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U.S. Supreme Court Shields U.S. Business from a Potentially Lethal Bullet – Wal-mart Stores v. Dukes

Posted on June 21st, 2011 | Author: Steven A. Karg

As a follow–up to our March 29, 2011 blog post, “Will the United States Supreme Court Declare an Open Season for Class Actions Against Business? – Wal-mart v. Dukes,” concerning the then-pending United States Supreme Court case, Wal-mart Stores, Inc. v. Dukes, Betty, et al., 10-277, we are happy to report that the Supreme Court yesterday reversed the Ninth Circuit Court of Appeals decision, and held  that class certification was not appropriate.   In Wal-mart, plaintiffs wanted the Court to affirm certification of a “nationwide class action consisting of all current and former female employees of Wal-Mart Stores, Inc., estimated at the time to comprise at least 1.5 million women.”  Petition for a Writ of Certiorari, 2010 WL 3355820, *1 (U.S. 2010).  Despite the fact that class members in Wal-mart would seek billions of dollars in back pay, the Ninth Circuit found plaintiffs’ monetary claims were not “‘superior in strength’” to the injunctive claims, and could be certified under Rule 23(b)(2).  Petition for a Writ of Certiorari, 2010 WL 3355820 at *5 (citations omitted).    The Ninth Circuit’s approach essentially allowed the plaintiffs to by-pass the more demanding requirements of F.R.C.P. 23(b)(3), which “‘imposes strict requirements of predominance, superiority and manageability…’” Id. at 9-10(citations omitted).

Justice Scalia authored the Court’s opinion which held that certification was improper, because 1) plaintiffs could not meet the commonality requirement of F.R.C.P. 23(a)(2), and 2) plaintiffs’ back pay – monetary claims could not be certified under F.R.C.P. 23(b)(2), “at least where (as here) the monetary relief is not incidental to the injunctive or declaratory relief.”  Slip Op. at 20.  The Supreme Court recognized the limited purpose of class actions and reiterated that “class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.’” (citing Califano v. Yamasaki, 442 U. S. 682, 700–701 (1979)).  Slip Op. at 8.  By recognizing that class action practice is the exception not the rule, the Supreme Court closed the litigation floodgates that could have resulted had it agreed with the Ninth Circuit’s approach.