By Eric M. Lloyd and Laura J. Maechtlen 

Late last week, plaintiffs in the U.S. District Court for the Northern District of California felt the ripple effects of the U.S. Supreme Court’s landmark decisions regarding same-sex marriage in United States v. Windsor and Hollingsworth v. Perry.

In Dragovich v. U.S. Dep’t of the Treasury, et al., No. C-10-01564 (N.D. Cal. Dec. 4, 2014), the Judge Claudia Wilken dismissed the class claims brought by plaintiffs seeking long-term care benefits for their same-sex domestic partners since any barriers precluding them from obtaining coverage also applied to heterosexual couples.

The ruling is important for all employers involved in workplace class action litigation.

Background To The Ruling

As of the date the Dragovich litigation started, same-sex spouses and registered domestic partners were ineligible to receive long-term care benefits under the California Public Employees’ Retirement System pursuant to the Health Insurance Portability and Accountability Act, 26 U.S.C. § 7702B(f) (“HIPAA”). The HIPAA, in turn, excluded such individuals from coverage under state-run benefits plans since it restricted benefits for spouses to heterosexual married couples pursuant to the Defense of Marriage Act, 1 U.S.C. § 7 (“DOMA”), and, omitted unmarried couples from eligibility for benefits. The plaintiffs, who are public employees of the State of California, thus sought long-term care benefits for their same-sex spouses and registered domestic partners. The Court certified the class in June 2011, and then granted summary judgment in the plaintiffs’ favor in May 2012. The defendants appealed the Court’s order granting summary judgment thereafter.

The Northern District of California’s recent rulings in Dragovich were prompted by developments that arose after the plaintiffs prevailed on summary judgment. In July 2013, the U.S. Supreme Court ruled that the DOMA’s restriction of the institution of marriage to heterosexual unions was unconstitutional in United States v. Windsor, 570 U.S. ___ (2013). On the same day as the Windsor decision, the Supreme Court also issued its ruling in Hollingsworth v. Perry, 570 U.S. ___ (2013), in which it declined to disturb the California Supreme Court’s ruling that the state’s ban on same-sex marriage was unconstitutional. Following the companion Windsor and Perry rulings, the Ninth Circuit vacated the Northern District of California’s grant of summary judgment in favor of the domestic partner plaintiffs and remanded the case for further consideration. The Ninth Circuit also dismissed the appeal as it applied to the plaintiffs involved in same-sex marriages, since the DOMA no longer operated to exclude same-sex spouses from eligibility for benefits.

The Court’s Ruling

On remand, the Judge Wilken granted the Federal and State defendants’ cross-motions for summary judgment as to the claims brought by plaintiffs involved in same-sex domestic partnerships. While the HIPAA still excluded domestic partners from eligibility for coverage under state-run plans, the Court held that the plaintiffs’ equal protection and substantive due process claims failed because the law impacted same-sex and heterosexual couples involved in a registered domestic partnership equally. Because same-sex couples in California could choose to marry following Perry, and, since the DOMA no longer restricted eligibility for benefits to heterosexual unions after Windsor, the barriers to benefits faced by all class members mirrored those faced by individuals involved in heterosexual domestic partnerships. The plaintiffs argued that couples involved in same-sex domestic partnerships faced barriers to marriage not faced by heterosexual couples, but the Court concluded that this argument was speculative and too individualized for resolution in a class action. The Court then denied the plaintiffs’ motion for class notice, since there was no on-going constitutional violation following Perry and Windsor.

In tandem with its summary judgment order, the Court denied the plaintiffs’ motion for additional remedies, which sought an order permitting class members to purchase benefits for the premiums they would have paid at the time they originally sought to enroll their same-sex partners. The Court held that providing the requested discounts would require complicated individualized inquiries which were not suitable for a class action, and, in any event that prospective relief was not available in the absence of an ongoing constitutional violation. The Court also denied the plaintiffs’ request for leave to file a supplemental complaint adding claims for alleged Title VII violations since such claims would necessarily be premised on multiple, complicated individualized inquiries.

