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.

Throughout Tuesday’s oral argument in Dukes v. Wal-Mart, the Justices appeared to divide along expected ideological lines. The conservative justices, including perennial “swing vote” Justice Kennedy, seemed dubious of the plaintiffs’ theory that diffuse, store-level decision making was sufficient to establish the cohesive policy or practice necessary for class treatment. Moreover, despite the issue formally before the Court being whether the elements for class certification have been satisfied (not whether Wal-Mart committed the sexual discrimination that is alleged), the Court’s conservative bloc showed an apparent sympathy for Wal-Mart’s argument that the company has, in the words of Wal-Mart’s lead attorney “a very strong policy against discrimination.”

Though in more muted terms, the Court’s liberal Justices — Justices Breyer, Ginsburg, Kagan and Sotomayor — appeared to accept the idea that permitting store managers to use subjective criteria in evaluating promotion decisions can create the equivalent of a coherent, company-wide policy and satisfy the commonality requirement. Supported by testimony from sociology experts, the plaintiffs theorize that, despite roughly three-quarters of Wal-Mart’s non-managerial employees being women, fewer than half of managers are women because the subjective decision-making criteria allow discriminatory motivations to tacitly infect the promotion process.

In an unusually spirited response, Justice Kagan squarely addressed Wal-Mart’s defense to certification based on a lack of commonality, and took issue with the contention of Theordore Boutros, Wal-Mart’s lead counsel, that “[Plaintiffs’] argument is that the common policy is giving tens of thousands of individuals discretion to do whatever they want. That is not commonality. It’s the opposite.” Justice Kagan interjected, “I don’t think that’s quite fair, Mr. Boutros,” and explained, “I think their argument was that the common policy was one of . . . using factors that allowed gender discrimination to come into all employment decisions. And in Watson [v. Fort Worth Bank & Trust, 487 U.S. 977 (1988)], we suggested that that was a policy, a policy of using subjective factors only, when making employment decisions. That’s exactly the policy that was alleged here.”

The full transcript of Tuesday’s oral argument is available here.

Justice Antonin Scalia sat on the bench during this week’s oral argument in Dukes v. Wal-Mart, despite calls for him to recuse himself from the case owing to his son, Eugene Scalia, being a partner with Gibson Dunn & Crutcher LLP, which represents Wal-Mart in the appeal. Among those seated in the gallery watching the proceedings: Eugene Scalia.

Justice Scalia’s disqualification would be unusual, as Supreme Court Justices typically do not recuse themselves from cases involving a family member’s law firm. However, Scalia was one of seven justices who in 1993 signed a policy that said they would not withdraw from a case unless there was some “special factor,” such as a relative’s status as lead counsel.

While Eugene Scalia is not active in litigating the Dukes appeal, he does chair Gibson Dunn’s Labor and Employment practice group, which is at least conceptually connected to the case, because the plaintiffs allege workplace discrimination. As a practical matter, though, it is Theodore Bourtos’ appellate group that is principally in charge of the day-to-day Dukes case management.

Those calling for Justice Scalia’s recusal (including Wal-Mart Watch, a union-funded advocacy group) contend that Eugene Scalia stands to benefit financially should his partnership profits increase as a result of the firm’s success in its Wal-Mart representation. In response, Gibson has implemented a procedure to exclude revenues from the Wal-Mart representation from Eugene Scalia’s partnership distribution, effectively an accounting take on the “ethical wall” by which firms isolate an attorney from specified information or matters.

Court watchers speculate that Justice Scalia will likely vote to reverse the Ninth Circuit’s ruling that affirmed the trial court’s discretion in certifying the class of approximately 1.5 million current and former Wal-Mart employees.

In a settlement that illuminates the connection between major events that capture society-wide attention and the infusion of substantial value into class action settlements, Bank of America has agreed to pay $410 million to settle sprawling litigation stemming from allegations that consumers were charged unlawful overdraft fees. The numerous cases were consolidated into an MDL action in a Florida district court as In re Checking Account Overdraft Litig., No. 09-MD-02036-JLK (S.D. Fla. filed June 10, 2009).

The plaintiffs alleged that Bank of America processed transactions in a way that maximized the assessment of overdraft fees, which until recently had been a significant source of revenue for commercial banks. Specifically, the class alleged that, instead of declining debit card transactions when customers’ accounts had insufficient funds to cover a purchase, Bank of America would authorize the charges. Moreover, it was alleged that charges were posted out of chronological order, and in order of largest transaction to smallest, thereby maximizing overdraft-fee revenue.

If the settlement is approved, the average class member’s recovery will be a non-trivial $78 — a piece of evidence to counter the notion that class members only receive pennies while lawyers significantly benefit from class action settlements. While overdraft fees have long been the focus of consumer complaints, it is only now, in the wake of abuses in the financial industry attendant to the “Great Recession,” that the claims have acquired substantial settlement value. Indeed, overdraft litigation is also pending against U.S. Bank, Key Bank, and HSBC. Now that the Bank of America settlement has set a rough market price of approximately $78 per customer, it is unlikely that other banks will be able to negotiate a smaller settlement or be willing to face jurors who have been inundated with adverse news stories about banking practices and no doubt influenced by their own experiences with excessive overdraft fees.