Jun 20, 2011

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Instant Analysis: Wal-Mart v. Dukes

In Wal-Mart v. Dukes, Justice Scalia delivered the opinion of the Court. Chief Justice Roberts and Justices Kennedy, Thomas, and Alito joined entirely. Justices Ginsburg, Breyer, Sotomayor, and Kagan joined as to Parts I and III.

We are presented with one of the most expansive class actions ever. The District Court and the Court of Appeals approved the certification of a class comprising about one and a half million plaintiffs, current and former female employees of petitioner Wal-Mart who allege that the discretion exercised by their local supervisors over pay and promotion matters violates Title VII by discriminating against women. In addition to injunctive and declaratory relief, the plaintiffs seek an award of backpay. We consider whether the certification of the plaintiff class was consistent with Federal Rules of Civil Procedure 23(a) and (b)(2).

The entire Court held that “The certification of the plaintiff class was not consistent with Rule 23(a).”

Justice Scalia’s Majority Opinion

Part II

In this Part, Justice Scalia only wrote for 5 members. He begins by explaining “commonality” under Rule 23(a)(2).

The crux of this case is commonality—the rule requiringa plaintiff to show that “there are questions of law or fact common to the class.” Rule 23(a)(2).5 That language is easy to misread, since “[a]ny competently crafted class complaint literally raises common ‘questions.’ ” Nagareda, Class Certification in the Age of Aggregate Proof, 84 N. Y. U. L. Rev. 97, 131–132 (2009). . . . Commonality requires the plaintiff to demonstrate that the class members “have suffered the same injury,” Falcon, supra, at 157. This does not mean merely that they have all suffered a violation of the same provision of law. . . . Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

Scalia notes that an attempt to sue about millions of employment decision at once would not yield a single answer for why an individual employee was disfavored.

Here respondents wish to sue about literally millions of employment decisions at once. Without some glue holding the alleged reasons for all those decisions together, it will be impossible to saythat examination of all the class members’ claims for relief will produce a common answer to the crucial question why was I disfavored.

Scalia, relying on Falcon, identifies “two ways in which that conceptual gap [between an individual’s claim of injury and class’s common injury] might be bridged.”

First, if the employer “used a biased testing procedure to evaluate both applicants for employment and incumbent employees, a class action on behalf of every applicant or employee who might have been prejudiced by the test clearly would satisfy the commonality and typicality requirements of Rule 23(a).” Second, “[s]ignificant proof that an employer operated under a general policy of discrimination conceivably could justify a class of both applicants and employees if the discrimination manifested itself in hiring and promotion practices in the same general fashion, such as through entirely subjective decisionmaking processes.”

The first “burden” does not apply because no testing process exists.

The first manner of bridgingthe gap obviously has no application here; Wal-Mart has no testing procedure or other companywide evaluation method that can be charged with bias. The whole point of permitting discretionary decisionmaking is to avoid evaluating employees under a common standard.

Scalia rejects the second burden, as ““significant proof” that Wal-Mart “operated under a general policy of discrimination . . . is entirely absent here.” Scalia discounts the Plaintiffs’ expert witness.

The only evidence of a “general policy of discrimination” respondents produced was the testimony of Dr. William Bielby, their sociological expert. Relying on “social framework” analysis, Bielby testified that Wal-Mart has a “strong corporate culture,” that makes it “‘vulnerable’” to “gender bias.” Id., at 152. He could not, however, “determine with any specificity how regularly stereotypes play a meaningful role in employment decisions at Wal-Mart. At his deposition . . . Dr. Bielby conceded that he could not calculate whether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking.”

Scalia even notes that Daubert should have applied at the class action certification stage.

