Dukes’ Applicability may be Limited

A recent opinion from the United States Court of Appeals for the Seventh Circuit demonstrates that the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) may have limited applicability to wage and hour class actions. More ›

Eighth Circuit Denies Class Certification Based on Dukes and Admits Third-Party Evidence to Prove Plaintiffs’ Claims

Six African American employees who worked in their employer’s steel plant in Blytheville, Arkansas, sued the employer. They alleged that the employer had violated Title VII of the Civil Rights Act of 1964, as amended, by systematically refusing to promote black employees and by allowing for a racially hostile work environment. In addition to their own claims, the employees sought to represent a class of approximately 100 other employees and job applicants representing the plant’s five different departments. The district court denied the request for class certification but allowed the employees’ six hostile work environment claims to proceed to jury trial. Each plaintiff was awarded $200,000 in damages. The employer appealed, contending that the court erred during the trial by allowing admission of evidence of alleged discrimination against employees other than plaintiffs. Plaintiffs cross-appealed, objecting to the court’s denial of class certification. The U.S Court of Appeals for the Eighth Circuit affirmed the district court on both grounds. First, in addressing plaintiffs’ argument regarding the denial of class certification, the court looked to the U.S. Supreme Court’s recent determinations on class action matters in this context and determined that although all of the claims involved the Blytheville plant, the class was improper under Wal-Mart v. Dukes, 564 U. S. ____ (2011), because “employment practices varied substantially across the plant’s various production departments.” Second, regarding the employer’s evidentiary objections, the court found that the nonparty evidence was admissible because such evidence “can be relevant to a plaintiff’s hostile work environment claim,” and because, in this case, the district court had conducted a fact-based analysis to determine whether each piece of evidence involved “the same place, the same time, [or] the same decision-makers” as the plaintiffs’ claims. This case demonstrates the compromise that some courts have begun striking in the wake of Dukes: where class actions are denied, parties are permitted to more broadly use evidence of discrimination or other wrongs against nonparties to prove their cases. Employers should be aware of this when managing employees’ complaints or preparing to defend a lawsuit.

Bennett, et al. v. Nucor Corporation, Nos. 09-3831/3834 (8th Cir. Sept. 22, 2011)

Wal-Mart v. Dukes, 564 U. S. ____ (2011)

Unlicensed Accountants may be Exempt From Overtime Pay Requirements

Unlicensed junior accounts who performed audits and provided other accounting services for their employer’s clients brought a wage-and-hour class action against the employer for overtime pay they were allegedly owed. The employer argued that the accountants were exempt from the wage-and-hour law’s overtime provisions under the “professional” exemption. Under California law, to claim the “professional” exemption, the employer must show that the employees were: (1) licensed or certified by the State of California and primarily engaged in law, medicine, dentistry, or accounting; or (2) primarily engaged in an occupation commonly recognized as a learned or artistic profession. The U.S. Court of Appeals for the Ninth Circuit held that the accountants could be exempt if their job duties indicated that they were engaged in a “learned profession,” even though they did not have CPA licenses. The court emphasized that when determining whether an unlicensed accountant is exempt or non-exempt, a “fact-specific inquiry” is required. This case serves as a reminder that whether an employee is exempt or non-exempt should not be determined categorically, but should be determined according to the job duties the employee actually performs.

Supreme Court Rejects Massive Class Action Against Wal-Mart

In a highly anticipated ruling, the U.S. Supreme Court recently issued its opinion in Wal-Mart Stores, Inc. v. Dukes, et al. (S. Ct. June 20, 2011). Plaintiffs claimed that the discretion afforded to local store managers over pay and promotions had an unfair, discriminatory impact on female employees. The proposed class in the case covered approximately 1.5 million current and former Wal-Mart employees, and would have involved billions of dollars in potential damages. The Court’s opinion hinged on the application of Fed. R. Civ. P. 23, which regulates class actions. Among other things, Rule 23 requires that the claims of all potential class members share a common issue of law or fact. Here, that would require evidence that women were the victim of one common discriminatory practice. With respect to this issue, the Court recognized that sufficient commonality might be established where an employer operated under a general policy of discrimination through which discrimination occurred via entirely subjective decision-making processes, it made clear that such a showing must rest on “substantial proof.” Moreover, the Court recognized that allowing such discretion is a common, presumptively reasonable business practice that raises no inference of discriminatory conduct. More ›