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The decision may be narrower than many seem to expect

April 18, 2011 5:08 PM

Greetings, all. My name is Jeff Jacobson. I'm a litigation partner at Debevoise & Plimpton LLP and, like some other posters here, I represent clients in consumer class actions. I am a big fan of every member of the panel Ted has assembled and I am grateful to Ted for allowing me to join the discussion. (Please note the usual disclaimers: I am not involved in the Dukes case, the opinions I express aren't necessarily that of my firm or any client, etc.)

My hoped-for outcome in the case is similar to Russell Jackson's. The outcome I find myself expecting, however, is different and substantially narrower. I do not think it an accident that, since the Supreme Court decided the Falcon case in 1982 with its "rigorous analysis" language, the Court has declined chance after chance to narrow Rule 23. As many of us painfully recall, the Court did not even grant certiorari in the Visa/Mastercard antitrust litigation, after the Second Circuit upheld a district judge's certification of a multi-million merchant Leviathan of a class that, ironically, included Wal-Mart. The Second Circuit "repudiated" (its word) that horrible decision later in In re IPO, and here we are hoping that the Supreme Court now adopts an analysis similar to, if not more sweeping than, the Second Circuit's new view, when the Court refused to correct the Second Circuit's whiff in 2001. My suspicion is that we in the defense bar may be disappointed, and that the decision the Supreme Court is to issue in the Dukes case will be substantially less broad and impactful than many seem to be expecting.

Andrew Trask is correct, I think, that the Court's decision will turn on the district court's and the Ninth Circuit's inability to say how the Dukes case possibly could be tried. The district court recognized that the "usual" process of proving discrimination in any particular employee's case couldn't work here. In a usual case, even if the plaintiffs managed to demonstrate at a class action trial that Wal-Mart had some discriminatory policy, Wal-Mart still should be able, at the stage where some individual human being seeks retrospective damages, to present individual evidence it believes proves that the discriminatory policy did not affect that employee. The district court's rather radical proposal was to ban Wal-Mart from presenting individual evidence and, in the event the plaintiffs win, to let the plaintiffs rely solely on whatever statistical model ended up yielding that win to decide how much Wal-Mart should pay in damages. Though I am merely an amateur Supreme Court-watcher, it seemed clear from the oral argument that at least eight justices, and possibly all of them -- the wildcard being Justice Ginsburg -- agree that the district court's proposal was dangerously wrong. Even Justices Sotomayor and Kagan openly expressed disagreement with the district court's approach.

Justice Sotomayor, eventually joined by Justice Kagan, did not seem at all inclined to defend the district court's inclusion of back pay awards among the issues to be resolved on a class basis. Justice Sotomayor's approach, as expressed at oral argument, seemed to be to try to find a way around the problem, and let the case proceed on a class basis at least in part, by stressing the plaintiffs' request for forward-looking injunctive relief. Justice Sotomayor essentially said to the plaintiffs' lawyer, "forget back pay -- what would your prescriptive injunction look like?" The plaintiffs' counsel responded that plaintiffs would seek a set of specific steps removing managers' discretion and ensuring that future decisions at Wal-Mart are made on a more gender-neutral basis. Justices Sotomayor and Kagan seemed to like that answer, and certainly seemed more than willing to let the district court try a case about whether such a forward-looking injunction is necessary and appropriate. At the same time, however, the Justices seemed resigned to, and possibly even in agreement with, an outcome that would reverse the district court's decision to include back pay in the putative class certification.

Importantly, although Ted Boutrous made the point for Wal-Mart that class members' future-damage claims would be barred by res judicata if a back-pay case went to verdict and Wal-Mart won, no Justice asked him what (if any) res judicata effects would result if the class litigated only over Wal-Mart's supposed policy problems and the need for a forward-looking injunction to correct them, and did not litigate the question of whether or how much the now-enjoined practice may have cost individual employees in the past. I am no employment lawyer, but it would seem the right answer would be that even if the plaintiffs litigate just the policy and forward-looking case, and lose (i.e., because there was no company-wide policy to discriminate), individual employees still would be free to argue that they were discriminated against in the past and suffered damages as a result.

Let's assume for a minute that I am right, and eight or even nine justices agree that the named plaintiffs fail to satisfy Rule 23(a) on typicality grounds -- what Russell Jackson's blog and Ted Boutrous's argument both (correctly, in my view) called "cohesion." If I am right, this would suggest that the Court could issue a relatively narrow decision on that basis and command the kind of unanimity that might give such a closely-watched decision maximum legitimacy. Would the Chief Justice really pass up a 9-0 or 8-1 ruling in this case if he could get one? And, by the way, how sure are we that five votes even exist for the kind of barn-burning decision the defense bar dearly would love to see?

For these reasons, I find myself predicting such a narrowly-framed decision: Certification reversed, 9-0 or 8-1, for failure to satisfy the commonality and typicality "cohesion" requirements of 23(a), along with a concurrence by (at least) Justices Ginsburg, Sotomayor and Kagan encouraging the district court to consider certifying a true injunctive class on remand. There may be another concurrence or two from the right wishing the Court had gone further, but only a concurrence.

Even in a narrow decision, however, I think we defense types will get our wish that the Court should address the standard judges must follow when weighing competing expert testimony at the class certification stage. This is not just a matter of Daubert, though I agree with James Copland that Daubert must apply to proposed testimony related to Rule 23 issues. The bigger question, and one I think the Court should and probably will answer in the affirmative, is whether courts must *weigh* competing expert testimony and decide, after giving due consideration to the defendants' expert's conclusions, whether the plaintiffs really will be able to prove their case on a common basis. Ted Boutrous rightly stressed that the district court chose to ignore Wal-Mart's expert, finding it his responsibility only to consider whether the plaintiffs' expert put forward a theory that might hold up at trial. As the Second Circuit correctly (in my view) held in In re IPO, that simply cannot be right.

A narrow decision, however, might well allow the Court to duck the circuit-split over when you can seek monetary damages in a (b)(2) case. If they do tackle that issue, the oral argument suggested the Court's majority will adopt the rule that damages must to flow automatically, without need for individual fact determinations. That decision hardly would surprise anyone.

The bottom line, for me, is that although I think there are at least four justices in favor of turning the Wal-Mart suit off completely, and doing so in the sweeping terms for which Russell is hoping, there may not be a fifth, and even if that's wrong, if the Chief Justice sees a chance for unanimity, a narrow decision on typicality grounds may seem a lot more attractive than a bitter split with the three women Justices on the losing side.

I am looking forward to hearing what my most esteemed colleagues think of this.




Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.