As any attorney who handles class action cases knows, the U.S.
Supreme Court's decision in Wal-Mart Stores, Inc. v.
Dukes, 131 S. Ct. 2541 (2011), was significant because it
clarified the Rule 23 standards for class certification and
strongly supported the need for a rigorous analysis of those
requirements. Of particular importance was the Court's focus on
the commonality requirement of Rule 23(a)(2) as being a real hurdle
that plaintiffs must overcome before a class can be certified, and
not a throw-away rule that is effectively subsumed by the
predominance requirement of Rule 23(b)(3). After Wal-Mart,
a party seeking to certify a class can no longer satisfy the
commonality requirement by raising issues that, while technically
common to a group of people, are not central to resolving the
dispute. Instead, the common questions must "resolve an issue
that is central to the validity of each of the claims in one
stroke."
Even though this holding appeared to be an important change in the
way the commonality requirement is to be applied, after
Wal-Mart was decided, it was not clear whether lower
federal courts would view the decision as making a real change to
the meaning of Rule 23(a)(2), or whether its holding would be
limited to employment discrimination disputes. This article focuses
on the way that federal courts have applied Wal-Mart's
enhanced commonality rule.
Before Wal-Mart, it was rare for the commonality
requirement to stand in the way of the certification of almost any
class. Class action complaints used to identify laundry lists of
basic and often uncontroversial questions raised by each class
member's claim, such as whether each purchased a product from
the defendant or whether the defendant had a particular company
policy. Any minimally competent plaintiffs' attorney could
draft a list of "common" issues, and, as a result,
defendants were unable to seriously contest the commonality
requirement.
In Wal-Mart, the Court went out of its way to give the
commonality requirement independent significance. After accepting
certiorari to determine whether the putative class satisfied Rule
23(b)(2) (concerning whether injunctive or declaratory relief is
proper for a class), the Court ordered briefing sua sponte
on the Rule 23(a) requirements and ultimately found that
"[t]he crux of this case is commonality."
In finding that Rule 23(a)(2) was not met, the Court clarified the
commonality requirement in three significant ways. First, it put a
limiting gloss on the terms of Rule 23(a)(2). The Rule requires
that there be "questions of law or fact common to the
class." But the Court explained that this requirement is not
satisfied merely by identifying any common question. Instead, the
common question must be "capable of classwide
resolution," meaning that the question must be capable of
resolution "in one stroke," yielding a "common
answer[]."
Second, Wal-Mart made the commonality requirement a real
obstacle to the certification of Rule 23(b)(2) classes seeking
injunctive or declaratory relief. Because the predominance
requirement of Rule 23(b)(3) does not apply to Rule 23(b)(2)
classes, a strong commonality requirement is critical to ensuring
that the claims of members of such classes are cohesive and rise or
fall on the basis of common issues.
Wal-Mart's third clarification was that the common
question must be central to the merits of the class claims. The
Court found insufficient basic questions such as "Do all of us
plaintiffs indeed work for Wal-Mart? Do our managers have
discretion over pay? Is that an unlawful employment practice?"
and "What remedies should we get?" Because the answers to
these types of questions are not "central to the
validity" of the putative class members' claims, they are
insufficient to satisfy the commonality requirement.
A review of recent decisions shows that lower courts have applied
Wal-Mart's commonality analysis across a range of
class action cases and in ways reflecting that Wal-Mart
changed the law in this area. For example, in Corwin v. Lawyers
Title Insurance Co., 276 F.R.D. 484 (E.D. Mich. Aug. 1, 2011),
the court applied Wal-Mart to a dispute involving the sale
of title insurance and found that commonality was not met. Stating
that the commonality requirement requires "a common issue the
resolution of which will advance the litigation," the court
found commonality lacking because "the critical inquiry
without which liability cannot attach requires individualized
determination." Likewise, in Stone v. Advance
America, 2011 U.S. Dist. LEXIS 142464 (S.D. Cal. Dec. 9,
2011), the court considered whether to certify a class of
individuals who received payday loans and held that a common
question such as "whether the defendant violated the same
statute with a uniform corporate policy" did not satisfy Rule
23(a)(2) because the key facts of each person's claim
"must be resolved on a transaction-by-transaction basis."
