Wal-Mart v. Dukes Shakes Up Employment Class Actions

The Supreme Court’s decision in Wal-Mart v. Dukes, heralded last term as a game-changer in employment class actions, has lived up to the hype.

Since the Court issued the Dukes decision in June, it has been cited by lower courts 260 times, according to a report issued on Monday by law firm Seyfarth Shaw. In comparison, the equally influential case, AT&T Mobility v. Concepcion, was cited just 215 times over the same period.

“There’s B.D., Before Dukes, and A.D., After Dukes,” said Gerald Maatman, Jr., a partner at Seyfarth Shaw, who is the editor of the firm’s “Annual Workplace Class Action Litigation Report. “It was a watershed event.”

In its opinion, the Supreme Court addressed whether a class of up to 1.5 million current and former female Wal-Mart employees could sue the giant retailer collectively. The proposed class of women, whose positions at the company varied widely, claimed they were paid less than men and were unfairly passed up for promotions. But the Court ruled the group of women could not sue collectively because they did not have enough in common.

A court’s decision to allow a group to sue collectively – a process known as class certification – is critical in any class action. If a court certifies a large class, it can put pressure on a defendant to settle claims because of the potential losses.

Since the Dukes decision, defendants in a variety of class actions have flooded courts with motions challenging the certification of large classes of plaintiffs. In employment disputes, the motions have been raised in cases alleging discrimination and violation of labor laws. The defendants have argued that claims made by plaintiffs lacked commonality. Some defendants have also used the ruling as a tool to have class claims dismissed even before the issue of class certification is addressed.

In November, for example, the U.S. Court of Appeals for the 6th Circuit affirmed the dismissal of a class action against Universal Health Card, LLC and Coverdell & Company, Inc. The case alleged the companies violated the consumer-protection laws of many states through deceptive advertorials. But the court held the variation in the claims and the different state laws involved were “neither efficient nor workable” under class action rules. It was the first time since the Dukes ruling that a federal circuit addressed the propriety of filing a motion to dismiss class claims at the initial pleading stage, according to the Seyfarth report.

The plaintiffs’ bar is trying to come up with new theories to circumvent Dukes. The National Employment Lawyers Association, for example, has created a task force to lend legal help to plaintiffs’ lawyers forced to respond to a Dukes motion.

One new approach may be filing more, smaller cases on the theory they have a better chance passing class certification rulings, according to Maatman. Plaintiffs in the Wal-Mart case have filed two smaller class actions following the Supreme Court’s decision.

Clearly the case is having a psychological effect on lawyers who bring discrimination class actions, said David Sanford of Sanford Wittels & Heisler, a law firm that specializes in representing employees in employment disputes.

“When you take on a case you’re about to embark on a very expensive, very time consuming and extremely risky project,” said Sanford. “People are looking at this twice now.”

Plaintiffs’ lawyers appear to be more sanguine about the prospect of obtaining class certification in cases alleging violations of the Fair Labor Standards Act – the other type of employment case affected by the Dukes decision, says Matthew Koski, an attorney fellow with The Employee Rights Advocacy Institute for Law & Policy, an arm of NELA.

Those kinds of actions, which are often about unpaid wages as a result of employers misclassifying employees, are brought under a different statute than workplace discrimination cases and do not require plaintiffs to show they were intentionally harmed by defendants. But Koski acknowledges that the full impact of the Dukes decision has yet to be understood.

“There’s a certain nervous curiosity about how this is going to play out,” Koski added.

(Editing by Andre Grenon)