Implications For Employers

Windsor and Perry were expected to unleash a cascade of rulings defining the rights of same-sex couples, as predicted in our prior blog postings hereDragovich is the latest indicator of the impact of these cases. The Court’s ruling that heterosexual and same-sex registered domestic partnerships in California are on equal footing is likely to impact employers down the line. Dragovich also provides employers seeking summary judgment of class claims with some nice language holding that speculative, individualized claims cannot be resolved in a class action.

By Gerald L. Maatman, Jr.

The Ninth Circuit’s ruling in Stockwell v. City & Cnty. of San Francisco, Case No. 12-15070 (9th Cir.  April 24, 2014), is already sparking a debate over the meaning of Rule 23. Our posting on the ruling is here. The decision ought to be required reading for all corporate counsel concerned about workplace class action litigation.

More recently, BNA Daily Labor Report contacted us for our views on Stockwell, and it subsequently published an extensive article on the implications of the decision.

We thought our loyal blog readers would find BNA’s article to be of interest. It provides an extensive analysis of the Ninth Circuit’s opinion in the form of a point/counter-point debate of sorts with Joe Sellers of Cohen Milstein, one of the leading lights of the plaintiffs’ class action bar, asserting a view of the plaintiffs’ bar and myself on behalf of the defense bar.

Enjoy the debate!

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).

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

As we reported here, following their stinging defeat before the U.S. Supreme Court in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), plaintiffs rebooted their claims in a fourth amended complaint alleging class-based gender discrimination claims with very important changes aimed to address deficiencies identified by the U.S. Supreme Court as barriers to class certification. The plaintiffs in Dukes moved again for class certification, relying on their “repackaged” theories focused on a smaller class of current and former female employees who worked in Wal-Mart regions centered in California and allegations of bias by a “discrete” group of California District and Regional Managers. However, plaintiffs were not successful. Noting that “[p]laintiffs’ proposed class suffers from the same problems identified by the Supreme Court, but on a somewhat smaller scale,” Judge Charles Breyer of the U.S. District Court for the Northern District of California denied the motion in August 2013 in a thorough order, finding that that the commonality issue was “dispositive.” That order, however, was not the final chapter in the twelve year old class action.  Plaintiffs filed a request to appeal the order under Rule 23(f), which was immediately granted by the Court. 

Unfortunately for Plaintiffs, the final chapter of the class claims may finally be here. On November 18, 2013, the U.S. Court of Appeals for the Ninth Circuit (Justices Silverman, Bybee and Christen) denied plaintiffs’ appeal in a one line opinion stating: “The court, in its discretion, denies the petition for permission to appeal the district court’s August 2, 2013 order denying class action certification.”   

The reversal of fortune for the plaintiffs in Dukes continues, with the Ninth Circuit’s order being one of the final decisions to preclude class claims filed against Wal-Mart in the Northern District of California.

By Laura J. Maechtlen and Brian Wong

Here’s a question fit for October 31: Can an employer be liable for over $100,000 in punitive damages in a Title VII action, despite a jury award to the plaintiff of zero compensatory damages and merely one dollar in nominal damages? In an opinion that should scare the daylights out of employers everywhere, the Ninth Circuit answered this question with a spine-chilling “Yes.”

This case has significant ramifications for the workplace class action world.


In State of Arizona v. ASARCO LLC, No. 11-17484 (9th Cir. Oct. 24, 2013), the Ninth Circuit considered whether the Constitution permits a six-figure punitive damage award in a sexual harassment suit where a jury found the plaintiff suffered one dollar in nominal damages. Defendant employer ASARCO, a large copper mining company, employed Plaintiff Angela Aguilar at a mill facility in Sauharita, Arizona beginning December 2005. During the eleven months she worked at the mill, Aguilar alleged she suffered repeated instances of sexual harassment by multiple successive supervisors and fellow co-workers, despite her complaints to ASARCO’s human resources department and at least one mill manager. 

