Dukes v. Wal-Mart: Creative Solutions for Plaintiffs

The Supreme Court’s Dukes v. Wal-Mart decision has garnered a great deal of attention in the popular press, likely due to the prominence of the defendant and the allegations that Wal-Mart systematically discriminated against female employees.  In addition to introducing a more onerous commonality standard, Dukes entailed at least two other issues bearing on the mechanics of class actions: (1) that individualized money damages cannot be awarded in Rule 23(b)(2) class actions; and (2) that affirmative defenses must be assessed in individualized hearings, seemingly precluding the sampling and survey methods that buttress class actions’ essential efficiencies.

Professor John C. Coffee, who holds the Adolf A. Berle Professorship at Columbia Law School, has suggested how these more complex Dukes issues might play out.  In a recent National Law Journal article, Professor Coffee suggested that the post-Dukes realities might not be as bleak as has been projected for plaintiffs, so long as plaintiffs’ lawyers advocate, and federal district court judges adopt, innovative procedural methods and intellectually cutting-edge approaches.

No Individualized Money Damages Under 23(b)(2).  With the Dukes holding that Rule 23(b)(2) injunctive actions can no longer commingle with Rule 23(b)(3) actions seeking monetary damages, class actions seeking monetary damages must be certified under Rule 23(b)(3).  However, the latter rule’s severe “predominance” requirement makes it ill-suited to the natural diversities that arise in cases against large defendants, such as violations occurring across multiple employment locations.  While Rule 23(b)(2) injunctive actions remain an option, the lack of certain methods for valuing such relief, and thus establishing fee awards, will continue to function as a disincentive.  Moreover, “claim splitting” prohibitions (exacerbated by the 23(b)(2) no-opt-out provision) and conflict arguments have typically been seen as insurmountable obstacles to bringing separate class actions for injunctive and monetary relief.  Not so, argues Professor Coffee.  First, federal courts can certify (and have certified) parallel (b)(2) and (b)(3) cases, each with their own class representatives.  Second, courts have ruled that the Due Process Clause trumps Rule 23(b)(2)’s mandatory provision proscribing opt outs, thereby obviating the claim splitting impediment.  Finally, Professor Coffee suggests that the pure muscle of legal argument may provide a solution: because Dukes prohibits monetary damages in (b)(2) classes, there is no overlap with (b)(3) classes.  Thus, the essence of claim splitting—failure to raise an argument in one case that could have been raised in the other case—is altogether avoided.

Rejection of Sampling Procedures.   Professor Coffee offers several possible solutions for dealing with Dukes’ holding permitting individualized hearings as to affirmative defenses.  First, he suggests challenging whether the affirmative defenses are pleaded with sufficient particularity, using the heightened pleading standards of Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).  While this tool is most often employed by defendants to challenge the particularity of complaints, it is equally applicable to Rule 12 challenges to affirmative defenses.  Second, plaintiffs can concede the necessity of individualized hearings and take the initiative to propose pragmatic ways for those hearings to take place, such as before a special master or magistrate judge.  Finally, Professor Coffee suggests decoupling the liability determination from affirmative defenses by using the much-neglected Federal Rule 23(c)(4).  This would permit plaintiffs to adjudicate only liability on a class-wide basis, and, thereafter, resolve affirmative defenses and determine damages in individual actions.  The “issue certification” authorized by Rule 23(c)(4) has so thin a record in reported caselaw that, perhaps fortunately for plaintiffs’ counsel contemplating this innovative use, there is little pre-existing guidance.

 At a minimum, Dukes implies that the trial plans long encouraged by federal courts and practical treatises such as the Manual for Complex Litigation must now become more detailed in addressing the requirements and challenges imposed by Dukes.  As such, some or all of Professor Coffee’s suggested innovations will perhaps turn up, first in trial plans, and later in reported cases.  Already, Dukes has been cited more than 50 times and distinguished in 23 of those cases, suggesting that the new strictures are just as navigable as Professor Coffee suggests.