Because commonality was dispositive, the court did not reach any of
the other Rule 23 requirements. In Haynes v. Planet Automall,
Inc., 276 F.R.D. 65 (E.D.N.Y. 2011), the court denied class
certification in a case alleging that a car dealer did not disclose
that certain fees it charged in connection with automobile
financing were part of the finance charge, in violation of the
Truth in Lending Act. The court cited Wal-Mart and found
that the commonality requirement was not met because determining
"the critical ... disputed question[]," whether the fees
were in fact part of the finance charge, could not be
"answered uniformly on a class-wide basis." And the court
in In re OnStar Contract Litigation, 2011 U.S. Dist. LEXIS
145846 (E.D. Mich. Dec. 19, 2011), refused to certify a class of
OnStar customers and found that the commonality requirement was not
met because the plaintiffs "offer[ed] the same kinds of broad
questions that the Court found insufficient" in
Wal-Mart.
Other courts have relied on Wal-Mart's rejection of
"common questions" that do not have "common
answers" as insufficient to meet Rule 23(a)(2). In In re
Bisphenol-A (BPA) Polycarbonate Plastic Products Liability
Litigation, 276 F.R.D. 336 (W.D. Mo. 2011), the court denied
motions for class certification in disputes over the inclusion of
BPA in baby bottles and cups because key fact questions such as
each person's "actions, decisions, knowledge, and thought
processes" in purchasing the products were "unique"
to each class member, not common. The court went so far as to find
that the basic question whether each plaintiff even bought a
product from the defendant was "not a common question because
it is not capable of classwide resolution as required by
[Wal-Mart]." Likewise, in Wong v. AT&T
Mobility Services LLC, 2011 U.S. Dist. LEXIS 125988 (C.D. Cal.
Oct. 20, 2011), the court denied class certification because
"while there might be common issues, it is relatively apparent
that there will not be common resolutions of or answers to the key
issues/questions." And in Novak v. Boeing Co., 2011
U.S. Dist. LEXIS 146676 (C.D. Cal. Dec. 19, 2011), the court found
that "Boeing has presented evidence that demonstrates that the
common questions asserted by Plaintiffs are not capable of common
resolution."
Wal-Mart's commonality rule has been analyzed in
employment disputes as well. In Ellis v. Costco Wholesale
Corp., 657 F.3d 970 (9th Cir. 2011), the plaintiffs challenged
Costco's promotion decisions on behalf of a company-wide class
of women. The Ninth Circuit held that in certifying a class, the
district court had failed to conduct the required "rigorous
analysis" of the commonality and typicality requirements of
Rule 23(a) by refusing to analyze the persuasiveness of the
parties' evidence. On remand, the district court was required
to "determine whether there was 'significant proof that
[Costco] operated under a general policy of
discrimination'" that formed the basis for each class
member's claim. Absent such a policy, the plaintiffs
"would face an exceedingly difficult challenge in
proving" commonality (citing Wal-Mart).
This is not to say that Wal-Mart's commonality
standard cannot be met, or even that it cannot be met in employment
discrimination cases. But the bar is now higher. For example, the
Seventh Circuit recently reversed the denial of class certification
of Title VII race discrimination claims because the claims did not
turn on local managers' exercise of discretion (as did
Wal-Mart), but on a company-wide practice that purportedly
had a disparate impact on class members. McReynolds v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 2012 U.S. App. LEXIS
3683 (7th Cir. Feb. 24, 2012). Even so, the Seventh Circuit noted
that if the class sought damages, hundreds of separate trials would
be necessary to determine whether each individual class member was
adversely affected, assuming the class could establish that the
practice in question caused a disparate impact.
In sum, these developments bode well for defendants faced with
motions for class certification. Several courts have explicitly
recognized that Wal-Mart established a more restrictive
commonality standard. As other courts confront situations in which
core liability issues are not common, or where no single issue
drives the outcome of the litigation, we expect that
Wal-Mart's commonality rule will give defendants
another real chance to defeat class certification.
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