The Supreme Court of the United States has agreed to step in to resolve a long-running dispute between Florida and Georgia. As noted in my previous post, it is the second Florida case on the Supreme Court’s docket this term that involves Florida’s commercial fishing industry.

Profound economic implications are at stake for each state.

For Georgia, the outcome could determine the sustainability of continued growth of the state’s largest metropolitan area. For Florida, the outcome may impact the economic prospects of commercial fishermen and a region of the panhandle.

Environmental concerns are also in play. Hanging in the balance is the welfare of a biodiverse natural area, protected species of mussels, and spawning grounds for Gulf sturgeon, a threatened species.

Apalachicola vs. Atlanta

As is true of many disputes between states, water rights are at issue in Florida v. Georgia. More specifically, the dispute centers around Georgia’s consumption of water from the Chattahoochee River (as well as Lake Lanier, which feeds the Chattahoochee) and the Flint River. Both rivers flow south from the Atlanta area before converging near the Georgia-Florida border to form the Apalachicola River:     

ACF Region.jpgFrom there, the Apalachicola River flows south through the Florida panhandle into the Apalachicola Bay and the Gulf of Mexico. Due in significant part to freshwater inflow from the river, the Apalachicola River and Apalachicola Bay are rich in biodiversity, so much so that the bay and a large section of the river and its floodplain have been designated a National Estuarine Research Reserve.

Among the many wildlife species making their homes in the Apalachicola Bay are endangered and threatened species of mussels. The bay also serves as spawning habitat for Gulf Sturgeon, a threatened species.

And the inflow of fresh water from the Apalachicola River has made the Apalachicola Bay fertile breeding ground for oysters. Historically, the bay has been Florida’s prime location for commercial oyster harvesting.

But that has changed in recent years. Oyster harvests were down 60% in 2013, leading the U.S. Secretary of Commerce to declare a commercial fishery failure. This year, the Florida Fish and Wildlife Conservation Commission (FWC) has implemented severe restrictions on harvesting, and is considering closing the oyster harvest in the bay altogether.

The loss of oysters in Apalachicola Bay coincides with decreasing inflows from the Apalachicola River, resulting in increased salinity in the bay, making conditions less favorable for oysters. According to Florida, the decreased inflow is the result of Georgia taking more than its fair share of water upstream, resulting in smaller quantities of water flowing downstream.

As the Atlanta metropolitan area has grown, Georgia has steadily increased consumption of water that would otherwise flow from the Chattahoochee and Flint Rivers into the Apalachicola River and Bay. But Georgia denies that its consumption has harmed the Apalachicola. In opposing Florida’s request for the Court to hear the case, Georgia asserted that Florida’s real issue is with the Army Corps of Engineers, which controls water releases upstream dams. It also said the decreased flow to the Apalachicola is attributable to droughts in recent years, not Georgia’s consumption of water.

The dispute has been building since 1989, when the Army Corps of Engineers first proposed allocating more water to Georgia. Georgia, Florida, and Alabama reached temporary agreements for water use to maintain an uneasy status quo for a time. It was followed by litigation involving (but not directly between) all three states, the Army Corps of Engineers, and a group of power customers that buy power generated from a dam on Lake Lanier.

Finally, in 2013, Florida opted to sue Georgia directly, and asked the Supreme Court to intervene. With the Supreme Court’s recent decision to accept the case, Florida will now get its day in court. By extension, so will the Apalachicola Bay and its commercial oyster fishing industry.

Not Your Typical Supreme Court Case

Florida v. Georgia is an original proceeding, which means the Supreme Court will be the first and last court to address the dispute. In most cases, the Supreme Court serves as an appellate court reviewing the decision of a lower appellate court. It generally decides purely legal issues, with facts developed long before a case reaches the Supreme Court.

Disputes between states are a different animal. Under Article III, Clause 2 of the United States Constitution, in “all Cases…in which a State shall be a Party, the Supreme Court shall have original Jurisdiction.” Based on that constitutional provision, Congress has enacted 28 U.S.C. section 1251(a), under which the Supreme Court’s jurisdiction is exclusive (meaning it is the only court in which suit may be brought) in any suit in which one state is suing another.

