A recent Ninth Circuit decision remanded a class certification order for reconsideration in light of Wal-Mart v. Dukes. The court made several key points about consideration of the merits, evaluation of expert testimony at the class certification stage, and Rule 23(b)(2).
In Ellis v. Costco Wholesale Corp., 2011 U.S. App. LEXIS 19060 (9th Cir. Sept. 16, 2011), the district court had certified a class of women employees of Costco who claimed gender discrimination in the company’s promotion practices. The Ninth Circuit sent the case back to the district court for reconsideration in light of Wal-Mart, making several important points:
- The merits must be considered where they overlap with class certification issues. In clarifying the class certification standard, the Ninth Circuit explained that “the merits of the class members’ substantive claims are often highly relevant when determining whether to certify a class. More importantly, it is not correct to say a district court may consider the merits to the extent that they overlap with class certification issues; rather, a district court must consider the merits if they overlap with the Rule 23(a) requirements.” Id. at *24. The court did not mention whether this rule would also extend to Rule 23(b) – such as where predominance overlaps with the merits – but presumably it would.
- The district court must consider not merely the admissibility of expert testimony but also its persuasiveness. The Ninth Circuit explained that Daubert applies at class certification, following the Supreme Court’s dicta on that point. It further concluded that the district court erred in that “[i]nstead of judging the persuasiveness of the evidence presented, the district court seemed to end its analysis of the plaintiffs’ evidence after determining such evidence was merely admissible. . . . [T]o the extent the district court limited its analysis of whether there was commonality to a determination of whether Plaintiff’s evidence on that point was admissible, it did so in error. . . . [T]he district court was required to resolve any factual disputes necessary to determine whether there was a common pattern and practice that could affect the class as a whole.” Id. at *26-27.
- Under Rule 23(b)(2), the named plaintiffs’ subjective intent with respect to seeking predominantly injunctive relief is now irrelevant, and the focus needs to be on Due Process considerations and whether monetary relief could be granted without individualized determinations. Interestingly, the Ninth Circuit suggests that there is an open question for the district court to decide regarding whether punitive damages are “incidental monetary relief” that can be awarded under Rule 23(b)(2) even after Wal-Mart. The court suggests that if the punitive damages’ claims are dependent on the defendant’s conduct and not on individual facts pertinent to particular plaintiffs, they might be appropriate for certification. Id. at *42. I would expect defendants to argue that punitive damages are never “incidental,” and, depending on the applicable law, a determination on punitive damages may require individualized determinations to establish liability and/or damages.