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The October 2015 United States Supreme Court Term is already well underway, and there are several cases on the docket that could have a significant impact on class action practice.  Here is a summary of the three cases this term that I think could have the biggest impact on class action practice going forward:

Campbell-Ewald Co. v. Gomez, No. 14-857

The Campbell-Ewald case addresses the tactic known as “picking-off” named plaintiffs in class actions, and deals with the question whether an offer of judgment that would provide a named plaintiff complete relief is sufficient to moot the plaintiffs’ claim, even if it is not accepted.  The case follows the Court’s 2013 decision in Genesis Healthcare v. Symczyk, where the majority opinion assumed, without deciding, that an offer of judgment had mooted the named plaintiffs’ claim in an FLSA collective action, based on a finding that the issue had been waived below.

Oral argument in Campbell-Ewald was held in October.  Justices Alito, Scalia, and Chief Justice Roberts all displayed open hostility to the plaintiffs’ position that she should be allowed to litigate the case even after the defendant had offered everything she hoped to achieve for herself in the case.  Despite these views, however, it remains to be seen whether a majority of the court will ultimately hold that any unaccepted offer of settlement is sufficient to actually moot the plaintiffs’ claim under Article III, or whether the decision will fall short of reaching that sweeping question.  Some of the questions posed by likely swing voter, Justice Kennedy, suggest that he agrees with his conservative colleagues that a litigant who has been offered full relief should not be permitted to proceed with the case, but other questions reflected a reluctance to treat an unaccepted offer the same as a judgment.  This suggests that the Court’s ultimate decision could turn on a more technical procedural analysis rather than the broader and more abstract question of whether a controversy can ever exist following an offer of full relief, but of course the questions posed during oral argument do not always signal the Court’s ultimate analysis.

When the Supreme Court originally granted cert in Campbell-Ewald, there appeared to be a split in the circuits on this question, but since then, the circuits have become aligned with the view that an unaccepted offer in a proposed class action does not moot the named plaintiffs’ claims.  A contrary ruling by the Supreme Court would revive a powerful tool that defendants could wield to effectively preempt many types of consumer class actions, especially those seeking statutory damages for small individual amounts.

Spokeo, Inc. v. Robins, No. 13-1339

Spokeo has been hailed as a case with the potential to end “no-injury” class actions.  Ostensibly at issue is whether Congress has the power to enact legislation that gives a private plaintiff the right to seek statutory damages despite the lack of any concrete injury.  A decision could therefore potentially have a significant impact on class actions brought under a variety of federal statutes that provide a private right of action to recover statutory damages upon proof of a violation, one that goes beyond the Fair Credit Reporting Act, the statute at issue in Spokeo.

However, during today’s oral argument, much of the questioning focused on whether the named plaintiff had, in fact, suffered an injury by alleging that false information had been published on his credit report, and the extent to which Congress actually intended to limit the private right of action under the Fair Credit Reporting Act to persons who could show an actual injury.  It seems likely that the outcome of the case will turn on the majority’s view of those two factors.

Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146

Tyson Foods offers the Court an opportunity to further elaborate on the concept of “trial by formula”, discussed in Justice Scalia’s 2011 opinion in Wal-Mart Stores, Inc. v. Dukes, as well as the standards governing expert testimony at the class certification phase, which the Court touched upon but did not  ultimately address directly in both Wal-Mart and again in the 2013 decision in Comcast Corp. v. Behrend.  It also raises the question whether it is ever proper to certify a damages class that includes individual plaintiffs that undisputedly lack any injury or damages.

Specifically, the Court granted certiorari on the following two questions:

I. Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample; and

II. Whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.

Oral argument in Tyson Foods is set for next Monday, November 10.

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I’ll be on the faculty of an upcoming Strafford CLE webinar entitled Statistics in Class Certification and at Trial: Leveraging and Attacking Statistical Evidence in Class Actions to be held next Tuesday, May 12, 2015, at 1:00 p.m. EDT.  This is a reprise of a program that I have done several times with Thompson Hine Partner Brian Troyer, and we’re pleased to be joined this time around by Edward J. Wynne of the Wynne Law Firm.

