A recent 9th Circuit decision demonstrates the power of the landmark 2011 Supreme Court case Wal-Mart Stores Inc. v. Dukes in employment class actions.
In Wang v. Chinese Daily News, the 9th Circuit overturned the class certification of a wage and hour dispute. In its opinion, the court cited Dukes, in which the high court ruled that a lower court had improperly certified a class of 1.5 million female Wal-Mart employees who claimed the retailer’s policies and practices were discriminatory toward women.
Wang is significant because the plaintiffs bar has repeatedly argued that Dukes only applies to discrimination class actions. And although a handful of other federal courts have applied Dukes to wage and hour collective and class actions (see “Beyond Wang”), the 9th Circuit’s decision is noteworthy because of the court’s historically employee-friendly reputation.
Michael Kun, a member at Epstein Becker & Green, compares Wang to a pingpong ball, as it has bounced between courts for nearly a decade.
In 2004, current and former Chinese Daily News employees filed a class action against the Los Angeles-based Chinese language news organization, claiming it violated the Fair Labor Standards Act (FLSA) and California labor laws because it didn’t pay them for overtime or compensate them for meal and rest breaks.
A lower court certified the plaintiffs as a class of 200, and a jury awarded them more than $2.5 million in damages in a 2006 trial. Chinese Daily News appealed to the 9th Circuit, which affirmed the lower court’s decision in 2010. The news organization then appealed to the Supreme Court, which vacated the judgment and remanded the case back to the 9th Circuit for consideration in light of Dukes. And on March 4, the 9th Circuit remanded the case back to the district court to reconsider the question of class certification.
Labor and employment experts say the most important aspect of the 9th Circuit’s decision is the part in which it addresses “trial by formula,” or using inferential statistics to determine classwide damages. The court wrote that employers defending against wage and hour class actions are “entitled to individualized determinations of each employee’s eligibility for monetary relief.”
In Dukes, “the Supreme Court said this whole notion of taking a random sample and extrapolating out violates due process,” explains Thomas Kaufman, a partner at Sheppard Mullin. “But the way they wrote that was not the clearest thing in the world. Some plaintiffs lawyers argued that the court was talking about it only in the context of the way that Title VII [of the Civil Rights Act of 1964] discrimination cases are tried.”
But the 9th Circuit squarely rejected that reasoning in Wang. “In remanding Wang, the 9th Circuit essentially said, ‘If you are going to certify a class here, it has to be done in a way other than trial by formula,’” Kun says. “In a wage and hour case, it’s going to be very difficult for plaintiffs to come up with a trial plan where damages can be calculated in a way other than through some formula.”
Kaufman agrees. “If you take away that tool, it becomes extremely difficult to try these cases.”
Experts agree that Wang is likely far from resolved. “The pingpong ball will continue to bounce on this one,” Kun says. “My expectation is that the district court will now issue a new opinion, and whether it grants or denies certification, that decision will be taken up to the 9th Circuit. That decision may end up back on the Supreme Court’s lap, particularly in light of the fact that there is this other case out there where the court declined to apply Dukes.”
That case is Ross v. RBS Citizens, in which the 7th Circuit declined to apply Dukes in a FLSA collective action and instead affirmed a district court’s class certification of a group of plaintiffs alleging federal and state wage and hour law violations. Last month, the Supreme Court vacated the ruling and remanded the case back to the 7th Circuit in light of the high court’s March 27 decision in Comcast Corp. v. Behrend, in which it held that a group of cable subscribers shouldn’t have been allowed to bring claims as a class because they did not adequately show how damages could be calculated on a classwide basis.
“So an argument can be made that there’s a split in the circuits as to whether Dukes applies,” Kun says. “One way or another, this issue may well end up in front of the Supreme Court.”