Today, the Ninth Circuit issued its long awaited en banc decision in Dukes v. Wal-Mart Stores, Inc., the case in which plaintiffs filed a class action alleging that Wal-Mart discriminates against women in violation of Title VII.

As we noted in prior posts, one of the (many) legal questions at issue in Dukes is the propriety of a classwide determination of punitive damages for Title VII claims. 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. A divided panel of the Ninth Circuit subsequently affirmed the certification of the requests for back pay and punitive damages but the court later granted rehearing en banc.

Today, in a 6 to 5 decision, a divided en banc panel affirmed the certification of the requests for back pay under Rule 23(b)(2) of the Federal Rules of Civil Procedure but reversed the certification of the requests for punitive damages under that rule.

In doing so, the majority opinion exacerbated an existing split amongst the federal appellate courts over the proper standard for determining when class certification is appropriate under Rule 23(b)(2). The en banc Dukes majority held that, “[t]o be certified under Rule 23(b)(2), . . . a class must seek only monetary damages that are not ‘superior [in] strength, influence, or authority’ to injunctive and declaratory relief.” In contrast, the Second Circuit’s Rule 23(b)(2) test assesses a plaintiff’s subjective intent in bringing a lawsuit to determine whether monetary relief predominates over declaratory and injunctive relief. And several other federal appellate courts hold that a class action seeking monetary relief may be certified under Rule 23(b)(2) only if the monetary relief is “incidental” to the other forms of requested relief.

The majority opinion held that, under its new test, a district court must “consider, on a case-by-case basis, the objective ‘effect of the relief sought’ on the litigation.” The majority explained that the following factors would be relevant to this legal analysis: (1) “whether the monetary relief sought determines the key procedures that will be used”; (2) “whether it introduces new and significant legal and factual issues”; (3) “whether it requires individualized hearings”; and (4) “whether its size and nature—as measured by recovery per class member—raise particular due process and manageability concerns.”

Applying this newly announced test to the Dukes case, the majority opinion concluded that the requests for back pay could be certified for class treatment under Rule 23(b)(2). But the majority determined that the district court abused its discretion by certifying the requests for punitive damages because the court did not undertake an analysis of whether certification of these requests rendered the final relief sought by the class “predominantly ‘related to money damages.’”

The majority, however, did not hold that claims seeking punitive damages can never be certified or could not be certified in the Dukes case. Instead, the majority opinion remanded the case for the district court to determine whether certification of the requests for punitive damages would be appropriate under Rule 23(b)(2) and, even if such certification were inappropriate, whether “hybrid certification”—certification of a portion of the case pursuant to Rule 23(b)(2) and the requests for punitive damage under the separate class certification standard set by Rule 23(b)(3)—would nonetheless be proper.

In remanding the punitive damages portion of the case, the majority opinion noted that several factors from its new test counseled against certification of the requests for punitive damages under Rule 23(b)(2). However, the majority also noted that one factor—whether individualized hearings were necessary—weighed against a finding that punitive damages predominate over declaratory and injunctive relief. According to the majority, the Dukes case “does not require individualized punitive damages determinations” because the plaintiffs’ “theory of the liability is a class-wide theory that is based on a company policy that allegedly affects all class members in a similar way.”

Five judges on the en banc panel dissented for a wide variety of reasons. The dissenting judges explained that the majority’s new test for class certification under Rule 23(b)(2) was “essentially unusable” and “aggravate[d] the already-existing inconsistency between the circuits.” The dissent also faulted the majority for concluding, in an “unprecedented holding,” that “punitive damages do not require individualized determinations because the plaintiffs allege[d] that Wal-Mart’s policy ‘affects all class members in a similar way.’” The dissent explained that this remarkable determination, “made with virtually no analysis, is wrong both as a matter of law and fact.”

Absent an unprecedented “super” rehearing en banc by the full Ninth Circuit, the Dukes saga in the Ninth Circuit is now over. Next up: whether Wal-Mart files a petition for a writ of certiorari with the U.S. Supreme Court and, if so, whether the high court agrees to step into the fray over what some have reported to be the largest class action in history.

As reported by Courthouse News Service, a federal judge in San Diego has ruled that a class of senior citizens can seek punitive damages against Allianz Life Insurance. The plaintiffs contend Allianz used deceptive sales tactics to sell derivative investments at senior centers.

We’ll be keeping an eye on this case. The availability of punitive damages in a class action is a hot issue, as some academics and bloggers have argued that awarding punitive damages via class action is inconsistent with the U.S. Supreme Court’s recent decisions on punitive damages. The availability of punitive damages by class action is currently pending before the Ninth Circuit in Dukes v. Wal-Mart.

For more discussion of this order, see this post at Bailey Class Action Daily.

Kim Kralowec has a detailed post on her UCL Practitioner blog describing yesterday’s Ninth Circuit en banc oral argument in Dukes v. Walmart. As we noted in a prior post, Dukes raises questions about the propriety of classwide determination of punitive damages for Title VII claims. Kim concludes her post by agreeing with The Recorder’s assessment that the outcome of the case is difficult to predict.

The EEOC has recently reversed course and decided to get involved in Dukes v. Wal-Mart Stores, Inc., currently set for oral argument before an en banc panel of the 9th Circuit on March 24. The district court and a divided panel of the Ninth Circuit have previously held that a class of 2 million potential plaintiffs in a gender discrmination lawsuit could be certified and that claims for punitive damages would not be tried on a case-by-case basis. The EEOC had decided not to get involved in this case as it worked its way up through the courts. According to the Recorder, Brad Seligman of the Impact Fund said that the recent amicus brief filing does not represent “a radical new EEOC making this decision.” Robin Conrad of the U.S. Chamber of Commerce disagrees, telling the Recorder, “It’s very troubling that the Obama administration thinks it might be appropriate to impose massive punitive damages on companies without ever giving them their day in court.”

In its amicus brief, the EEOC argues that “Punitive damages lend themselves to classwide determination in a Title VII pattern-or-practice case since neither the claim nor the damages focuses on individual victims of discrimination. The focus of a claim under a pattern-or-practice theory is not on individual employment decisions but rather on an overall ‘pattern of discriminatory decisionmaking.’”

Wal-Mart’s lawyer, Theodore Boutrous Jr. at Gibson, Dunn & Crutcher, called the EEOC’s position “fundamentally incorrect.”

The composition of the en banc panel suggests that this could be a closely divided opinion. The panel members include Chief Judge Kozinski, and Circuit Judges Reinhardt, Rymer, Hawkins, Silverman, Graber, Fisher, Paez, Berzon, Bea and Ikuta.