Case No. 07-15838
______________________________________________________ IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
______________________________________________________ SHIRLEY “RAE”ELLIS, LEAH HORSTMAN, AND ELAINE SASAKI,
ON BEHALF OF THEMSELVES
AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs – Appellees,
v.
COSTCO WHOLESALE CORPORATION, Defendant – Appellant.
____________________________________________________________ On Appeal from the United States District Court
for the Northern District of California, San Francisco Division Civil Action No. C 04-3341 MHP
_________________________________________________________________ SUPPLEMENTAL BRIEF OF APPELLEES
_________________________________________________________________ BRAD SELIGMAN JOCELYN D.LARKIN THE IMPACT FUND 125 University Avenue, Suite 102 Berkeley, CA 94710 Telephone: 510-845-3473 STEVE STEMERMAN ELIZABETH A.LAWRENCE SARAH VARELA
DAVIS,COWELL &BOWE
595 Market St., #1400 San Francisco, CA 94105 Telephone: 415-597-7200 BILL LANN LEE JULIA CAMPINS LINDSAY NAKO LEWIS,FEINBERG,LEE,
RENAKER &JACKSON,P.C. 476 – 9th Street Oakland, CA 94607 Telephone: 510-839-6824
Attorneys for Plaintiffs – Appellees (Additional Counsel listed within)
KELLY M.DERMODY
DANIEL M.HUTCHINSON
LIEFF,CABRASER,HEIMANN
&BERNSTEIN LLP
Embarcadero Center West 275 Battery Street, 30th Floor
San Francisco, CA 94111 Telephone: 415-956-1000
JAMES FINBERG
ALTSHULER BERZON LLP
177 Post Street, Suite 300 San Francisco, CA 94108 Telephone: 415-421-7151
TABLE OF CONTENTS
I. INTRODUCTION ... 1 II. ARGUMENT ... 4
A. Remand Is Appropriate Where There Has Been an Intervening Change in the Law ... 4 B. The Supreme Court Held that Subjective Practices Can Be Challenged on a
Classwide Basis but Clarified the Standard for Demonstrating Compliance with Rule 23(a)(2), Thereby Making Remand Appropriate. ... 5 C. On Remand, the District Court Will Confirm that the Scope of this Case
and the Evidence Supporting Certification Are Substantially Distinct from the Class Certification Order Disapproved in Wal-Mart. ... 7 D. Monetary Remedies in this Case May Appropriately Be Certified under
Rule 23(b)(3) on Remand. ... 16 III. CONCLUSION ... 20
TABLE OF AUTHORITIES
Cases
Allison v. Citgo Petroleum Corp.,
151 F.3d 402 (5th Cir. 1988) ... 16, 17 Califano v. Yamasaki,
442 U.S. 682 (1979 ... 5 Cooper v. S. Co.,
390 F.3d 695 (11th Cir. 2004) ... 16 Dukes v. Wal-Mart Stores, Inc.,
603 F.3d 571 (9th Cir. 2010) ... 10 Eubanks v. Billington,
110 F.3d 87 (D.C. Cir. 1997) ... 16 Fusari v. Steinberg,
419 U.S. 379 (1975) ... 4 International Brotherhood of Teamsters v. United States,
431 U.S. 324 (1977) ... 17, 18, 19 Jefferson v. Ingersoll International Inc.,
195 F.3d 894 (7th Cir. 1999) ... 16 Jenson v. Eveleth Taconite Co.,
130 F.3d 1287 (8th Cir. 1997) ... 19 Kirby v. Colony Furniture Co.,
613 F.2d 696 (8th Cir. 1980) ... 16 Klein v. United States,
Molski v. Gleich,
318 F.3d 937 (9th Cir. 2003) ... 17 Neal v. Dir. D.C. Dept of Corr.,
1995 WL 517246 (D.D.C. Aug. 9, 1995) ... 19 Reeb v. Ohio Department of Rehabilitation & Corrections,
435 F.3d 639 (6th Cir. 2006) ... 16 Rich v. Martin Marietta Corp.,
522 F.2d 333 (10th Cir. 1975) ... 16 Robinson v. Lorillard Corp.,
444 F.2d 791 (4th Cir. 1971) ... 16 Robinson v. Metro-North Commuter R.R. Co.,
267 F.3d 147 (2d Cir. 2001) ... 16, 17 Sanko S.S. Co., Ltd. v. United States,
272 F.3d 1231 (9th Cir. 2001) ... 4 Shawmut Bank, N.A. v. Kress Assoc.,
33 F.3d 1477 (9th Cir. 1994) ... 5 United States v. City of New York,
2011 WL 2680474 (E.D.N.Y. July 8, 2011) ... 5, 18, 19 United States v. City of New York,
258 F.R.D. 47 (E.D.N.Y. 2009) ... 19 Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011) ... passim Watson v. Fort Worth Bank & Trust,
Statutes
42 U.S.C. § 2000e-2 ... 7 Rules
1 I. INTRODUCTION
The Court should remand this interlocutory appeal in light of the intervening changes in the law resulting from the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Remand is appropriate because the
district court must make additional findings, and a class certification determination is correctly the province of the district court in the first instance.
