As we previously reported, following the re-booting of discrimination claims by a member of the former class in Dukes et al. v. Wal-Mart Stores, Inc., a Texas federal district court judge dismissed the individual and class claims of that plaintiff. On appeal, the Fifth Circuit reversed the dismissal of the named plaintiff’s individual (but not class) claims and remanded for further proceedings. The Fifth Circuit’s ruling is a good read for appellate issues stemming from workplace class actions.
Plaintiff Stephanie Odle and six other named plaintiffs filed suit on behalf of themselves and approximately 50,000 female Wal-Mart employees, alleging that they were subjected to gender discrimination as a result of specific policies and practices in Wal-Mart’s regions located in whole or in part in Texas. Odle, et al. v. Wal-Mart Stores, Inc., No. 3:11-CV -2954 (N.D. Tex.). Specifically, Plaintiffs alleged gender discrimination by denying equal opportunities for promotion to management track positions, and denying equal pay for both hourly retail store positions and for salaried management positions. On October 15, 2012, U.S. District Judge O’Connor dismissed all class claims, reasoning that the lawsuit was not timely filed, and not protected by tolling principles. Specifically, the District Court found the named plaintiff Stephanie Odle’s individual claims, and the class claims, could not benefit from the Supreme Court’s 1974 decision in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), which can allow former class members who either intervene or file individual claims in another forum to toll otherwise time-barred claims. In his ruling, Judge O’Connor relied on the Fifth Circuit’s 1985 decision in Salazar-Calderon v. Presidio Valley Farmers Association, 765 F.2d 1334 (5th Cir. 1985) (Calderon I), which restricted tolling to subsequent individual lawsuits and not class actions. Judge O’Connor reasoned that he was bound by Calderon I and, alternatively, and that the cases the plaintiffs cited — including Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Co., 130 S. Ct. 1431 (2010), and Smith v. Bayer Corp., 131 S. Ct. 2368 (2011) — were merely “illuminating.” See Odle, et al., No. 3:11-CV -2954, at 12-16 (N.D. Tex. Oct. 15, 2012). Thus, the plaintiffs’ class claims did not benefit from American Pipe tolling, and the claims filed by Odle and the class were dismissed. Plaintiffs then timely filed a motion requesting that Judge O’Connor certify his October 15 ruling for interlocutory review on the issue of tolling.
Although Judge O’Connor acknowledged that the Fifth Circuit “disfavors” interlocutory appeals and allows certification only in “exceptional” cases, he agreed with plaintiffs in a January 7, 2013 order and certified the case for review. See Odle, et al., No. 3:11-CV -2954 (N.D. Tex. Jan. 7, 2012). The District Court determined that a controlling question of law was involved, and an immediate appeal would materially advance the ultimate termination of the litigation. Id. at 4-5.
Fifth Circuit Decision
The Fifth Circuit Panel wrote a lengthy description of Odle’s involvement in litigation against Wal-Mart, pointing out that Odle and other plaintiffs filed the Dukes litigation a month after the EEOC issued Odle a right-to-sue letter, that the class representatives sought certification under Rule 23b)(2) and (b)(3), and that the California district court certified a Rule 23 (b)(2) class, but it neither considered nor addressed the Rule 23 (b)(3) request. The Fifth Circuit Panel also noted that, on appeal from the certification order, the Ninth Circuit ruled that employees like Odle, who were no longer working for Wal-Mart when Dukes was filed, lacked standing to pursue injunctive relief under Rule 23 (b)(2), yet “may be eligible to receive back pay and punitive damages.” Odle at 4 (citing Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 623 (9th Cir. 2010). In fact, the Ninth Circuit had remanded back to the district court with instructions that the district court could “in its discretion, certify a separate Rule 23(b)(3) class of former employees” like Odle for such relief. Before the California district court could address that issue, the case was stayed on appeal to the Supreme Court, which eventually decertified the nationwide Rule 23 (b)(2) class. Odle at 5. The Fifth Circuit Panel also noted that Odle filed her Texas action by the tolling extension the California district court granted to all former Dukes class members who had an EEOC notice of their right to sue. Odle at 6. The Panel’s framing of the facts seemingly portends the legal conclusion to come.
Turning from the facts towards analysis, the Fifth Circuit Panel stated that class actions, like other lawsuits, are subject to statutes of limitations, but that the American Pipe tolling jurisprudence aimed “to balance the competing interests of class action … efficiency … [with] those of statutes of limitation” that protect “against stale claims.” Odle at 8. On one hand, the filing of a class action would toll the running of a statute of limitations for all asserted class members. Odle at 9. On the other, if certification is denied or a class is decertified, “tolling ceases.” Id. The Fifth Circuit Panel then had to distinguish Circuit precedent, specifically, the follow on litigation to the Calderon I decision, upon which the District Court relied. The Fifth Circuit Panel found that the follow-on case, Calderon II, 863 F.2d 384 (5th Cir. 1989), was distinguishable because it involved the Circuit’s “second go-around with the same putative class action.” Odle at 10. The Fifth Circuit Panel additionally found that Calderon II is distinguishable from Odle’s action because the district court in Dukes initially certified the class and, even after the Ninth Circuit removed former employees like Odle from that class, it remanded with instructions to consider “for the first time — the carved-out class of former employees under a different subsection, viz., Rule 23(b)(3).” Odle at 11-12 (emphasis in original and stating also that “[t]he face that the California district court did not consider, much less deny, certification of the class of former employees…is a crucial distinction”). In other words, the Fifth Circuit did not view the Ninth Circuit’s refusal to allow former employees like Odle to remain in the Rule 23(b)(2) class the California district court did certify to be a “final adverse determination” for tolling purposes. Odle at 14.
Implications For Employers
Whether this decision sets the right balance in terms of guarding against “stale claims” remains to be seen. The “undead” nature of this case is heightened by the fact that Odle began working for Wal-Mart in 1991, and Wal-Mart was first notified of her discrimination claims in October 1999, following her termination. Thus, even the most recent evidence relevant to her individual claims is nearly 15 years old. One cannot help but wonder whether at least some of the witnesses relevant to her claims are actually dead. When dealing with litigation holds, prepare for the possibility of a long-haul and consider securing the testimony of the most relevant witnesses in an admissible form before proceedings drag on too long.