Tuesday, April 27, 2010
Court Upholds Certification of Class Action Against Wal-Mart
From Staff and Wire Service Reports
A sharply divided federal appeals court yesterday upheld certification of the largest gender bias class action in U.S. history against Wal-Mart Stores Inc.
In its 6-5 ruling, the Ninth U.S. Circuit Court of Appeals said the world’s largest private employer will have to face charges that it pays women less than men for the same jobs and that female employees receive fewer promotions and have to wait longer for those promotions than male counterparts.
The retailer, based in Bentonville, Ark., has fiercely fought the lawsuit since it was first filed in 2001 by six women purporting to represent a class of women employed in a range of Wal-Mart positions, from part-time entry-level hourly employees to salaried managers.
Attorneys for the Wal-Mart employees said the potential class encompasses more than 1 million women, but Wal-Mart asserted that fewer than 500,000 women were covered by yesterday’s decision.
U.S. District Judge Martin J. Jenkins of the Northern District of California—who has since left the federal bench for the First District Court of Appeal—granted the plaintiffs’ certification motion as to issues of alleged discrimination, including liability for punitive damages, as well as injunctive and declaratory relief, but rejected the proposed class with respect to the request for back pay.
Wal-Mart, which employs 2.1 million workers in 8,000 stores worldwide, lost its appeal to the Ninth Circuit in 2007, but persuaded the court to revisit the case en banc.
The retailer contended that Jenkins had erred by finding the commonality and typicality requirements of Federal Rule of Civil Procedure 23(f) were satisfied, and Senior Judge Michael Daly Hawkins seized the opportunity to clarify the standard for granting certification in his decision for the court.
Hawkins opined that the Supreme Court “provided clear, if sometimes misunderstood, guidance on the issue of what standards a district court applies when deciding whether to certify a class” in General Telephone Co. of the Southwest v. Falcon, (1982) 457 U.S. 147, which held that “a Title VII class action, like any other class action, may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.”
Pursuant to Falcon, Hawkins said, a district court must analyze underlying facts and legal issues going to the appropriateness of class certification to ensure that Rule 23’s requirements are satisfied and not simply presumed from the pleadings.
He acknowledged that this determination “will sometimes, though not always, require an inquiry into and preliminary resolution of disputed factual issues, even if those same factual issues are also, independently, relevant to the ultimate merits of the case,” but emphasized that “Rule 23 gives neither party the right to turn the certification decision into a trial.”
While a district court may have to resolve factual issues related to the merits to satisfy itself that Rule 23’s requirements are met, “the purpose of the district court’s inquiry at this stage remains focused on, for example, common questions of law or fact under Rule 23(a)(2), or predominance under Rule 23(b)(3), not the proof of answers to those questions or the likelihood of success on the merits,” Hawkins explained.
In this case, Hawkins reasoned that the plaintiffs had offered evidence suggesting common pay and promotion policies among Wal-Mart’s many stores providing a nexus between the subjective decision making and statistical evidence demonstrating a pattern of lower pay and fewer promotions for female employees.
“That the jury might later find Wal-Mart’s statistical evidence more persuasive does not detract from the district court’s determination, after extensive review, that [plaintiff’s evidence]…raises common issues appropriate for class adjudication,” he said.
Hawkins went on to reject Wal-Mart’s claim that the size of the proposed class rendered the case unmanageable, but agreed that those putative class members who were no longer Wal-Mart employees at the time plaintiffs’ complaint was filed did not have standing to pursue injunctive or declaratory relief.
He also concluded that the district court had abused its discretion by failing to analyze whether certifying the plaintiffs’ punitive damage claims would cause the issue of monetary damages to predominate. The appellate court directed the district court to reconsider the propriety of class certification with regard to punitive damages.
Judges Stephen Reinhardt, Susan P. Graber, Raymond C. Fisher, Richard A. Paez, and Marsha S. Berzon joined Hawkins, while Judge Sandra Ikuta wrote a blistering dissent, joined by Chief Judge Alex Kozinski and Judges Pamela Ann Rymer, Barry G. Silverman, and Carlos T. Bea.
“No court has ever certified a class like this one, until now,” Ikuta wrote. “And with good reason.”
She argued that the plaintiffs could not demonstrate the proposed class was subject to a general policy of discrimination since their case was based on a collection of 120 affidavits from women concentrated in six states which claimed discrimination “in different forms, at the hands of different people, in different stores, in different parts of the country, at different times, under a constellation of facts unique to each individual.”
Ikuta posited the majority’s conclusion that “one declaration for every 12,500 women” was sufficient to raise an inference of common discriminatory experiences “does not pass even the straight-faced test.”
Wal-Mart’s lead lawyer, Theodore Boutrous of Gibson, Dunn & Crutcher, opined that yesterday’s decision “opens up every company in America that has employees to class actions like this,” while Jeff Gearhart, an executive vice president for Wal-Mart, said the company is considering whether to appeal to the U.S. Supreme Court.
Gearhart remarked that Wal-Mart does not believe the plaintiffs’ claims were “representative of the experiences of our female associates,” insisting that the company is “an excellent place for women to work and fosters female leadership among our associates and in the larger business world.”
He said the company is “proud of the strides we have made to advance and support our female associates and have been recognized for our efforts to advance women through a number of awards and accolades.”
Unions and other critics have long complained that Wal-Mart’s workplace practices needed improvement, especially in the areas of diversity and career advancement. The discounter responded to the pressure last year at its annual shareholders’ meeting by announcing a plan to address the issue of promoting women, creating a “global council” comprised of 14 Wal-Mart female executives.
Brad Seligman, the lead lawyer suing Wal-Mart, hailed yesterday’s decision as a victory for his clients since it “upheld the heart of the case” against Wal-Mart, which could potentially cost the retailer billions of dollars if it is found liable.
The case is Dukes v. Wal-Mart Stores, Inc., 04-16688 and 04-16720.
Copyright 2010, Metropolitan News Company