Click on this link to register and take advantage of a special 50% discount to the program.

 

 

 

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The California Supreme Court issued its long-awaited decision in Duran v. U.S. Bank National Association yesterday, addressing the use of statistical sampling as a way of evaluating aggregate liability and damages in a class action. Although Duran is a wage and hour case, its analysis is pertinent to the use of statistical evidence in a variety of other class action contexts.

In the opening line of his majority opinion, Justice Corrigan referred to Duran “an exceedingly rare beast” because it was a wage and hour class action that had proceeded all the way through trial to verdict.  In the trial court, the plaintiff had presented testimony from statistician Richard Drogin, who had also notably served as an expert for the plaintiffs in Walmart Stores Inc. v. Dukes.  Drogin proposed a random sampling analysis that purported to estimate the percentage of the defendant’s employees that had been misclassified for purposes of entitlement to overtime pay.  The trial court did not rely on Drogin’s analysis but instead came up with its own sampling approach, which involved pulling the names of 20 class members, hearing testimony from these witnesses along with the named plaintiffs, and then extrapolating the court’s factual findings across the entire class in order to determine the defendant’s liability.

The supreme court affirmed a decision by the Court of Appeal holding that this sampling approach violated due process and was a manifest abuse of discretion.  Generally, there were two independent reasons for the supreme court’s conclusion: 1) the use of random sampling deprived the defendant of the opportunity to present individualized evidence supporting its defenses to the claims; and 2) the sampling method adopted by the court was inherently flawed and unreliable.

Without categorically rejecting the use of statistics as a tool in managing class action litigation, the supreme court identified numerous conceptual limitations on its use.  First, “[s]tatistical methods cannot entirely substitute for common proof . . . .  There must be some glue that binds class members together apart from statistical evidence.”  So, while statistics may serve as circumstantial evidence to support a common issue–such as the existence of centralized policy or practice, they may not be used as a substitute for establishing commonality or for avoiding individualized determination of individual issues–such as by generalizing effects of a given policy or practice on large groups of claimants where the effects vary in actuality.

Second, a trial court cannot utilize statistical evidence in a way that prevents the individual adjudication of individual defenses.  Although courts are encouraged to develop innovative procedures in managing individual issues, a court cannot ignore individual issues altogether or prevent them from being decided on an individual basis.

Third, if statistical evidence is to be used as part of a litigation plan for managing complex class action, the methods to be employed should be presented, evaluated, and scrutinized at the class certification stage.  The court should not simply assume that statistical methods will permit class treatment and certify the class based on this hypothetical possibility.

Fourth, the court must ensure that the statistical method to be employed has to be reliable, based on statistically valid data, and not prone to a high margin of error.  In other words, junk science or ad hoc, rough justice are not enough.

The Duran opinion is worthy of careful study for anyone considering the use of statistics in class certification proceedings, both in the wage and hour context and in class actions more generally.  It also provides a colorful illustration of the due process and manageability problems posed by the “trial by formula” approach to class actions that the United States Supreme Court criticized in Dukes.

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I’m very excited to be speaking at a Strafford Publications CLE webinar tomorrow entitled: Statistics in Class Action Litigation: Admissibility, Expert Witnesses and Impact of Comcast v. Behrend.   The program is scheduled for June 18, 2013 at  1:00pm-2:30pm EDT.  This is the third iteration of this presentation, which has been updated to offer insights in light of the Supreme Court’s Comcast decision earlier this term.  Brian Troyer of Thompson Hine in Cleveland and Justin Hopson and Rick Preston from Hitachi Consulting in Denver will be co-presenting.  Below is a synopsis of the program.  Click here for more information and to register:

Class certification standards have become more rigorous, and the skillful use of statistical evidence is an important part of class actions. Effectively employing or challenging statistics can make a difference in winning or losing a class certification motion.

Statistical evidence is introduced through expert witness testimony, and Daubert challenges may be an effective strategy. This raises the issue of the scope of the court’s inquiry into the merits at the class certification stage.