But the Supreme Court has discretion to decide whether such a suit is appropriate for resolution by the Court. A state wishing to sue another state must ask the Court for permission to file its complaint, which Florida did in October 2013.

Before deciding whether to take Florida’s case, the Supreme Court asked the Solicitor General of the United States (the federal government’s Supreme Court counsel) for its views on whether the case should be accepted. Although the Solicitor General suggested waiting to hear the dispute until after the Army Corps of Engineers has revised its own procedures, the Supreme Court decided that the case should be heard now.

The litigation will now begin in earnest, beginning with Georgia filing an answer to the complaint. Because the Supreme Court is not a trial court generally engaged in deciding disputed facts, the Court generally appoints a special master to conduct initial proceedings. The special master prepares a report, with findings and recommendations, either party can object to the report, and the Supreme Court reviews the special master’s report, considers any objections, and issues an opinion.

Ultimately, the question for the Supreme Court is how to equitably apportion the rivers’ water. In other words, it will decide the fairest way to allocate water among the states’ competing interests. That decision will affect the future of natural resources, industry, and citizens of both states.

As by now you may have heard, in a move that defied the pundits and the odds-makers, the Supreme Court of the United States upheld the Constitutionality of the Patient Protection and Affordable Care Act. 

Here’s a link to the opinion. Chief Justice ROBERTS joined Justices GINSBURG, BREYER, SOTOMAYOR, and KAGAN in holding that the individual mandate, under which individuals must either maintain a certain amount of insurance coverage or pay a fee to federal government, is a valid exercise of Congress’ power to tax and spend. Congress called the fee a penalty for political reasons, but the government argued in court that it was no different than a tax.

At the same time, a majority of the Court, including Justice Roberts, held that Congress’ powers under the Commerce Clause, which is the power Congress relies on for most of the laws it enacts, do not extend to passing laws like the individual mandate. In other words, a majority of the Court accepted the “broccoli” argument that Congress cannot force an individual to purchase a product he/she doesn’t want.

Here are my initial reactions:

(1) You might say this outcome is a lesson not to read too much into how oral argument goes, given that so many people came away from oral argument with the impression that the Court would strike down the ACA. But I wouldn’t read too much into it. From the oral argument transcript, it was pretty clear that Justice Roberts was the most likely of the more conservative justices to vote to uphold the law. At the very least, how 8 of the 9 justices felt about the issues was, in fact, obvious from oral argument.

(2) Although the decision’s impact for this case is obviously a “win” for Congress, it may well be that the impact on future cases is the opposite. The Court’s commerce clause analysis is likely to provide plenty of fodder for challenges to future laws passed under Congress’ commerce clause power.So while this is obviously not an immediate win for the small government camp, it may turn out to be one in the long run.

It turns out that the case challenging the ACA’s individual mandate isn’t the first time the Supreme Court has been confronted with questions about the interplay of the health insurance and health care markets. The previous case, called Blue Shield of Virginia v. McCready, 457 U.S. 465 (1983), is a decision dealing with the Sherman Act, not Constitutional issues. But the Court examined an issue that closely parallels one of the key issues in the individual mandate case. And it seems to have been totally missed in the debate.

A major issue in today’s oral arguments before the Supreme Court on the individual mandate, as in the court of appeals’ decisions, is whether the market the individual mandate seeks to regulate is the market for health insurance (in which some people who don’t participate will be required to participate by the mandate) or the market for health care, in which almost everyone will participate at one point or another.

An exchange between several justices and Paul Clement, arguing for the 26 states challenging the law, focused on whether the two markets are in fact separable. Isn’t health insurance just a way to pay for health care, as the government argues? No, according to Mr. Clement:

CHIEF JUSTICE ROBERTS: Well, Mr. Clement,the key to the government’s argument to the contrary is that everybody is in this market. It’s all right to regulate Wickard — again, in Wickard against Filburn, because that’s a particular market in which the farmer had been participating. Everybody is in this market, so that makes it very different than the market for cars or the other hypotheticals that you came up with, and all they’re regulating is how you pay for it.

MR. CLEMENT: Well, with respect, Mr. Chief Justice, I suppose the first thing you have to say is what market are we talking about? Because the government — this statute undeniably operates in the health insurance market. And the government can’t say that everybody is in that market. The whole problem is that everybody is not in that market, and they want to make everybody get into that market.

