A revised 2-1 panel decision in Dukes, et al. vs. Wal-MartStores Inc., the bellwether class action in 2007, issued inDecember, affirmed a class certification order in a genderdiscrimination action against Wal-Mart that challenges pay andmanagement promotion decisions.

The decision, issued by the 9th Circuit on Dec. 11, 2007,vacated its earlier decision of Feb. 6, 2007, which had certified,under Rule 23(b)(2), a class of more than 1.5 million current andformer female employees. As such, it was--and remains--the largestemployment class action ever certified.

In its new decision, the 9th Circuit reiterated its opinion thatthe district court did not abuse its discretion in finding that adiverse class of salaried and hourly female employees, employedacross 3,400 stores, was nonetheless united by companywidepractices.

The 9th Circuit found evidence of a link between these practicesand discriminatory impacts on women by examining expert opinions,statistical evidence and anecdotal evidence.

The district court had a basis to conclude that claims forinjunctive and declaratory relief predominated over monetaryclaims, even though many class members were no longer employed bythe company--and despite the plaintiffs' demand for not only backpay but classwide punitive damages.

The 9th Circuit rejected arguments that the trial would beunmanageable because of the class's huge size, and unconstitutionalbecause the company would be deprived of its constitutional rightto defend individual pay and promotion decisions.

It determined that if the company were found liable ofdiscrimination at the merits stage, the district court could employa formula to determine the amount of back pay and punitive damagesowed to the class members.

It also might use "test cases" to give the company a chance todefend some personnel decisions on the merits, with the resultsbeing subject to statistical analysis in order to support aclasswide formula.

Finally, the 9th Circuit ruled in favor of Wal-Mart in upholdingthe district court's decision not to certify promotion claimsbrought by class members for whom there was no objective evidenceof qualifications for and interest in promotions.

While achieving the same substantive outcome of the Feb. 6decision, the new ruling reflects various changes.

o The 9th Circuit indicates that plaintiffs no longer employedwhen the suit was filed should not be part of the class forpurposes of injunctive relief.

The district court had approved a class of all current andformer female employees starting 300 days before the first EEOCcharge was filed in 1999.

The 9th Circuit, however, ruled that the class should be allwomen still employed when the complaint was filed in June 2001.

The 9th Circuit remained "confident that the primary reliefsought by these plaintiffs remains declaratory and injunctive innature, notwithstanding their request to also be 'made whole' in amonetary sense to the full extent provided under Title VII."

o The 9th Circuit expanded upon its reasoning in response toconcerns about manageability and due process.

Relying on Hilao vs. Estate of Ferdinand Marcos, 103 F.3d 767(9th Cir. 1996), the 9th Circuit determined that although thedistrict court's proposal to use a formula to compensate classmembers was "somewhat imperfect," it was not a reason to find thatdue process protections were violated, especially now at thepre-merits stage.

o The new decision contains numerous analytical refinements thatmake the decision superficially more compatible with U.S. SupremeCourt law, and the trend in other circuits toward meaningfulrigorous analysis of Rule 23 requirements.

In footnote 2 of the opinion, for example, the 9th Circuitacknowledged that district courts must (and not merely may) resolvefacts needed for Rule 23 analysis, even if those facts go to themerits. Similar adjustments occur at other places.

Even with the removal of inaccurate pro-certification rhetoric,however, the 9th Circuit still accepted the opinion of theplaintiffs' expert, who used a "social framework analysis" toexamine employment policies.

The 9th Circuit held that the expert's opinion satisfied thestandard in Daubert vs. Merrell Dow Pharmaceuticals Inc., 509 U.S.579 (1993), and that in a class-action context, disagreements withthe experts' inferences did not mean the testimony could not beadmitted as expert evidence to bolster plaintiffs' arguments oncommonality.

Like the old ruling, the new decision contains a vigorousdissent, with the dissenting judge arguing that the changes to themajority's decision did not alter his belief that theclass-certification order was unworkable, and that the class shouldnot have been certified.

The dissent was especially critical of the contention thatinjunctive and declaratory relief predominated over monetaryrelief, calling the suggestion "risible."

The dissent argued that except for the wealthiest people,"billions of dollars are going predominately over words and solemncommands and promises about how to behave in the future."

The dissent also questioned the district court's management planapproved by the majority that would permit a bifurcated process andthe use of a formula to determine punitive damages.

The dissent, however, asserted that both "phases of this planare constitutionally defective because they are inadequatelyindividualized," arguing there would never be an adjudication madeby an Article III judge and jury because "Wal-Mart will never get achance, for example, to prove to a jury that [Betty] Dukes wastried as a manager and did not perform well, or that [Edith] Aranadid indeed steal time or at least that after a good-faithinvestigation Wal-Mart fired her for that nonpretextualreason."

Wal-Mart had filed a petition for rehearing en banc as to theFeb. 6 opinion before the full 9th Circuit. However, the Dec. 11ruling renders that petition moot. The company likely will renewits petition.

The Dukes ruling is a plaintiff-friendly interpretation of Rule23 that deepens the divisions in the federal circuits on theability of employers to defeat nationwide class actions whereplaintiffs seek far-ranging injunctive relief, coupled withrequests for classwide punitive damages.