Such findings will make clear that this case is not Wal-Mart. It is infinitely smaller, and simpler, with powerful and direct evidence of the discriminatory attitudes and practices of the small group of decision-makers. These significant differences are directly relevant to the new Rule 23 determination that the district court must properly undertake. This case involves:
700 potential class members, not 1.5 million women;
two job categories, Assistant General Manager and General Manager, not “a multitude”;
only management employees, no hourly workers; a promotion claim only, no equal pay claim;
a selection process for promotion directed by the CEO and many selections subject to his personal approval;
direct evidence of the CEO’s stereotyped ideas about women’s roles; a small group of high-level decision-makers (29 executives in total)
responsible for all decisions challenged in the case, not thousands of individual store managers acting alone;
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no decision-making at the store level; and
compelling admissions from numerous company managers about the pattern of stereotyped decision-making resulting from the company’s promotion process, documented in company records, in 2001 and again in 2005.
In Wal-Mart, the Supreme Court found that the Rule 23 commonality requirement was not satisfied on the specific record in that case, because of the myriad
decision-makers, class members, job positions, and challenged practices. Here, in contrast, plaintiffs present a manageable, focused case involving a common
promotion policy, a small group of decision-makers including the CEO, and a cohesive and relatively small set of affected employees.
The Supreme Court’s Wal-Mart decision reformulated the test for Rule 23(a)(2) commonality. It affirmed that subjective practices, an element of the promotion policy at issue here, may be challenged in a pattern or practice case but clarified that plaintiffs must “identif[y] a common mode of exercising
discretion.” Wal-Mart, 131 S. Ct. at 2554. Here, plaintiffs have provided
compelling evidence of a policy of subjective pre-selection for two management promotions implemented by the CEO and a small group of senior executives, which has resulted in statistically significant disparities for female candidates. Plaintiffs have also proffered evidence of biased attitudes and, most importantly, admissions by Costco’s own managers about the way in which this system
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are “caretakers” and are not interested in the Merchandising Manager position, a key training rotation for these management jobs, because of their family
obligations. SER 30-33. He further labeled one key merchandising function as a “male-oriented job.” SER 69-70. This is precisely the type of evidence that supports a finding of a “common mode of exercising discretion.” Wal-Mart, 131 S. Ct. at 2554. The district court must, however, review this body of evidence as a whole in light of the newly articulated Rule 23(a)(2) standard.
The Supreme Court’s decision in Wal-Mart also changed the law for the certification of remedies. The Court limited the types of monetary claims that may be certified under Rule 23(b)(2), holding that most monetary claims should instead be considered for certification under Rule 23(b)(3). Following then-controlling Ninth Circuit precedent, the district court in this case certified the monetary
remedies under Rule 23(b)(2). Because the district court below did not analyze the certification under Rule 23(b)(3), it should be permitted to evaluate in the first instance whether the class should be certified under Rule 23(b)(3) or as a hybrid Rule 23(b)(2), (b)(3) class.1
1 Costco raised other issues on this appeal, such as typicality. Those issues have been fully briefed and are not implicated by the Supreme Court’s decision in Wal-Mart.