JUSTICE KAGAN: Well, doesn’t that seem a little bit, Mr. Clement, cutting the bologna thin? mean, health insurance exists only for the purpose of financing health care. The two are inextricably interlinked. We don’t get insurance so that we can stare at our insurance certificate. We get it so that we can go and access health care.

MR. CLEMENT: Well, Justice Kagan, I’m not sure that’s right. I think what health insurance does and what all insurance does is it allows you to diversify risk. And so it’s not just a matter of I’m paying now instead I’m paying later. That’s credit. Insurance is different than credit. Insurance guarantees you an upfront, locked-in payment, and you won’t have to pay any more than that even if you incur much great expenses. And in every other market that I know of for insurance, we let people basically make the decision whether they are relatively risk averse, whether they are relatively non-risk averse, and they can make the judgment based on –

In other words, according to Clement, the health insurance market is distinct from the health care market because buying insurance is not the same thing as paying for health care in advance. You buy insurance to avoid risk, not to pay for things you’ll buy later.

The counter-argument is that while that’s true for most kinds of insurance, health insurance is fundamentally different. Why? Because when you buy homeowner’s insurance, you are trying to avoid the risk of a financial loss if it turns out that a hurricane comes along and damages my house. But there’s also the (better than 50%) chance that a hurricane won’t come along.

When I buy health insurance, on the other hand, I’m not (only) protecting against the risk that I might need to go to the doctor at some point — I know I’m going to go to the doctor. So it can be argued that I buy health insurance, at least in part, as a sort of pre-payment for my doctor’s care (and to take advantage of the lower prices my doctor charges to the insurer).

And that’s pretty much what the Supreme Court said in McCready. McCready was a participant in her employer’s group health plan, provided by Blue Shield of Virginia, who sued Blue Shield based on an alleged conspiracy with psychiatrists to prevent reimbursement for treatment by psychologists. The issue was whether the injury she suffered by being denied reimbursement for treatment was too remote for her to have standing to challenge the conspiracy under the Sherman Act.

McCready was not actually a participant in the health insurance market because her employer purchased a group policy, but she was a participant in the health care market because she went to see a psychologist and paid for it (then sought reimbursement). Blue Shield argued that McCready lacked standing because the market targeted by the alleged conspiracy was the health insurance market, not the health care market:

Petitioners next argue that…the Section 4 remedy…is not available to McCready because she was not an economic actor in the market that had been restrained. In petitioners’ view, the proximate range of the violation is limited to the sector of the economy in which a violation of the type alleged would have its most direct anticompetitive effects. Here, petitioners contend that that market, for purposes of the alleged conspiracy, is the market in group health care plans. Thus, in petitioners’ view, standing to redress [457 U.S. 465, 480] the violation alleged in this case is limited to participants in that market – that is, to entities, such as McCready’s employer, who were purchasers of group health plans, but not to McCready as a beneficiary of the Blue Shield plan.

The Supreme Court rejected that argument, explaining that “as a consumer of psychotherapy services entitled to financial benefits under the Blue Shield plan, we think it clear that McCready was ‘within that area of the economy . . . endangered by [that] breakdown of competitive conditions’ [457 U.S. 465, 481] resulting from Blue Shield’s selective refusal to reimburse.” In other words, although the conduct was directed toward the health insurance market, it had direct effects on participants in the health care market.


In a footnote, the Court also agreed with the court of appeals that the health insurance plan was really akin to a means for pre-paying for medical treatment, not an insurance policy in the usual sense:

Blue Shield Plans are not insurance companies, though they are, to a degree, insurers. Rather, they are generally characterized as prepaid health care plans, quantity purchasers of health care services.

The ultimate Sherman Act-specific holding of McCready has little to do with the individual mandate case, but the point is that the Supreme Court has already addressed the interplay of the health insurance market with the health care market, and has expressed a view that strongly suggests that they are not two independent markets.

Is McCready a silver bullet? Probably not. But it sure seems important to me that there is Supreme Court precedent on an issue that is so central to the debate. Certainly important enough to at least enter the discussion. Why isn’t anyone talking about it? 