The District Court’s Punitive Award

After an eight day trial in the U.S. District Court for the District of Arizona, a jury found ASARCO liable on Aguilar’s sexual harassment claims, but not on her constructive discharge or retaliation claims. The jury did not find any compensable damages for Aguilar, instead awarding her one dollar in nominal damages for the sexual harassment claim and $868,750 in punitive damages. When ASARCO moved for judgment as a matter of law, the district court ordered that the punitive damages award be reduced to Title VII’s statutory maximum of $300,000, but held the damages were not constitutionally excessive.

The Ninth Circuit’s Holding On Appeal

On appeal, the Ninth Circuit evaluated the propriety of the punitive award through the lens of the U.S. Supreme Court’s three “guideposts” for determining unconstitutional excessiveness: (i) the degree of reprehensibility of the defendant’s conduct; (ii) the ratio of the punitive award to the actual harm inflicted on the plaintiff (i.e., the dollar value of compensatory and nominal damages awarded); and (iii) the existence of any civil or criminal penalties that could be imposed for comparable misconduct. BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996). 

As to reprehensibility of ASARCO’s conduct, the Ninth Circuit held the minimal magnitude of harm actually inflicted on Aguilar had little bearing on whether ASARCO acted reprehensibly or with reckless disregard for Aguilar’s health and safety. Hauntingly, the Ninth Circuit declined to consider the degree of harm inflicted, and instead considered only the type of harm inflicted, holding intentional discrimination “high on the reprehensibility scale.” ASARCO, at 10. Similarly, the Ninth Circuit considered ASARCO’s disregard for risk to Aguilar sufficiently reprehensible to warrant high punitives, notwithstanding the fact that the specter of harm never actually materialized. Id.

 As to the ratio of the punitive award to the actual harm inflicted, the Ninth Circuit acknowledged that the district court’s 300,000 to 1 ratio far exceeded the next highest ratio — a 125,000 to 1 award — that it could locate in its own survey of discrimination cases. ASARCO, at 14. Importantly, the Supreme Court has previously held “[punitive] damages must bear a reasonable relationship to compensatory damages,” Gore, 517 U.S. at 580, and “few awards exceeding a single-digit ratio between punitive and compensatory damages … will satisfy due process.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419 (2003). In light of these admonitions, the Ninth Circuit concluded a reduction of the punitive award was in order. 

As to possible penalties for comparable misconduct, the Ninth Circuit held Title VII’s damages cap to be a “legislative judgment” appropriate for benchmarking the reasonableness of a punitive award, and weighing in favor of damages “at least on the order of the statutory cap.” ASARCO, at 16-17. 

In a frightening turn, the Ninth Circuit then held “a 300,000 to 1 ratio raise[d] [its] judicial eyebrows,” but a 125,000 to 1 ratio — the highest prior ratio it could find — did not. The Ninth Circuit cited numerous cases striking down lesser punitive award ratios despite findings of actual harm, id. at 19-20, but nonetheless imposed the 125,000 to 1 ratio upon ASARCO, an employer that caused no actual harm.

The Ninth Circuit vacated the district court’s $300,000 punitive award, and remanded the case with the instruction that a new trial be ordered should the plaintiff reject a remittitur to $125,000. Id. at 21.

In a partial dissent, Justice Hurwitz took issue only with the majority’s decision to reduce the punitive award below Title VII’s statutory cap. Invoking Second and Fifth Circuit precedent, Justice Hurwitz explained “[a] defendant receiving a fine within the statutory limits could hardly complain of a due process violation because of the absence of notice.” Id. at 24.

Employer Takeaway

ASARCO is truly scary precedent, as the Ninth Circuit has all but severed the relationship between the magnitude of actual harm suffered by a Title VII plaintiff and the defendant employer’s exposure to punitive damages.

