Tuesday, June 21, 2011


Class Action law suits are  complex civil litigation cases, but not all complex cases will be class action litigation.  The fact of a large number of plaintiffs is only one factor a court must consider in certifying a class under Rule 23 of the Federal Rules of Civil Procedure.  In a nutshell Rule 23 requires a) numerosity, b) commonality, c) typicality, and d) adequate representation.  A) the class is so large that it is not practicable to join all the members in one lawsuit.  B) there are questions of law or fact common to the class.  C) the claims or defenses of the representative parties are typical of the claims or defenses of the class. D) the representative parties will fairly and adequately protect the interests of the class.
Rule 23 also provides structural safeguards.  In Wal-Mart v. Dukes, No.  10-277, 564 U.S. _____ (2011) the Court gives a lesson to lawyers about pleading Rule 23 litigation.  In this case the plaintiffs presented the issue of  backpay under Rule 23(b)(2).

          (2) the party opposing the class has acted or refused
          to act on grounds that apply generally to the class, so
          that final injunctive relief or corresponding declaratory
          relief is appropriate respecting the class as a whole   

Key to the plaintiffs' case is the argument that Wal-Mart has a de facto policy of discriminating against women through underpayment and refusal to promote on a basis consistent with the way Wal-Mart pays and promotes men.  This sounds, at first blush, like a Rule 23(b)(2) case.  But take a look at Rule 23(b)(3).
          (3) the court finds that the questions of law or fact
          common to class members predominate over any
          questions affecting only individual members, and
          that a class action is superior to other available
          methods for fairly and efficiently adjudicating the
          controversy. The matters pertinent to these findings include:

          (A) the class members' interests in individually
          controlling the prosecution or defense of separate actions;

          (B) the extent and nature of any litigation concerning the
          controversy already begun by or against class members;

          (C) the desirability or undesirability of concentrating
          the litigation of the claims in the particular forum; and

          (D) the likely difficulties in managing a class action.
Associate Justice Scalia delivered the opinion which was fully joined by Chief Justice Roberts and Associate Justices Kennedy, Thomas, and Alito and partially joined by Associate Justices Ginsburg, Breyer, Sotomayor and Kagan.  Ginsburg wrote an opinion which concurred in part and dissented in part.  The minority took exception to the majority's treatment of the commonality aspect of Rule 23, otherwise this is a 9-0 ruling.
Discussing Rule 23 (b)(1) and (2) Scalia said "Classes certified under (b)(1) and (b)(2) share the most traditional justifications for class treatment—that individual adjudications would be impossible or unworkable, as in a (b)(1) class, or that the relief sought must perforce affect the entire class at once, as in a(b)(2) class. For that reason these are also mandatory classes: The Rule provides no opportunity for (b)(1) or (b)(2) class members to opt out, and does not even oblige the District Court to afford them notice of the action."
Rule 23(b)(3) is a less traditional, and less stringent, rule permitting class certification according to Scalia.  "Rule 23(b)(3), by contrast, is an “adventuresome innovation” of the 1966 amendments, Amchem, 521 U. S., at 614 (internal quotation marks omitted), framed for situations “in which ‘class-action treatment is not as clearly called for’,” id., at 615 (quoting Advisory Committee’s Notes, 28 U. S. C. App., p. 697 (1994 ed.)).  It allows class certification in a much wider set of circumstances but with greater procedural protections. Its only prerequisites are that “the questions of law or fact common to class members pre-dominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”" (emphasis added).
In a case like Dukes where all women who worked at Wal-Mart did not claim to belong to the class Scalia noted that only 23(b)(3) allows for potential litigants to opt out of the class.  Another benefit of 23(b)(3) is in the management of a fluid class.  The issue of backpay being owed to members of a mandatory class requires the District Court to make determinations of who was employed when.  The opt in or opt out features of (b)(3) provides for judicial economy. Due Process is served by 23(b)(3) where the plaintiff class seeks individualized monetary damages.  Scalia wrote: "In the context of a class action predominantly for money damages we have held that absence of notice and opt-out violates due process. See Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 812 (1985). While we have never held that to be so where the monetary claims do not predominate, the serious possibility that it may be so provides an additional reason not to read Rule 23(b)(2) to include the monetary claims here."
Scalia drives the due process point home by linking it with Title VII.  "Wal-Mart is entitled to individualized determinations of each employee’s eligibility for backpay. Title VII includes a detailed remedial scheme. If a plaintiff prevails in showing that an employer has discriminated against him in violation of the statute, the court “may enjoin the respondent from engaging in such unlawful employment practice, and order such affirmative action as may be appropriate, [including] reinstatement or hiring of employees, with or without backpay . . . or any other equitable relief as the court deems appropriate.” §2000e–5(g)(1). But if the employer can show that it took an adverse employment action against an employee for any reason other than discrimination, the court cannot order the “hiring, reinstatement, or promotion of an individual as an employee, or the payment to him of any backpay.” §2000e–5(g)(2)(A)."
For her part Associate Justice Ginsburg says too much 23(b)(3) analysis is going in to the majority's 23(a)(2) commonality.  She says the majority gets the cart before the horse.  "The Court blends Rule 23(a)(2)’s threshold criterion with the more demanding criteria of Rule 23(b)(3), and thereby elevates the (a)(2) inquiry so that it is no longer “easily satisfied”"  Generally, Rule 23(a) criteria are easily satisfied.  See, PREDOMINANCE OF COMMON QUESTIONS — COMMON MISTAKES IN APPLYING THE CLASS ACTION STANDARD, by J. Douglas Richards & Benjamin D. Brown, Rutgers Law Journal Vol. 41:163 -2009.
Ginsburg zeroes in on the majority's overreach. "“The Rule 23(b)(3) predominance inquiry” is meant to “test whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Products, Inc. v. Windsor, 521 U. S. 591, 623 (1997). If courts must conduct a “dissimilarities” analysis at the Rule 23(a)(2) stage, no mission remains for Rule23(b)(3)."
Dukes' massive class action lawsuit is dead.  Smaller class action suits are still available where the putative classes of aggrieved women winnow themselves into groups where the commonality requirements become, as Scalia would say, pellucidly clear.  Otherwise said, their similarities will be transparent. When commonality is transparent the 23(a)(2) requirements will be easily satisfied.  Litigation still requires proof. Smaller, more cohesive classes, will make it easier to drive the resolution of the legal issues to  clear conclusions. 
The size of these smaller classes will make them more manageable.  Although it is possible to have large class sizes without Rule 23 certification, my best guess is that the plaintiffs will regroup and proceed in waves of (b)(3) actions against Wal-Mart.  For their part Wal-Mart won what is due every litigant, a fair hearing on the individualized claims of the plaintiffs when and only if the common issues of law and fact are resolved in favor of the class.

If a winnowed group fail to satisfy the Rule 23 (a) and (b)(3) criteria the case moves on as a large complex civil litigation.  The risk of inconsistent results weighs heavily against requiring hundreds of thousands of women to each go it alone.

No comments:

Post a Comment