August 27, 2010

Cert. Petition in Wal-Mart v. Dukes Raises Class Certification Issues That May Impact Whether Punitive Damages are Subject to Class Treatment

This past Wednesday, Wal-Mart filed a petition for a writ of certiorari urging the Supreme Court to step into the fray over what some have reported to be the largest class action in history. (Wal-Mart’s cert. petition can be found here on SCOTUSblog.)

The plaintiffs in Dukes v. Wal-Mart Stores, Inc., filed a class action alleging that Wal-Mart discriminates against women in violation of Title VII. The federal district court held that a class estimated to include more than 1.5 million women—including their requests for back pay and punitive damages—could be certified. As we noted in a prior post, an en banc panel of the Ninth Circuit issued a sharply divided 6 to 5 decision affirming class certification of the plaintiffs’ requests for back pay under Rule 23(b)(2) of the Federal Rules of Civil Procedure.

In doing so, the Ninth Circuit exacerbated an existing split among the federal appellate courts over the proper standard for determining whether a class action can be certified under Rule 23(b)(2) where the class seeks monetary relief in addition to injunctive and declaratory relief. Notably, the Ninth Circuit adopted a new standard for certifying a Rule 23(b)(2) class under these circumstances and reversed the class certification of the plaintiffs’ requests for punitive damages so that the district court could determine whether these requests could be certified under this new 23(b)(2) standard or under Rule 23(b)(3).

Wal-Mart’s petition asks the Supreme Court to decide whether a class may be certified under Rule 23(b)(2) if it seeks monetary relief and, if so, “in what circumstances” this rule “can be used to certify monetary claims.” If the Supreme Court chooses to take up this issue, the Supreme Court’s decision may affect whether punitive damages claims are subject to class certification.

For example, Wal-Mart argues that Rule 23(b)(2) “does not authorize certification of any claims for monetary relief.” If the Supreme Court agrees, then class certification under 23(b)(2) might not be available to plaintiffs seeking punitive damages in addition to injunctive and declaratory relief. And even if the Supreme Court concludes class claims seeking monetary relief can be certified under Rule 23(b)(2), the Supreme Court might nonetheless choose to place stringent restrictions on the circumstances when such claims are properly subject to class certification. If the Supreme Court decides to follow the restrictive class certification standard adopted by the Fifth Circuit, for example, it is possible that class certification under Rule 23(b)(2) might not be available to plaintiffs asking for punitive damages. (See Allison v. Citgo Petroleum Corp. (5th Cir. 1998) 151 F.3d 402, 416-418 [affirming determination that class certification for claims seeking compensatory and punitive damages was inappropriate under Rule 23(b)(2) because these claims for monetary relief were not sufficiently incidental to the injunctive and declaratory relief sought].)

Interestingly, in addition to raising the overarching question of whether claims for monetary relief generally can be certified as part of a class action under Rule 23(b)(2), Wal-Mart’s petition also addresses whether claims seeking punitive damages in particular are subject to class certification. According to Wal-Mart, in remanding the case for further proceedings, the Ninth Circuit “suggested that the district court . . . might be able to certify the punitive damages claims under Rule 23(b)(2) or Rule 23(b)(3) . . . .” Wal-Mart maintains this ruling “conflicts with numerous decisions that have rejected adjudication of punitive damages on a class-wide basis” and “would also violate Wal-Mart’s Seventh Amendment rights if a jury did not resolve all factual issues related to punitive damages.”

According to the Supreme Court’s on-line docket in Wal-Mart Stores, Inc. v. Dukes, Case No. 10-277, the plaintiffs’ response to Wal-Mart’s petition is due on September 24, 2010.