After ASARCO, single-digit ratio analysis is no longer “a talisman in civil rights cases involving nominal damages.” ASARCO, at 23. Absent that protection, there now lurks the danger of significant punitive exposure in Title VII cases, even where no harm has occurred. Employers in the Ninth Circuit: Happy Halloween – Not!

wdwas.jpgBy Gerald L. Maatman, Jr. and Jennifer A. Riley

On June 6, 2013, Judge Benjamin H. Settle of the U.S. District Court for the Western District of Washington issued an opinion in Canada v. Meracord, LLC, No. 12-5657 (W.D. Wash. June 6, 2012), and denied defendants’ motion to dismiss plaintiff’s claims. 

In a cursory opinion, Judge Settle held that an unaccepted offer of judgment – even for the full amount of the named plaintiff’s individual claim – did not moot plaintiff’s class action. 

Judge Settle refused to apply the Supreme Court’s recent decision in Genesis Healthcare Corp. v. Symczyk, 133 S.Ct. 1523 (2013), wherein the Supreme Court found that, following an offer of judgment, a plaintiff lacked any interest in an FLSA collective action that would preserve her claims.     

Judge Settle’s decision demonstrates that, notwithstanding Genesis, a Circuit split over the impact of offers of judgment remains intact and the viability of this common defense tactic for eliminating low-value claims remains uncertain in the context of class action litigation.

Background Facts

Plaintiffs Marie Johnson-Peredo, Dinah Canada, and Robert Hewson filed a class action against numerous defendants alleging, among other claims, violations of the Racketeering Influenced and Corrupt Organizations Act, the Washington Debt Adjusting Act, and the Washington Consumer Protection Act. Id. at 1-2.

On April 25, 2013, Defendants served Johnson-Peredo an offer of judgment for $13,058.46, plus attorneys’ fees, costs, and expenses.  Johnson-Peredo did not accept, but the Defendants nevertheless moved to dismiss her claims as moot. Id. at 2.

The District Court’s Opinion

The district court denied Defendants’ motion to dismiss and held that the offer of judgment did not moot the action. 

The district court relied on the Ninth Circuit’s opinion in Pitts v. Terrible Herbst, Inc., 653 F.3d 1081, 1091-92 (9th Cir. 2011), wherein the Ninth Circuit held that an accepted offer of judgment – for the full amount of the named plaintiff’s individual claim – made before a motion for class certification – “does not moot a class action.”  Id.

The court rejected Defendants’ argument that Pitts was abrogated by the Supreme Court’s opinion in Genesis

In Genesis, plaintiff brought a collective action claiming that her employer failed to pay for work performed during meal breaks in violation of the FLSA. Id. at 3. Plaintiff received a full offer of judgment for the amount of her claim but failed to accept the offer within the allotted time. The Supreme Court held that, because no other putative collective action member had opted in, plaintiff “had no personal interest in representing putative, unnamed claimants, nor any other continuing interest that would preserve her suit from mootness.” Id. at 3. Thus, the case as a whole had to be dismissed when her own claim became moot.

The district court declined to apply Genesis because it found “nothing to indicate that the specific holding extends beyond FLSA collective actions.” Id. It also declined to certify its ruling for appeal noting that Defendants failed to meet their burden under the collateral order doctrine.  Id.


Judge Settle’s opinion demonstrates that, notwithstanding Genesis, the Circuit split regarding whether an unaccepted offer of judgment makes a claim moot remains intact. If other courts follow suit, the effect of this common defense tactic in the class action context will continue to vary by Circuit.

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. 

lawjusticeandflagcopy2.jpgBy Gerald L. Maatman, Jr., Laura J. Maechtlen, and Joshua M. Henderson

Under Title VII, the EEOC has an obligation before filing suit to engage in conciliation in good faith with an employer that is the subject of the Commission’s investigation and good cause determination. This conciliation requirement is not a perfunctory task, or a mere box that needs to be checked before the EEOC can file a complaint in court. Good-faith conciliation is intended to provide adequate notice to an employer of the nature of the charges against it, and an opportunity to resolve the matter before litigation ensues. Against this backdrop, and as this blog has noted before here and here, federal courts are taking a closer look at the EEOC’s litigation tactics. In a new decision by Judge Leslie Kobayashi of the U.S. District Court of Hawaii granting the employer’s motion to dismiss in EEOC v. ALTRES, Inc., et al., Case No. 11-CV-799 (D. Haw. Aug. 22, 2012), these two issues were joined in an opinion that will likely reverberate in EEOC matters throughout the country.

