April 27, 2010
In a high-profile class action lawsuit that seems destined to reach the U.S. Supreme Court, a sharply divided Ninth Circuit on April 26 ruled 6-5 that a sex discrimination lawsuit against Wal-Mart could proceed as a class action. It is believed to be the biggest employment discrimination case in U.S. history with more than 1 million present and former female workers claiming billions of dollars for alleged unequal pay and opportunities for promotion.
While the substantive claims relate to employment discrimination, the Rule 23 class action procedural issues are equally significant to wage-and-hour cases, particularly given that there are more wage-and-hour class actions than employment discrimination class actions in recent years. Even in FLSA sec. 16(b) collective actions, the federal courts tend to apply Rule 23 concepts
Rule 23 is a procedural device that is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. Trial courts are required to engage in a “rigorous analysis” to determine that the requirements for a proposed class action comply with controlling law and do not jeopardize the parties’ substantive rights, including due process. In the Dukes case, the six named plaintiffs are claiming that they were subject to a pattern or practice of discrimination that, if proven, can be extrapolated to cover approximately 1.5 million other workers who would then be entitled to relief simply by being in the class and without individually proving their claims. The employer argued that even if it engaged in a pattern or practice of discrimination it is entitled, as a matter of due process, to raise individual defenses such as whether discrimination actually occurred as to a particular worker and what the worker’s damages, if any, are. This right is based on International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977). Had the Dukes majority been sensitive to the due process analysis set forth in Teamsters, it would have denied class certification because, to do otherwise, denies the employer the right to assert its individual defenses. Instead, the majority emphasized that it would be “uneconomical and inefficient” to conduct individual inquiries and indicated that the trial court “may award class-wide relief at the damages phase of a Title VII class action without individualized hearings.”
The lengthy Ninth Circuit opinion contains much interesting analysis for wage-and-hour class action counsel regarding the Rule 23 requirements and burdens in a class action certification motion. There is much discussion concerning the degree to which anecdotal testimony combined with statistical evidence and expert testimony may be used to satisfy the commonality and typicality requirements under Rule 23(a). However, the decision ultimately turns on the extent to which trial courts are permitted to minimize due process considerations to take advantage of the alleged efficiency of deciding liability and damages on an class-wide basis. Given the importance of the issue, the close Ninth Circuit decision, the tsunami of wage-and-hour class actions, and the absence of recent U.S. Supreme Court guidance regarding Rule 23 due process considerations, the Dukes case seems ripe for review