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Posts Tagged ‘back pay’

Last week, Seventh Circuit Court of Appeals Judge Richard Posner authored an opinion addressing one of the key issues awaiting a ruling by the United States Supreme Court this term, holding that an employment discrimination class action seeking back pay could not be certified under FRCP 23(b)(2).   Here is a relevant excerpt from the opinion, Randall v. Rolls-Royce Corp., No. 10-3446, slip op.  at 12-14 (7th Cir., March 30 2011) (I have removed the internal citations for ease of reading),

[I]magine if the plaintiffs in this case were just seeking an injunction commanding basepay equalization between male and female employees.

But that’s not what they’re seeking, exclusively or even mainly; and indeed this isn’t a proper Rule 23(b)(2) suit.  Class action lawyers like to sue under that provision because it is less demanding, in a variety of ways, than Rule 23(b)(3) suits, which usually are the only available alternative. . . . Of particular significance, “plaintiffs may attempt to shoehorn damages actions into the Rule 23(b)(2) framework, depriving class members of notice and opt-out protections. The incentives to do so are large. Plaintiffs’ counsel effectively gathers clients—often thousands of clients—by a certification under (b)(2). Defendants attempting to purchase res judicata may prefer certification under (b)(2) over (b)(3).” . . . How far Rule 23(b)(2) can be stretched is the issue in the gigantic class action against Wal-Mart, Dukes v. Wal-Mart Stores, Inc. . . . now before the Supreme Court. The present case is not as big a stretch, but it is big enough. 

True, the only monetary relief sought is back pay; true, too—contrary to the common but erroneous notion that courts of equity can’t award monetary relief—they can do so if the award is merely incidental to the grant of an injunction or declaratory relief: “incidental” in the sense of requiring only a mechanical computation. That is the “clean-up” doctrine of equity. . . . In such a case, to make the class representative bring a second suit, for damages, on top of his injunctive action would create pointless redundancy. . . .

The plaintiffs argue that if only equitable relief is sought, a class action suit may be maintained under Rule 23(b)(2) even if the equitable relief is mainly monetary. We disagree. To read “injunctive” in the rule to mean “equitable” is to become mired in sticky questions of differentiating between “legal” and “equitable” actions—and such questions abound. . . .  We can avoid the mire by recognizing that Rule 23(b)(2) class actions are limited to cases in which “final injunctive relief or corresponding declaratory relief” is appropriate, rather than extending to all cases in which any kind of equitable relief is sought. . . . The monetary relief sought in a case, whether denominated legal or equitable, may make the case unsuitable for Rule 23(b)(2) treatment. . . .  As this case illustrates: calculating the amount of back pay to which the members of the class would be entitled if the plaintiffs prevailed would require 500 separate hearings. The monetary tail would be wagging the injunction dog. An injunction thus “would not provide ‘final’ relief as required by Rule 23(b)(2). An injunction is not a final remedy if it would merely lay an evidentiary foundation for subsequent determinations of liability.”

Could it be that the resolution of this issue is as simple as the recognition that “equitable” doesn’t mean “injunctive” and that class actions seeking monetary relief, whether “equitable” or “legal” can only be brought under Rule 23(b)(3), not Rule 23(b)(2)?  The Supreme Court should have an answer within the next two months.

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The Wal-Mart v. Dukes argument was held as scheduled today.  Here is a Wal-Mart v. Dukes Oral Argument Transcript.  Some initial observations:

  • The beginning of the defendant’s argument was focused on the proper standard for reviewing whether the plaintiff had sufficiently common evidence of a uniform policy.
  • It was not until later in the defendant’s argument that the questioning turned to the question certified for review: whether a Rule 23(b)(2) class action should be certified in a class action seeking monetary relief in the form of back pay.  Questioning on this issue continued into the plaintiff’s argument, but then returned to questions of what standard should apply more generally in certifying an employment discrimination class action.
  • On balance, the tougher questioning of the defendant’s attorney was from the more liberal faction of the court, and the tougher question of the plaintiff’s attorney was from the more conservative faction of the court. 
  • However, to the extent the questions can be a sign of a potential split in the Court (always a dangerous assumption), it is interesting that Justice Ginsburg seemed particularly troubled by the plaintiff’s position on the applicability of Rule 23(b)(2) to the back pay claims.
  • Overall, the sentiment seemed to be against allowing Rule 23(b)(2) to be used as a vehicle to resolve individual back pay claims (again, recognizing that the nature and tone of oral argument questions is not a very reliable way to predict outcomes).  However, there seemed to be some support among several Justices for the possibility that a case could be certified under Rule 23(b)(2) for injunctive relief only, on the ground that hiring policies are discriminatory because they are excessively subjective.

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The United States Supreme Court will hold oral argument next Tuesday, March 29, 2011, in case of Wal-mart v. Dukes, No. 10-277.  The issue for review, at least so far, according to order granting certiorari, 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.

Hopefully, questions posed by the justices during the argument will also provide insight into what the Court meant in its somewhat vague directive that the parties brief the issue “Whether the Class Certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”

Another thing I’ll be looking out for is whether the questions appear to limit the analysis to the employment discrimination context, or whether they portend a more general analysis of Rule 23 that could impact class actions in other subject matter areas.

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