The parties dispute whether Bielby’s testimony even met the standards for the admission of expert testimony under Federal Rule of Civil Procedure 702 and our Daubert case. The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. 222 F. R. D., at 191. We doubt that is so, but even if properly considered, Bielby’s testimony does nothing to advance respondents’ case. “[W]hether 0.5 percent or 95 percent of the employment decisions at Wal-Mart might be determined by stereotyped thinking” is the essential question on which respondents’ theory of commonality depends. If Bielby admittedly has no answer to that question, we can safely disregard what he has to say. It is worlds away from “significant proof” that Wal-Mart “operated under a general policy of discrimination.”

Scalia, in disagreement with Justice Ginsburg, finds that an employment policy that provides managers with discretion weakens the inference that there is discrimination.

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices. It is also a very common and presumptively reasonable way of doing business—one that we have said “should itself raise no inference of discriminatory conduct,”

Just because discretion can lead to discrimination does not mean this is always the case.

But the recognition that this type of Title VII claim “can” exist does not lead to the conclusion that every employee in a company using a system of discretion has such a claim in common. To the contrary, left to their own devices most managers in any corporation—and surely most managers in a corporation that forbids sex discrimination—would select sex-neutral, performance-based criteria for hiring and promotion that produce no actionable disparity at all. . . . A partyseeking to certify a nationwide class will be unable to show that all the employees’ Title VII claims will in fact depend on the answers to common questions.

Scalia would require a “common mode of exercising discretion that pervades the entire company.” This point does not address Ginsburg’s claim of inherent and implicit bias.

Finally, Scalia rejects the Plaintiffs’ regression analysis. Even if it does show statistically significant “disparities between men and women at Wal-Mart . . .[and] these disparities . . . can be explained only by gender discrimination,” “that would still not demonstrate that commonality of issue exists.” Scalia also rejects the use of anecdotes to prove discrimination: “But when the claim is that a company operates under a general policy of discrimination, a few anecdotes selected from literally millions of employment decisions prove nothing at all.”

Citing Chief Judge Kozinski’s opinion, the Plaintiffs have “little in common but their sex and this lawsuit.”

Part III

In Part II, Justice Scalia wrote for the entire Court that “respondents’ claims for backpay were improperly certified under Federal Rule of Civil Procedure 23(b)(2).”

Our opinion in Ticor Title Ins. Co. v. Brown, 511 U. S. 117, 121 (1994) (per curiam) expressed serious doubt about whether claims for monetary relief may be certified under that provision. We now hold that they may not, at least where (as here) the monetary relief is not incidental to the injunctive or declaratory relief.

The Plaintiffs argued that “their claims for backpay were appropriately certified as part ofa class under Rule 23(b)(2) because those claims do not“predominate” over their requests for injunctive and declaratory relief.” After rejecting their reliance on the Advisory Committee’s notes—“Of course it is the Rule itself, not the Advisory Committee’s description of it, that governs,”—Justice Scalia identifies that “Respondents’ predominance test, moreover, creates perverse incentives for class representatives to place at risk potentially valid claims for monetary relief.”

Justice Ginsburg’s Opinion Concurring in Part and Dissenting in Part

First, Justice Ginsburg notes where she agrees with the majority.

The class in this case, I agree with the Court, should not have been certified under Federal Rule of Civil Procedure 23(b)(2). The plaintiffs, alleging discrimination in violation of Title VII, 42 U. S. C. §2000e et seq., seek monetary relief that is not merely incidental to any injunctive or declaratory relief that might be available. See ante, at 20–
27. A putative class of this type may be certifiable under Rule 23(b)(3), if the plaintiffs show that common class questions “predominate” over issues affecting individuals— e.g., qualification for, and the amount of, backpay or compensatory damages—and that a class action is “superior” to other modes of adjudication.

She departs from the majority in that she would remand the case to determine whether the class meets the requirements of 23(b)(3).

