Over the past decade or so, higher court rulings regarding class actions have tended to dramatically favor either corporations or workers. Corporations have arguably scored the most significant victories.
However, with the recent exit of Justice Antonin Scalia from the United States Supreme Court, there are some indications that this tide has begun to turn. At the same time, it is clear that a Republican victory in November 2016 would return a conservative majority to the Court, and devastate any positive momentum in terms of workers’ rights.
Vaquero v. Ashley Furniture Industries, Inc., No. 13-56606 (June 8, 2016), a recent decision of the Ninth Circuit, is a good example of the type of decision that we can hope to see more of in the future. Vaquero does three important things. First, it properly limits the scope of Wal-Mart v. Dukes, 564 U.S. 338 (2011) with respect to the issue of commonality. Second, it limits the impact of Comcast v. Behrend, 133 S. Ct. 1426 (2013) in wage and hour class actions. Finally, it underscores the critical holding in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016) that plaintiffs may continue to rely upon representative evidence to prove both liability and damages. As such, Vaquero provides powerful ammunition for workers and their advocates in class actions.
Recent years have seen a concerted effort, led mainly by large corporations and their attorneys, to torpedo class actions. These efforts have enjoyed some success at the United States Supreme Court. For example, in Dukes, a discrimination case, the Court denied certification of a class of more than a million women who claimed that they had been denied equal pay and promotions because of their gender. The Court focused on Wal-Mart’s argument that resolution of the plaintiffs’ claims would involve subjective decisions by many different managers across the United States. Dukes therefore focused on the issue of commonality, and whether there was enough “glue” holding the class members’ claims together.
Similarly, in Comcast, an antitrust case, the Court reversed an order granting class certification because, it found, the plaintiffs had not provided an adequate model for proving damages. The Court agreed with the defendants’ argument that the plaintiffs’ damages model failed to measure damages resulting from the defendants’ allegedly illegal conduct.
In Vaquero, the Ninth Circuit considered the application of Dukes and Comcast to wage and hour class actions . There, the plaintiffs sought to represent a relatively small (approximately 600 person) class of sales associates who were paid entirely on a commission basis. The plaintiffs claimed that they were required to perform many jobs that were not directly related to sales, such as cleaning the stores and moving furniture. (California law is clear that paying workers by commission for work that is not directly involved in selling is unlawful. See Ramirez v. Yosemite Water Co. (1999). Likewise, California law prohibits employers from averaging wages paid in different pay periods in order to meet minimum wage requirements. See Armenta v. Osmose, Inc. (2005).)
The district court certified the class. Defendants then appealed, arguing that the district court should not have certified in light of Dukes and Comcast. The Court of Appeals rejected the defendants’ arguments, and affirmed the order certifying the class.
First, the Ninth Circuit held that Dukes did not defeat class certification with respect to commonality. The injury in Vaquero was much less abstract, and much more focused, than the injuries at issue in Dukes. In Vaquero, all of the workers were paid by commission. Therefore, they were all subject to the same allegedly unlawful policy. If the company failed to compensate sales associates for work that was not directly involved in selling, then it violated the law for all sales associates who were required to perform such work. The Court’s holding with respect to Dukes is significant, because it properly limits the impact of that case in wage and hour class actions.
Next, the Court held that Comcast did not defeat class certification with respect to damages. The Court clarified that it read Comcast to require only that the plaintiffs must show that their damages stemmed from the allegedly illegal actions. See Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 987-88. That burden is not difficult to meet in wage and hour cases, because, unlike in antitrust class actions, the damages (unpaid wages) flow directly from the alleged violations. The Court’s holding with respect to Comcast therefore essentially eliminates the impact of that case in wage and hour class actions.
The Vaquero court’s holding is consistent with a series of earlier Ninth Circuit decisions holding that a need for individualized findings as to damages should not defeat class certification. For example, in Yokoyama v. Midland Nat’l Life Ins. Co. (9th Cir. 2010) 594 F.3d 1087, 1094, the Ninth Circuit held that “damages calculations alone cannot defeat class certification.” See also Leyva v. Medline Indus., Inc. (9th Cir. 2013) 716 F.3d at 514.
Vaquero is also consistent with Tyson Foods, the most recent Supreme Court decision discussed in this post. In Tyson Foods, the defendant made an argument that, if accepted, would have wreaked havoc on class actions: It argued that the plaintiffs could not use expert testimony and statistical surveys to prove damages. However, the Supreme Court, newly reduced to eight justices, rejected a broad rule against such representative evidence. Instead, the Court held that the admissibility of evidence turns not on whether it is individualized or representative, but rather on whether it is reliable in proving or disproving the issues in the case. And, critically, the Court held that a class action could be certified even if class members had to prove both liability and damages on an individual basis 136 S. Ct. at 1046.
Finally, the Vaquero court considered the defendants’ argument that the use of representative evidence would violate their rights under the Rules Enabling Act. On that point, the defendants had argued that, in light of the holding in Dukes, allowing representative evidence would violate the defendants’ right to cross examine each individual class member and to challenge his or her claims in court.
The Vaquero court rejected this argument. The Supreme Court made it clear in Tyson Foods that “[Dukes] does not stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability.” 136 S. Ct. at 1048. Furthermore, to bar certain types of evidence merely because the case is brought on behalf of a class would ignore the Rules Enabling Act’s instruction that the use of the class action device cannot abridge any substantive right. Id. at 1046.
Vaquero therefore rejected the defendants’ attempt to broaden the holdings of Dukes and Comcast, as well as the defendants’ attempt to extend those holdings to wage and hour class actions. Vaquero also underscores the holding in Tyson Foods that plaintiffs can use representative evidence where it is relevant to the claims at issue. As such, Vaquero is a huge win for workers and proves that the class action device has (so far) survived the attempts of defense counsel and large corporations to destroy it.