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As Wal-Mart constitutes an intervening change in the law while this appeal was pending, this Court should remand the class certification order for
reconsideration in light of the Supreme Court’s ruling. II. ARGUMENT
A. Remand Is Appropriate Where There Has Been an Intervening Change in the Law
The Supreme Court’s recent articulation of the standard for satisfying Rule 23(a)(2) and identification of the types of claims that are properly certified under Rule 23(b)(2) constitutes an intervening change in the law during the pendency of this appeal. Remand is appropriate in such circumstances. See Sanko S.S. Co., Ltd. v. United States, 272 F.3d 1231, 1232 (9th Cir. 2001) (appeal remanded
because district court relied on case which Supreme Court subsequently reversed, establishing more restrictive test); see also Fusari v. Steinberg, 419 U.S. 379, 387-88 (1975) (appeal remanded in light of intervening changes in governing law); Klein v. United States, 627 F.3d 1272, 1273 (9th Cir. 2010) (after return of a
certified question from the California Supreme Court, the court remanded to the district court to consider an issue in the first instance).
On remand, the district court will necessarily resolve disputed facts and apply those findings to the modified rules. Those determinations include whether there is “convincing evidence” of a question or questions common to the class,
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whether common remedies issues predominate over individual issues, whether the case is manageable as a class action, and whether class treatment is superior to other alternative means of adjudicating the claims of the class. The district court is in the best position to make those fact-intensive case management determinations in the first instance. See, e.g., Califano v. Yamasaki, 442 U.S. 682, 703 (1979) (class certification decisions are assigned to the discretion of a trial court); see also Shawmut Bank, N.A. v. Kress Assoc., 33 F.3d 1477, 1504 (9th Cir. 1994) (appellate
court should avoid finding facts in the first instance); United States v. City of New York, 2011 WL 2680474, at *25-29 (E.D.N.Y. July 8, 2011) (performing this
fact-intensive analysis to pending employment discrimination class action after Wal-Mart).
Plaintiffs believe that the district court will reaffirm its prior determination that class certification is proper, but recognize that the contours of the class certification order must be altered to conform with Wal-Mart.
B. The Supreme Court Held that Subjective Practices Can Be Challenged on a Classwide Basis but Clarified the Standard for Demonstrating Compliance with Rule 23(a)(2), Thereby Making Remand Appropriate.
In Wal-Mart, the Supreme Court affirmed its earlier decision in Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 990-91 (1988), that a system of subjective
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Wal-Mart, 131 S. Ct. at 2554 (quoting Watson). This is because “‘an employer’s
undisciplined system of subjective decision-making [can have] precisely the same effects as a system pervaded by impermissible intentional discrimination.’” Id. (quoting Watson; alterations in original). Under Watson, therefore, if such practices “adversely affect” protected classes, they “may be analyzed under the disparate impact approach.” Watson, 487 U.S. at 991.
To certify a class challenging such a subjective system, the Supreme Court held that plaintiffs must identify a “common mode of exercising discretion.” Wal-Mart, 131 S. Ct. at 2554. While “‘a single [common] question’ will meet Rule
23(a)(2),” the Supreme Court explained that the common question must “produce a common answer to the crucial question why was I disfavored.” Id. at 2552, 2556. For disparate impact analysis (where proof of intent is not required), plaintiffs must identify a “‘specific employment practice’ . . . that ties all their . . . claims
together.” Id. at 2555-56.2
As described below, the parameters of this case and the evidence supporting class certification are starkly different from Wal-Mart, ensuring the necessary “glue” between the challenged policy and the disparate outcomes for women is present. Thus, plaintiffs can satisfy the Supreme Court’s requirements.
2For purposes of a disparate treatment claim, plaintiffs must demonstrate
“significant proof that [defendant] operated under a general policy of
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C. On Remand, the District Court Will Confirm that the Scope of this Case and the Evidence Supporting Certification Are
Substantially Distinct from the Class Certification Order Disapproved in Wal-Mart.
Plaintiffs have established the existence of a subjective promotion process that will meet the Rule 23(a) standard set forth in Wal-Mart.