Whether the class the plaintiffs describe meets the specific requirements of Rule 23(b)(3) is not before the Court, and I would reserve that matter for consideration and decision on remand.1 The Court, however, disqualifies the class at the starting gate, holding that the plaintiffs cannot cross the “commonality” line set by Rule 23(a)(2). In so ruling, the Court imports into the Rule 23(a) determination concerns properly addressed in a Rule 23(b)(3) assessment.

Someone call Adam Liptak. Justice Ginsburg used not one, but two (!) dictionaries to define the word “question.” Holmes never needed no stinking dictionary.

A “question” is ordinarily understood to be “[a] subject or point open to controversy.” American Heritage Dictionary 1483 (3d ed. 1992). See also Black’s Law Dictionary 1366 (9th ed. 2009) (defining “question of fact” as “[a]disputed issue to be resolved . . . [at] trial” and “question of law” as “[a]n issue to be decided by the judge”).

Justice Ginsburg includes her own lengthy fact section from the district court proceedings, focusing on the claims of Dukes regarding gender stereotypes.

Women fill 70 percent of the hourly jobs in the retailer’s stores but make up only “33 percent of management employees.” 222 F. R. D., at 146. “[T]he higher one looks in the organization the lower the percentage of women.” Id., at 155. The plaintiffs’ “largely uncontested descriptive statistics” also show that women working in the company’s stores “are paid less than men in every region” and “that the salary gap widens over time even for men and women hired into the same jobs at the same time.” Ibid.; cf. Ledbetter v. Goodyear Tire & Rubber Co., 550 U. S. 618, 643 (2007) (GINSBURG, J., dissenting).

Ginsburg also recounts a number of “class members’ tales of their own experiences.”

The plaintiffs’ evidence, including class members’ tales of their own experiences,4 suggests that gender bias suffused Wal-Mart’s company culture. Among illustrations, senior management often refer to female associates as “little Janie Qs.” Plaintiffs’ Motion for Class Certification in No. 3:01–cv–02252–CRB (ND Cal.), Doc. 99, p. 13 (internal quotation marks omitted). One manager told anemployee that “[m]en are here to make a career and women aren’t.” 222 F. R. D., at 166 (internal quotation marks omitted). A committee of female Wal-Mart executives concluded that “[s]tereotypes limit the opportunities offered to women.”

In Part C, Justice Ginsburg talks about the risk of bias and discretion which may result in “disparate effects.”

The District Court’s identification of a common question, whether Wal-Mart’s pay and promotions policies gave rise to unlawful discrimination, was hardly infirm. The practice of delegating to supervisors large discretion to make personnel decisions, uncontrolled by formal standards, has long been known to have the potential to produce disparate effects. Managers, like all humankind, may be prey to biases of which they are unaware.6 The risk of discrimination is heightened when those managers are predominantly of one sex, and are steeped in a corporate culture that perpetuates gender stereotypes.

Citing Watson v. Fort Worth Bank & Trust and Wards Cove—cases that preceded the Civil Rights Act of 199— which purported to weaken the disparate impact test, Justice Ginsburg noted:

Aware of “the problem of subconscious stereotypes and prejudices,” we held that the employer’s “undisciplined system of subjective decisionmaking” was an “employment practic[e]” that “may be analyzed under the disparate impact approach.” . . .
The plaintiffs’ allegations state claims of gender discrimination in the form of biased decisionmaking in both pay and promotions. The evidence reviewed by the District Court adequately demonstrated that resolving those claims would necessitate examination of particular policies and practices alleged to affect, adversely and globally, women employed at Wal-Mart’s stores. Rule 23(a)(2), setting a necessary but not a sufficient criterion for classaction certification, demands nothing further.

Justice Ginsburg disagrees with the “dissimilarities” approach the Court adopted.

The “dissimilarities” approach leads the Court to train its attention on what distinguishes individual class members, rather than on what unites them

Ginsburg concludes by elaborating on the nature of employment discrimination, and how these violations of law could be remedied through Rule 23.