The 2011 Wal-Mart v. Dukes Supreme Court ruling underscored the prominent role of statistical evidence in assessing the merits at the certification stage. The Court’s recent Comcast v. Behrend ruling reinforces Dukes regarding merits assessments at class certification, thus impacting the continued role of statistical evidence.

Listen as our experienced panel examines statistical evidence in certification proceedings, the impact of Comcast v. Behrend and related case law, and best practices for using statistics and cross-examining witnesses.

Outline

  1. Role of statistical evidence in support of class certification
  2. Expert testimony and Daubert analysis at class certification stage
  3. Impact of Comcast v. Berhrend and Wal-Mart v. Dukes
  4. Science of statistics and cross-examining the statistics witness

Benefits

The panel will review these and other key questions:

  • What is the impact of Comcast and Dukes upon the use of statistical analysis at class certification?
  • What strategies can counsel use to effectively cross-examine statistics witnesses?
  • What types of statistics can be introduced and what are the proper ways to utilize statistics?

Following the speaker presentations, you’ll have an opportunity to get answers to your specific questions during the interactive Q&A.

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I’m pleased to announce that the BakerHostetler Class Action Defense Team has just released its 2012 Year-end Review of Class Actions, a joint project with the firm’s Employment Class Actions, Antitrust, and Data Privacy practice teams.  See below for a synopsis of the project.  Click the link above to access a copy of the report itself:

We are pleased to share with you the BakerHostetler 2012 Year-end Review of Class Actions, which offers a summary of some of the key developments in class action litigation during the past year. Class action litigation continues to persist in all areas of civil litigation despite the Supreme Court’s 2011 decisions in AT&T Mobility v. Concepcion and in Wal-Mart Stores, Inc. v. Dukes, which were seen by many commentators as marking the beginning of the end of class actions as we know them. But while the Supreme Court’s 2011 decisions have had a significant impact on class action litigation, they have not brought about its demise and are not likely to do so anytime soon. In the last two years, we’ve seen landmark decisions and the addition of important judicial gloss to those decisions. 2013 will be no different as the Supreme Court is set to weigh in on a series of key cases this spring.

We hope you find this Review a useful tool as you move forward into the new year. This comprehensive analysis of last year’s developments in class action procedure and jurisdiction, as well as developments by subject matter will hopefully provide context and insight as you look ahead to 2013’s expected trends in class action law, including the proliferation of privacy class action litigation and class action litigation relating to the LIBOR rate-fixing scandal.

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My colleagues at BakerHostetler have put together some great content on several class action-related topics recently that readers should find interesting.

First, the Baker Hostetler Class Action Defense Team issued an executive alert today discussing the Supreme Court’s decision to grant certiorari in another case involving class arbitration waivers.  The alert, titled U.S. Supreme Court Considers Arbitration Clauses and Class Actions Next Year, summarizes the issues to be addressed in Oxford Health Plans LLC v. Sutter.  The alert was authored by newly elected Cleveland Partner Ruth E. Hartman and Class Action Defense Team Leader Ernie Vargo.

Another executive alert, titled Recent Trends in Class Actions for Telephone and Fax Solicitation and Advertising, was issued last week by the Privacy and Data Protection and Class Action Defense Teams.   The alert, authored by my colleague in Denver, Justin Winquist, summarizes the latest trends in class action litigation under the Telephone Consumer Protection Act (TCPA).

Finally, my partner Casie Collignon authored a blog post yesterday with an update on the latest in the ongoing saga of Dukes v. Wal-Mart on remand following the U.S. Supreme Court’s decision.  The post is entitled, California District Court Awaits Class Certification Motion in Wal-Mart.

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My partner, Casie Collignon, recently attended CLE International’s conference Class Actions: Plaintiff and Defense Perspectives in Chicago earlier this month, and she graciously agreed to share a summary of her notes.  Here they are for anyone who was unable to attend.  I’ll be attending the ABA’s 16th National Institute on Class Actions next week, so stay tuned for my notes from that conference as well.

