Dukes v. Walmart Fallout

Eveyone knows about the Dukes v. Walmart case (post is here). Well, Ellis v. Costco is another "big box" retailer case, in which female managers challenged Costco's promotion practices.

According to the opinion, Costco does not document or set concrete standards re promotion to General Manager and it always promotes from within the ranks of its AGMs.  Several female Costco employees brought a nationwide class action, claiming Costco's promotion practices discriminated against women.

The Ninth Circuit reversed the district court's grant of class certification.  The opinion finds many errors with the district court's reasoning, mainly because of Dukes' interpretation of the class action standards in federal court (Rule 23).   For example, the district court failed to conduct a "rigorous analysis" regarding whether a common question of law or fact would affect the entire proposed class's rights to recovery. The court of appeals also held the district court did not consider whether individual circumstances rendered the plaintiffs incapable of proving the "typicality" element.  Costco put forward evidence regarding the named plaintiffs that appeared to explain individualized reasons why each plaintiff did not succeed.

The court of appeals also rejected certification under Rule 23(b), which permits class certification in cases where the relief sought is primarily an injunction rather than damages.  Again, relying on Dukes, the court of appeals noted Walmart precludes certification under Rule 23(b)(2) when each class member would be entitled to an award of money damages. Moreover, former employees cannot bring claims for injunctive relief, as injunctions operate prospectively and former employees will have no stake in them.

There is more. But this case places into focus that Dukes will have a profound effect on large employment law class actions in federal court. It remains to be seen how California courts deal with Dukes, but the state's courts do rely on federal law when evaluating class actions.

The case is Ellis v. Costco and the opinion is here.