We are investigating possible claims against the following insurance companies as well as other companies:

• Aetna Inc.
• American International Group Inc. (AIG)
• AXA
• Genworth Financial Inc.
• Guardian Life Insurance Co.
• Lincoln National Corp.
• MetLife
• MONY Life Insurance Co.
• Mutual of Omaha
• New York Life Insurance Co.
• Northwestern Mutual Life Insurance Co
• Prudential Financial, Inc.
• Reliance Standard Life Ins. Co.,
• SunLife
• Unum Group

Have you lost money as a result of the same or similar activities by your insurance company? Report your case.

We are investigating possible claims against the following banks:

There is no doubt that this is the most important decision from the Supreme Court about class certification in some time and that defendants’ counsel will use it to argue against class certification in many current and future cases.  But the decision really should not be  a surprise to anyone who litigates or follows class cases.  Nor should it be as problematic for class certification as many commentators are claiming.  In fact, it was surprising that the district court and a divided en banc panel of the Ninth Circuit had allowed the case to proceed as a class action because there was no uniform policy at the company that was being challenged and the claims depended upon millions of individual employment decisions by Wal-Mart’s managers, making the claims unsuitable for class treatment.  In addition to being important because of its holding, the decision also is important because of the language it uses and the limitations it places on certain provisions of Rule 23, especially Rule 23(b)(2) which is usually used for cases seeking injunctive or declaratory relief.

Justice Scalia wrote the majority decision and began by noting that the Wal-Mart case “presented .. one of the most expansive class actions ever.”  That alone is saying a lot about the uniqueness of this case and the breadth of the proposed class because the Supreme Court and federal courts throughout the country have historically dealt with massive class actions involving millions of class members and multiple issues.  But here Justice Scalia sets the tone by noting that this is one of the most expansive ever, presumably not just in terms of the number of proposed class members but also in terms of the issues involved.

He then discussed the massive and complex corporate structure at Wal-Mart, the nation’s largest private employer, and the way that the pay and promotion decisions at Wal-Mart are generally committed to the local managers’ broad discretion, which is exercised in a largely subjective manner.  (page 2).  The plaintiffs did not allege that Wal-Mart had any express corporate policy against the advancement of women. (page 4).  Instead, they challenged the subjective decisions of the local managers.

Plaintiffs broadly defined the proposed class as “all women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.”  (page 5).  To support their motion for class certification the plaintiffs relied upon statistical evidence, anecdotal reports of discrimination and the testimony of a sociologist about the culture at Wal-Mart.

Justice Scalia noted that the most important issue in this case was whether the plaintiffs could satisfy the commonality requirement of Rule 23.  He said it is not enough to just recite some common issues because any competently drafted complaint will be able to raise common issues.  (see page 9 in which Justice Scalia favorably cites a 2009 law review article by Professor Nagareda of Vanderbilt Law School).  Instead, Justice Scalia says that what matters is the capacity of the class-wide proceeding to generate answers that are apt to drive the resolution of the case.  The focus should be on the common answers, not the common questions.   What killed this case is that the claims involved millions of employment decisions that lacked any common glue holding together the reasons for those decisions. As Justice Scalia put it:

“Here [plaintiffs] wish to sue about literally millions of employment decisions at once. 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 was I disfavored.” (at 11-12) (emphasis in original).

The problem for plaintiffs was that there was no common standard or common practice that was company-wide at Wal-Mart.  “The whole point of permitting discretionary decision making is to avoid evaluating employees under a common standard.” (page 13).  Nor could plaintiffs show that Wal-Mart operates under a general policy of discrimination because Wal-Mart’s announced policy forbids sex discrimination.  (page 13).    The best plaintiffs could do was offer vague testimony from a sociologist but that evidence was “worlds away” from the proof necessary to show that Wal-Mart had a policy of discriminating. (page 14).  Instead, the evidence established that the company gave discretion to its numerous local managers and supervisors over employment matters, which “on its face” is just the opposite of a  uniform employment practice and defeated commonality.  Importantly, the court found that commonality did not exist because “demonstrating the invalidity of one manager’s use of discretion will do nothing to demonstrate the invalidity of another’s.” (page 15). ” In a company of Wal-Mart’s size and geographical scope, it is quite unbelievable that all managers would exercise their discretion in a common way without some common direction. [Plaintiffs] attempt to make that showing by means of statistical and anecdotal evidence, but their evidence falls well short.” (pages 15 -16). “[Plaintiffs] have identified no ‘specific employment practice’—much less one that ties all their 1.5 million claims together. Merely showing that Wal-Mart’s policy of discretion has produced an overall sex-based disparity does not suffice.” (page 17).

In the dissent Justice Ginsburg criticized the majority for focusing on the dissimilarities between the putative class members and by addressing that point in his majority opinion, Justice Scalia does plaintiffs everywhere by confirming that in order to satisfy the commonality requirement of Rule 23, “we quite agree … that even a single common question will do.”  (page 19).  Plaintiffs in future class actions will latch onto that sentence to argue that despite the language and holding of the Wal-Mart decision, only one common issue is necessary for class certification.  That will be important for future class actions.  The problem in Wal-Mart, however, was that the plaintiffs were not able to establish even one common question.

The majority also concludes that the plaintiffs’ claims for back pay were improperly certified under Rule 23(b)(2) and that claims for monetary relief may not be certified for class treatment under 23(b)(2),  “at least where (as here) the monetary relief is not incidental to the injunctive or declaratory relief.”  (page 20).    The court deferred the question of whether Rule 23(b)(2) authorizes the class certification of monetary claims at all.  Instead, it decided that the provision cannot be used to certify claims for individualized relief.  (page 20)(emphasis in original).   Citing the Law Review article by Professor Nagareda (which is repeatedly cited by the majority and the dissent throughout the decision) , Justice Scalia wrote that “The key to the (b)(2) class is ‘the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of the class members or as to none of them.’  Nagareda, 84 N. Y. U. L. Rev., at 132. In other words, Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant. Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.”  These comments no doubt will lead to additional litigation about the appropriate use of Rule 23(b)(2).

The court recounted the history behind Rule 23(b)(2) and noted that civil rights cases (without a claim for individual damages) are a prime example of what that section was meant to address.  The majority found that “permitting the combination of individualized and class-wide relief in a (b)(2) class is also inconsistent with the structure of Rule 23(b). ” (page 21)  The court distinguished between (b)(1) and (b)(2) classes on the one hand (which do not provide for opting-out and do not provide for notice) and 23(b)(3) which “allows class certification in a much wider set of circumstances but with greater procedural protections.”  Importantly, the court said that “individualized monetary claims belong in Rule 23(b)(3).”  (page 22). Analyzing the claims here, the court found that plaintiffs with individual monetary claims need the protections of notice and the ability to opt-out so that they can decide “for themselves” whether to tie their fates to the class representatives or go it alone — a choice Rule 23(b)(2) does not ensure that they have.  (page 24)

In the last paragraph of the majority’s decision, the Court rejects the idea that the claims could be tried through a sampling process or “Trial by Formula”.  The lower court had proposed this method by which it would review a sample of the claims by class members to determine what percentage of class members in that sample had valid claims.  It would then apply that percentage to the entire remaining class  and the number of presumptively valid claims would be multiplied by the average back pay award in the sample set in order to arrive at a class-wide recovery.  The Supreme Court rejected this novel “Trial by Formula” approach.

As you can see, the decision is rife with issues and language that will keep class action practitioners and courts busy for some time sorting out the meaning of the decision and applying the general pronouncements to real-life cases.

Click here to read the decision.