On October 4th and 5th, esteemed panels of class action plaintiff and defense lawyers, along with multiple reputable class action administrators, gathered for panel discussions involving class action trends across the country from all perspectives. Below are just a few of the highlights from the conference:

  • Class Actions are not dead after DukesDukes may not have had the one-sided effect that everyone anticipated. Program Co-Director Francis Citera of Greenberg Traurig noted that class certification decisions after Dukes have been, despite popular opinion, very balanced.  In the federal courts since Dukes, there have been 32 cases certified, 33 denials of class certification, and 15 cases where certification was denied in part and granted in part.
  • Manageability remains key to certification – Even though the Dukes, Concepcion, and Comcast trends are on the tips of all class action practitioners’ tongues, manageability is still a top concern from all perspectives.  The Honorable William J.  Bauer of the Seventh Circuit opined about the importance of being able to be able to show the Court what a class action trial will actually look like.  This sentiment was echoed by plaintiff’s class action lawyer Kenneth Wexler of Wexler Wallace, who suggested that all plaintiffs’ class certification motions should be accompanied by an actual trial plan.  Defense attorney Sascha Henry of Sheppard Mullin Richter & Hampton opined  that the defense practitioner can take advantage of both the existence of a plaintiff’s trial plan or the lack of a trial plan in the manageability context.  For example, if there is no trial plan at all, the defendant can argue that the plaintiffs   have not alleged a practical way to manage the case and therefore have not met their burden of proving the manageability requirement.  Alternatively, if a plan is submitted, then the defendant has a precise manageability roadmap to attack. 
  • New settlement notice program trends – While traditional mailers and post card notices still reign supreme for claim rates, Patrick Izie of Class Action Services discussed some new media trends in class action settlements.  He opined that new media, such as QR codes, mobile device notifications, and coupon websites can have a dramatic impact on your claims rates without increased costs. And, even though the parties may not have intended their class settlements to appear on websites such as duckydeals.com, once these types of sites start listing your class action settlements, you can expect claims rates to spike.
  • Class Certification may never truly be over –   Attorney for the plaintiff in McReynolds v. Merrill Lynch, Linda Friedman of Stowell & Friedman, and class action defense lawyer Andrew Trask of McGuireWoods, both agreed that an important lesson to be learned from both the Merrill Lynch case and the recent denial of the motion to dismiss in the smaller Walmart case which is back pending in the Northern District of California, is that no ruling in the class certification context is ever truly permanent. Thus, the class action community should be on the lookout for second and even third bites at the apple with smaller proposed classes and arguments for issue class certification.

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Editor’s Note – This article is a joint submission to CAB and the BakerHostetler Class Action Lawsuit Defense Blog.  Please visit our firm’s blog for more riveting class action-related content.

A definitive ruling on whether courts may certify class actions to decide discrete issues, as opposed to cases or claims, will have to wait.  Last Monday, the United States Supreme Court denied a writ of certiorari to review the Seventh Circuit Court of Appeals’ ruling in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012).

In McReynolds, which was decided after the Court’s ruling in Wal-Mart Stores, Inc. v. Dukes, the Seventh Circuit had reversed a denial of certification of a class in a disparate impact employment discrimination case, holding that a class could be certified for the limited purpose of resolving the issue of whether a specific policy of the Defendant created an unlawful disparate impact on black stock brokers.  For a more detailed summary of Judge Posner’s decision in McReynolds, see Deborah Renner’s March 1, 2012 CALD post.

The issues that had been presented for review by the Supreme Court were as follows:

(1) Whether the Seventh Circuit’s certification of a disparate impact injunction class conflicts with this Court’s decision in Wal-Mart Stores, Inc. v. Dukes, which rejected certification of a nationwide class that, like this one, asserted disparate impact claims based on employment policies requiring the exercise of managerial discretion; and

(2) whether the Seventh Circuit erred in holding, in conflict with other circuits, that Federal Rule of Civil Procedure Rule 23(c)(4) permits class certification of a discrete sub-issue when the claim as a whole does not satisfy Rule 23(b) and hundreds of individual trials would be needed to determine liability.

