The Supreme Court’s online docket indicates that the justices denied certiorari today in Allstate v. Jacobsen.
Related posts:
-
SCOTUS denies cert. in class action punitive damages case (Allstate v. Jacobsen)
-
Cert. petition on class action punitive damages distributed for May 2 conference (Allstate v. Jacobsen)
We previously reported on this pending cert. petition, which raises questions about due process constraints on the award of punitive damages in state court class action proceedings. The Supreme Court’s online docket now indicates that the petition will be considered during the Court’s May 2 conference.
-
DRI amicus brief challenges constitutionality of Montana Supreme Court opinion allowing classwide adjudication of punitive damages (Allstate v. Jacobsen)
Our firm has filed an amicus curiae brief on behalf of DRI, asking the U.S. Supreme Court to decide whether the Montana Supreme Court violated Allstate’s due process rights in a class action punitive damages case.
This lawsuit began when Robert Jacobsen sued to challenge Allstate’s claims adjustment practices in Montana. The trial court certified the case as a class action and approved a procedure calling for punitive damages to be awarded on a classwide basis. The Montana Supreme Court determined that the trial court’s procedure violated due process because it would permit the award of punitive damages to class members who may not have suffered any actual harm from the challenged claims-handling procedures.
Unfortunately, the Montana Supreme Court “fixed” that problem in a way that still violates due process. The court authorized the trial court to determine entitlement to punitive damages on a classwide basis, followed by individual trials to determine the amount of compensatory and punitive damages to be awarded to each class member.
Our brief argues that the revised procedure still runs afoul of the Due Process Clause because entitlement to punitive damages cannot be decided on a classwide basis when the defendant engaged in different conduct towards each class member. An individualized assessment of the defendant’s conduct towards each particular plaintiff is required.
Other aspects of the Montana Supreme Court’s opinion raise serious due process concerns, and as a result the case has attracted a lot of attention from defense-oriented interest groups. At least five different amici have filed briefs supporting Allstate’s petition for review. There may still be others that haven’t yet shown up on the docket.
See additional coverage on Overlawyered and Legal NewsLine.
-
Ninth Circuit calls on district court to consider whether punitive damages claims can be certified for class treatment in light of Wal-Mart v. Dukes
When the U.S. Supreme Court decided Wal-Mart v. Dukes back in June, we observed that the Court’s interpretation of Federal Rule of Civil Procedure 23(b)(2) might lead federal courts to conclude that claims for punitive damages cannot be certified for class treatment under this rule. Late last week, the Ninth Circuit instructed a federal district court to consider this very question in Ellis v. Costco Wholesale Corp.
Rule 23(b)(2) allows for class treatment only when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” In Wal-Mart, the Supreme Court assessed whether this rule justified class certification where the class sought not only declaratory and injunctive relief but backpay as well. The Court held that Rule 23(b)(2) does not authorize class certification where, as with claims for backpay, each class member would be entitled to an individualized award of monetary damages.
As we explained at that time, the Supreme Court has previously held that any punitive damages award must be tied to the harm suffered by a plaintiff. (See, e.g., State Farm Mutual Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 422-423.) We therefore noted that, in the future, courts may well conclude that claims for punitive damages, like claims for backpay, are claims for an individualized award of monetary damages that cannot be certified for class treatment under Rule 23(b)(2). Since then, several federal district courts have reached precisely that conclusion. (See, e.g., Morrow v. Washington (E.D. Tex. Aug. 29, 2011) 2011 WL 3847985, at *30 [claims for punitive damages “are not appropriate for Rule 23(b)(2) certification” because they “would require an individualized, factual determination for each claim”]; Altier v. Worley Catastrophe Response, LLC (E.D. La. July 26, 2011) 2011 WL 3205229, at *13 [denying class certification under Rule 23(b)(2) with respect to punitive damages claim because such a claim “requires a focus on individualized issues to comply with constitutional protections”].)
This issue also came up in Ellis. There, the Ninth Circuit vacated a district court’s order granting class certification and remanded to the district court to consider whether class certification should be granted pursuant to the legal standards established in Wal-Mart. In doing so, the Ninth Circuit “highlight[ed] several factors for the district court to consider” on remand. Among those factors, the Ninth Circuit—rather than deciding the issue itself—said the district court may consider on remand whether plaintiffs’ claim for punitive damages could be certified in accordance with Wal-Mart‘s interpretation of Rule 23(b)(2).