Here, the evidence demonstrates that Costco has a uniform promotion system that is controlled from the top. At the direction of Costco’s CEO Jim Sinegal, District and Regional Vice Presidents prepare lists of their top candidates for promotion to Assistant General Manager and General Manager, and forward their lists to Divisional Vice Presidents and COO Richard DiCerchio. SER 55-56, 61-63, 153; ER 130-41. Costco then displays the photographs and biographies of these future promotables in the “Green Room” in the Costco Corporate Office. ER 1000. Access to the “Green Room” is limited to the company’s top executives, thereby ensuring not only that other employees remain ignorant of the details of the promotion practices, but also that only the top executives have the ultimate
authority for promotions. With few exceptions, those promoted are the individuals who have appeared on these lists. SER 59-60.3
3 Costco’s promotion process for Assistant General Manager and General
Manager includes multiple uniform components that collectively disadvantage women. Under Title VII, Plaintiffs need not separate out the elements if they are not capable of individual analysis. 42 U.S.C. § 2000e-2(k)(1)(B)(i) (“[I]f the complaining party can demonstrate to the court that the elements of a respondent's
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The small group of decision-makers responsible for implementing the policy challenged in this case is comprised of only twenty-nine executives: the CEO, the COO DiCerchio, the two Executive Vice Presidents, three Divisional Vice
Presidents, the eight Regional Senior Vice Presidents, and the sixteen District Vice Presidents. ER 1001; Appellant’s Opening Brief at 5. These executives meet frequently and receive instructions from Costco’s CEO regarding the criteria he expects them to apply in making selection decisions. ER 1021; SER 12, 15-16. The CEO and COO must personally approve all General Manager selections made by District Vice Presidents. SER 52-53, 82-86, 105-06.
Given the close communication and collaboration among this small group about promotion decisions, it is not difficult to understand how they are influenced to exercise their discretion in a common way that disadvantages women. For example, there is evidence that the CEO, who sets these promotion selection criteria, holds stereotyped perceptions about the appropriate roles for women and men in the warehouse. SER 69-70 (explaining his views that women do not wish to be Merchandising Managers and that forklift driving, which he calls a “male oriented job” is crucial to being a good merchant). Indeed, the CEO himself stated
decisionmaking process are not capable of separation for analysis, the
decisionmaking process may be analyzed as one employment practice.”). This provision of Title VII was not at issue in Wal-Mart.
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that “women have a tendency to be caretakers,” which he believes explains their lack of advancement. SER 30.
In the context of this carefully constructed pre-selection process, senior executives apply their subjective judgment in making the promotions decisions for Assistant General Manager and General Manager positions. See, e.g., SER 58, 122, 141-42, 146-47. They do so without the benefit of written criteria or posting of openings, relying instead on the directions provided by the CEO and their own stereotyped perceptions. SER 12-15, 123-24, 167-70, 194-96. Furthermore, plaintiffs’ statistical proof demonstrates that women have been disadvantaged to a statistically significant degree by this process. See Appellees’ Brief at 24-25. Together, this evidence supports a finding that there is a “common mode” of exercising discretion among this small group of decision-makers.
Many other differences explain why Wal-Mart does not preclude certification in this case.
Smaller Class—The class definition covers only approximately 700 women.
ER 997. In contrast, the Wal-Mart case “presented . . . one of the most expansive class actions ever” with over 1.5 million class members. Wal-Mart, 131 S. Ct. at 2547. This case challenges only about 100 promotion decisions per year and a far more limited group of eligible candidates. ER 46, ER 746.
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Two management job positions only—The claims in Wal-Mart involved
women across all job positions in the retail stores, a “multitude of different jobs, at different levels of Wal-Mart’s hierarchy.” Wal-Mart, 131 S. Ct. at 2557 (quoting Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 652 (9th Cir. 2010) (en banc)
(Kozinski, J., dissenting)). In contrast, this case involves only two, closely-linked management-level positions: Assistant General Manager and General Manager. ER 988. Such a narrowed focus increases commonality because it greatly limits the differences among the class members.
Promotion claim only—Additionally, plaintiffs allege discrimination in
promotion only. ER 988. In contrast, the plaintiffs in Wal-Mart challenged
promotions and pay for both hourly and salaried employees. Wal-Mart, 131 S. Ct. at 2548.
Number of Decision-Makers—In Wal-Mart, the Court held that the
discrimination alleged was the result of the decentralized decision-making of “thousands of managers.” Id. at 2548. In Wal-Mart, there were 3,400 store managers, and hundreds of additional district managers, regional managers, and vice presidents. The Supreme Court found it “quite unbelievable that all managers could exercise their discretion in a common way without some common direction.” Id. at 2555. In contrast to Wal-Mart, the decision-making here is confined to a
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exercise their discretion in promotions decisions under the direction and supervision of the company’s CEO. See discussion supra.
This quantum difference in the number of decision-makers is particularly significant in evaluating the persuasiveness of plaintiffs’ statistical proof. Plaintiffs’ statistical data, which found statistically significant shortfalls for the promotion of women, captures the decisions of only those twenty-nine decision-makers. In Wal-Mart, the Court faulted the use of aggregate data for thousands of decision-makers, which could possibly mask variations among them (as further discussed below). Wal-Mart, 131 S. Ct. at 2555.