I may be the only person in the world who is more interested in the 9th Circuit’s decision in Perry v. Brown, (the much publicized suit over the constitutionality of California’s Proposition 8) for its lessons in advocacy than for its political issues. I see this case as one of the true tests of the limits of legal skill. From the get-go, the question has been whether two of the brightest legal minds out there — David Boies, whose famous cases include representing former VP Al Gore in Bush v. Gore and Ted Olson, who represented former President Bush in that case, and served as Solicitor General after it — could come up with a way to convince the courts (most importantly, a majority of the Supreme Court of the United States) to find a Constitutionally protected right to same-sex marriage.

But after digesting the 9th Circuit’s decision, it is also clear that there’s now something else at work: the fact that judges don’t like handing down decisions that are likely to be reversed. And that apparently includes 9th Circuit Judge Stephen Reinhardt, despite his having told the LA Times in July that he wasn’t bothered that the Supreme Court had reversed so many 9th Circuit decisions (including several he authored) of late.

So once Boies, Olson, and their allies convinced the district court and 9th Circuit to go along with their arguments (which was far from assured at the outset) the authors of the two opinions, who are pretty brainy themselves, added their own slants with the intent of avoiding reversal. It’s interesting to see the way in which the district court’s decision (authored by Judge Walker) and the 9th Circuit’s opinion (by Judge Reinhardt) reach the same result through very different means, with each approach apparently intended to minimize the chances that the Supreme Court will reverse.

Judge Walker’s decision made a sweeping proclamation that, in effect, there is a constitutional right to same-sex marriage. Perhaps recognizing that this holding would have a hard time surviving appellate scrutiny given the current state of the law, he grounded his decision on a broad base of factual findings about the purpose and effect of Proposition 8, presumably hoping for the deference appellate courts grant to a district court’s factual findings.

But the 9th Circuit was convinced by the proponents of Prop 8 (whose counsel is no slouch either) that most of Judge Walker’s factual findings were “legislative facts,” i.e. generalized facts, rather than the type of case-specific facts to which appellate courts might defer, and didn’t defer to Judge Walker’s fact-finding.

And the current Supreme Court seems unlikely to find a constitutional right to same-sex marriage. That’s probably why Judge Reinhardt reframed the issues such that it affirmed Judge Walker’s finding that Proposition 8 is unenforceable, but avoided making a broadly applicable pronouncement of a constitutional right to same-sex marriage.

The 9th Circuit’s decision reinforces the importance of how you frame the question to be answered, particularly when it comes to issues of constitutional interpretation. [I touched on this topic in discussing the arguments for and against the individual mandate in the PPACA, where the challengers frame the “commerce” it regulates as the health insurance market and argue that the individual mandate improperly requires citizens to participate in a market they otherwise would not rather than regulating the activities of persons already participating in commerce; while the Justice Department argues that the “commerce” at issue is healthcare financing, and that all (or almost all) citizens participate in the healthcare market, so the individual mandate regulates existing commerce rather than requiring citizens to participate in a market where they otherwise would not. This issue is discussed more in-depth at Volokh Conspiracy by Case Western Law Professor Jonathan Adler.]

Judge Reinhardt reframed the question in Perry from whether it is unconstitutional to prohibit same-sex marriage to the much narrower issue of whether it is unconstitutional for a state in which same-sex couples (1) have the right to marry; and (2) have all of the same rights as other couples with regard to adoption and other family-related matters, to revoke the right of same-sex couples only to marry. The apparent strategy in that approach was that it not only avoided a broad pronouncement of a newly recognized constitutional right, but also essentially limited the reach of the holding to California only.

A time-honored way to avoid Supreme Court review is to decide the case on pure state law grounds. But that being impossible in Perry, the 9th Circuit did the next best thing by deciding it on federal grounds that apply only to one state. The other apparent advantage is that by reframing the issue as being about revoking existing rights that same-sex couples had shared with the general population, it has parallels to the Supreme Court’s relatively recent decision in Romer v. Evans.

Will the Supreme Court take up the case despite the more narrow focus of the holding on California? I’d be shocked if it didn’t. A bigger question will be whether the Supreme Court will address it through the narrower frame of the 9th Circuit’s opinion. And if it does, the question will become whether the Court will think the facts are similar enough to Romer to apply stare decisis. It’s noteworthy that Judge Smith, in his dissent from the 9th Circuit’s decision, accepted the framework adopted by the majority, but concluded that Romer was distinguishable and that Proposition 8 passed constitutional muster.

