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January 10, 2011

The future of employment discrimination class actions

Michael Waterstone

By Professor Michael Waterstone

This is another installment of Loyola's "11 on '11" series, in which Loyola Law School professors are weighing in on what they expect to be the biggest legal issues in their fields in 2011.

This spring, the Supreme Court will weigh in on Wal-Mart v. Dukes, a case which could have huge implications for both employment discrimination and class action law. Plaintiffs are a class of female Wal-Mart employees alleging sex discrimination. Specifically, they claim that they were paid less than men in comparable positions and received fewer promotions to management positions. The District Court certified a class of more than 1.5 million employees, but the Ninth Circuit reduced the number to 500,000 by excluding female employees who no longer worked at Wal-Mart from the class.

Even at 500,000, this would still be the largest-ever gender bias class action case. Enter the Supreme Court. The order granting certiorari indicates the Court will look at two questions. The first question is whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)--which by its terms is limited to injunctive or corresponding declaratory relief--and, if so, under, what circumstances? Plaintiff's damage claims are for back pay, declaratory relief, and punitive damages, but not compensatory damages. There is currently a Circuit split on the issue of to what extent monetary damage claims are allowable in a 23(b)(2) class action. The stakes here are important: If plaintiffs' damage claims disqualify them from a 23(b)(2) class action, they will need to serve notice to every individual plaintiff and show that common issues predominate over individual ones.

The second question goes more to the heart of whether a class this big can be maintained, asking "whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a)?" The Court will look at whether plaintiffs' evidence--including statistical proof of disparities between men and women, anecdotal evidence, and expert proof on social framework analysis showing susceptibility to gender bias in the management structure--establish a corporate-wide policy of discrimination, an issue that could be common to all women in the class?

This second issue could be transformative within class action law. If plaintiffs are able to demonstrate company-wide policies based on this type of evidence, it could open up the door to larger class actions, and not just necessarily limited to gender discrimination. In the area of disability law, with which I have the greatest familiarity, courts have been quite reluctant to certify employment discrimination class actions. Part of this is based on the view that people with various disabilities have individualized conditions and employment experiences that cannot be aggregated under the commonality and typicality prongs of the class action analysis. Although Dukes does not directly address this, the recent American with Disabilities Amendments Act may make it more likely that increased numbers of individuals will be viewed by courts as having a disability under the ADA.

But if the Court allows the commonality and typicality prongs to be met in Dukes, one could envision an enterprising plaintiff's lawyer showing a dearth of hiring or advancement of employees with disabilities, anecdotal evidence of disability discrimination, and decentralized and subjective decision making creating the potential for bias. This could provide a jumpstart to disability discrimination employment class actions, and could reinforce an idea that I have discussed elsewhere--that it is the shared stigma of the disability classification and the employer's response to disability that can serve to bind together members of the class.

Of course, this would require the Court to uphold the Ninth Circuit's decision in Dukes. This is not a Court that has been inclined to view employment discrimination or class action law expansively. If the Court uses Dukes as an opportunity to move class actions with any damage claim into the 23(b)(3) category, or holds that plaintiffs' evidence does not demonstrate a corporate-wide policy that allows plaintiffs to meet the commonality and typicality prongs of Rule 23(a) (both outcomes I view as more likely than affirming the Ninth Circuit), employment discrimination class actions will be curtailed moving forward. Either way, this is certainly a case that businesses and the plaintiffs' bar will do well to watch in 2011.