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

On April 24, the U.S. Court of Appeals for the Ninth Circuit in Stockwell v. City & Cnty. of San Francisco, Case No. 12-15070 (9th Cir.  April 24, 2014), overturned an order denying class certification of age discrimination claims filed by a group of police officers against the City and County of San Francisco. Relying heavily on Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1194–95 (2013) — a securities fraud case — the Ninth Circuit held that the district court erred in denying class certification by disregarding the existence of a common question by focusing, among other issues, alleged flaws in a statistical study underpinning the plaintiffs’ theory of disparate impact.

The ruling is important for employers defending workplace class actions. Stockwell dilutes the strong defense standards established by the Supreme Court in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).


Until 2005, police officers over the age of 40 who took and passed a “Q-35” exam for promotion to Assistant Inspector with the San Francisco Police Department (SFPD) were placed on a list of candidates eligible for promotion.  In 2005, however, the SFPD abandoned use of the Q-35 examination, and began using a new “Q-50” Sergeant’s exam aimed at improving operational flexibility and promotional progression. The change in practice allegedly resulted in 35 Sergeants under the age of 40 being appointed to the investigations bureau at the SFPD, despite the fact that the over-40 group was already deemed qualified. 

SFPD officers impacted by the change in practice filed a class action alleging that SFPD’s decision to use the Q-50 exam instead of the Q-35 list constituted a pattern or practice of discrimination and caused a disparate impact on older officers in violation of the Age Discrimination in Employment Act (ADEA) and California’s Fair Employment and Housing Act (FEHA). The district court denied an initial motion for certification because the officers failed to satisfy the requirements of Rules 23(a)(2) and 23(b)(3). The officers then filed a Second Amended Complaint alleging only a disparate impact theory of liability, again under both the ADEA and FEHA, and sought certification again under Rule 23(b)(3). 

The district court again denied the officers’ second bid for class certification in August 2011 on their state law age discrimination claims (as well as under the ADEA pursuant to 29 U.S.C. 216(b)), finding that they had met three of the four requirements for certification — including numerosity, typicality and adequacy of representation — but that they had failed on commonality grounds. The district court ruled that the officers statistical study that they submitted to show disparate impact failed to include a regression analysis accounting for possible alternative explanations (other than age) for the alleged statistical disparity, and denied class certification under Rule 23(b)(2). The district court then expressly declined to rule on the officers’ argument that the putative class satisfied the requirement of Rule 23(b)(3). 

The Ninth Circuit Opinion

The panel of Ninth Circuit Judges — John Wallace, Marsha Berzon, and Raymond Fisher — granted plaintiffs’ motion for interlocutory review, but noted that the officers failed to adequately brief their ADEA claim on appeal and thus forfeited it.  Stockwell v. City & Cnty. of San Francisco, Case No. 12-15070 at 6, fn. 1. Accordingly, the Ninth Circuit’s opinion focused entirely on the issue of whether Rule 23 certification should have been granted for on plaintiffs’ state law claims under California’s FEHA.

The Ninth Circuit reversed the district court’s denial of class certification on the grounds that they failed to meet the class commonality requirement. Citing extensively to Amgen, and also to Wal-Mart Stores, Inc. v. Dukes, the Ninth Circuit noted that the district court impermissibly evaluated the merits of the class’ claims in conducting its commonality inquiry, reasoning that “while some evaluation of the merits frequently cannot be helped,” the “likelihood of overlap with the merits is no license to engage in free-ranging merits inquiries at the certification stage.” Id. at 9. Instead, “merits questions may be considered to the extent — but only to the extent — that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” Id.

The Ninth Circuit panel further noted that a common contention need not be one that “will be answered, on the merits, in favor of the class.” Id. at 9 (noting that Amgen, 133 S. Ct. at 1191 “illustrates well the application of the principle that demonstrating commonality does not require proof that the putative class will prevail on whatever common questions it identifies”). Instead, it only “must be of such a nature that it is capable of class-wide resolution — which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. (citing Wal-Mart, 131 S. Ct. at 2551).

Applying those principles, the Ninth Circuit noted that the district court critiqued the plaintiffs’ statistical study as inadequate for — among other reasons—failing to conduct a regression analysis to take account of alternative explanations, unrelated to age, for any statistical imbalance.  However, whatever the failings of the class’s statistical analysis, according to the Ninth Circuit, those failures would affect every class member’s claims uniformly because each member of the putative class suffered the effects of eliminating the Q-35 list. Id. at 16-17. Thus, the Ninth Circuit found that the officers supported their request for class certification with identification of a single, common discriminatory policy with a statistical study that presumably establishes the age-based disparate impact of the policy, and noted that was all plaintiffs needed to do to meet Rule 23(a)(2)’s commonality requirement. Id. at 17-18. Indeed, the Ninth Circuit found that the quality of their proof is an issue for later in the case, not the class certification stage.    

The Ninth Circuit then remanded the case to the district court to consider in the first instance whether the putative class satisfies the strictures of Rule 23(b)(3), as well as the other prerequisites for class certification.

Implications For Employers

Wal-Mart and Amgen are relatively recent decisions by the Supreme Court, and lower federal courts continue to interpret both decisions. In Wal-Mart, the Supreme Court clarified that an analysis of the merits in a Rule 23 hearing is not inappropriate, so long as that analysis is part and parcel of looking at the issue of whether plaintiffs established all the Rule 23 prerequisites for class certification. Following Amgen, however, plaintiffs have used the decision to dilute Wal-Mart’s rationale by arguing that courts have abused their discretion by delving “too much” into the merits.  Stockwell is one of the first cases to adopt this argument in an employment-related class action context. Indeed, until now, most courts viewed Amgen as relevant to securities fraud class actions only, but not to employment class actions. Thus, although the Stockwell decision is limited to the Ninth Circuit and focused on California state substantive law, employers should expect to see the plaintiffs’ bar cite to Stockwell to explain and interpret Supreme Court precedent.  

The Ninth Circuit’s reliance on Amgen is curious, however. Amgen focused on Rule 23(b)(3), but it was used by the Ninth Circuit in Stockwell to make Rule 23(a)(2) pronouncements. Indeed, Rule 23(a)(2) is often a huge road block in an employment-related class action involving pay, promotions, etc. due to individualized personnel decision-making and individualized damages. In addition, Rule 23(b)(3) is even tougher to surmount than Rule 23(a)(2), as predominance and manageability often break down in employment-related class actions. For this reason, employers will likely continue to distinguish Amgen, and now Stockwell, for their failure to address Rule 23(b)(3) and inapplicability to those cases in which certification turns on 23(b)(3).