Aggregating and resolving dissimilar claims in Rule 23(b)(3) classes

Allan Erbsen is an Associate Professor at the University of Minnesota Law School, where he teaches Federal Courts and Civil Procedure.  He previously was in private practice specializing in appellate and complex litigation at Mayer, Brown & Platt in Chicago and Wilmer, Cutler & Pickering in Washington, DC.

The Supreme Court’s recent decision in Wal-Mart Stores, Inc. v. Dukes may suggest a new approach to thinking about certification of class actions under Rule 23(b)(3).  This approach emphasizes the importance of heterogeneity among class members and would require two distinct inquiries.  Courts would first consider the extent of heterogeneity, which determines whether claims – or components of claims – are theoretically aggregable.  Courts would then assess the practical significance of heterogeneity, which determines whether a class action could resolve the parties’ dispute.

Technically, Dukes addresses certification in only a narrow context: the application of Rules 23(a)(2) and 23(b)(2) to a putative class of employees seeking an injunction and back pay due to an alleged culture of discrimination that permeated an employer’s nationwide operations.  Yet Dukes is one of only a handful of recent Court decisions addressing certification in any context.  The decision’s influence will transcend its holding as lower courts try to extrapolate its limited guidance across a wide range of cases.  Subtle dimensions of the majority and dissenting opinions – stray remarks, curious citations, novel analytical methods, and suggestive variations in tone and emphasis – can become influential clues about answers to questions that the Court did not directly consider.  For example, as other commentators have noted, the opinions might be read to support broad propositions about the extent to which substantive law should evolve to accommodate procedural realities that would otherwise hinder effective enforcement of entitlements, or the role of merits inquiries at the certification stage, or the quantum and nature of evidence necessary to prove a classwide practice or injury.  Here, I will highlight how a few tantalizing but ambiguous sentences in Dukes address the significance of heterogeneity in proposed 23(b)(3) classes.

Assessing the implications of Dukes requires a detailed understanding of the multifaceted certification inquiry in 23(b)(3) cases.  Judges contemplating whether to certify proposed class actions seeking damages often must pierce two carefully crafted illusions.  Proponents of certification will define the class and dispute at high levels of abstraction.  Their goal is to conjure images of a homogenous class alleging homogenous claims amenable to resolution in a single civil action.  In contrast, opponents of certification revel in the subtly variant details of individual claims and defenses.  Their goal is to depict the class as a loose amalgam of heterogeneous members with heterogeneous claims that each require independent review in separate proceedings.  In difficult cases, both visions are exaggerated: class members raise some common questions that favor certification and some individualized questions that disfavor certification.  Applying Rule 23(b)(3) in difficult cases arguably requires two lines of inquiry.  The court must first identify the extent of heterogeneity within the class, which I call the Aggregability inquiry, and then apply a rubric for translating that conclusion into a decision about whether certification is appropriate, which I call the Resolvability inquiry.  (I have defined these terms in more detail elsewhere.)

Evaluating Aggregability is more than merely an exercise in quantifying differences between class members.  Some differences are immaterial.  The Aggregability inquiry requires courts to identify salient heterogeneity that could complicate collective adjudication of the plaintiffs’ claims.  The court must determine what class members allege, what the relevant substantive law requires them to prove, and what kinds of evidence they seek to introduce.  Analyzing the pleadings, proffers, and law will enable a rough estimate of how legally relevant heterogeneity is likely to manifest as litigation progresses.

Once the court has both a quantitative and qualitative sense of heterogeneity, it can decide whether heterogeneity is an obstacle to certification.  Some portions of the case will be easily aggregable, and others less so.  If class members are sufficiently heterogeneous, litigating their claims within a single civil proceeding will be inappropriate.  Defining the tolerable limits of heterogeneity requires identifying indispensable features of public civil adjudication and considering whether courts can manage relatively heterogeneous cases consistently with those features.  In essence, the court must decide if the case is resolvable within a class action setting; i.e., whether the court can feasibly render a final judgment that retains fidelity to the applicable substantive law.