The key issues considered by the Court in EEOC v. ALTRES, Inc., et al. were: (i) whether the EEOC’s conciliation obligation is a jurisdictional prerequisite to filing suit, or whether it was a requirement that could be waived if not pleaded as an affirmative defense; and (ii) whether the EEOC did, in fact, engage in conciliation in good faith before filing its lawsuit under section 706 of Title VII to recover on behalf of an unspecified number of female employees that the EEOC alleged were subjected to sexual harassment and retaliation by their employer.

The Court held that the EEOC’s statutory duty to conciliate in good faith before filing a lawsuit is jurisdictional. The Ninth Circuit (in which the District Court of Hawaii sits) held in a case decided 30 years ago – the case of EEOC v. Pierce Packing, 669 F.2d 605 (9th Cir. 1982) – that it is indeed jurisdictional, but the EEOC argued that the Ninth Circuit’s decision had been eroded (if not overruled) by subsequent U.S. Supreme Court authority, such as Arbaugh v. Y&H Corp., 546 U.S. 500 (2006). Significantly, Judge Kobayashi declined to follow the lead of her colleague on the same court who held in EEOC v. Global Horizon, Inc.,2012 U.S. Dist. LEXIS 928160 (D. Haw. Mar. 16, 2012), that the obligation is not a jurisdictional prerequisite to filing a lawsuit.  Likewise, she rejected many other rulings from throughout the United States that have accepted the EEOC’s contention.

On the second issue, the Court concluded that the EEOC had failed to conciliate with the employer in good faith: “[T]he Court finds that the EEOC failed to conciliate in good faith when it failed to provide either Defendant with any information with which they could evaluate the EEOC’s claims.” (The case involved two defendants, an employer and a PEO, or Professional Employer Organization, which provided human resources services to the employer). 

Judge Kobayashi also had some sharp words for the manner in which the EEOC conducted itself: “The EEOC’s obstinate refusal to offer any information, including the results of its investigation, does not demonstrate ‘a willingness to work toward settlement,’ because ‘a fundamental element of working toward settlement is providing a reasonable amount of information to make settlement a possibility.’ The statute requires EEOC to conduct conciliation and therefore Congress must have intended it to be done in a meaningful way. In order to be meaningful, conciliation must have context and provide for an exchange of relevant and specific information between the parties. It is no surprise that Defendants, faced with little information, were unwilling to entertain the EEOC’s ‘take-it-or-leave-it’ offer. The EEOC cannot expect employers to make substantial offers of settlement when they are provided with no information with which to evaluate their liability.” 

Rather than dismiss the case outright, however, the Court granted leave to the EEOC to file an amended complaint, but only after engaging in conciliation in good faith. In its order, the Court identified the information that the EEOC would need to provide to satisfy its statutory obligation: “The EEOC is instructed to provide Defendants with information such as the number or identity of Claimants identified during its investigation, specific incidents of harassment or discrimination, and any other information reasonably necessary for Defendants to evaluate the claims and formulate a reasonable offer of settlement.” 

Perhaps this strong language will provide further impetus for the EEOC to rethink its approach to prosecution of litigation, an issue that is receiving increased attention recently with the EEOC’s meeting on its Strategic Enforcement Plan. That being said, the decision in EEOC v. ALTRES, Inc., et al. will be a powerful litigation tool for employers facing recalcitrant EEOC positions over good faith conciliation issues.

Readers can also find this post on our new EEOC Countdown Blog here.

gavel.jpgBy Gerald L. Maatman, Jr. and David Ross

Virtually every class action pending in federal court has undergone a re-examination based on the U.S. Supreme Court’s holding in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011). The issues arises either based on a defense motion to strike or decertify a class based on Dukes or in the parties’ briefing of a motion for class certification. Defendants typically argue that the class theories are no longer viable under Dukes, and Plaintiffs often defend their class claims as being consistent with the SCOTUS ruling. Federal district court judges are left to analyze whether Dukes completely blocks, impedes in part, or green lights the Plaintiffs’ class claims.

