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Looking back at Wal-Mart decision, 7th Circuit limits class actions

by on
in Employment Law,Human Resources

Since the U.S. Supreme Court issued its landmark Wal-Mart v. Dukes decision in 2011, courts and employers have focused on the commonality requirement pursuant to Rule 23(a)(2) for class certification. Rule 23 of the Federal Rules of Civil Procedure spells out the criteria for establishing the validity of a class action, in which a group of plaintiffs may join together to pursue a claim in court. (See box below.)

This focus on the commonality requirements for class-action lawsuits is good news for employers. If a recent 7th Circuit case is an indication, courts are taking a close look at whether groups of plaintiffs have enough in common to constitute a valid class. It may mean that em­­ployers will face fewer large class-action lawsuits.

In August, the 7th Circuit ad­­dressed the issue in Bolden v. Walsh (No. 12-cv-2205, 7th Cir., 2012), reversing a class order certifying two classes. The appeals court held that the plaintiffs could not demonstrate that their claims satisfied the commonality requirement that the Supreme Court set in Wal-Mart.

Two certified classes

Twelve workers at Walsh Con­­struc­­tion filed a lawsuit, alleging that the company’s superintendents practiced or tolerated racial discrimination in assigning overtime work and in working conditions. The workers asked the district judge to certify the suit as a class action covering all 262 Chicago-area construction projects on which Walsh had worked since mid-2001.

The district court granted the plaintiffs’ request and certified two classes:

1. A hostile work environment class, which included “all blacks employed by Walsh on its construction sites in the Chicago Metro­poli­­tan area during the time period June 1, 2001, through the present.”

2. An overtime class, which included “all blacks employed as journey­­men by Walsh in the Chicago Metro­­poli­­tan area during the period June 1, 2001, and through the present, who were denied opportunities to work, not afforded overtime hours or not afforded premium pay hours, because of their race.”

Walsh Construction appealed the class certification.

Reversed by appeals court

On appeal, the 7th Circuit reversed the district court’s class certification order.

In addition to finding problems with the two class definitions, the 7th Circuit held the plaintiffs could not satisfy Rule 23(a)(2), which re­­quires questions of law or fact common to the class. The court pointed out that the construction sites had different superintendents. The plaintiffs even acknowledged that different sites had materially different working conditions and that, in fact, most Walsh superintendents did not discriminate on the basis of race.

The court noted the case’s similarities with Wal-Mart. The plaintiffs in both Wal-Mart and Bolden argued that discretionary acts by local managers produced discriminatory effects that justified class treatment. How­­ever, conditions at different stores or construction sites do not present a commonality question where there are multiple managers who exercise independent discretion.

In Wal-Mart, the Supreme Court stated that “allowing discretion by local supervisors over employment matters ... is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.”

The 7th Circuit observed that Walsh’s policy of allowing on-site discretion to superintendents is the exact policy that the Supreme Court held could not be addressed in a companywide class action.

Not a ‘manageable’ class

Finally, the 7th Circuit found that, in addition to failing Rule 23(a)(2)’s commonality requirement, the hostile work environment class in Bolden was not manageable. The court explained that it would require at least one trial per construction site in order to ascertain site-specific conditions and perhaps one trial per week or month per construction site because construction crews are constantly changing.

In addition to being a favorable outcome for employers, Bolden provides more guidance in understanding whether a class satisfies the commonality requirement in a class action. Bolden reaffirmed that employees who file a class action based on managers’ discretionary decision-making generally will not have the necessary commonality to satisfy Rule 23(a)(2).

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