Co-authored by Gerald L. Maatman, Jr. and Laura J. Maechtlen

On January 20, 2011, the defense submitted its merits brief to the U.S. Supreme Court in Dukes, et al. v. Wal-Mart.

The Supreme Court’s future decision in Dukes is sure to be significant for employers on many levels, as employers can expect further elucidation of Rule 23 certification standards in employment discrimination class actions. The case offers a framework for the analysis required in Rule 23(b)(2) class actions seeking injunctive and declaratory relief, coupled with a demand for massive monetary recovery. The Supreme Court’s future ruling in Dukes could prove to be critical for both sides in high-stakes class actions, and depending on the ultimate outcome of the case, it also has the potential for sparking a renewed discussion about class action reform. View the December 6, 2010 blog post regarding The Supreme Court’s decision to accept certiorari here

The defense’s merits brief is a broad brush attack on the Ninth Circuit’s interpretation of Rule 23 in the 6 to 5 en banc decision of the Ninth Circuit Court of Appeals (San Francisco) – reported at 603 F.3d 571 (9th Cir. 2010) (view ruling) – which affirmed an earlier class certification order in the largest employment discrimination class action ever certified. The Ninth Circuit upheld an earlier panel decision certifying a class action gender discrimination lawsuit challenging Wal-Mart’s pay and promotions practices. The full Ninth Circuit ruled that the U.S. District Court for the Northern District of California did not abuse its discretion in finding that the large and diverse class – encompassing approximately 1.5 million female employees, both salaried and hourly with a range of positions, who are or were employed at one or more of company’s 3,400 stores across the country – was united by a complex of company-wide discriminatory practices against women where plaintiffs presented expert opinions, factual evidence, statistical evidence, and anecdotal evidence showing a corporate policy and common pattern of discrimination imposed on female employees nationwide.

The company’s merits brief advances two main areas of attack, including the certification order’s inconsistency with the Rule 23(a) prerequisites, and its irreconcilability with Rule 23(b)(2)’s requirements.

While the merits brief addresses each of the Rule 23 (a) requirements of commonality, typicality, and adequacy, the centerpiece of the defense argument regarding Rule 23 (a) is commonality. The defense contends that millions of discretionary personnel decisions on pay and promotions by thousands of individual managers throughout the company’s U.S. operations defy common treatment for purposes of Rule 23(a)(2). The defense challenges plaintiffs’ statistical presentation as defective and insufficient to justify class certification because those statistics were aggregated nationally and were therefore unhinged from the reality of the company’s facilities.  The defense argues that, because over 90 percent of the stores had no pay rate differences between men and women that are statistically significant, the aggregated statistics cannot support a finding of commonality regarding the myriad of decisions of local store managers or the impact of those personnel decisions on individual class members.

On the Rule 23(b)(2) issue, the defense brief asserts that the monetary damages – billions of dollars – sought by plaintiffs stands the applicable legal standards on their head.  The company argues that the massive monetary damages at issue must be treated for class certification purposes, if at all, under Rule 23 (b)(3), which requires that class members be given the opportunity to receive notice and opt-out to pursue their own claims for monetary relief. To that end, the defense brief asserts that plaintiffs’ claims for punitive damages will always predominate in a situation where such claims dwarf the claims for injunctive or declaratory relief.

Next up in the Supreme Court briefing schedule are the amicus briefs to be filed in support of the defense by January 27, 2011. Plaintiffs’ merits brief is due on February 21, 2011. Oral argument is now set for March 29, 2011.

Stay tuned!