Judge Reinhardt’s opinion, however, may not be the 9th Circuit’s last word on Perry. According to Lyle Denniston at SCOTUSBLOG, the proponents of Proposition 8 plan to ask the 9th Circuit to rehear the case en banc before petitioning for certiorari. They may be hoping the 9th Circuit will itself reframe the issues in the case before it even reaches the Supreme Court.

I’d be surprised if any 2011 decision of Florida’s appellate courts has drawn more attention in legal, medical, and insurance professional circles than the Fourth District Court of Appeal’s decision in May (covered in this post) in Kingsway Amigo Insurance Company v. Ocean Health Inc. In case you missed it (i.e. you either aren’t a PI or insurance defense lawyer, a doctor that treats accident victims, or insurance company employee or you are and have been living in a cave for the last 6 months) the 4th DCA held in Kingways Amigo that auto insurers cannot rely on the 2008 amendments to Florida’s No Fault law (PIP) that allow PIP reimbursement rates to medical providers to be limited to 80% of 200% of Medicare Part B reimbursement amounts unless the applicable insurance policy says explicitly that providers’ reimbursement rates may be so limited. 

There have been several further developments in and related to that litigation:  

  1. The court’s decision has caused considerable angst to Florida automobile insurers, with 5 of them submitting amicus curiae briefs in support of Kingsway Amigo’s motion for rehearing and rehearing en banc by tthe 4th DCA.  Nonetheless, the 4th DCA denied the motions.  The 4th DCA’s decision has now become final, and is reported at 63 So.3d 63.
  2. As noted in the comments to my prior post on the case, the same issue had been teed up for the 3rd DCA in U.S. Security Insurance Company v. Professional Medical Group, Inc., raising the possibility that a decision in that case could either (a) solidify the 4th DCA’s holding if the 3rd DCA came out the same way; or (b) create a conflict among the Districts that would confer discretionary jurisdiction for Supreme Court review if the 3rd DCA disagreed with the 4th.  But earlier this month the 3rd DCA declined to do either one, and relinquished jurisdiction over U.S. Security.  Its reason for doing so appears to be that the parties’ briefing and oral argument revealed that the case was too “fact-specific.” 
  3. Having been denied rehearing by the 4th DCA, and without the benefit of a conflicting (or any) decision in U.S. Security, Kingsway Amigo has asked the Florida Supreme Court to accept review over the case.  It argues in its October 17, 2011 Brief on Jurisdiction* that the 4th DCA’s decision conflicts with statements by other Districts in certain cases involving the PIP statute.  Ocean Health replies in its own Brief on Jurisdiction that there can be no direct and express conflict between Kingsway Amigo and any of the cases cited by the insurer because none of those decisions addressed the precise issue confronted by the 4th DCA, and, in fact, Kingsway Amigo addressed a matter of first impression in Florida appellate courts.  Ocean Health even goes so far as to request that Kingsway Amigo be ordered to pay for its attorney’s fees.

FWIW, I don’t think the Florida Supreme Court is particularly likely to accept review of Kingsway Amigo.  But the issue in dispute isn’t going away, and may well make it to the Court eventually, as I expect that other Districts will weigh in on the issue sooner or later. 

*  To request discretionary review by the Florida Supreme Court, parties generally must file a Notice to Invoke Discretionary Jurisdiction and a brief explaining why the Court has jurisdiction over the case and why it should choose to exercise that jurisdiction.  The opposing party may then file an answer brief addressing those issues.)          

2011 will surely go down as the Year of the Class Action in the Supreme Court of the United States.  If you were surprised at the potential effects of Concepcion v. AT&T Mobility LLC for consumer class actions (unlike many observers, I didn’t see it as their end), then you might want to sit down before reading the Court’s decision in Walmart v. Dukes — which has far greater implications for employment discrimination class actions.

In my first entry on this blog back in April, I wondered where the Court was going with Dukes.  Was it looking to address when (if ever) the easier-to-satisfy Rule 23(b)(2) can be used to certify a class seeking monetary relief?  Plaintiffs’ burden of proof in showing that a class satisfies the requirements of Rule 23?  Or was the Court bothered by an issue specific to Title VII class actions only — the theory that allowing “excessive subjectivity” in hiring decisions can be a “pattern or practice” that may be actionable in an employment discrimination suit if the plaintiffs show a disparate impact on women?

