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Law Alert!

Landscape Shifts for Class Action Lawsuits

In one of the largest class action law suits ever, Betsy Dukes and approximately 1.5 million current and former female Wal-Mart employees brought suit for discrimination against women in Wal-Mart's promotion and pay policies. The United States Supreme Court ruled against class certification in a decision that has significantly changed the legal landscape for large-scale federal class action lawsuits.

In Wal-Mart Stores v Dukes (June 20, 2011, No. 10-277), the United State Supreme Court held that, for a potential class action lawsuit to be certified by federal courts, the lead plaintiffs must produce "significant proof" their claims share such strong commonality with those of the general class members that the determination of the validity of each claim can be resolved in one class-wide stroke.

The Court also made it clear that claims for individualized monetary relief such as back pay cannot be certified under the Federal Rule 23(b)(2) "injunctive-type" lawsuits; instead, suits involving any type of individualized monetary claims can now only be brought as a Rule 23(b)(3) "damages-type" lawsuit irrespective of whether the injunctive or monetary relief predominates.

What does this federal decision mean in California?

We have CCP §382, which authorizes class action suits "when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court." Also, common questions of law or fact must predominate over individual ones. Richmond v Dart Indus. (1981) 29 C3d 462, 470, 478. This means that Wal-Mart's new and stronger commonality requirements in federal court don't change the California class action landscape much, if at all.

But the case does makes it clear that Eisen v Carlisle & Jacquelin (1974) 417 US 156, 177, which California courts have interpreted to bar them from looking at the merits of a case in ruling on class certifications, stands for no such proposition. 564 U.S. __, 10 n6. The "no looking into the merits" argument is thus dead.

Does Wal-Mart signal the end of large-scale class action lawsuits in federal courts?

Perhaps. At least this much appears to be clear: Plaintiffs' counsel must be careful to split up a large, but not entirely uniform, claims into smaller ones to ensure the crucial commonality of claims.

For more on this topic, see CEB's blog. On discrimination in employment and class action litigation, see CEB's books Advising California Employers and Employees and California Wage and Hour Law and Litigation.

© The Regents of the University of California, 2013. Unauthorized use and/or duplication of this material without express and written permission is strictly prohibited.

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