Posts belonging to Category Caselaw Developments

At its essence, the Dukes v. Wal-Mart appeal that was argued before the Supreme Court last week is not about the ultimate merits — whether Wal-Mart discriminated against female employees by disproportionately promoting males — but whether that ultimate merits determination can be made in a single, class-wide adjudication. As in many class actions where injunctive or declaratory relief is sought under FRCP 23(b)(2), the key certification issue in Dukes is whether common issues of law or fact exist. For the Dukes plaintiffs, this means that they must identify a specific Wal-Mart policy that is applicable class-wide, so that they can point to that policy as being the impetus behind the gender discrimination. This challenge is heightened by the rarity of overtly discriminatory policies within today’s corporate culture. The days of “smoking gun” memos describing nefarious policies and practices are long gone, except perhaps as a plot device in a book or film.

Accordingly, many of the questions posed by Justices during the Dukes oral argument seemed designed to get to the heart of what specific policy, if any, was at issue in this case. For example, Justice Kennedy pressed Wal-Mart’s lawyer, Gibson Dunn’s Theodore Boutrous, as to whether deliberate indifference to discrimination could qualify as a policy, while Chief Justice Roberts wanted to know whether, if the head office received regular reports from its stores revealing widespread patterns of discrimination, “[a]t some point, can’t they conclude that it is their policy of decentralizing decisionmaking that is causing or permitting that discrimination to take place?”.

These questions exemplify an important issue, not just in Dukes but in any class action alleging a uniform policy or practice as the basis for establishing the commonality necessary for certification. To the extent that Dukes endorses the principle of law embodied in Justice Kennedy’s inquiry — that deliberate indifference may be regarded as a de facto policy — it could provide a helpful analytical tool for plaintiffs.

The official transcript of the Dukes oral argument is available here.

Following a record volume of amicus briefs and extensive mainstream media coverage recognizing it as a landmark-in-the-making, oral argument in Dukes v. Wal-Mart is finally here. Starting this morning at 10:00 a.m. EST, Wal-Mart’s appellate attorney, Theodore Boutros of Los Angeles-based Gibson Dunn & Crutcher, presented his oral argument (with frequent interruptions from the Justices, of course).

For those looking to the oral argument for indications of how the Court might rule, the transcript is available here.

For more background and briefing, see the blog sponsored by Goldstein, Howe & Russell, P.C. — bringing to bear the singular insights and analysis of attorneys from one of the country’s preeminent Supreme Court litigation specialty firms, with particularly trenchant and comprehensive coverage of Dukes.

For a brief analysis of this morning’s oral argument, see the Associated Press’ coverage here.

Along with Dukes v. Wal-Mart and AT&T v. Concepcion, class action practitioners are closely watching another key case during this term of the United States Supreme Court: Smith v. Bayer, 593 F.3d 716 (8th Cir.), cert. granted, 131 S. Ct. 61 (U.S. Sept. 28, 2010) (No. 09-1205), in which the Court will decide whether federal courts have the authority to enjoin state class actions. Specifically, the justices are considering whether the denial of class certification in a federal district court can be res judicata as to a class action in state court making the same substantive allegations, with a different named plaintiff.

Smith v. Bayer arises from respondent Bayer’s distribution of Baycol, a prescription cholesterol drug that gave rise to multi-district proceedings, including McCollins v. Bayer Corp., in which a West Virginia resident who had taken Baycol moved to certify a class under West Virginia’s consumer protection law. Certification was denied because individual questions predominated. Thereafter, a different named plaintiff (now the Smith v. Bayer class representative) moved for certification in West Virginia state court, asserting the same theory of liability as had been denied certification in McCollins v. Bayer. However, the McCollins court issued an injunction, holding that the attempted certification in West Virginia state court fell within the re-litigation exception to the Anti-Injunction Act. The court reasoned that the proposed class was identical to that in McCollins, West Virginia’s class certification rules are identical to Rule 23, and petitioners’ interests had been adequately represented in McCollins. The Eighth Circuit affirmed and the Supreme Court granted certiorari.

The petitioners argue that a federal court’s denial of class certification cannot collaterally estop a state class action, irrespective of whether the theory of liability is substantively identical and the basis for the denial of class certification was not unique to the prior named plaintiff. In turn, Bayer argues that there is no due process violation, as the petitioners can still bring individual actions, and are simply precluded from re-litigating the identical class certification issue.

The parties’ Supreme Court briefs are available here: Brief for Petitioners, Brief for Respondent, Supplemental Brief of Respondent, and Petitioners’ Reply Brief.

Following on a torrent of amicus submissions that have made Dukes v. Wal-Mart, 603 F.3d. 571 (9th Cir.) (en banc), cert granted, 131 S. Ct. 795 (Dec. 6, 2010) (No. 10-277) perhaps the most extensively briefed case in Supreme Court history, the case is now set for oral argument next Tuesday, March 29, 2011. In concert with AT&T v. Concepcion (which takes up the validity of class action waivers), Dukes represents an opportunity for the Roberts Court to remake the rules applicable to class actions in federal courts.

Apart from taking up several discrete issues broadly relevant to nearly all class actions, Dukes is effectively a Rorschach test on class actions: Corporate interests see Rule 23 as merely a device for “greedy” plaintiffs’ firms (is there any other type?) to blackmail companies into paying attorneys’ fees, while consumer and employee rights advocates contend that class actions are a necessary corrective in the free market system.

While oral argument can be an unreliable indicator of Supreme Court outcomes, there are some tendencies to look out for during next Tuesday’s session. For instance, do Justices presumed to be unsympathetic to class actions (notably Scalia, Thomas, and Alito) appear swayed by class action supporters’ market-based arguments? Is a radical remaking of class action rules harmonious with a conservative Justice’s preference for stability and predictability? Likewise, oral argument will occasionally reveal signs of ideological drift on the Court’s liberal wing. Justice Breyer, for instance, while known as a member of the progressive bloc of the Court, was at the forefront of the movement to deregulate airfares during the 1970s. Here, one should look for indications that a Justice presumed to be supportive of class actions harbors any skepticism toward the large and varied class in Dukes.

As with any case where big-picture procedural issues are at stake, it is likely that behind-the-scenes negotiations will result in complex majority opinions and concurrences in both Dukes and Concepcion that may be difficult to reconstruct from the Justices’ public statements at oral argument. The suspense should end by late spring, when decisions in both cases are expected to be issued.