Whereas Wal-Mart scored a major victory for employers in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), its saga continues as former class members continue to pursue class claims in regional forums.  As we previously have discussed (here, here, here and here), former Dukes plaintiffs have attempted to pursue follow-on lawsuits with varying degrees of success.

Recently, in Phipps, et al. v. Wal-Mart Stores, Inc.,, No. 13-6194 (6th Cir.), the U.S. Court of Appeals for the Sixth Circuit reversed the U.S. District Court for the Western District of Tennessee and found that plaintiffs’ class claims were not time-barred.  As a result, the plaintiffs can pursue class certification of the same gender discrimination claims formerly at issue in Dukes.

The decision is an important read for employers. It strikes a blow to the impact of orders denying class certification and may open the door for losing plaintiffs to shop different class certification theories in different forums.

Background

On June 8, 2001, six named plaintiffs filed suit under Title VII in the Northern District of California on behalf of all former and current female employees of Wal-Mart Stores nationwide.  Id. at 2-3.  The plaintiffs sought certification of a nationwide class of current and former female employees under Rule 23(b)(2), or alternatively, under Rule 23(b)(3).  Id. at 3.  In 2004, the district court certified a nationwide class under Rule 23(b)(2).  Id.  In 2007, the Ninth Circuit affirmed the district court’s certification of a nationwide class under Rule 23(b)(2) for current employees and remanded for the district court to consider certification of punitive damages classes under Rule 23(b)(2) or Rule 23(b)(3) and certification of former employees classes under Rule 23(b)(3).  Id.

The Supreme Court granted certiorari and, in June 2011, issued its landmark decision, reversing certification of a nationwide class of current employees under Rule 23(b)(2).  The Supreme Court held, among other things, that the plaintiffs did not demonstrate questions of law or fact common to the class because they failed to provide “significant proof” of a nationwide policy or other “specific employment practice” that affected 1.5 million class members in the same way.  Id. at 4.

Thereafter, plaintiffs promptly filed a motion in the California district court to extend tolling of the statute of limitations.  The district court granted the motion and directed all class members who had not filed administrative charges with the EEOC to do so on or before May 25, 2012.  The plaintiffs then amended their California case to narrow the scope of the proposed class to current and former female employees who had been subjected to gender discrimination within California regions.  Id. at 5.  In addition, plaintiffs filed suits in four other jurisdictions – including Tennessee, Texas, Florida, and Wisconsin – to bring individual and class claims concerning other Wal-Mart regions.  Id.

In Tennessee, three unnamed class members filed their own lawsuit asserting individual and putative class claims under  Rule 23(b)(2) and Rule 23(b)(3) on behalf of current and former female employees in Wal-Mart “Region 43” – a region allegedly centered in Middle and Western Tennessee, and including portions of Alabama, Arkansas, Georgia, and Mississippi.  All three plaintiffs had filed administrative charges with the EEOC within the deadline ordered by the district court, and they filed suit within 90 days of receiving right-to-sue letters.

Wal-Mart moved to dismiss the putative class claims under Rule 12(b)(6), arguing that Sixth Circuit precedent prohibited tolling for any purported class action brought after a previous denial of class certification.  The district court agreed and dismissed the class claims with prejudice, but certified its decision for interlocutory appeal.  Id. at 6.

The Sixth Circuit’s Opinion

The timely filing of a class action complaint normally tolls the statute of limitations for all members of the putative class until a court decides that the suit is not appropriate for class treatment.  Id. at 7.  At that point, the putative class members can move to intervene as plaintiffs in the pending action or can file their own lawsuits. Id.

In Phipps, Wal-Mart argued that, because the Supreme Court already had rejected class certification of plaintiffs’ claims in Dukes, tolling was not available for plaintiffs’ rebooted class theory.  The Sixth Circuit disagreed.

With respect to their Rule 23(b)(3) claims, the Sixth Circuit found that, when plaintiffs initiated their action in Tennessee, no court in any jurisdiction had denied certification of a Rule 23(b)(3) class of current and former female employees.  Id. at 13.  Indeed, the original motion for class certification under Rule 23(b)(3) filed by the Dukes plaintiffs remained pending in the California district court after the Supreme Court issued its decision.  Id.at 15.

With respect to their Rule 23(b)(2) claims, the Sixth Circuit held that the issue was not whether the class action was timely filed but whether plaintiffs’ class claims were precluded by the Supreme Court’s decision in Dukes.  It found no preclusion.  Plaintiffs, for the first time, sought certification of a regional class under Rule 23(b)(2) for themselves and all other current Wal-Mart employees in Region 43.  Id. at 18.  “These substantive claims are within the scope of those asserted by the nationwide class in Dukes, . . . but the class seeks neither relitigation nor correction of the earlier class claims.”  Id.

The Sixth Circuit rejected Wal-Mart’s argument that it is unfair to permit absent class members to “stack” one class action onto another, noting that “this form of argument flies in the face of the rule against non-party preclusion.”  Id. at 21.  “We follow the Supreme Court’s lead and trust that existing principles in our legal system, such as stare decisis and comity among courts, are suited to and capable of address these concerns.”  Id.

Implications

In Phipps, the Sixth Circuit allowed former class members to re-assert the same class claims that the Supreme Court rejected in Dukes, primarily because plaintiffs invoked a different rule and certification theory (Rule 23(b)(3)) on behalf of a smaller group of class members (Region 43).  As such, the Sixth Circuit’s opinion seemingly opens the door for plaintiffs who lose class certification in one forum to file the same claims in other forums, “stack” their tolling periods, and “shop” different class certification theories in the hopes of exhausting their opponents or obtaining more favorable rulings.  If successful, such plaintiffs can raise the stakes for defendants by subjecting them to never-ending series of lawsuits involving claims that, because of extended tolling, reach back years or even decades.  It remains to be seen whether Wal-Mart will seek further review of the Sixth Circuit’s decision or, if plaintiffs proceed with their motion for class certification, whether the district court indeed will resolve the matter based on principles of “stare decisis and comity.” 

Stay tuned.