The denial of certification means that the lower federal courts will be left to decide whether and under what circumstances “issue certification” is permitted.  A procedural tool not often applied in practice until recently,  issue certification, at least in some form, is expressly permitted under FRCP 23(c)(4) (“When appropriate, an action may be brought or maintained as a class action with respect to particular issues.”).  However, a common question that arises in the interpretation of this language, and the one that had been presented for review in McReynolds, is whether issue certification is permitted when the resolution of the issue certified would not eliminate the need to resolve individualized issues before any claim could be resolved.

The federal circuits are split on whether issue certification is allowed to resolve discrete issues short of a full claim.  The Fifth Circuit has not allowed issue certification in a class action for damages where predominance cannot otherwise be satisfied, and it has not allowed issue certification in a class action for injunctive or declaratory relief in cases when monetary relief is the predominant relief sought.  Castano v. American Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996) (“[a] district court cannot manufacture predominance through the nimble use of subdivision (c)(4).”); Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998).  [Ed. Note: just before the Supreme Court denied the petition for certiorari, in McReynolds, the 5th Circuit issued its decision in Rodriquez v. Countrywide Home Loans, Inc., No. 11-40056 (Sept. 14, 2012), a case that the McReynolds plaintiffs argued in supplemental briefing to the Supreme Court eliminated the Circuit split.  In Rodriguez, the 5th Circuit approved of the use of Rule 23(c)(4) to certify a class for the purpose of resolving injunctive and equitable relief, leaving damages for a different proceeding].  The Second Circuit has been more open to issue certification. Robinson v. Metro North Commuter,  R.R. Co., 267 F.3d 147 (2d Cir. 2001) (holding that “litigating the pattern-or-practice liability phase [of a disparate treatment discrimination case] for the class as a whole would both reduce the range of issues in dispute and promote judicial economy”); In re Nassau County Strip Search Cases, 461 F.3d 219 (2d Cir. 2006) (holding that “a court may employ Rule 23(c)(4) to certify a class on a particular issue even if the action as a whole does not satisfy Rule 23(b)(3)’s predominance requirement.”). The approach taken by Judge Posner in McReynolds generally follow the Second Circuit’s approach by allowing issue certification even where predominance would not be satisfied with respect to the claim as a whole.

An interesting feature of issue certification is that unlike full-blown class certification of a claim or case, issue certification does not necessarily put a defendant at risk of catastrophic liability in a single stroke, because any individualized defenses to liabilty on the claim as a whole may still be available even after the common issue is decided.  On the other hand, it is this feature that often begs the question whether issue certification has any utility in materially advancing litigation that will inevitably require individualized proceedings before reaching finality.  It also leaves the procedure vulnerable to a great risk of misinterpretation and abuse, which may explain the Fifth Circuit’s skepticism.  Plaintiffs may seek and courts may grant issue certification on the mistaken impression that to certify part of a class will hasten the resolution of litigation.  Defendants may fear issue certification based on a mistaken belief that certification of even part of a class action puts them at risk of aggregated liability.

The real question with issue certification tends to be whether formally certifying an issue for class-wide treatment creates any practical efficiency that materially advances litigation.

In many cases, there are legal issues, the answer to which indisputably have class-wide implications, but the question arises whether formal certification of these issues is even necessary.  For example, common legal issues are often resolved in a preliminary motion.  Even if these issues are not resolved on a class-wide basis after a formal order of certification, their resolution has a practical class-wide effect.  Examples would be decisions on the interpretation of a particular statutory provision.  For example, does the statute confer a private right of action?  Is proof of injury required as an essential element of a statutory claim? Whatever the initial court’s decision on this type of issue is likely to have a practical impact on any later litigation, so the resolution of the issue in the first case to address it tends to have a practical impact on any other affected litigants that usually avoids the need for duplicate litigation on the same issue.

In other cases, resolution of issue, however indisputably common, can often bring the litigation no further to conclusion.  For example, in products liability case against a tobacco company, resolution of the factual issue whether cigarettes cause cancer probably does not move most cases closer to resolution because the primary issue in the case is going to be whether cigarettes caused the plaintiff’s cancer.