And correspondingly, would the decision’s effects extend to: (a) only civil right cases; (b) all (b)(2) classes; or (c) all class actions?  While many think the answer is all of the above, I think the decision is for the most part confined to (a) and (b).

The Basics of the Decision

The thrust of the Dukes decision can be gleaned from this comment by J. Russell Jackson (who makes his living defending corporations against class actions) on his blog Consumer Class Actions and Mass Torts: “”it’s like an 8-year-old’s Christmas morning in my office!”

Lawyers on the plaintiffs’ side, on the other hand, must feel like they found coal in their stockings, despite what they told the National Law Journal when it called for their reactions.

A description of the background, facts, and procedural hisory of the case can be found in my earlier post, so I’ll focus on the holding.

The Court was unanimous in rejecting the court of appeals’ conclusion that Rule 23(b)(2) certification was appropriate.  The Court also addressed Rule 23(a), with a 5-4 majority rejecting the 9th Circuit’s finding that the class members shared “common issues of law or fact” satisfying Rule 23(a)(2)’s “commonality” requirement.

Either holding would have been sufficient to reverse the decision on appeal, and appellate courts generally try to confine their analyses to what is necessary to decide the case before the court, so it’s somewhat surprising that the Court addressed both points.  Perhaps it did so to ensure that the case wouldn’t wind up back before the Court if the plaintiffs tried another route to certification on remand.  Then again, the Court may have simply felt that since the issues were already teed up, it would be more efficient to decide them now than to wait for them to be brought up again in some future case.

Defense lawyer Jackson goes on to say that the Court fulfilled 5 of the 8 wishes on his wishlist.  I personally think he overstates it a bit.  At least 2 of his wishes — that courts must perform a rigorous analysis at class certification, and can’t use Rule 23 to abridge substantive rights — had been granted by the Court long ago.  And the courts of appeals had already unanimously endorsed another of his wishes: that courts must decide merits issues where necessary to the Rule 23 analysis.

That said, it’s hard to argue with the notion that Dukes embraces many positions advanced by class action defense lawyers.  And I think the decision has the potential to all but eliminate private enforcement class actions under Title VII, as well as the use of Rule 23(b)(2) in cases involving monetary claims (i.e., it will not be used in most cases brought by for-profit law firms).

What About Other Types of Class Actions?

The impact on class actions that don’t involve civil rights is not as clear to me.  Many commentators are saying that the Court’s description of commonality will impact all class actions.  But I’m not so sure.

Cases Like Dukes Are Highly Individualized

One thing to remember when reading appellate decisions is this:  context always matters.  And that is particularly true in Dukes.  As in many Title VII class actions, Dukes is an effort to try very individualized legal claims through representative plaintiffs.  In the absence of an explicit written policy to discriminate or a test designed to achieve the same goal, decisions to hire or promote an employee are extremely individualized.  They’re based not only on an applicant’s qualifications and performance, but also on the qualifications and performance of competing applicants.

So proving that a particular hiring or promotion decision was unlawful is often inseparable from the individual circumstances of that decision.  The “excessive subjectivity” theory was an attempt to get around that problem through statistics.  But statistics in such a case may tell you something about the employer’s overall hiring, but they still can’t say with certainty whether any particular person was adversely impacted.

I’ve always felt that plaintiffs in Title VII cases were held to a lesser standard than in other class actions.  That was likely attributable to the the historical bond between class actions and civil rights actions — Brown v. Board of Education is probably the most famous class action to this day — as well as the understanding that Rule 23’s drafters had civil rights class actions in mind.

After Dukes, forget the Advisory Committee Notes to Rule 23(b).  They may say that provision is meant to apply to “various actions in the civil-rights field where a party is charged with discriminating unlawfully against a class…”  But the text of the rule specifically refers to cases involving “declaratory or injunctive relief.”

So courts’ traditional understanding that Rule 23(b) also encompassed other forms of “equitable relief” in civil rights cases (i.e., backpay) even though monetary in nature, was misgurided, according to the Court.  But in a nod to Brown, perhaps, the Court clarified that when the Advisory Committee notes speak of civil rights cases, they are referring to desegregation cases and the like, where only non-monetary relief is at issue.