No Decision-Making at the Store Level—As noted above, this is not a case in
which the decision-making occurs at the store level, as in Wal-Mart. See id. at 2554. As the district court found here, “Defendants argue that promotion decisions to AGM and GM vary by region and that promotion decisions to AGM are made at the store level. However, these assertions are unsupported . . . . Rather, the
evidence before the court indicates that officers at the regional and corporate levels are involved in promotion decisions.” ER 1000-01.
In Wal-Mart, the Supreme Court found commonality lacking in part because the decision-makers were at the store level but the statistics did not adequately reflect such decision-making. Wal-Mart, 131 S. Ct. at 2554. Here, in contrast, the
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statistics that demonstrate gender disparities and the decision-making resulting in such disparities, are closely aligned. See ER 999-1001.
Moreover, both parties’ experts found that in every region,4 there was a negative shortfall in the promotion of women prior to the filing of this action. ER 45-46 (Drogin Decl. ¶ 20 & n.21); ER 389-95 (Saad Second Decl., Exs. R2–R8). A shortfall in a region is highly probative of discrimination directly affecting the class members there, especially in light of the relatively small number of
promotion decisions. Because the relevant decision-making happens at the regional and corporate level, plaintiffs’ statistics match the decision-making in a way that the Wal-Mart plaintiffs’ evidence did not.
Express Admissions of a Pattern of Stereotyped Decisionmaking—The
Wal-Mart Court faulted the plaintiffs for relying solely on anecdotes, statistics and
social science. Here, plaintiffs have important additional evidence: admissions from Costco managers that did not exist in Wal-Mart and that strongly support the finding of a common policy and mode of exercising discretion.
The evidence shows that, in 2001, the company voluntarily convened
interviews and focus groups among its managers (known as “the BOLD Initiative”) to review barriers to the advancement of women. SER 93-96; see also Appellees’
4
There were too few promotions in the Texas region to conduct a meaningful statistical analysis. ER 45-46.
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Brief at 8-12. Costco’s own managers recognized that its promotion policies led to stereotyping that disadvantaged women. ER 1002; see also, e.g., ER 145; SER 167-71.5 Participants identified, in their own words, the “‘good old boy’ network,” “type casting people (stereotypes)” and “[p]rejudices” as potential barriers. SER 167. Costco’s managers identified barriers hindering the promotion of women as including “[l]ack of consistent application of systems dealing with promotions, training, reviews etc.,” “[r]elying on the use of ‘word of mouth’ to evaluate talent” and “[s]tereotyping.” SER 168. Promotions were “[d]one as special favors at times or based on relationships,” SER 169, and “[i]t depend[s] on who you know as to whether you get the training needed to be promoted,” SER 171. In a May 2001 report, the internal project team identified some of the “barriers that have prevented the company from benefiting from a diverse management team” and concluded that “[i]nconsistencies in the promotion practices allow for favoritism and individual biases to enter into the process.” ER 145.
In response to the BOLD Initiative and the managers’ recommendations, Costco adopted changes to its promotion practices for lower level positions, but notably did not change those practices relating to promotions to Assistant General Manager and General Manager. ER 1002; see also, e.g., SER 65-67, 102-03. The
5In light of these uncontested facts from within Costco itself, plaintiffs’
sociological expert confirms rather than establishes the common mode of decision-making.
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evidence established that the CEO personally blocked the recommendation to make these necessary changes because Costco has a “culture built into [the]
company that was recognizing on a regional basis who was qualified to become an assistant manager and a manager.” SER 66. In other words, Costco’s top
executive refused to alter policies that the company had itself identified as discriminatory.