Of course, it’s possible the district court may sidestep this Rule 23(b)(2) issue since the Ninth Circuit also indicated the district court could consider whether to certify the punitive damages claim pursuant to Rule 23(b)(3). But there is no guarantee the district court would do so. As we’ve previously pointed out, although some courts have certified punitive damages claims for class treatment, several federal courts have declined to do so because the necessity of assessing an award of punitive damages in light of the defendant’s conduct toward a particular plaintiff requires individualized inquiries that prevent a plaintiff from satisfying Rule 23(b)(3)’s predominance requirement.
-
U.S. Supreme Court reverses class certification in Wal-Mart v. Dukes
We’ve been tracking the Wal-Mart v. Dukes case for its possible impact on the availability of punitive damages in class actions.
Yesterday, the U.S. Supreme Court reversed the Ninth Circuit’s decision approving the certification of a class action in Wal-Mart. The court did so for two reasons, one of which may make it more difficult for courts to certify punitive damages claims for class treatment.
First, a five-justice majority of the court held that the plaintiffs could not satisfy Federal Rule of Civil Procedure 23(a)’s commonality requirement, which is a threshold requirement for certifying any class action under Rule 23. Other blogs will likely cover that aspect of the opinion, but it’s beyond the scope of our focus here.
Second, the Supreme Court unanimously held that the claims for backpay were improperly certified under Federal Rule of Civil Procedure 23(b)(2), which allows for class treatment only when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The court determined that Rule 23(b)(2) does not authorize class certification where, as with the backpay claims in Wal-Mart, each class member would be entitled to an individualized award of monetary damages.
The Supreme Court’s interpretation of Rule 23(b)(2) may lead courts to conclude that claims for punitive damages, like claims for backpay, cannot be certified under Rule 23(b)(2). The Supreme Court has previously held that any punitive damages award must be tied to the harm suffered by a plaintiff. (See, e.g., State Farm Mutual Auto. Ins. Co. v. Campbell (2003) 538 U.S. 408, 422-423.) Thus, courts may well conclude that claims for punitive damages, like claims for backpay, are claims for an individualized award of monetary damages that cannot be certified under Rule 23(b)(2).
Although plaintiffs might still move to certify claims for individualized monetary relief under Rule 23(b)(3), federal courts could decline to certify claims for punitive damages under this provision if they conclude these claims cannot satisfy Rule 23(b)(3)’s predominance requirement, which requires a plaintiff to show that the questions of law or fact common to class members predominate over any questions affecting only individual class members. While some courts have certified class actions where the plaintiffs seek punitive damages, several federal courts have held declined to certify punitive damages claims under Rule 23(b)(3) because the necessity of assessing an award of punitive damages in light of the defendant’s conduct toward a particular plaintiff, and in light of the compensatory damages awarded to a particular plaintiff, requires individualized inquiries that prevent a plaintiff from satisfying Rule 23(b)(3)’s predominance requirement. (See, e.g., Allison v. CITGO Petroleum Corp. (5th Cir. 1998) 151 F.3d 402, 418-420 [finding no abuse of discretion where district court refused to certify claims for punitive damages for class treatment under Rule 23(b)(3) in Title VII action because these claims “require[] individualized and independent proof of injury to, and the means by which discrimination was inflicted upon, each class member,” the claims “must therefore focus almost entirely on facts and issues specific to individuals rather than the class as a whole,” and such a class action would thus improperly “‘degenerate into multiple lawsuits separately tried’”]; In re Baycol Products Litigation (D. Minn. 2003) 218 F.R.D. 197, 215-216 [“a determination of punitive damages is based on individual issues”; holding “Plaintiffs’ proposed class trial on punitive damages poses . . . due process concerns” similar to those in State Farm v. Campbell “because the conduct upon which Plaintiffs would base their punitive damages claim is not specific to a particular plaintiff[’]s[] claims”]; Reap v. Continental Cas. Co. (D.N.J. 2001) 199 F.R.D. 536, 548-550 [denying class certification under Rule 23(b)(3) in part because “individual issues would predominate over common ones during the damages phase” of trial in a case alleging violations of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act since “calculating compensatory and punitive damages . . . for thousands of class members would prove to be quite an individualized task”].)