So I think one major lesson of Dukes is that civil rights cases are to be treated the same as any other class action.

The Court’s Rule 23(a)(2) Analysis Is Not A Major Change

Which brings us back to the principle that context always matters.  In my view, the Court’s discussion of commonality is inseparable from its rejection of the “excessive subjectivity” theory.  And the Court’s finding that the class didn’t satisfy commonality loses much of its significance when removed from that context.

So I don’t think that the Court’s analysis of the requirement of commonality under Rule 23(a)(2) will have quite the impact on other types of cases that many are predicting.  In fact, I don’t think the Court really changed the standard that generally applies in determining whether the class members share common issues of law or fact.  To satisfy commonality, the Court said:

[The class members’] claims must depend upon a common contention…That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

What’s new about that?  In the types of cases that I’ve always understood to be good candidates for class action treatment, which is to say where the substantive claims are defendant-centered, that commonality standard would appear to be satisfied.

Take, for example, a price-fixing case.  A “common contention” that is “central to the validity of each one of the claims” is the existence of a price-fixing scheme among the defendants.  And if one plaintiff proves that such a scheme existed, it generally will have resolved that contention class-wide, “in one stroke.”

The same is true in a 10b-5 securities case.  When a plaintiff resolves the central issue of whether the defendants made false or misleading statements, that issue is resolved class-wide.  So too in an Enron-style ERISA cases alleging imprudent investment in an employer’s stock.  When a plaintiff resolves the central contention that it was imprudent for plan managers to invest plan assets in the investment vehicle at issue, the validity of that contention is established class-wide, “in a single stroke.”

              The Court’s Rule 23(b)(2) Holding is Significant, But Mostly for Title VII Cases

There’s no denying that the Court severely restricted the use of the Rule 23(b)(2) accross the board.  The Court nominally left open the possibility that (b)(2) might be used where monetary relief is “incidental to requested injunctive or declaratory relief” and “damages…flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief,” as the 5th Circuit held in Allison v. Citgo Petroleum Corp.

But at the same time, the court strongly implied that allowing a non-opt-out class to pursue monetary relief violates due process.  So I wouldn’t expect to see any such classes certified anytime soon.  Nor are many plaintiffs likely to request it, as the Court made it as difficult to certify a (b)(2) class as a (b)(3) class, in concluding that (b)(2) applies only when “predominance and superiority are self-evident.”

Yet, again, this holding would seem to primarily impact class actions brought under Title VII and other civil rights statutes.  Plaintiffs in most other cases seek monetary relief and certification under Rule 23(b)(3).  Courts, after all, have rarely found that injunctive and declaratory relief predominated in a case where plaintiffs also sought monetary relief.  Outside of the civil rights context, at least.




In Walmart Stores, Inc. v. Dukes, even more than in most cases, the U.S. Supreme Court stands at a crossroads.  Or to be more precise, in Dukes, the Court stands at several crossroads.  There’s little doubt that whichever path it chooses is going to have a big impact on some aspect of federal civil litigation.  The real question is:  Which one? 

Here’s why it’s so hard to figure out where Dukes is going.  The Court generally grants certiorari (i.e., agrees to hear an appeal), for one of a few reasons.  Most commonly, the Court hears cases to resolve conflicts among the different circuits of the courts of appeals about a legal issue.  The Court will occasionally hear a case that doesn’t involve circuit conflicts if it considers the case to be of great public importance (e.g., Bush v. Gore).  Very rarely, the Court takes cases when neither factor is present, but it wants to overrule its own prior precedent.  Only the justices and their clerks know what they wanted to do when agreed to hear Dukes, but it is a case that could fit into any of these categories.

Looking at the questions the Court granted certiorari to decide only adds to the confusion.  The Dukes litigation in the Ninth Circuit (first before a panel, then before the en banc court) focused on two issues.  First, there’d been a sea change in circuit precedent on plaintiffs’ burden of proof for class certification.  The 2nd, 3rd and 7th Circuits had recently abandoned the principle that a class should be certified so long as the plaintiff presents some evidence to support each of the requirements for certification under Rule 23(a) and (b), holding instead that a class should be certified only if the plaintiff puts on stronger evidence than the defendant comes up with.  The novelty of those decisions was that judges now have to resolve disputed fact issues at class certification that would normally be for a jury to resolve at trial.  That issue impacts every class action case, and Dukes was thought to be the 9th Circuit’s chance to weigh in on it.  