Four years later, in August 2005, Costco launched another series of focus groups on potential barriers to the advancement of women and minorities. SER 187-92. The barriers identified by Costco’s managers mirrored the earlier comments made by the 2001 focus groups. Managers again cited the lack of written guidelines and the lack of clarity in promotion criteria as barriers to the promotion of women. They noted the need for “[c]onsistent criteria for
promotion,” and for “identifying what skills and behaviors are necessary and communicating the expectations consistently.” SER 187-88. “Employees when questioned do not know the path to promotion . . . .” SER 195. Others observed that getting promoted depended partly on “[w]ho you know,” SER 194, the
“[t]endency to promote people like us” and “[s]tereotypes,” SER 196. Participants reported that barriers included employees “not knowing of job opportunities across the country (job postings),” and “[l]ack of knowledge about upcoming
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The focus groups identified specific barriers to women obtaining
merchandise experience, including the “[p]erception of stockers as ‘big strong men,’” and the “[u]nconscious stereotype that women can’t be Merchandise Managers or forklift drivers.” SER 190, 191. They recognized that women were blocked by lack of rotation into merchandising positions. “[A]s rotation has
slowed this has affected our female managers. Many of them have started in areas such as Marketing, Admin, and Front End. In many cases, they have occupied these roles and have not been rotated on to the floor, which is a requisite for advancement.” SER 193.6 Despite the results of Costco’s 2005 focus groups, the company still did not change the promotions practices for the Assistant General Manager and General Manager positions.
6Although in Wal-Mart, the Supreme Court rejected the “social framework
analysis” of Dr. Bielby, it did so because he could not tie his analysis with the employment decisions at Wal-Mart. Here, in contrast, not only did plaintiffs’ expert Dr. Reskin link her theory of sex stereotyping with specific practices at Costco, such as the assumption that women cannot drive forklifts—an essential part of the Merchandising Manager job—but her connections were confirmed by Costco’s own managers in the BOLD Initiative. SER 32-33. Additionally, Dr. Reskin linked her stereotyping theory to Costco’s CEO himself, putting his stereotyping statements in context and connecting them to the discrimination at issue in the case. See, e.g., SER 30-33 (explaining Sinegal’s unsupported
characterization of women as caretakers not interested in driving forklifts and its effect on the promotions practices of the company).
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For all these reasons, plaintiffs have presented considerable evidence— which the Supreme Court found lacking in Wal-Mart—that complies with the standard for commonality recently announced by the Supreme Court.
D. Monetary Remedies in this Case May Appropriately Be Certified under Rule 23(b)(3) on Remand.
The Supreme Court’s decision in Wal-Mart changed the law concerning the certification of monetary remedies in Title VII class actions. The district court must therefore reconsider its ruling under Rule 23(b).7
Prior to the Supreme Court’s Wal-Mart decision, every circuit to decide the issue had held that Title VII back pay losses could be certified under Rule 23(b)(2) as incidental to the injunctive relief claims.8 The circuits differed, however, on the treatment of other damage remedies such as compensatory and punitive damages.
7Plaintiffs originally requested either certification under Rule 23(b)(2) or
hybrid certification under Rule 23(b)(2) and (b)(3). Hybrid certification remains viable under Wal-Mart and, as further explained, is particularly appropriate for a Title VII case.
8Reeb v. Ohio Dep’t of Rehab. & Corr., 435 F.3d 639, 650 (6th Cir. 2006);
Cooper v. S. Co., 390 F.3d 695, 720 (11th Cir. 2004), overrruled on other grounds by Ash v. Tyson Foods Inc., 546 U.S. 454, 457 (2006) (per curiam); Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 169-70 (2d Cir. 2001); Jefferson v. Ingersoll Int’l Inc., 195 F.3d 894, 896 (7th Cir. 1999); Eubanks v. Billington, 110 F.3d 87, 92 (D.C. Cir. 1997); Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir. 1988); Kirby v. Colony Furniture Co., 613 F.2d 696, 699-700 (8th Cir. 1980); Rich v. Martin Marietta Corp., 522 F.2d 333, 342 (10th Cir. 1975); Robinson v. Lorillard Corp., 444 F.2d 791, 802 (4th Cir. 1971).
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Compare Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415-16 (5th Cir. 1988)
(permitting certification only of “incidental damages”), with Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 169-70 (2d Cir. 2001) (rejecting
bright-line test in favor of “ad hoc approach”). The district court here followed the Ninth Circuit’s then-controlling test for Rule 23(b)(2) certification in Molski v. Gleich, 318 F.3d 937, 949-50 (9th Cir. 2003), and certified the case, including injunctive relief, back pay, and compensatory and punitive damages, under Rule 23(b)(2). ER 1005-07.