The latest ruling framing the “Dukes effect” is Easterling, et al. v. Connecticut Department of Corrections, Case No. 08-CV-826 (D. Conn. Nov. 22, 2011). Plaintiffs in Easterling – who sued on behalf of a class of rejected female corrections officer (“CO”) applicants – alleged that a component of a Connecticut Department of Corrections (“DOC”) physical fitness test was gender biased. The facts of the case are straight forward. Easterling applied for work with the DOC in 2004. At the time, CO candidates had to first pass a written examination and then a physical fitness test that included a 1.5 mile run that needed to be completed within the time allotted for the candidate’s age/sex cohort. If a candidate passed both tests, they proceeded to the interview stage of the application process, followed by a background investigation and medical examination. The physical fitness test consisted of four parts, and failure on any one part constituted failure of the entire physical fitness test. Although Easterling passed the written exam and three of the four components of the physical fitness test, she failed to complete the 1.5 mile run within the allotted time and was not advanced to the interview stage. Id. at 2-3.She sued in 2008 under Title VII of the Civil Rights Act of 1964, asserting that the physical fitness test had a disparate impact on female CO applicants.

Earlier in the litigation, Judge Janet Hall granted class certification for plaintiffs’ claims under Rule 23(b)(2). The Court found that Easterling had standing to pursue disparate impact claims against the DOC. Among other things, she found that Easterling could redress her alleged injuries resulting from the physical fitness test through remedies such as an injunction barring the DOC from hiring from applicant lists that were the product of unlawful policies, practices, or customs. Id. at 3.

In the wake of the SCOTUS ruling in Dukes, Defendants moved for decertification. On November 22, 2011, the Court held that even though the initial certification order could not stand in light of Dukes, decertification was not warranted. In effect, Judge Hall rejected the defense motion in part, but ruled that Dukes required a conversion of the class into a “hybrid class” per Rule 23(b)(3). Specifically, Judge Hall reasoned that on account of Dukes, the class claims needed to be “re-booted” — i.e., certified under Rule 23(b)(2) for class-wide declaratory and injunctive relief, and under Rule 23(b)(3) for monetary and individualized injunctive relief.

This past May, the Court had granted summary judgment on the issue of liability to the class on the claim that the 1.5-mile run component of the physical fitness exam the DOC used for corrections officer applicants between 2004 and 2006 had a disparate impact on female candidates

The members of the class include “[a]ll female applicants for the position of Correction Officer at the State of Connecticut Department of Correction who participated in the selection process and failed only the 1.5 mile run portion of the physical fitness test at any time from June 28, 2004 and continuing to the date of final judgment in this matter.” Id. at 17.

Judge Hall determined that her original certification order under Rule 23(b)(2) could not stand in light of Dukes, which rejected the U.S. Court of Appeals for the Second Circuit’s broad reading of Rule 23(b)(2) in Robinson v. Metro-North Commuter Railroad Co., 267 F. 3d 147 (2d Cir. 2001). The Court found that while Dukes overturned an en banc opinion of the U.S. Court of Appeals for the Ninth Circuit, the Ninth Circuit’s predominance test was identical to that of the Second Circuit. Id. at 4. Specifically, prior to Dukes, Second Circuit precedent provided that Rule 23(b)(2) certification was proper of a class seeking both injunctive and monetary relief as long as the positive weight or value to the Plaintiffs of the injunctive or declaratory relief sought was predominant over the value or the monetary relief and class treatment would be efficient and manageable. Judge Hall opined that she had relied on Robinson‘s now-defunct predominance test when it initially granted Plaintiff motion for class certification. Given the ruling in Dukes, the Court reasoned that the Supreme Court’s wholesale disavowal of that test qualified as a compelling reason to re-examine the earlier certification order. Id. at 4-5.