The second main issue impacts only a small number of class actions, primarily involving civil rights and/or employment discrimination.  The issue is:  In what circumstances can a class be certified under Rule 23(b)(2) — which is easier to meet than the more commonly used Rule 23(b)(3)?  

The en banc 9th Circuit declined to disagree with the decisions of other circuits on the first issue. It acknowledged slight tension with the 5th Circuit on the second issue, but adopted a nebulous “totality of the circumstances” test, making it harder to see a true circuit conflict even on that issue. 

In its certiorari petition, Walmart identified the Rule 23(b)(2) issue as the primary question for the Court to address, but included a second, broad catch-all issue, encompassing, among other issues, the 9th Circuit’s interpretation of the burden of proof.

The Court agreed to decide Walmart’s first issue but not its second one, so it appeared the Court wanted to decide this conflict issue. But the Court then added its own second question, which was broad and vague as to the precise issue it wanted to look at:  “whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”  It’s anyone’s guess what the Court meant by that, because Rule 23(a) contains 4 separate elements, and there are many different potential problems with proving each of them.  Was the Court’s focus on “the class certification ordered” in this particular case an indication that the Court viewed this case as one of great public importance?  The fact that hundreds of thousands of female employees were suing such a large company certainly makes the case newsworthy, but did that put it on the same footing as, say, Bush v. Gore?  Or was the Court alluding to the burden of proof issue, perhaps seeing a conflict?

Oral argument last week may have shed some light on where the Court is really going.  Having looked over the oral argument transcript, my guess is the Court is more interested in looking at whether to overrule its prior precedent.  As Lyle at SCOTUSBLOG, and press accounts have highlighted, the Court seemed most concerned with the “pattern or practice” (proving a pattern or practice required to for liability under the section of Title VII the plaintiffs sued under) the plaintiffs said they could prove on a common basis, even though the class members worked in different stores and had different managers.  They argued that Walmart’s pattern or practice was to give local hiring decision-makers’ “excessive subjectivity.”  In other words, Walmart would be responsible for discrimination by hiring decision-makers at the store level because it did not make managers use objective criteria in their decisions.  

Justice Kennedy, among others, didn’t seem enamored with that theory.  But as the plaintiffs pointed out, they didn’t invent it.  The Supreme Court did.  International Brotherhood of Teamsters v. United States was not a class action.  But the government (the plaintiff) in that case faced some of the same problems the Dukes plaintiffs faced:  How do you prove a that a large employer with many locations, and different individuals making hiring and promotion decisions at each location, subjected all affected employees to the same discriminatory pattern or practice? 

Perhaps based on the conviction that the need to root out corporate cultures that fostered unspoken gender biases outweighed other considerations, the Court in Teamsters endorsed the idea that plaintiffs can prove liability for all employees in their affected class by showing that the central office’s policy and practice of allowing local managers to use excessive subjectivity enabled biased decision-making, so long as they also prove that wide scale disparities exist throughout the company that can’t be explained by innocent factors.

The Dukes plaintiffs latched onto that theory, but unfortunately for them, the litigation is pending in 2011, not 1977 (when Teamsters was decided), and the Court’s outlook has changed quite a bit in the intervening 34 years. 

And at least some of the justices appear ready to put Teamsters to bed, or at least interpret it as having an extremely narrow application that doesn’t include the Dukes facts.  A decision to go in that direction would obviously be significant to Walmart and the members of the Dukes class.  And it would probably impact similar gender bias suits against large employers. 

Some, like Professor Kent Greenfield argue that overruling or marginalizing Teamsters could adversely affect workplace equality, but I’ll leave social and political analysis to others. 

Whatever its social import, a decision focused on the Teamsters theory could actually have a much smaller affect on federal court litigation as a whole.  Such a decision would impact a much  narrower class of cases than a decision on the burden of proof for class certification or the scope of cases that can be certified under Rule 23(b)(2).