Yesterday, in a post contained here, I examined the Ninth Circuit’s commonality analysis in Dukes v. Wal-Mart Stores, Inc., 2010 U.S. App. LEXIS 8576 (9th Cir. Cal. Apr. 26, 2010). Today I will examine the Court’s analysis concerning the propriety of certifying damage claims under Rule 23(b)(2). The Court’s analysis on this issue is significant, as it stands to permit certification of Rule 23(b)(2) damage classes beyond the discrimination context.
Under Rule 23(b)(2), certification is appropriate if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief . . . is appropriate respecting the class as a whole.” See Fed. R. Civ. P. 23(b)(2). As a general rule, “Rule 23(b)(2) … ‘does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages.’” See Dukes, 2010 U.S. App. LEXIS 8576, at 123 (quoting Fed. R. Civ. P. 23(b)(2) advisory committee's note to 1966 amends.). Here, Wal-Mart claimed that certification of a (b)(2) class, which included back pay and punitive damage claims, was error because such claims for monetary relief predominated over claims for injunctive and declaratory relief.
In addressing Wal-Mart’s challenge, the Ninth Circuit revisited the applicable standard for evaluating whether monetary relief “predominates” over declaratory and injunctive relief (as instructed by the advisory committee note statement quoted above). As reasoned by the Court, the “subjective intent” approach – which was the approach previously followed by the Ninth Circuit in Molski v. Gleich, 318 F.3d 937 (9th Cir. 2003) – provides an incomplete method for answering this question, as (1) “the sole emphasis on the plaintiff's intent ignores important indicators of the ‘strength, influence, [and] authority’ of a request for specific monetary relief” and (2) “requires courts to engage in a nebulous and imprecise inquiry into the plaintiffs' intent in bringing a particular suit.” See Dukes, 2010 U.S. App. LEXIS 8576, at 123-27. Based thereon, the “subjective intent” analysis in Molski was overruled. See id.
The Court similarly rejected the approach followed by other circuits providing that “monetary relief predominates over other forms of relief ‘unless it is incidental to requested injunctive or declaratory relief.’” See id., at 123 (citing Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415-16 (5th Cir. 1998)). As reasoned by the Court, this approach (1) conflicted with the Advisory Note by equating the term “predominant” with the more restrictive phrase “more than incidental” and (2) “‘usurps the district courts' authority granted by Rule 23 . . . to rigorously analyze the case, probe behind the pleadings if necessary, and exercise its own discretion within the framework of the rules in determining whether the action is to be so maintained.’” See id., at 125-126.
According to the Court, the superior approach was to ascribe the term “predominant” a literal meaning, limiting Rule 23(b)(2) certification to “monetary damages that are not ‘superior [in] strength, influence, or authority’ to injunctive and declaratory relief.” See Dukes, 2010 U.S. App. LEXIS 8576, at 124 (quoting Merriam-Webster's Collegiate Dictionary 978 (11th ed. 2004)). Under this approach “a district court should consider, on a case-by-case basis, the objective ‘effect of the relief sought’ on the litigation”, evaluating “factors such as  whether the monetary relief sought determines the key procedures that will be used,  whether it introduces new and significant legal and factual issues,  whether it requires individualized hearings, and  whether its size and nature – as measured by recovery per class member – raise particular due process and manageability concerns ….” See id., at 127.
Under this approach, the district court was deemed to have acted within its discretion by including claims for back pay, but exceeded its discretion by including punitive damage claims.
With regard to backpay claims, the Court noted that every circuit to have addressed the issue, even those applying the most restrictive standard, has deemed backpay claims “fully compatible with the certification of a Rule 23(b)(2) class.” See Dukes, 2010 U.S. App. LEXIS 8576, at 130-131. As explained by the Court, such authorities have consistently concluded that awards of backpay do not predominate over the injunctive remedies because (1) “the ‘calculation of back pay generally involves [relatively un]complicated factual determinations and few[ ] individualized issues’” and (2) “back pay is ‘an integral component of Title VII's 'make whole' remedial scheme …which the drafters of the Federal Rules of Civil Procedure clearly intended Rule 23(b)(2) to apply.” See id., at 133-34 (noting that the advisory committee notes expressly contemplated “‘actions in the civil-rights field where a party is charged with discriminating unlawfully against a class’”).
Conversely, inclusion of a punitive damage claim was deemed an abuse of discretion, as the district court failed to undertake any analysis evaluating the impact of the inclusion of such a claim. See Dukes, 2010 U.S. App. LEXIS 8576, at 140-141. On remand, the district court was advised to consider the following issues: (1) whether the punitive damage claim would be tried to a jury, and if so, whether this procedural change causes the monetary damage claim to predominate; (2) whether addition of the element of “malice” necessary to recover punitive damages introduces significant evidentiary and legal arguments that would not have otherwise been necessary; (3) whether the potential size of individual punitive damage awards, which under Title VII is capped at $300k per individual, triggers due process issues requiring adjudication under Rule 23(b)(3); and (4) whether plaintiff’s punitive damage theory – which is based on a uniform theory of liability – would mitigate against a finding that punitive damages predominate. See id., at 141-44. Moreover, the district court was further advised, in the event Rule 23(b)(2) certification was not appropriate, to consider certification under Rule 23(b)(3) (which has been deemed appropriate in the Ninth Circuit). See id., at 144-45.
Finally, Wal-Mart challenged the propriety of including former employees under a Rule 23(b)(2) class on the grounds that any monetary relief would predominate due to such persons lacking standing to pursue injunctive relief. The Court agreed, but limited this finding solely to individuals who were no longer employed at Wal-Mart on the date the complaint was filed. See id., at 147-48. However, the Court did not leave excluded people hanging. With regard to individuals whose employment terminated pre-filing, the district court was advised to revisit whether certification of a Rule 23(b)(3) class was appropriate. See id.