Ninth Circuit Court of Appeals Upholds Certification of Nationwide Class in Dukes v. Wal-Mart Stores and Reverses Other Aspects of the Lower Court's Decision

By the narrowest margin of 6-5, the Ninth Circuit United States Court of Appeals upheld portions of a California district court's certification of a Federal Rule of Civil Procedure 23 (b)(2) class of current female employees employed in any position (from part-time entry level hourly employees to salaried managers) at any Wal-Mart store nationwide.  Dukes v. Wal-Mart Stores (9th Circuit April 26, 2010).  The claims were brought by six individuals alleging sex discrimination in pay and promotions.  Their requests for injunctive relief, declaratory relief and back pay relating to their allegations of sex discrimination in pay and promotions were certified as a class action nationally with respect to current employees only.  "Although the size of this class action is large, mere size does not render a case unmanageable," Judge Michael Daly Hawkins wrote for the majority. 

The entire Ninth Circuit rejected other portions of the District Court's certification order, sending the case back to the District Court to consider whether the Plaintiffs' claims for punitive damages should be certified under Rule 23(b)(2) or (b)(3).  The Ninth Circuit also clarified that a court must sometimes resolve factual issues related to the merits to properly determine the appropriateness of class certification under Rule 23, though it cautioned that those inquiries should not predominate the court's analysis.  In so stating, the majority noted that it rejected the "no merits inquiry" as inhibiting the proper Rule 23 analysis.  The majority also pointed out a number of other legal errors committed by the district court, including its failure to test the reliability of the Plaintiffs’ expert opinions, as required by Federal Rule of Evidence 702 and United States Supreme Court precedent.

A sharply worded dissent was authored by Judge Sandra Ikuta, and joined by four other judges.  The dissent described the majority's decision to certify the class as follows:  "No court has ever certified a class like this one, until now.  And with good reason.  In this case, six women who have worked in 13 of Wal-Mart's 3,400 stores seek to represent every woman who has worked in those stores over the course of the last decade—a class estimated in 2001 to include more than 1.5 million women."

The Ninth Circuit's decision related solely to procedural issues regarding the scope of the class.  It does not provide any guidance on the underlying merits of the plaintiffs' sex discrimination claims.  The Court specifically stated "we neither analyze nor reach the merits of Plaintiffs' allegations of gender discrimination."  The decision is an important one for employers, as it allows a large group of nationwide employees to bring certain allegations and claims before a jury in one massive class action lawsuit. 

Seyfarth Shaw will be providing a more thorough analysis of the Court's 137-page decision as a Management Alert.  In the meantime, should you have any questions regarding the impact of the decision, please contact the Seyfarth attorney with whom you work, or any Labor & Employment attorney on our website.