The Supreme Court ruled in Wal-Mart that back pay and other monetary remedies are no longer appropriately certified under Rule 23(b)(2) and should instead be subject to certification under Rule 23(b)(3). 131 S. Ct. at 2558-59. It concluded that this approach is consistent with the language of the rule and will ensure that class members have an opportunity for notice and opt-out if they choose to pursue their claims individually. Id. The Court further clarified that, under International Brotherhood of Teamsters v. United States, 431 U.S. 324, 361 (1977), the class action trial plan must ensure the ability of the employer to contest the individual class members’ monetary claims. Wal-Mart, 131 S. Ct. at 2561. Under Rule 23(b)(3), the district court must determine whether common issues predominate over individual issues, and whether class treatment will be
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The analysis of certification under Rule 23(b)(3) is a heavily fact-based inquiry. See, e.g., United States v. City of New York, 2011 WL 2680474, at *25-29
(E.D.N.Y. July 8, 2011).
The district court has not reviewed certification under Rule 23(b)(3), but could, based upon the evidence, conclude that common issues predominate. See City of New York, 2011 WL 2680474, at *25-27 (identifying common remedies
issues). Moreover, a class action remains the superior method of litigating these issues, because the court can resolve the myriad common issues in one proceeding and leave only the individualized issues for additional Teamsters proceedings, as one court has held, applying Wal-Mart. City of New York, 2011 WL 2680474, at *27 (“[E]ven if the individual questions were significant enough to defeat
certification under Rule 23(b)(3), the court will isolate those common questions appropriate for class treatment by narrowly certifying the non-hire victim and delayed-hire victim subclasses as to the issues susceptible to classwide proof.”).9
Such a bifurcation—where the trial court resolves liability in a Stage I proceeding, and then in Stage II allocates damages with hearings on any
9In a case involving 7,100 class members (over 2,000 of whom were eligible
for compensatory damages), a district court recently denied a motion to decertify the class after Wal-Mart, noting that although “the hearings that will be required to resolve these claims may be large in number, the court will not shrink from the task of making the victims of the City’s discrimination whole.” City of New York, 2011 WL 2680474, at *20.
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individualized issues—is both feasible and appropriate. Courts with classes much larger than this one have approved this process. See, e.g., United States v. City of New York, 258 F.R.D. 47, 67 (E.D.N.Y. 2009) (certifying liability phase under
Rule 23(b)(2) and deferring decision regarding certification of claims for monetary relief until after determination of liability); City of New York, 2011 WL 2680474, at *25-28 (after determination of liability, certifying certain issues relating to monetary relief under Rule 23(b)(3); see also Jenson v. Eveleth Taconite Co., 130 F.3d 1287 (8th Cir. 1997) (reviewing damages phase of case; certification order at 139 F.R.D. 657 (D. Minn. 1991)); Neal v. Dir. D.C. Dept of Corr., 1995 WL 517246, at *4-5 (D.D.C. Aug. 9, 1995).
These individualized damages hearings would operate under the procedure set forth in Teamsters, which establishes a presumption, after a finding of liability, that a female employee’s non-promotion was the result of discrimination. The individualized issues to be resolved focus on whether Costco has borne its burden to prove, through admissible evidence, that any employee’s specific non-promotion was not the result of discrimination and the amount of damages. City of New York, 2011 WL 2680474, at *25. Moreover, because no damages hearings would be necessary unless plaintiffs prove Costco’s liability for damages, it is preferable to resolve the liability issue first on a classwide basis, resolve issues common to all claims for damages, and then move to any necessary damages calculations. The
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exact process and format of this bifurcation is a trial plan issue best resolved in the first instance by the trial court. See Fed. R. Civ. P. 23(d)(1)(A) (granting the district court the power to issue orders to “determine the course of proceedings or prescribe measures to prevent undue repetition or complication in presenting evidence or argument”).
III. CONCLUSION
For these reasons, this Court should remand to the district court for proceedings to reconsider the class certification issue in light of the intervening authority.
Dated: July 25, 2011 Respectfully submitted, /s/Julia Campins
JULIA CAMPINS
LEWIS,FEINBERG,LEE,RENAKER &JACKSON,P.C.
476 – 9th Street Oakland, CA 94607
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CERTIFICATE OF COMPLIANCE
I certify that pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rules 32-1 and 32-3, the attached brief is proportionately spaced, has a typeface of 14 points or more, and contains 4,471 words.
Dated: July 25, 2011 LEWIS, FEINBERG, LEE, RENAKER, & JACKSON, P.C.
By: /s/Julia Campins Julia Campins
