Ellis v. Costco: On Remand Following Dukes, Ninth Circuit Vacates Order Granting Certification in Discrimination Action

The theory of liability in Dukes v. Wal-Mart (discussed here) is that a company's policy of allowing local decision-makers to make hiring and promotion decisions can have a disparate impact on women and violate Title VII.  Brad Seligman, lead counsel for the plaintiffs in Dukes, has said that this is a very narrow and rarely used theory.  Regardless, the same theory is at issue in another of Seligman's cases, Ellis v. Costco Wholesale Corporation, 657 F.3d 970 (9th Cir. 9/16/11). 


On remand following the SCOTUS decision in Wal-Mart, the Ninth Circuit vacated the district court's order granting class certification under Federal Rules 23(b)(2) and 23(b)(3).  The Court held as follows:

1. Because at least one named plaintiff (Sasaki) alleged a concrete injury that is both directly traceable to Costco's allegedly discriminatory practices and is redressable by both injunctive relief and monetary damages, the Court affirmed the district court's holding that she had standing to pursue the action.
2. The Court  vacated and remanded the district court's ruling as to commonality under Rule 23(a) because the district court failed to conduct the required “rigorous analysis” to determine whether there were common questions of law or fact among the class members' claims and instead relied on the admissibility of the plaintiffs' evidence to reach its conclusion on commonality.
3. The Court vacated the district court's ruling as to typicality under Rule 23(a) because the district court failed to consider the effect that defenses unique to the named Plaintiffs' claims have on that question. 
4. The Court affirmed the district court's ruling that Sasaki, a current employee who continues to be denied promotion, has incentive to vigorously pursue injunctive relief as well as monetary damages on behalf of all the class members and is an adequate class representative under Rule 23(a).  However, the Court vacated the district court's finding that the other named plaintiffs, as former employees with "no incentive" to pursue injunctive relief, could adequately represent the class. 
5. In light of Wal-Mart's rejection of the predominance test under Rule 23(b)(2), the Court vacated the district court's certification of the class under that Rule and remanded for the district court to consider whether the claims for various forms of monetary relief will require individual determinations and are therefore only appropriate for a Rule 23(b)(3) class. 

The opinion is available here. 

Supreme Court Schedules Oral Argument in Exemption Case

The California Supreme Court will hear oral argument in Harris v. Superior Court (Liberty Mutual Insurance) on Monday, October 3, 2011, at 9:00 a.m., in San Francisco. Harris raises the following issue:

Do claims adjusters employed by insurance companies fall within the administrative exemption (Cal. Code Regs, tit. 8, section 11040) to the requirement that employees are entitled to overtime compensation?

For more information on this case, go here.

Goodwin Liu and Julie Su Confirmed

Governor Brown on Thursday swore in Goodwin Liu as the California Supreme Court's newest justice. Brown nominated Liu to the Supreme Court in July, after Liu withdrew his name from consideration for the Ninth Circuit Court of Appeals. Republicans had blocked Liu's nomination by President Obama, complaining that he was too liberal for the Ninth Circuit. Liu replaces Justice Carlos Moreno, the author of a number of important employment and class action decisions, who retired in February. Recent articles re. Liu: Sacramento Bee; Los Angeles Times.

On Tuesday, Julie Su was confirmed as California's Labor Commissioner. Su will lead the Division of Labor Standards Enforcement, or DLSE.

Congratulations to Justice Liu and Commissioner Su.

Supreme Court to Determine Federal Preemption of Driver Misclassification Action

On August 10, 2011, the California Supreme Court granted review in People ex rel. Harris v. Pac Anchor Transportation, Inc. This is the issue on review:

Is an action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) that is based on a trucking company's alleged violation of state labor and insurance laws "related to the price, route, or service" of the company and, therefore, preempted by the Federal Aviation Administration Authorization Act of 1994 (49 U.S.C. § 14501)?

The Court of Appeal held that the federal statute, popularly known as the FAAAA, did not preempt such an action. Discussed here.

The Supreme Court's web page on the case is here. It is Case No. S194388. Go here to sign up for automatic email notifications about developments in the case.