealed the district court's decision to limit the availability of back pay for promotion claims.
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Issue:
Does the certification of a nationwide class of approximately 1.5 million female employees, alleging sex discrimination in pay and promotions stemming from a corporate policy of subjective decision-making, satisfy the commonality requirements of Federal Rule of Civil Procedure 23(a) and the requirements of Rule 23(b)(2) when claims for back pay and punitive damages are included?
Opinions:
Majority - Judge Hawkins
Yes, in large part. The district court did not abuse its discretion in certifying a class of current employees under Rule 23(b)(2) for injunctive and declaratory relief, as well as back pay, but it must reconsider the certification of punitive damages claims and the claims of former employees. A district court must conduct a rigorous analysis of the Rule 23 factors, which may overlap with the merits, to determine if common questions exist, not to resolve the merits themselves. Here, Plaintiffs presented sufficient evidence to raise a common question of whether Wal-Mart’s company-wide policy of subjective, discretionary decision-making by local managers resulted in a pattern or practice of gender discrimination. This evidence included: (1) expert testimony on gender stereotyping in subjective systems, (2) aggregated statistical analyses showing significant gender disparities in pay and promotions across all regions, and (3) anecdotal evidence from 120 employee declarations. For Rule 23(b)(2) certification, the court established a new test: monetary relief must not be 'predominant' over injunctive or declaratory relief. Under this test, back pay is a permissible equitable remedy in a Title VII case and does not predominate. However, the district court erred by certifying punitive damages without analyzing whether they caused monetary relief to predominate; this issue is remanded for consideration under either Rule 23(b)(2) or (b)(3). Claims by former employees, who lack standing for injunctive relief, are also remanded for consideration as a separate Rule 23(b)(3) class.
Concurrence - Judge Graber
Yes. The majority's holding is an unremarkable application of class action principles. Certification is appropriate when challenging the effects of an employer's company-wide policies, and the massive size of the class does not, by itself, make certification an abuse of discretion.
Dissent - Judge Ikuta
No. The certification of this class was an abuse of discretion because the plaintiffs failed to bridge the 'wide gap' between their individual claims and the existence of a class of 1.5 million women who suffered the same injury. The plaintiffs did not present the 'significant proof' of a general policy of discrimination required by General Telephone Co. of Sw. v. Falcon. The anecdotal evidence from 120 declarations is statistically insignificant and not representative. The statistical evidence, aggregated at the regional level, is not probative of discrimination at the store level where decisions are made. The expert testimony was not subjected to a proper Daubert analysis to ensure its reliability. Furthermore, certifying this class under Rule 23(b)(2) was improper because claims for individualized monetary relief predominate, and the proposed trial plan strips Wal-Mart of its statutory and due process rights under Title VII to present individualized defenses for each class member's claim.
Dissent - Chief Judge Kozinski
No. The members of this proposed class are too different from one another. They worked in a multitude of jobs, at 3,400 different stores, under a kaleidoscope of supervisors, and subject to varied policies. The class members have little in common but their sex and this lawsuit.
Analysis:
This decision significantly impacted class action litigation in the Ninth Circuit by clarifying the 'rigorous analysis' standard for certification, confirming that courts must resolve factual disputes necessary to rule on Rule 23 requirements even if they overlap with the merits. It established a new, more flexible 'predominance' test for Rule 23(b)(2) classes seeking monetary damages, replacing the circuit's prior 'subjective intent' test and rejecting the more restrictive 'incidental damages' test used elsewhere. The case set a major precedent for certifying massive employment discrimination class actions based on allegations that a decentralized, subjective decision-making policy functions as a common practice of discrimination, thereby opening the door for similar large-scale challenges against national corporations.
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