By Louis M. Solomon
"Rae" Ellis, et al v. Costco Wholesale Corp., No. 07-15838 (9th Cir. Sept. 2011) [enhanced version available to lexis.com subscribers / unenhanced version available from lexisONE Free Case Law] , presents one of the first Court of
Appeals' efforts to apply the Supreme Court's class action decision in Wal-Mart
Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). The international litigation
practice rulings in the decision arise from the increased usage of "class" or "mass"
claims in litigation and arbitration of international disputes (see for example
our recent posting on the ICSID decision permitting such "mass" claims to be brought in
the commercial context).
Costco involves class claims asserting discrimination based on gender
in Costco's promotions practice. The Ninth Circuit affirmed in part but reversed
in major part the District Court's treatment of the class issues, principally:
First, the Ninth Circuit found that the
District Court had not conducted the "rigorous analysis" required to determine
whether there were common questions of law or fact among the class members' claims.
The "rigorous analysis" standard is far older than Wal-Mart and requires
a deep analysis of the actual merits of the proposed class claim. If the District
Court needs to determine disputed issues of fact in order to perform the rigorous
analysis and in turn the commonality claim, then so be it. As the Supreme
Court said in Wal-Mart, "What matters to class certification is not the raising
of common 'questions' . . . but the capacity to generate common answers
apt to drive the resolution of the litigation.
Court of Appeals also ruled that, although Daubert's standard of analysis
was appropriate on a Daubert challenge (i.e., a challenge to the admissibility
of proposed expert opinions, see Daubert v. Merrell Dow Pharms, Inc., 509 U.S. 579
(!993) [enhanced version / unenhanced version ], the commonality determination required the District Court to
Third, the Ninth Circuit vacated the
District Court's findings as to "typicality" since the District Court failed to
consider the "effect that defenses unique to the named Plaintiffs' claims" would
have on the typicality question.
Fourth, based on Wal-Mart, the
Court of Appeals ruled that "predominance" was not a relevant criteria in assessing
whether a Rule 23(b)(2) (injunction) class could be certified. That is, the
class could not seek damages as merely incidental to an injunction. Post-Wal-Mart,
"predominance" was no longer the test for determining whether monetary damages
may be included in a 23(b)(2) class action" rather, "the relevant inquiry is what
procedural safeguards are required by the Due Process Clause for the type of relief
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