Iowa Employer Law Blog
Finding commonality: The lessons of Dukes for class litigation
Mar. 5, 2012 – Jeffrey A. Krausman, Iowa Employer Law Blog
This article was co-authored by Dickinson attorney John Lande and was first published January 19, 2012, in the online journal of the Alternative Dispute Resolution Committee of the American Bar Association’s Litigation Section.
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In June of 2011, the U.S. Supreme Court issued decisions in two cases applying Federal Rule of Civil Procedure 23 and its standards for class actions: Erica P. John Fund v.Halliburton, 131 S. Ct. 2179 (2011) and Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011). The decision in Halliburton, while important in its own right, has limited relevance to cases not sharing a similar factual background. Specifically, Halliburton dealt with class litigation in the context of investor suits against corporate executives who allegedly inflated stock prices. Dukes, described by the Court as “one of the most expansive class actions ever,” examined at length the Rule 23(a)(2) requirement that class actions “state questions of law or fact common to the class.” Dukes is important to examine because it represents a comprehensive analysis of the “commonality” and “predominance” standards in Rule 23 and because arbitration rules, such as the Supplementary Rules for Class Arbitration of the American Arbitration Association (AAA) and the JAMS Class Action Procedures, incorporate both the “commonality” and “predominance” standards found in Rule 23.
Class Action Requirements
The district court certified the plaintiffs as a class. A divided en banc Ninth Circuit affirmed the district court’s ruling. The majority found that the plaintiffs’ evidence of commonality was sufficient to raise the common question of whether Wal-Mart’s female employees were subject to a single set of discriminatory employment practices. This was sufficient to meet the burden set out in Rule 23(a)(2).
Two issues made their way to the Supreme Court: whether the plaintiffs had established commonality as required by Rule 23(a) and whether a court could award damages in the form of back pay to a class certified under Rule 23(b)(2). The Court unanimously disposed of the second issue, holding that under Rule 23(b)(2), the plaintiffs could not seek an award for back pay. The issue that divided the Court, and ultimately sank any class certification chances for the plaintiffs, is what it takes for a class to meet the commonality requirement under Rule 23(a).
Dukes’ Search for Commonality
The majority examined whether there was any “glue” holding together the various discriminatory acts alleged. The Court acknowledged that a “rigorous analysis” of whether the Rule 23(a) requirements have been met may necessitate a court to “probe behind the pleadings before coming to rest on the certification question.” The proof of commonality “overlaps” with at least some examination of the merits of the plaintiffs’ claims. Finding insufficient evidence of a specific employment practice that tied all 1.5 million claims together, the Court held that Rule 23(a)’s commonality requirement was not met.
The dissent, written by Justice Ginsburg, rejected this analysis. Justice Ginsburg argued that the majority’s interpretation of “commonality” improperly blends the Rule 23(b)(3) requirement that class questions “predominate” over individual questions with the more basic 23(a)(2) requirement that there are questions of law or fact common to the class. Specifically, the dissent rejected the majority’s focus on dissimilarities between class members when determining whether common questions of law or fact are present to meet the initial certification tests. Instead, Justice Ginsburg argued that even a single question of law or fact common to the class will satisfy the commonality requirement.
The dissent asserted that the majority’s approach borrows too heavily from Rule 23(b)(3). Courts necessarily engage in a dissimilarities analysis under Rule 23(b)(3) because they must weigh the commonalities and the dissimilarities to determine whether the commonalities “predominate.” Weighing similarities, according to Ginsburg, is solely a 23(b)(3) inquiry. Considering dissimilarities in the 23(a) phase imports a more exacting standard into a stage of the litigation that does not require this analysis, and may potentially defeat certification for classes that will ultimately be certified under Rule 23(b)(1) or (2), which do not have to meet the Rule 23(b)(3) predominance requirement.
The majority responded to Justice Ginsburg’s critique by noting that any competently drafted complaint could allege a common question. Instead, the majority would ask if the common contention is capable of class-wide resolution, meaning that a determination of that issue is key to resolving “the validity of each one of the claims in one stroke.” Finding too many dissimilarities between the prospective class members suggests the answer to that critical question is “no.”
The plaintiffs in Dukes were unable to establish that any unifying civil rights violation tied together the 1.5 million members of the proposed class. The lack of a common contention that, once resolved, would determine a central issue for all claims meant that the threshold requirement for “commonality” found in Rule 23(a)(2) was not satisfied. To identify that common contention, it is appropriate for the court to examine the nature of the claims even if this results in an overlap with the eventual determination of the merits of the case.
Tags: AAA, American Arbitration Association, class action lawsuits, class action litigation, Class Action Procedures, commonality, commonality standard, Federal Rules of Civil Procedure, FRCP, JAMS, predominance standard, Rule 23, Supplementary Rules for Class Arbitration, Wal-Mart Stores v. Dukes
Categories: Employment & Labor Law, Featured Article, Jeff Krausman, Litigation & Trial Law, Mediation & Arbitration