-
U.S. Supreme Court hears oral argument in Wal-Mart v. Dukes
Yesterday, the U.S. Supreme Court heard oral argument in Wal-Mart v. Dukes, which we’ve been tracking for its possible impact on the availability of punitive damages in class actions.
Based on a reading of the oral argument transcript, at least five justices appeared ready to overturn the district court’s decision to certify what is reportedly the largest class action in history. Justices Alito, Kennedy, Roberts, and Scalia seemed to signal that they agree the class does not satisfy the threshold requirements set by Federal Rule of Civil Procedure 23(a) for all federal class actions. Even several of the other justices who one might expect would be sympathetic to the plaintiffs’ argument appeared troubled by aspects of the class certification decision, although they did not necessarily agree the plaintiffs failed to satisfy Rule 23(a)’s threshold requirements.
For example, the questions Justice Ginsburg asked suggested she may yet conclude at least some portion of plaintiffs’ lawsuit cannot be certified solely under Rule 23(b)(2) even if the plaintiffs satisfied Rule 23(a). Justice Ginsburg indicated that, under the advisory committee’s note for Rule 23(b)(2), a class action cannot be certified under that rule if the monetary relief sought predominates over injunctive relief. She questioned how plaintiffs could say injunctive rather than monetary relief predominates here given that nearly half of the class members are not interested in injunctive relief but all of the members are interested in money.
Interestingly, Justice Sotomayor seemed to suggest that, where a class seeks both injunctive and monetary relief, it may be appropriate for courts to decide whether the class should be certified under Rule 23(b)(2) based on a test developed by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998). If the Allison test were applied to the plaintiffs’ lawsuit, the plaintiffs in Wal-Mart—and plaintiffs in future class actions—may face an uphill struggle persuading a court to certify requests for back pay and punitive damages for class treatment under Rule 23(b)(2). See Allison, 151 F.3d at 416-418 (affirming determination that class certification for claims seeking compensatory and punitive damages was inappropriate under Rule 23(b)(2) because these claims for monetary relief were not sufficiently incidental to the injunctive and declaratory relief sought).
Given the questions posed by Justices Ginsburg and Sotomayor, it will be interesting to see whether the Supreme Court reverses class certification in a close (perhaps 5 to 4) decision holding the plaintiffs failed to satisfy Rule 23(a)’s threshold requirements or whether, either in lieu of or in addition to this determination, a broader coalition of justices agrees the class fails to satisfy Rule 23(b)(2).
Related posts:
Wal-Mart v Dukes argument set for March 29
Wal-Mart v. Dukes cert. petition redistributed for Dec. 3 conference
Wal-Mart v. Dukes cert. petition up for consideration next week
Ninth Circuit’s Dukes v. Wal-Mart decision addresses class certification of punitive damages claims
-
Cert. granted in Dukes v. Wal-Mart; review limited to first question plus new issue added by the Court
The U.S. Supreme Court today granted Wal-Mart’s petition for certiorari in the Dukes case. Wal-Mart’s petition raised two issues, but the Court’s order granting certiorari states that review will be limited to the first issue: “Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.” As we noted in a previous post, the Supreme Court’s answer to this question could affect whether punitive damages are subject to class certification.
The Supreme Court declined to answer a second question raised by the petition: “Whether the certification order conforms to the requirements of Title VII, the Due Process Clause, the Seventh Amendment, the Rules Enabling Act, and Federal Rule of Civil Procedure 23.” The Court did, however, add a second question of its own: “Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”
Links:
Supreme Court’s on-line docket
Wal-Mart’s cert. petition (via SCOTUSblog)
Related posts:
Wal-Mart v. Dukes cert. petition redistributed for Dec. 3 conference
Wal-Mart v. Dukes cert. petition up for consideration next week
Ninth Circuit’s Dukes v. Wal-Mart decision addresses class certification of punitive damages claims
-
Wal-Mart v. Dukes cert. petition redistributed for Dec. 3 conference
The U.S. Supreme Court was slated to consider Wal-Mart’s cert. petition in Wal-Mart v. Dukes on November 23, but the court ruled on the other petitions from that conference today and made no ruling on Dukes. Instead, the case has been redistributed for consideration this Friday, December 3.
