Monday, December 06, 2010

The Dukes Cert. Grant - What It Is; What It Isn't

The Supreme Court granted certiorari in the Dukes v. WalMart (now called WalMart v. Dukes) class action today.  By blogging standards, that fact is probably old news.  For example, here's a New York Times story about the grant.  The law profs' blogs have also been all over this.

We weren't even going to blog about this, except we've already had two people contact us and ask what we thought.  Since we figure there's some confusion about what Dukes is all about, we thought we'd better say something.

First, the text of the Court's order is:
Petition GRANTED limited to Question I presented by the petition.  In addition to Question I, the parties are directed to brief and argue the following question: "Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)."
That means, to know what's going on, we have to go to the cert. petition - filed by WalMart as the petitioner, since it lost in the 9th Circuit below.  That's also why WalMart's name goes first in the Supreme Court.  The Court's practice is always to list the petitioner first, even if it was the defendant in the lower courts (and thus went after the "v." in those courts).

OK, we've dug out the petition.  That first question is:  "(1) Can claims for monetary relief be certified under Fed. R. Civ. P. 23(b)(2) - which by its terms is limited to injunctive or corresponding declaratory relief - and, if so, under what circumstances?"

So what is Dukes about?  The briefest description we can give is that it's about the scope of Rule 23(b)(2).  We'll get back to that.

What isn't it about.  Well first of all, contrary to the New York Times story, it's not about the huge size of the Dukes class - at least not directly.  Second of all, it's not about the punitive damages issue that we discussed earlier on this blog.  That fell out of Dukes at the 9th Circuit en banc reconsideration level, where certification of a punitive damages class was vacated.  Third of all, it's not about the raft of constitutional or global class action issues that the defendant also appealed.  The following question - #2 in the petition - was not accepted for review by the Court:
Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.
Well, except insofar as the very last part of this question presented is also encompassed by the Rule 23(a) question fashioned by the Court.

Back to Rule 23(b)(2).  Lawyers, especially in the class action biz, tend to speak in shorthand, which unfortunately makes it hard for everybody else to follow along.  Rule 23 is the federal rule of procedure that governs class actions - that says when they are and aren't allowed.  Part (b)(2) of that rule sets out one reason why a class can be certified - where the suit involves "grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole."

We've highlighted the most important terms of Rule 23(b)(2).  In short, it's a form of class certification intended to apply to requests for injunctions or declarations.

What Rule 23(b)(2) isn't supposed to be about is money damages.  That's governed by Rule 23(b)(3) and there's a bunch of different criteria involved.

That's important in Dukes, because even with punitive damages off the table, the plaintiffs in Dukes are seeking a huge amount of money, in the form of back pay, front pay, and other relief that's allowed in employment-related civil rights cases like Dukes.

Basically, the defendant claims that in Dukes the plaintiffs are hiding the ball.  They're trying to certify a class that's really mostly about money under the standards of a section of Rule 23 that's intended to govern only non-monetary relief.

Rule 23(b)(2) has two other notable characteristics.  It's mandatory.  There's no opt out for anybody who doesn't want to be in the class.  That's another reason why it's not appropriate for awarding money.  It also doesn't have the "predominance" of common issues test, which is how our clients in our drug/device cases almost always (see our cheat sheet) nowadays defeat class certification in cases seeking money.  There's law, though, that (b)(2) classes have to be even more "cohesive" than other kinds because there are no opt outs.  That's sort of a super-predominance test, at least where plaintiffs are trying to sneak in monetary damages.

This section of Rule 23 is relatively old, dating from 1966, so it frames the injunctive vs. money distinction somewhat archaicly in terms of the distinction between "law" and "equity."  In the olden days, almost a century ago, there were two different sets of courts, one for telling people what they could and couldn't do, and the other for telling them what they had to pay, if anything.  The first courts were "equity" and the second set was "law."

That's sort of out of date, so section 2.04 of the ALI's Aggregate Litigation Principles looks at the question a little differently, in terms of the "divisibility" or "indivisibility" of the relief sought.  If one plaintiff's recovery doesn't depend on anybody else's (such as paying plaintiff X for damages caused by the defendant's tortious conduct, but not paying plaintiff Y because s/he couldn't prove causation) then the relief is "divisible" and not within Rule 23(b)(2).  If the nature of the relief claimed means it's thumbs up or thumbs down for all the plaintiffs (seeking to stop certain conduct, no matter who it's being done to), then the relief is "indivisible" and would be within Rule 23(b)(2).

The Dukes issue thus does not often rear its head in our products liability sandbox.  Plaintiffs want money from our clients.  Where it does come up sometimes is in medical monitoring cases.  Plaintiffs often try to dress up claims that a defendant should pay for medical monitoring with a bunch of bells and whistles and then try to pass that off as "injunctive" relief.  Most of the time they've lost, but sometimes they have gotten away with it.  There are three "ilustrations" in §2.04 that, well, illustrate, these possibilities.  Bexis drafted them, and the ALI accepted them.  One is that the monitoring program, while presented as some court-ordered scheme, is still mostly about money.  The second is when the program is different (or, we'd say, the court has been wittingly or unwittingly duped), and is not mostly about money.  The third is a pure "lump sum" payout that is plainly monetary.

So Dukes is going to decide, in the context of a massive civil rights case, whether and how much plaintiffs can get away with shoehorning large demands for money into a means of class certification intended for non-monetary injunctive/declarative relief.

But there's that other question, added by the Court itself, whether the certification in Dukes was "consistent with Rule 23(a)."  We're not sure what that means, and that's where the sheer size and complexity of the case may well come into play.  Rule 23(a) sets up four hurdles that any class, monetary or non-monetary, has to meet before a court can permit a class action:  (1) numerosity (which we don't think can possibly be an issue); (2) commonality "whether there are questions of law or fact common to the class"; (3) typicality, whether "the claims or defenses of the representative parties [that is, the plaintiff seeking to represent the class] are typical of [those] of the class"; and (4) adequacy, whether the class representative and/or the class' would-be lawyers "will fairly and adequately protect the interests of the class."

The huge Dukes class is all over the country, encompassing thousands of stores and hundreds of job descriptions.  The larger and more diverse a class is, the less likely that anybody can have "typical" claims or "adequately" represent all the members in it.  There will also be fewer "common" issues the more polyglot a class becomes, but that requirement (commonality) has been watered down so severely by the courts that having just one common issue is ordinarily enough to satisfy that not very high hurdle.

So that question, globally invoking "Rule 23(a)," means that we could well get the overall standards for typicality and generality updated/redefined by the Court.  That could be a bigger deal than even the Rule 23(b)(2) question, which itself has been kicking around for decades.  Rule 23(a) affects all class actions, monetary or not, so whatever the Court has to say about Rule 23(a) will spill over - positively or negatively.  Still, even if Dukes goes south (which we doubt it will, or else the Court wouldn't have taken it) our product liability clients have "predominance" to fall back on, which isn't implicated by Dukes at all.

So that's what Dukes - at the Supreme Court level - is and isn't about.  It's about square pegs (demands for money) being pounded into round holes (Rule 23(b)(2)).  It's about how large and diverse a class can be and still satisfy the typicality and adequacy (and possibly commonality) prongs of Rule 23(a).  It's not about punitive damages.  It's not about Due Process or any other constitutional issue.  It's not about the Rules Enabling Act or the substantive law of employment discrimination.  It's not directly about the size of the class, although that may well factor into the Rule 23(a) analysis.

And for those of us who defend (or who prosecute) class actions, it may be the biggest case of the decade.

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