Monday, July 18, 2011

Supreme Court's Wal-Mart decision dramatically alters class action landscape
White & Case LLP
Owen C. Pell, Gregory G. Little and Glenn M. Kurtz
June 24 2011

On June 20, 2011, the Supreme Court issued its decision in Wal-Mart Stores, Inc. v. Dukes, 564 US ___ (2011), a Title VII gender discrimination case against Wal-Mart, the nation’s largest private employer. The issues before the Court concerned the scope of class certification under Rule 23 of the Federal Rules of Civil Procedure. While the Court split over particular issues, it was unanimous in reversing the decision of the Ninth Circuit; it held that the District Court had improperly certified a proposed class of some 1.5 million female employees of Wal-Mart who all claimed gender discrimination.
The unanimous part of the Court’s decision held that most class actions seeking monetary compensation cannot be brought under the portion of Rule 23(b) which was designed for suits seeking injunctive or declaratory relief. This will have a significant impact on employment discrimination cases by precluding the use of Rule 23(b)(3) where plaintiffs seek backpay and other individualized damage claims. In a more far-reaching ruling, the Court also ruled 5-4 that in order for any class to be certified as presenting common questions of law or fact under Rule 23(a), the class claims must depend upon some common contention—the resolution of which is subject to classwide resolution which will resolve an issue central to the validity of one of the class claims. This latter ruling, which will apply to all potential class actions, may make it somewhat more difficult for plaintiffs to obtain broad class treatment of many claims.

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