To be certified, a class must meet all the requirements of Federal Rule of Civil Procedure 23(a)—numerosity, commonality, typicality, and adequacy—and at least one of the three requirements set forth in Rule 23(b). Rule 23(b)(2) allows certification when “final injunctive relief or declaratory relief is appropriate respecting the class as a whole.” But Rule 23(b)(2) does not expressly authorize class actions seeking monetary relief, and, according to the advisory committee notes, “does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages.” Relying on the text of Rule 23(b)(2) and the accompanying advisory committee note, most courts have held that class actions seeking primarily monetary relief must be certified, if at all, under Rule 23(b)(3), which requires the plaintiff to establish that common issues predominate over individual ones and that a class action would be superior to other means for resolving the dispute. On December 6, 2010, the Supreme Court granted certiorari in Wal-Mart Stores, Inc. v. Dukes, No. 10-277, to address the requirements for class certification under Rule 23(b)(2). The question presented is whether claims for monetary relief may be certified under Rule 23(b)(2), and, if so, under what circumstances. The Court further directed the parties to brief the question whether the particular class certification ordered under Rule 23(b)(2) was consistent with the four requirements of Rule 23(a).

This case is of tremendous importance to businesses nationwide, as demonstrated by the large number of amicus briefs filed in support of the petition. Class certification is a critical stage in any class action, and the scope of Rule 23(b)(2) can affect class action litigation in virtually any context. If the Court affirms a permissive approach to certifying claims for monetary relief under Rule 23(b)(2), then certification of class actions seeking monetary damages will become easier and businesses will face greatly increased exposure to class action liability. Wholly apart from its broader significance, the case is of interest in its own right, as the Ninth Circuit’s decision below certified a class of historic size against the world’s largest private employer, with potential damages in the billions of dollars.

In 2001, six plaintiffs brought a class action in a California federal district court alleging that Wal-Mart had engaged in company-wide gender discrimination in violation of Title VII of the 1964 Civil Rights Act. The plaintiffs asserted that women employed in Wal-Mart stores around the country received less pay and fewer promotions than men in comparable positions. The district court certified a class that encompassed the claims of up to 1.5 million female employees seeking injunctive and declaratory relief and back pay. After a panel of the Ninth Circuit affirmed, the Ninth Circuit granted en banc review and—as described in an earlier Mayer Brown client alert—ultimately affirmed by a vote of 6-5.

The Ninth Circuit concluded that the plaintiffs’ claims for back pay—despite possibly totaling billions of dollars—did not predominate over their requests for injunctive and declaratory relief. In so holding, the Ninth Circuit announced a new standard for determining when claims for monetary relief predominate over claims for injunctive relief such that a class may be certified under the more lenient Rule 23(b)(2) standard. According to the Ninth Circuit, a class may be certified under Rule 23(b)(2) if it seeks “monetary damages that are not ‘superior [in] strength, influence, or authority’ to injunctive and declaratory relief.” 603 F.3d at 616. To determine whether that standard is met in a given case, the Ninth Circuit directed consideration of four factors, including whether the request for monetary relief introduces new and significant legal or factual issues, whether it requires individualized hearings, and whether its size and nature raise due process and manageability concerns.

The Ninth Circuit’s en banc decision created a three-way circuit split, between the Ninth Circuit; the Second Circuit, which determines whether monetary relief predominates by examining, among other things, whether reasonable plaintiffs would bring the suit “even in the absence of a possible monetary recovery” (Robinson v. Metro-North Commuter R.R., 267 F.3d 147, 164 (2d Cir. 2001)); and several other circuits, which hold that monetary relief predominates “unless it is incidental to requested injunctive or declaratory relief” (Allison v. Citgo Petroleum Group, 151 F.3d 402, 415 (5th Cir. 1998)).

Absent extensions, amicus briefs in support of the petitioner will be due on January 27, 2011, and amicus briefs in support of the respondents will be due on March 1, 2011.

For more information on this legal update, please contact Evan Tager at +1 202 263 3240 or Archis Parasharami at +1 202 263 3328 in our DC office.

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