CADNUS-District-Court-California.gifBy Gerald L. Maatman, Jr., Laura J. Maechtlen, and Robb D. McFadden

While we don’t often blog about hearings without resulting rulings, here is an exception – on June 8, 2012, Judge Charles R. Breyer of the U.S. District Court for the Northern District of California presided over what could be the final chapter for one of the smaller “rebooted” class actions following the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).

After their stinging defeat before the Supreme Court, the plaintiffs re-filed a fourth amended complaint in Dukes v. Wal-Mart Stores, Inc., No. 3:01-CV-02252 (N.D. Cal.) which alleges class-based gender discrimination claims very similar to those originally alleged in Dukes, but with two important changes: (1) they narrowed the scope of their class claims to current and former female employees who worked in Wal-Mart regions centered in California; and (2) they attempted to establish commonality by claiming that the source of bias was a “discrete group of California District and Regional Managers who provided common direction, oversight, and approval of the challenged discriminatory pay and promotion practices.” 

On January 16, 2012, Wal-Mart moved to dismiss the fourth amended complaint, arguing that it was nothing more than a thinly veiled attempt to repackage the same legal theory that had been soundly rejected by the SCOTUS in Dukes. According to Wal-Mart, the proposed class still contains a myriad stores, districts, regions, and divisions, including hundreds of thousands of employees supervised by thousands of separate managers. Because the delegation of decision-making authority to multiple lower-level managers is not an employment practice capable of class-wide resolution, Wal-Mart asserted that the plaintiffs’ fourth amended complaint could not satisfy the Supreme Court’s test for commonality. 

In opposition, the plaintiffs argued that the proposed class is consistent with the geographic contours of Wal-Mart’s decision-making process because four regional managers provided common direction to approximately 20 lower level managers. Taken together, that plaintiffs claimed that their decisions demonstrate that Wal-Mart’s “de facto unwritten policy was one of discrimination” — a policy supported by statistical analyses showing that women in the California Regions have been paid less on average than similarly-situated men.

At last Friday’s hearing on Wal-Mart’s motion to dismiss, Judge Breyer stated that the plaintiffs could only move forward with a refiled lawsuit if they could overcome the Supreme Court’s criticisms with new evidence, but that he was “seriously concerned” they had not fixed the “fatal defects” identified in Dukes.  At one point, he even appeared to buy Wal-Mart’s arguments, asking plaintiffs’ counsel whether “this is also a case of delegation?”

Plaintiffs responded by arguing that the claims in the fourth amended complaint directly challenge the managers’ actual decisions, rather than the Company’s delegation of decision-making authority.

Judge Breyer did not issue a tentative ruling and took the matter under submission. If the Judge finds that the plaintiffs alleged facts sufficient to survive Wal-Mart’s motion to dismiss, it would reopen the gates of discovery and effectively permit the plaintiffs to pursue new claims based on new facts after more than a decade of litigation. On the other hand, if the Judge grants Wal-Mart’s motion to dismiss, it would be a significant development in Wal-Mart’s fight to defeat Plaintiff’s re-tooled theories used to pursue class-wide discrimination claims. 

A decision is expected sometime this summer. This is sure to be a ruling of significance to employers and the class action bar alike.