Judge Hall framed the issues as how the Court should respond to a shift in controlling law. The choices were to: (i) revoke the certification order entirely and dismiss Easterling’s case; (ii) keep the order in place for Rule 23(b)(2) certification on the issues of liability and class-wide injunctive relief per Dukes, but require that all claims for monetary and individualized injunctive relief be pursued in separate, individual lawsuits by the class members; or (iii) adopt the hybrid approach suggested by Plaintiff, maintaining the Rule 23(b)(2) certification with regard to liability and class-wide injunctive relief and certifying a separate Rule 23(b)(3) class on the issues of monetary and individualized injunctive relief.

Finding that Dukes overturned Robinson on the propriety of a predominance test under Rule 23(b)(2), Judge Hall determined that Dukes did not overturn Robinson completely. She ruled that decertification was not appropriate because “Dukes did not reject … [the Second Circuit’s] interpretation of Rule 23(c)(4).”  Id. at 7. Under Rule 23(c)(4), Judge Hall reasoned, federal judges are exhorted to use the class action device liberally to reduce the range of disputed issues in complex litigation and achieve judicial efficiencies.  Although Robinson was a pattern or practice disparate treatment case, the Court found that “its logic is equally applicable to disparate impact suits” because liability in both of these types of cases is established via class-wide, statistical proof. Id. at 6. Further, in both types of actions, as soon as systemic adverse treatment or impact is established, the Court may enter class-wide injunctive relief without investigating the validity or value of individual class members’ claims.
For these reasons, Judge Hall determined that the prior Rule 23(b)(2) certification ruling could be kept in place as to the issues of liability and class-wide injunctive relief. Further, the hybrid approach suggested by Plaintiff could be adopted because certification of the claims for monetary and individualized injunctive relief was proper under Rule 23(b)(3).

To warrant certification under Rule 23(b)(3), a class must meet two requirements beyond the Rule 23(a) prerequisites of commonality, numerosity, typicality, and adequacy. Specifically, Plaintiff must establish that common questions predominate over any questions affecting only individual class members and class resolution is superior to all other available forms of adjudication. The predominance requirement is met if resolution of some of the factual or legal issues that qualify each class member’s case as a genuine controversy can be achieved through generalized evidence and are more substantial than questions subject only to individualized evidence. As is usually evident in most class action contexts, certification is far more difficult to establish under Rule 23(b)(3) than Rule 23(b)(2).

Nonetheless, while the remedial stage of disparate impact litigation generally is dominated by individualized proof, Judge Hall reasoned that this was not the case here. The Court opined that the goal at the remedies stage “is to recreate ‘as nearly as possible … the conditions and relationships that would have been had there been no unlawful discrimination.’ ”  Id. at 12. Although, “[i]n the present case, the Court finds that it would be impossible to determine exactly which class members would have received job offers from the DOC if a 1.5 mile run had not been part of the physical fitness test,”  the Court found that the aggregate amount of individual relief ascertainable in a 23(b)(3) proceeding (even though the precise methodology for proving the aggregate amount had not yet been determined). Id. at 14.

Based on the record, it was unsettled which class members would have passed the subsequent medical screening and criminal background check, or gotten through the interview that would have taken place had they not failed the physical fitness test. In addition, passing the medical screening, criminal background check, and interview stages still only would have resulted in a class member being certified as an applicant and placed on an eligibility list, with no assurance of being that they would have been selected from that list. Accordingly, Judge Hall indicated that rather “than resort to ‘mere guesswork,’ … the Court will make an aggregate calculation of the back pay to which the class is entitled. This sum can then be distributed to eligible class members on a pro rata basis.” Id. at 13.

The Court opined that “this method of assessing monetary relief ‘is a consequence of substantive Title VII law, and not a creative method of proof intended to accommodate the logistical demands of class proceedings,’ ” and also is appropriate for calculating the particularized individual relief the class requests, such a “priority hiring” or front pay. Id. Although individual issues still will exist after such calculations are made, “the Court finds that these individual questions are less substantial than the issues that will be subject to generalized proof.” Id. at 15.

