As many of you are undoubtedly quite aware, the U.S. Supreme Court recently decided  Wal-Mart Stores, Inc. v. Dukes et al., No. 10-277 (U.S. June 20, 2011) and, we submit, sent a clear message to the judiciary and to employment plaintiffs’ counsel that the “rubber stamp” class certification process under federal law is at an end.  The “c” in class still stands for “commonality” and not “close enough”.

Betty Dukes, a former Wal-Mart employee, sued the company for alleged discrimination against female employees in areas such as pay and promotions.  As the case grew, so did the scope of women allegedly within the compass of the putative class. By the time of the decision two weeks ago, the Plaintiffs’ proposed class numbered approximately 1.5 million past and current female Wal-Mart employees. Using statistics to try and illustrate the disparities between male and female salaries and management positions, the Plaintiff attempted to make the same case for all of the women involved. In its monumental decision on June 22, the Supreme Court deemed this evidence insufficient and heretofore required, as is required by Fed.R.Civ.P. 23, “commonality.”

Class action suits must meet certain requirements under the Federal Rules of Civil Procedure. Due to its vast size, the Dukes proposed class by its very nature satisfied several class requirements, notably that given its size the presence of every class member in court was unfeasible; that the claims and defenses of the representative parties were typical of the claims or defenses of the class; and that the best interests of the class were similar and therefore could be fully represented.  However, one critical, and, we submit, the most important, requirement was not met. In what came to be called the “crux of the case”, the Court ruled that the Plaintiff did not fulfill the “commonality” requirement of a class action suit. Parties seeking class certification under federal law must prove that the class has common questions of law or fact, meaning that they have suffered the same injury, not merely “that they have all suffered a violation of the same provision of law;” i.e. commonality as to specific facts and circumstances is what is important, not a common question of law alone.  Although all the women allegedly had the same general complaint of discrimination, the nature of discrimination as applied to each proposed class member’s specific employment situation and how the overall case would be resolved was far too vast to be heard as one class action suit.

Since Wal-Mart grants its managers discretion over pay and promotions, the court noted that the Plaintiffs wished “to sue about literally millions of employment decisions at once,” and that “[w]ithout some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question” of why an individual employee was disfavored.  In addition, though the Plaintiff submitted 120 declarations of discrimination as evidence for the group, the court decided these were insubstantial and unrepresentative of a class of one and a half million.

 

An additional fault in the Plaintiff’s argument for class certification resided in the issue of resolution. The Supreme Court’s decision in the case made clear that the damages and remedies for the Plaintiffs would need to be the same or at least similar in order to treat the Plaintiffs as one large class. In this case, the vast differences in salary and the nature of discrimination between the millions of women in the alleged class would prove too great to treat the group as a single class.

So what exactly does this mean for future class action suits?

For starters, class actions will have a much harder time getting certified in federal court unless their proposed class members can demonstrate true commonality, not just facts that while close, have no actual common facts, for example, a shared decision maker/wrongdoer leading to a shared and common remedy. In cases such as the Wal-Mart case, plaintiffs will likely find much more success in small scale actions at state or regional levels. Due to the rejection of the 120 signed statements, it is clear that much more will need to be demonstrated than merely trouping forward plaintiffs who say they were wronged. Potential plaintiffs will now have to say that they were wronged in the same way, by the same wrongful conduct, and that they share a common remedy that will rectify the actual wrong.  Commonality of a class must be demonstrable in order to certify a class, and it appears that plaintiffs’ counsel will no longer be able to “cut corners” and argue, “you should certify this class because they always are.”  A corollary is likely that the named plaintiff must truly be representative beyond speculation.

We submit that the message from the Supreme Court in Wal-Mart is that it is not permissible for the Plaintiff’s bar to simply boot strap wrongs against one individual by a Defendant into “open season” on that Defendant by anyone who “might” have suffered a similar wrong, you must demonstrate a true commonality of actual facts and circumstances and available and appropriate remedies. The “rubber stamp” fishing expeditions are over.

Although the Wal-Mart case certainly seems to be a victory for Wal-Mart and other large corporations, it is not the end of the road for discriminated employees and shouldn’t be. Even with a more stringent examination of the facts and circumstances in common, scaled-down class action suits with actual facts and circumstances in common will and should proceed unabated. With that in mind, the Wal-Mart case is likely to proceed as many smaller classes defined by common facts and circumstances, redressable by a common theory of damages and remedies.