A big problem with issue certification is that resolution of important issue in a vacuum, without proper context, can have disastrous and unfair consequences later in a case. Answering the question whether the defendant was “negligent” is a problem in most cases becuase the question of “negligence usually depends not simply on whether the defendant breached an applicable standard of care, but also whether that breach caused injury to the plaintiff.  So, certifying the question of “negligence” is usually inappropriate due to the necessity to resolve individualized questions of fact.  Unless the question on which the class is to be certified is very well defined, certification in these types of case can create serious problems.  Certification of whether the defendant breached an applicable standard of care may be a more appropriate question for certification, but only if resolution of that question could materially advance the litigation to a resolution.  In many cases, as in the tobacco example noted above, certifying a preliminary question of “breach of the standard of care” does not create any real efficiencies in the litigation as a practical matter.

Thus, there are serious questions whether issue certification has any social utility in many cases.  However, not only are there situations in which issue certification is not only beneficial from the perspective of judicial economy, but there are also situations in which issue certification can be used by a defendant to its own advantage.  They include:

1) a case in which certification appears imminent, despite the presence of individualized issues; in these cases, issue certification provides a an alternative to full blown certification in a way that may preserve the defendant’s ability to avoid having a determination of mass liability in a single case or the defendant’s ability to raise important individualized defenses.

2) to illustrate the analytical and manageability flaws in certification of an entire case or claim.  In some cases, pointing out issue certification as an option may serve not only to provide an option short of full-blown certification, but also to show to the court how certification of merely the issues that are truly common may not create any real efficiency in resolving the litigation.  In these cases, pointing out that issue certification is an option may serve to avoid class certification in its entirety.

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According to Pete Kasperowicz at The Hill’s Floor Action Blog, Senator Al Franken (D-Minn.) and Representative Rosa DeLauro (D-Conn.) have introduced legislation in Congress intended to reverse limitations on employment discrimination class actions recognized in the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes

A fact sheet available on Senator Franken’s official website describes the key provisions of the bill as follows:

The Equal Employment Opportunity Restoration Act will restore workers’ ability to challenge discriminatory employment practices on a class-wide basis. It adds to Title 28 of the U.S. Code a new section 4201, which does the following:

  • Section 4201(a) creates a new judicial procedure – called “group actions” – that workers can use when bringing employment discrimination cases. The requirements for establishing a group action are the same as the pre-Dukes requirements for maintaining a class action under Rule 23 of the Federal Rules of Civil Procedure—namely, clarifying that the merits of the case need not be proven to certify the group action.
  • Section 4201(b) provides that group actions can be used regardless of whether the group is challenging an objective employment practice, a subjective employment practice, or a mixed employment practice (such as the use of a written test to qualify for an interview).  It also provides that employers’ written anti-discrimination policies can be considered as a defense to certification only insofar as the employer demonstrates that the policy actually has been implemented in practice.
  • Section 4201(c) says that the group actions authorized by this section are subject to the same procedural requirements as class actions authorized by Rule 23. These include notice and opt-out requirements. This section also preserves the application of the Class Action Fairness Act and the availability of appeals.
  • Section 4201(d) says that courts can use statistical analyses and any other procedures they deem necessary to provide justice to prevailing plaintiffs.

It does not appear from Senator Franken’s fact sheet that the bill has significant bipartisan support, and having just been introduced, there is no telling how far it will go towards becoming law in its present form.  However, we’ll keep an eye on any future developments here at CAB.

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It’s not too late to sign up for next Wednesday’s Strafford Publications Webinar, Statistics in Class Action Litigation: Admissibility, Expert Witnesses and Impact of Wal-Mart v. Dukes.  Click the link on the title of the program for more information and to sign up.

For anyone looking for sneak preview, here are the program slides, which were are the result of the joint efforts of my co-presenters, Brian Troyer of Thompson Hine and Rick Preston of Hitachi Consulting, and me.  We hope you can make it!

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