As to superiority of class treatment under Rule 23(b)(3), Judge Hall found that “[i]t would be absurd to have more than a hundred class members separately litigate the issue of aggregate back pay, just as it would be absurd to have them separately litigate the question of class-wide liability.” Id. at 15-16. Plaintiffs asserted that there may be as many as 177 class members and the DOC acknowledged that there could be up to 125. Finally, the Court found that any difficulties likely to arise in managing this class action, “are far less daunting than the difficulties involved in litigating over a hundred separately captioned actions.” Id. at 16.

Implications For Employers
This decision differs from other post-Dukes cases where defendants more typically challenge the threshold issues of commonality under Rule 23(a) because plaintiffs failed to challenge the impact of a specific employment practice and relied instead on a theory of adverse impact arising from discretionary, subjective decision-making – a theory that Dukes largely rejects in class cases.  Here, plaintiffs specifically challenged the employment practice of a uniform pre-employment test, which Dukes allowed may support a finding of commonality under Rule 23(a) and, in principle, may support a 23(b)(2) class for injunctive and declaratory relief for the class as a whole, apart from monetary damages.  Dukes , however, did not address the use of “hybrid” certifications, where damage claims might be certified under the stricter provisions of 23(b)(3), in addition to a 23(b)(2) class for injunctive relief.  Notably, the Court’s analysis in Easterling finds the “hybrid” certification approach consistent with Dukes and applies a liberal interpretation to the 23(b)(3) requirement that common questions must predominate over individualized issues (and perhaps influenced by the Court’s reluctance to revoke class certification at a late stage in the litigation).  Because the Court found the aggregate liability ascertainable on a class basis, it also found this common issue to be predominate in determining damages, following the Robinson scheme, even though damages in any individual case would be subject to the defense that the candidate was not otherwise qualified, would not have been hired in any event, or failed to mitigate damages.

Easterling is yet another example of how “Dukes questions” continue to spawn new Rule 23 puzzles. It is also a window into how the plaintiffs’ class action bar is utilizing “re-booting” theories to find their way around some of the impediments to class certification created by Dukes.

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

On January 27, 2011, 10 amicus briefs were filed with the U.S. Supreme Court in support of the Defendant in Dukes, et al. v. Wal-Mart.

While amicus briefs are not unusual in Supreme Court appeals, the number of amicus briefs filed in the Dukes case is unusual, and manifests the high-stakes which employers and the plaintiffs’ class action bar confront in this litigation.

Seyfarth Shaw submitted amicus briefs on behalf of Costco Corp. [click to link to Costco brief], and the Society of Human Resource Management and the HR Policy Association [click to link to SHRM brief].

Of course, by now, most of our readers know that the Ninth Circuit’s interpretation of Rule 23 in the 6 to 5 en banc decision in Dukes – reported at 603 F.3d 571 (9th Cir. 2010) (view ruling) – 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.

While the Ninth Circuit’s decision may not have transformed Rule 23 law, it has changed the landscape for employment class actions.  Dukes presents the Supreme Court with the opportunity to elucidate how much, for purposes of Rule 23(a), class members must have in common for a class action to be certified and the extent to which under Rule 23(b)(2) claims for money damages impact certification.

The amicus briefs assert that as to certain issues relative to plaintiffs’ claims against Wal-Mart, the Ninth Circuit’s Rule 23 class certification analysis erred in permitting the plaintiffs to rely upon statistics aggregated above the decision-making level, permitting the plaintiffs to rely upon external labor markets in a promote-from-within case, permitting the plaintiffs to rely upon an abstract sociological theory of stereotyping without first showing how that theory applies to actual workplaces, and permitting the plaintiffs to seek monetary damages under Rule 23(b)(2), which is primarily designed for injunctive relief.

Plaintiffs’ merits brief is due on February 21, 2011. Oral argument is now set for March 29, 2011.

Stay tuned!