The Dukes opinions do not explicitly distinguish between Aggregability and Resolvability, but employing that distinction helps clarify the decision’s implications.  The majority’s analysis parallels what I define as the Aggregability inquiry.  The opinion reviews the plaintiffs’ contentions, analyzes the substantive law applicable to those contentions, considers the plaintiffs’ proposed method of proving their contentions, and concludes that the evidence cannot legally establish a classwide claim given heterogeneity among class members.  In effect, the Court held that the claims were not aggregable.  This conclusion is debatable.  For example, one can dispute the Court’s characterization of the record and its interpretation of Title VII.  But regardless of whether the Court’s conclusion about Aggregability is correct, the holding signals that the Aggregability inquiry is important and provides lower courts with a rough template for conducting it.  (Although Dukes applied Rules 23(a)(2) and 23(b)(2), there is no reason to think that the aggregability inquiry would function differently in 23(b)(3) cases, which still require pre-certification assessment of heterogeneity prior to analysis of Resolvability.)  Some readers might also extract a second message about Aggregability from the holding.  Arguably, the dissent’s relatively expansive interpretation of Title VII rested on the implicit realization that substantive law must adapt to the procedural environment in which it operates.  If class actions are often the only viable means of enforcing a right, and if such actions are likely to involve significant heterogeneity, then perhaps courts must tailor their understanding of the substantive law to facilitate aggregate proof and aggregate remedies.  The majority seemed unmoved by this concern, which lower courts could read as a justification for similarly grudging approaches to Aggregability in other contexts.  However, the class in Dukes was so sprawling, and the statistical evidence of discrimination so question-begging, that the majority’s skepticism may be case specific.  The decision therefore can be read to require an Aggregability inquiry in future cases and to establish the inquiry’s general parameters, but need not be interpreted as compelling particular conclusions beyond its narrow context.

Although the Dukes holding rested on Aggregability, dicta in the opinions discussed Resolvability in a way that could influence lower courts.  The majority, favorably quoting an article by Richard Nagareda, observed: “What matters to class certification . . . is not the raising of common ‘questions’—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.  Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.”  In other words, even if some issues within a class action are aggregable, certification might nevertheless be inappropriate because residual heterogeneity renders the overall litigation unresolvable.  The quote thus confirms the need for a two-step Aggregability/Resolvability inquiry.  Dukes was an outlier case where the first step mooted the second step.  Once the Court concluded that the plaintiffs’ claims were not even slightly aggregable, there was no reason to consider whether a class action could concurrently resolve aggregable and non-aggregable issues.  In contrast, most 23(b)(3) cases are likely to include a mix of common and individual questions implicating Resolvability.

The Dukes majority did not explain how lower courts should analyze Resolvability, but its reference to “dissimilarities” provides a potentially important clue.  An ambiguous word embedded in a quote within a lengthy opinion is obviously not the sturdiest foundation for predictions about future jurisprudence.  However, the word is intriguing because of its novelty, its origin, and the dissent’s reaction.  First, the Court had not previously invoked “dissimilarity” when analyzing class cohesion.  Seemingly innocuous transitions to new terminology in analysis of old problems can signal a change in emphasis, as the Court’s shift from “notice” to “plausibility” pleading recently demonstrated.  Second, the Court extracted “dissimilarities” from a context focused on Resolvability.  Richard Nagareda’s article had used the term while critiquing how Rule 23(b)(3)’s predominance requirement emphasized “similarity at some unspecified level of generality” rather than focusing on salient “dissimilarities” that frustrated “resolution” of class members’ claims.  Likewise, in an article discussing Resolvability, I argued that Rule 23(b)(3) “conflates the similarity and dissimilarity inquiries into a single balancing test, thus obscuring the practical and theoretical importance of dissimilarity standing alone.”  Both articles suggested rethinking how Rule 23(b)(3) operates in practice, and both suggested greater emphasis on dissimilarity.  The Court did not expressly endorse such reform, but its favorable citation to the underlying critique opens a door for advocates and lower courts seeking to alter the predominance inquiry.  Finally, Justice Ginsburg’s dissent viewed the majority’s invocation of “dissimilarities” as more than a stray quotation.  She repeatedly referenced the “‘dissimilarities’ inquiry,” “dissimilarities analysis,” “‘dissimilarities’ approach,” and “‘dissimilarities’ notion” that focused “on what distinguishes individual class members, rather than on what unites them.”  Moreover, she seemed sympathetic to this emphasis in some contexts, observing that “[t]he Court errs in importing a ‘dissimilarities’ notion suited to Rule 23(b)(3) into the Rule 23(a) commonality inquiry.”  If “suited” means “appropriate for” (rather than “designed for”), then the dissent embraced an emphasis on   dissimilarities during the Resolvability inquiry in 23(b)(3) cases.  The majority did not disagree (and the dissent presumably did not intend to adopt a stricter view of certification standards than the majority).

The Court’s reference to “dissimilarity” in the context of Resolvability may portend a new emphasis in evaluating Rule 23(b)(3) classes.  When combined with the Court’s treatment of Aggregability, a two-step inquiry emerges that lawyers and lower courts can examine and refine in future cases.