Links:
Supreme Court’s on-line docket
Wal-Mart’s cert. petition (via SCOTUSblog)
Related posts:
Wal-Mart v. Dukes cert. petition up for consideration next week
Ninth Circuit’s Dukes v. Wal-Mart decision addresses class certification of punitive damages claims
-
Wal-Mart v. Dukes cert. petition up for consideration next week
Wal-Mart’s cert. petition in the Dukes case will be considered by the Supreme Court next Tuesday.
Useful links:
Supreme Court’s on-line docket
Wal-Mart’s cert. petition (via SCOTUSblog)
Related posts:
Ninth Circuit’s Dukes v. Wal-Mart Decision Addresses Class Certification of Punitive Damages Claims
-
Cert. Petition in Wal-Mart v. Dukes Raises Class Certification Issues That May Impact Whether Punitive Damages are Subject to Class Treatment
This past Wednesday, Wal-Mart filed a petition for a writ of certiorari urging the Supreme Court to step into the fray over what some have reported to be the largest class action in history. (Wal-Mart’s cert. petition can be found here on SCOTUSblog.)
The plaintiffs in Dukes v. Wal-Mart Stores, Inc., filed a class action alleging that Wal-Mart discriminates against women in violation of Title VII. The federal district court held that a class estimated to include more than 1.5 million women—including their requests for back pay and punitive damages—could be certified. As we noted in a prior post, an en banc panel of the Ninth Circuit issued a sharply divided 6 to 5 decision affirming class certification of the plaintiffs’ requests for back pay under Rule 23(b)(2) of the Federal Rules of Civil Procedure.
In doing so, the Ninth Circuit exacerbated an existing split among the federal appellate courts over the proper standard for determining whether a class action can be certified under Rule 23(b)(2) where the class seeks monetary relief in addition to injunctive and declaratory relief. Notably, the Ninth Circuit adopted a new standard for certifying a Rule 23(b)(2) class under these circumstances and reversed the class certification of the plaintiffs’ requests for punitive damages so that the district court could determine whether these requests could be certified under this new 23(b)(2) standard or under Rule 23(b)(3).
Wal-Mart’s petition asks the Supreme Court to decide whether a class may be certified under Rule 23(b)(2) if it seeks monetary relief and, if so, “in what circumstances” this rule “can be used to certify monetary claims.” If the Supreme Court chooses to take up this issue, the Supreme Court’s decision may affect whether punitive damages claims are subject to class certification.
For example, Wal-Mart argues that Rule 23(b)(2) “does not authorize certification of any claims for monetary relief.” If the Supreme Court agrees, then class certification under 23(b)(2) might not be available to plaintiffs seeking punitive damages in addition to injunctive and declaratory relief. And even if the Supreme Court concludes class claims seeking monetary relief can be certified under Rule 23(b)(2), the Supreme Court might nonetheless choose to place stringent restrictions on the circumstances when such claims are properly subject to class certification. If the Supreme Court decides to follow the restrictive class certification standard adopted by the Fifth Circuit, for example, it is possible that class certification under Rule 23(b)(2) might not be available to plaintiffs asking for punitive damages. (See Allison v. Citgo Petroleum Corp. (5th Cir. 1998) 151 F.3d 402, 416-418 [affirming determination that class certification for claims seeking compensatory and punitive damages was inappropriate under Rule 23(b)(2) because these claims for monetary relief were not sufficiently incidental to the injunctive and declaratory relief sought].)
Interestingly, in addition to raising the overarching question of whether claims for monetary relief generally can be certified as part of a class action under Rule 23(b)(2), Wal-Mart’s petition also addresses whether claims seeking punitive damages in particular are subject to class certification. According to Wal-Mart, in remanding the case for further proceedings, the Ninth Circuit “suggested that the district court . . . might be able to certify the punitive damages claims under Rule 23(b)(2) or Rule 23(b)(3) . . . .” Wal-Mart maintains this ruling “conflicts with numerous decisions that have rejected adjudication of punitive damages on a class-wide basis” and “would also violate Wal-Mart’s Seventh Amendment rights if a jury did not resolve all factual issues related to punitive damages.”
According to the Supreme Court’s on-line docket in Wal-Mart Stores, Inc. v. Dukes, Case No. 10-277, the plaintiffs’ response to Wal-Mart’s petition is due on September 24, 2010.