Wal-Mart’s delegation of discretion over pay and promotions is a policy uniform throughout all stores. The very nature of discretion is that people will exercise it in various ways. A system of delegated discretion, Watson held, is a practice actionable under Title VII when it produces adiscriminatory outcomes. 487 U. S., at 990–991; see supra, at 7–8. A finding that Wal-Mart’s pay and promotions practices in fact violate the law would be the firststep in the usual order of proof for plaintiffs seeking individual remedies for company-wide discrimination. Teamsters v. United States, 431 U. S. 324, 359 (1977); see Albemarle Paper Co. v. Moody, 422 U. S. 405, 415–423 (1975).That each individual employee’s unique circumstances will ultimately determine whether she is entitled to backpay or damages, §2000e–5(g)(2)(A) (barring backpay if a plaintiff “was refused . . . advancement . . . for any reason other than discrimination”), should not factor into the Rule 23(a)(2) determination.

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  • http://Website steve rappoport

    Read Watson before suggesting that it purported to eliminate the disparate-impact test. You’ll be in for a surprise.

    I have only run quickly over this decision, but I suspect that its importance is two-fold. First, it wipes out decades of Title VII class-action law. Second, whether it makes class actions unavailable as a practical matter depends on how tightly the commonality requirement is defined; if putative class members must stand almost identically to one another (which seems inconsistent with the very premise of Rule 23(b)(3)), then virtually no employment-discrimination lawsuit will be fit for class certification.

  • Mary Kelly Persyn

    Plaintiffs claimed that managerial discretion allowed freewheeling discrimination among the mostly-male managers. But the majority opinion seems to indicate that it’s this very discretion that insulates Wal-Mart from facing a class certified via commonality. Seemingly major insulation for corporations from Title VII class actions, though we’ll have to see how it plays out in the courts, obviously.

    • Josh Blackman

      Yes, this is a point Justice Ginsburg raised in her dissent–allowing such discretion opens the door to implicit types of bias.

  • http://Website Veracitor

    In fact, the 1991 CRA was passed to codify and perpetuate “disparate impact” analysis, originally a judicial interpretation of the 1964 C.R.A. from which the Supreme Court began to retreat in 1989 in Wards Cove. The 1991 C.R.A. “overruled” Wards Cove.

    So, I regret to suggest, you appear to be slightly confused or misinformed about the effect of the 1991 C.R.A.

    Not only is disparate impact not a “dead letter,” it is now the tail that wags the dog. Comparatively few civil rights cases now turn on disparate treatment (often plaintiffs do not even allege it) because it’s much easier to make out a case for disparate impact.

    (Basically, all cognitive or behavioral hiring or promotional standards produce racial disparate impacts. Indeed, one reason employers require college degrees for so many jobs is that the courts have decided to ignore the disparate impact of such requirements– so businesses outsource cognitive/ behavioral screening to college admissions offices.)

    • Josh Blackman

      My mistake. I updated the post above to reflect that. I seem to recall learning something to that effect from my labor law class, but I may be in error. Thank you for the note.

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  • http://Website steve rappoport

    One interesting issue to think about is comparing the requirements for establishing adverse impact (for purposes of disparate-impact analysis) and the commonality requirement for class-certification purposes.

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  • http://Website steve rappoport

    If I were in charge of the law, I would revise Rule 23 so that the concepts of commonality and typicality applicable to b(2) class actions would be much tighter than that for b(3) class actions, given the differences in the types of classes and the procedures and remedies applicable to each. In fact, I might well define 23(a) differently for the two types of class actions.

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  • http://Website steve rappoport

    It occurs to me that every one of the 1.6 million women in the now-improper class can now bring her own lawsuit, with the statute of limitations being suspended during the pendency of the class action (assuming that the EEOC charge was broadly enough written). If enough women do so, Wal-Mart may find the expenses of defending against even, say, a thousand individual actions (or mini-class actions) quite daunting.

  • http://Website steve rappoport
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