Donald Falk, Marcia Goodman, Archis Parasharami, Aug 16, 2011
Last year we reported on the en banc Ninth Circuit’s pathbreakingly broad decision affirming the certification of a class of 1.5 million plaintiffs in a lawsuit alleging that Wal-Mart had discriminated against its female employees at all levels. At that time, we noted that the court of appeals had lowered the bar to class certification in several important respects, creating or deepening at least three conflicts among the circuits that might draw the attention of the Supreme Court.
The effects of the Ninth Circuit’s decision were short-lived; the Supreme Court granted certiorari and reversed in Wal-Mart Stores, Inc. v. Dukes. The Court unanimously concluded that the Ninth Circuit had gone too far in approving certification under Federal Rule of Civil Procedure 23(b)(2). Rejecting the Ninth Circuit’s use of that Rule as a less-demanding basis to certify a 1.5-million-member class of individuals seeking individual monetary awards, the Court restored Rule 23(b)(2) to its traditional limits as a means for permitting a class to seek a common injunction or declaration.
In addition, the Court (over dissent) provided its first comprehensive and coherent definition of what it means for a question to be “common” under Rule 23(a)(2). That holding will influence the analysis of damages classes that can be certified only by satisfying Rule 23(b)(3) with proof that common questions predominate over individual ones. Only questions that are “common” under Rule 23(a)(2) count in the predominance analysis under Rule 23(b)(3).
Both aspects of the Supreme Court’s decision in Dukes are likely to affect certification of antitrust class actions (and, thus, the incentives for defendants to settle cases of questionable merit). The Court’s Rule 23(b)(2) holding removes a potential avenue to certify classes for both injunctive and pecuniary relief based on a single-factor analysis that addresses only the allegedly unlawful practice rather than its differing (and sometimes absent) effects on each individual class member.
More significant may be the Court’s clarification that commonality under Rule 23(a)(2) does not encompass every abstract theory or general factual similarity, but involves important issues that can be resolved for all class members in a single stroke. The Court’s skeptical reaction to the Dukes plaintiffs’ use of expert testimony to avoid individualized issues also may have particular significance in antitrust class certification proceedings. While the Ninth Circuit’s superseded decision had provided unusually broad support to plaintiffs seeking class certification, the Supreme Court’s decision sets relatively clear limits on aspects of class certification that had become indistinct and thus improperly permissive.