Just this morning, the United States Supreme Court released its long-awaited opinion in Wal-Mart v. Dukes.  The Court unanimously reversed the Ninth Circuit, holding that the class certification was not consistent with the Federal Rule of Civil Procedure 23(a) governing class actions.  The class of plaintiffs consisted of women who worked at Wal-Mart and allegedly suffered discriminatory pay and promotion practices at any point since December 1998, including those not hired until years after the suit was filed in 2001.

Writing for the Court, Justice Antonin Scalia concluded that the millions of plaintiffs and their claims did not have enough in common: “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why I was disfavored.” 

Justices Ginsburg, Breyer, Sotomayor and Kagan concurred in part and dissented in part, agreeing that the class should not have been certified under 23(b)(2), but that a class of this type may be certifiable under Rule 23(b(3) if the plaintiffs show that common class questions “predominate” over issues affecting individuals and that a class action is “superior” to other modes of adjudication.

While this decision is clearly a big victory for the nation’s largest private employer and the business community at large, does the Dukes decision signal that the class action pendulum has swung back toward a rational, reasonable use of Rule 23 actions?  What does Dukes mean for DRI members and our clients?

In what was among the most-watched case of the term, the U.S. Supreme Court this morning reversed the Ninth Circuit’s decision in Wal-Mart Stores, Inc. v. Dukes, No. 10-277, which, if allowed to stand, would have been the largest employment class action in history.  The case originated as a sexual discrimination case by Wal-Mart employee Betty Dukes and some other female employees, and grew into a class action case with 1.5 million plaintiffs—all Wal-Mart female employees were included whether or not they wanted to participate and whether or not they had a grievance with the company. 

This decision carries important ramifications not only for large employers like Wal-Mart, but for any company targeted by class action complaints, as the class certification decision is often a case’s critical juncture. Certification puts enormous pressure on a defendant to settle, regardless of the case’s merit.  Had the Court not reversed the Ninth Circuit’s decision, it would likely have led to even more class action complaints and certifications. 

The decision has far-reaching implications for both Title VII class actions and for class actions generally, and an adverse decision for Wal-Mart could have dramatically expanded the circumstances in which class certification is appropriate.  In line with the arguments included in DRI’s amicus curiae brief, the Court held that the proposed class would have lowered the burden on plaintiffs to show that they were victims of intentional, institutionalized discrimination, and restricted the right of defendants to present individualized defenses for the numerous and varied claims that companies may face.  The Court found that the certification of the plaintiff class by the district court, affirmed by the Ninth, was not consistent with Federal Rule of Civil Procedure Rule 23(a)(2), which requires a party seeking class certification to prove that the class has common “questions of law or fact.”  “Without some glue holding together the alleged reasons for those decisions,” the Court stated in its summary argument, “it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question.”  The Court also held that the plaintiffs’ backpay claims were improperly certified under Rule 23(b)(2).

It seems to be a daily occurrence.   Somewhere in the U.S. a complaint is filed, a decision is rendered or a news article is published involving the inappropriate use of e-mail, social media and/or text or voice messages.   What isn’t a daily occurrence is when the newsworthy incident involved a celebrity.

As was recently reported in an article linked on DRI Today, future Hall-of-Fame NFL quarterback Brett Favre (now with the Minnesota Vikings) has been accused of sending inappropriate text and voicemail messages to a television reporter, a contractor and massage therapists when he played for the New York Jets in 2008.  To date, Favre has not denied the allegations of what may become known by the new verb “favring,” and the New York Jets and NFL are investigating.

High-profile allegations such as these often serve a useful purpose in educating the general public on the inappropriateness of certain conduct and the potential consequences.    Few Americans knew that sexual harassment was a form of unlawful discrimination until the confirmation hearings for Justice Clarence Thomas.

As advisors and counselors to employers and businesses, what else can we learn from the “Favre Fiasco”?  Is there a silver lining in these sleazy allegations?

Care Initiatives, one of Iowa’s largest employers, a non-profit company operating 56 nursing homes, has been involved in grueling litigation for the last five years. It would appear that even a non-profit company can be affected by claims of profit, greed, and sexual harassment.

It all started when a former executive who was in line to become the next CEO accused the current CEO of sexual harassment. This lead to her firing (her job duties were investigated with a conclusion that she was not worthy of her position), her filing of a lawsuit and her recovery of over $1 million in settlement. The lawsuit took two years in which 10 years worth of Internet company e mails were turned over in discovery including, a computer hard drive.

As a result of the lawsuit, the Des Moines Register published an article about questionable profits and payments made by Care Initiatives. Thereafter, Care Initiatives was investigated for potential abuses of the federal nonprofit laws. At the same time, the former employee’s husband, who was a retired attorney, began sending a series of threatening e-mails to Care Initiatives and its attorneys, accusing them of tax fraud and refusing to return to the company 14 boxes of confidential documents produced in the lawsuit and ordered returned. Care Initiatives obtained an order for contempt and is now seeking $134,000 in sanctions against the employee and her husband.

Our advice to our clients is always to be careful of becoming adverse to employees who are charged with too much knowledge and information of the running of the company. It is also interesting to see how a case can easily get out of hand and affect anyone involved. Yet most important for the attorneys among us or those defending attorneys, is that when you proceed with a personal crusade disregarding a court order the price can be steep.