United States: 9th Circuit Applies Dukes v. Wal-Mart To A Wage/Hour Class Action

On March 4, 2013 the Ninth Circuit issued a second opinion in the action, Wang v. Chinese Daily News (Wang II), in which it reversed the class certification it had previously affirmed and remanded the matter for further consideration of Rule 23(a) commonality and Rule 23(b)(3) predominance. The Wang II decision follows a remand from the United States Supreme Court which had reversed the original Wang judgment in light of the inconsistencies between the lower courts' rulings and the certification standards the Supreme Court announced in Dukes v. Wal-Mart ("Dukes").  As explained below, except for the last paragraph of the case, this mostly just restates holdings of other cases  But there is one highly significant holding at the end of the case concerning the application of "Trial by Formula" to wage/hour class actions that defense lawyers should be expected to cite in almost every class action they defend.

The Basic Facts

This case has been bouncing around in the courts for years.  The case alleges exempt misclassification and other related wage and hour claims on behalf of a class of about 200 reporters for the Chinese Daily News.  The case was filed in 2004, certified in 2005 and, in a trial in 2006, the class was awarded some $2.5 million in damages plus additional amounts for attorney's fees, interest, and penalties.  The certification of the case was actually under Rule 23(b)(2) [although the district court indicated it could have also certified under Rule 23(b)(3)] on the legal theory that the request for injunctive relief was more important to the class representative than the claim for monetary relief.  The district court also found common issues under Rule 23(a) under the very low standard that was generally used for "commonality" pre-Dukes.  After the sea-change in class certification law effected by Dukes, however, the Supreme Court summarily reversed and remanded the decision to the Ninth Circuit for further consideration consistent with Dukes.

The Ninth Circuit's Analysis

The Ninth Circuit had previously affirmed the district court in the original 2010 Wang decision.  This time, the Ninth Circuit reversed the certification under Rule 23(b)(2) and remanded for further consideration of Rule 23(a) and 23(b)(3). 

Availability of Certification Under Rule 23(b)(2): The reversal of the certification under Rule 23(b)(2) did not really make any new law.  The U.S. Supreme Court in Dukes already held that Rule 23(b)(2) certification is not generally for a case seeking monetary relief (although it left the door open for some extraordinary unspecified way in which you might use Rule 23(b)(2) to get some monetary relief), and the Supreme Court also already determined that former employees lack standing to seek injunctive relief.  As such, it was unsurprising that the Ninth Circuit reversed the Rule 23(b)(2) certification.  In fact, it appears that the Wang plaintiffs conceded on the point.

Commonality Under Rule 23(a): For Rule 23(a), the Ninth Circuit recognized that Dukes had heightened the commonality requirement such that the district court's articulation of commonality was insufficient to meet the test.  The alleged common issue the district court identified was the employer's "alleged pattern of violating state labor standards."  The Ninth Circuit held that what was required was "evidence that the entire class was subject to the same allegedly discriminatory practice."  The Ninth Circuit further clarified, however, that even one truly "common" issue would qualify to satisfy Rule 23(a).  The Ninth Circuit noted that the class here was very different from the proposed class in Dukes in that it was only 200 employees working in one location as opposed to more than a million working nationwide.  The Ninth Circuit still recognized, however, that "there are potentially significant differences among the class members" that would impact commonality, so it remanded the case for further findings on that issue.

Predominance Under Rule 23(b)(3):  For Rule 23(b)(3), the Ninth Circuit noted that, in its 2009 decision, Vinole v. Countrywide Home Loans (which I argued in the Ninth Circuit), it had previously criticized the Wang district court's determination that the blanket classification of reporters as exempt was not enough, standing alone, to justify a finding that common issues predominated.  Previously, in Wang I, the Ninth Circuit declined to reach the issue as they affirmed the certification under Rule 23(b)(2).  This time, they sent it back down, noting the Vinole criticism and further noting that, for the meal period claim, the district court should follow the direction the California Supreme Court gave in Brinker of "providing a meal period" in deciding whether common issues predominated as to that claim.  The Ninth Circuit's description of Brinker's holding is not particularly noteworthy, as they simply quote from the Brinker opinion verbatim without any special "gloss" on the holding we might like or dislike.

The Most Significant Part of the Decision.  Up to this point, the decision largely restates points already made in other cases. In Section II-D on damages, however, the Ninth Circuit announces a new holding that clarifies Dukes significantly. The panel holds that the prohibition on "trial by formula" set forth in the unanimous portion of Dukes was not intended to apply solely to discrimination cases, but to routine wage-hour cases as well.   Here is the quote in total:

"In Wal-Mart, the Supreme Court disapproved what it called "Trial by Formula," wherein damages are determined for a sample set of class members and then applied by extrapolation to the rest of the class "without further individualized proceedings." Wal-Mart, 131 S. Ct. at 2561. Employers are "entitled to individualized determinations of each employee's eligibility" for monetary relief. Id. at 2560. Employers are also entitled to litigate any individual affirmative defenses they may have to class members' claims. Id. at 2561. If the district court again certifies a class under Rule 23(b)(3), it should calculate damages in light of the Supreme Court's admonitions in Wal-Mart."

This is potentially hugely significant, in that it holds that if a class is certified, the employer is entitled to raise defenses to damages as to each and every class member and cannot have the process short circuited by selecting a small "sample" of class members, trying the case as to that small sample, and then extrapolating the results to the broader class.   This will be controlling authority as to the California district courts and likely is to be influential on state courts hearing that the "Trial by Formula" portion of Dukes was just dealing with a specific Title VII issue.  Without using trial by formula, it is often impossible to try an exemption misclassification case because it becomes unmanageable to consider every potential class member's individual situation and conduct a "mini trial" on each person. While this doesn't make class certification impossible in all cases, it makes it much harder to develop a workable class trial.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
15 Nov 2018, Other, San Diego, United States

The University of San Diego's Center for Cyber Security Engineering and Technology will host this upcoming Symposium in Cyber Law, Risk and Policy to be held on the beautiful USD campus.

15 Nov 2018, Speaking Engagement, San Francisco, United States

EMPOWERED WOMEN MAKING A DIFFERENCE: Give back to your community and change a life with Sheppard Mullin’s Women Lawyers Group

16 Nov 2018, Other, Los Angeles, United States

Sheppard Mullin partner Jonathan Aronie will speak on “Careers in White Collar Practice and Corporate Compliance” panel at Duke Law.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions