CADNUSBy Gerald L. Maatman, Jr. and Laura J. Maechtlen

We previously blogged about what could have been 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), but a September 21, 2012 ruling by Charles R. Breyer of the U.S. District Court for the Northern District of California will allow the case to see another day.   

As our blog readers may remember, following their stinging defeat before the Supreme Court, 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 only; and (2) they attempted to establish commonality by alleging 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 included myriad of 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 was 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 the hearing on Wal-Mart’s motion to dismiss, Judge Breyer appeared to agree with Wal-Mart. However, on September 21, 2012, Judge Breyer issued a ruling denying the motion to strike or dismiss the class claims. Dukes v. Wal-Mart Stores, Inc., No. C 01-02252, 2012 WL 4329009 (N.D.Cal. Sept. 21, 2012). In his Order, Judge Breyer held that the Supreme Court’s decision reversing judgment of the Court of Appeals did not foreclose the trial court from considering a renewed certification motion on a “narrower class-action claim.” Id. at *6-7. Judge Breyer reasoned that the “Supreme Court’s decision rested not on a total rejection of the plaintiffs’ theories, but on the inadequacy of their proof,” and found that the amended complaint was sufficient to survive a motion to dismiss because it alleges “proof” of a common discriminatory practice. Id. at *8-9. Judge Breyer observed, however, that Plaintiffs “still must prove that every decisionmaker …perhaps four hundred or so under the corporate structure alleged …operated under a common policy or mode of decisionmaking.” Id. at *9.  Plaintiffs have “yet had an opportunity to present their evidence,” and the claims do not fail as a matter of law. Id.  

In addition to the commonality arguments, Judge Breyer addressed whether the Supreme Court’s decertification of the national class prevents the absent members of the first amended complaint’s proposed class from continuing to benefit from the tolling of the statute of limitations. Recognizing that the law is “unsettled,” and following a substantive discussion of Catholic Soc. Servs. v. I.N.S., 232 F.3d 1139 (9th Cir. 2000)(en banc) — the “controlling” Ninth Circuit case — Judge Breyer held that where “plaintiffs are permitted to amend a complaint to address deficiencies that precluded an initial attempt at certification, and the newly proposed class is a subset of claims that defendants had notice of, the goals of avoiding multiplicitous litigation and unfair surprise continue to be served by tolling the claims of the members of the subsequent putative class.” Id. at *11. Judge Breyer also held that Wal-Mart’s argument that class members cannot benefit from the “single filing” or “coat-tailing” doctrine following class decertification fails for the same reasons. Id. at * 12. Under those doctrines, “so long as one plaintiff timely files an administrative complaint, a class of similarly-situated plaintiffs may ‘piggyback’ on that complaint, thereby satisfying the exhaustion requirement.” Id.  

Plaintiffs were ordered to submit a motion on class certification no later than January 11, 2013, which will be heard at 10 a.m. on February 15, 2013. We will be watching the proceedings with great curiosity.