Monday, April 26, 2010

Ninth Circuit Affirms in Part Class Certification Order in Dukes v. Walmart

On April 26, 2010, the Ninth Circuit issued its long awaited opinion in Dukes v. Walmart, 2010 U.S. App. LEXIS 8576 (9th Cir. Cal. Apr. 26, 2010).  As reflected in the introduction of the opinion, the Court affirmed the lower court’s certification of the “23(b)(2) class of current employees with respect to their claims for injunctive relief, declaratory relief, and back pay.” The Court remanded for reconsideration certification of the punitive damages claims, as well as the claims of former employees.

Wal-Mart’s appeal claimed that “the district court erred by: (1) concluding that the class met Rule 23(a)'s commonality and typicality requirements; (2) eliminating Wal-Mart's ability to respond to individual Plaintiff's claims; and (3) failing to recognize that Plaintiffs' claims for monetary relief predominated over their claims for injunctive or declaratory relief.” See Dukes, 2010 U.S. App. LEXIS 8576, at 7-8. As the Court’s analysis is quite dense, I will address each of these arguments in successive postings.

With regard to the challenge to Rule 23(a) commonality, Wal-Mart claimed the evidence underpinning the district court’s certification analysis was insufficient to establish a common factual or legal question relating to the existence of discrimination. Such evidence challenged by Wal-Mart included “(1) facts supporting the existence of company-wide policies and practices that, in part through their subjectivity, provide a potential conduit for discrimination; (2) expert opinions supporting the existence of company-wide policies and practices that likely include a culture of gender stereotyping; (3) expert statistical evidence of class-wide gender disparities attributable to discrimination; and (4) anecdotal evidence from class members throughout the country of discriminatory attitudes held or tolerated by management.” See Dukes, 2010 U.S. App. LEXIS 8576, at 75-76. For several reasons, the Ninth Circuit disagreed.

First, the Court concluded that there was substantial, "undisputed" evidence in the record supporting plaintiffs’ contention that Wal-Mart operates a highly centralized company that promotes policies common to all stores and maintains a single system of oversight. As explained by the Court, this included evidence of (1) a uniform personnel and management structure across stores; (2) extensive oversight by Wal-Mart headquarters with regard to store operations, including the use of standardized company-wide policies governing pay and promotion decisions, and a strong, centralized corporate culture; and (3) consistent gender-related disparities in every domestic region of the company. See Dukes, 2010 U.S. App. LEXIS 8576, at 76.

Second, the Court rejected Wal-Mart-s claim that the trial court erred by relying upon expert evidence which concluded that “that Wal-Mart is ‘vulnerable’ to bias or gender stereotyping” at the “macro” level (i.e. involving all Wal-Mart stores). As reasoned by the Ninth Circuit majority, the district court acted well within its discretion by relying upon such evidence, as the district court affirmatively demonstrated that the expert opinion at issue was itself tied directly to the plaintiffs’ proffered undisputed evidence of centralization:
The district court reviewed Plaintiffs' and Wal-Mart's competing claims as to Wal-Mart's uniform culture and determined that "the evidence indicates that in-store pay and promotion decisions are largely subjective and made within a substantial range of discretion by store or district level managers, and that this is a common feature which provides a wide enough conduit for gender bias to potentially seep into the system." Id. at 152. Having evaluated this evidence in detail, the court determined "that given the evidence regarding strong uniform culture and policies, the degree and impact of this practice is a significant question of fact common to the class as a whole." Id. at 153. Such a reasoned determination is what our standard for Rule 23 requires.
See Dukes, 2010 U.S. App. LEXIS 8576, at 78.

As reasoned by the Court, Wal-Mart’s criticisms regarding the reliability of the conclusions rendered by plaintiff’s expert implicated a merits based issue that was reserved for the jury to resolve. See Dukes, 2010 U.S. App. LEXIS 8576, at 79-80. Moreover, the Court concluded that Wal-Mart’s Daubert challenge to plaintiff’s expert evidence was misplaced, as Walmart improperly challenged expert conclusions, not methodology used in arriving at the proffered opinions. See id., at 78-82 (“For the class certification, however, Dr. Bielby's opinions, for which Wal-Mart did not challenge the methodology, raised a question ‘of corporate uniformity and gender stereotyping that is common to all class members.’ [] We cannot say that considering Dr. Bielby's opinions in this method was an abuse of discretion.”).

Third, the Court similarly rejected Wal-Mart’s claim that the trial court erred by relying upon plaintiff’s statistical evidence, which evaluated discrimination at the “macro” level, as opposed to each store individually. As reasoned by the Court, “[i]t is well established that plaintiffs may demonstrate commonality by presenting statistical evidence, which survives a ‘rigorous analysis,’ sufficient to fairly raise a common question concerning whether there is class-wide discrimination.” See Dukes, 2010 U.S. App. LEXIS 8576, at 86. In the case at hand, the district court was deemed to have rendered its determination based on such as rigorous analysis, as the court relied on evidence demonstrating that “a store-by-store analysis would not capture: (1) the effect of district, regional, and company-wide control over Wal-Mart's uniform compensation policies and procedures; (2) the dissemination of Wal-Mart's uniform compensation policies and procedures resulting from the frequent movement of store managers; or (3) Wal-Mart's strong corporate culture.” See id., at 87-91.

Finally, the Court rejected Wal-Mart’s assertion that the 120 declarations submitted by plaintiffs containing anecdotal evidence of discrimination (1) was not competent evidence of discrimination, and (2) insufficient evidence of discrimination in light of the size of the certified class. As reasoned by the Court, “anecdotal evidence of discrimination is commonly used in Title VII ‘pattern and practice’ cases to bolster statistical proof by bringing ‘the cold numbers convincingly to life.’” See Dukes, 2010 U.S. App. LEXIS 8576, at 106. The Court further reasoned that, contrary to Wal-Mart’s argument, the district court did not rely upon such anecdotal evidence to establish commonality by itself, but in conjunction with the other evidence submitted by plaintiffs (as discussed above). See id., at 107-108.

In light of the forgoing, the Court concluded that the district court’s Rule 23(a)(2) commonality analysis failed to disclose any grounds on which an abuse of discretion could be framed:
The district court's analysis of Rule 23(a)(2) complies with the standard the Supreme Court has set down and we have explained today for a district court adjudicating a motion for class certification. Plaintiffs' factual evidence, expert opinions, statistical evidence, and anecdotal evidence provide sufficient support to raise the common question whether Wal-Mart's female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII. Evidence of Wal-Mart's subjective decision-making policies suggests a common legal or factual question regarding whether Wal-Mart's policies or practices are discriminatory. Many other courts have reached the same conclusion based on similar evidence. See, e.g., Staton, 327 F.3d at 955; Shipes, 987 F.2d at 316; Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1557 (11th Cir. 1986); Segar v. Smith, 738 F.2d 1249, 1276 (D.C. Cir. 1984).
See Dukes, 2010 U.S. App. LEXIS 8576, at 113-114.

More on the Court's analysis tomorrow.

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