By Michael Kun, Regina Musolino and Aaron Olsen
Since the Supreme Court’s historic ruling in Wal-Mart Stores, Inc. v. Dukes, attorneys have debated the scope and impact of the decision. Not surprisingly, plaintiffs’ counsel have argued that the decision was limited to its facts, or to discrimination cases, or to cases involving nationwide claims. And they have argued that Wal-Mart has no application whatsoever to wage-hour class actions and collective actions. In only a few words, the Supreme Court may have answered some of these questions.
Earlier this month, the United States Supreme Court quietly vacated a $7.7 million award in a wage-hour class action in Chinese Daily News v. Wang, remanding the case to the Ninth Circuit for further consideration in light of Wal-Mart. While the Supreme Court did not provide any further analysis or guidance, and while the Ninth Circuit’s ultimate ruling cannot be predicted, the vacation order alone would seem to undermine a few of the arguments that many plaintiffs’ counsel have been making since Wal-Mart was decided – particularly that Wal-Mart was limited to its facts and has no application to wage-hour matters. Simply, if the Supreme Court believed Wal-Mart was not applicable to wage-hour claims, there would have been no reason to vacate Chinese Daily News.
The history of the Chinese Daily News class action is a long and tortured one that most readers of this blog would have little interest in. It is a hybrid class action alleging claims under both the federal Fair Labor Standards Act (“FLSA”) and California state law for unpaid overtime wages, meal and rest break violations, wage statement violations and waiting time penalties as to approximately 300 employees working at a single facility. A California district court certified a class under the FLSA, as well as under both Rule 23(b)(2) and Rule 23(b)(3). The matter ultimately went to trial, where the class prevailed. The Ninth Circuit subsequently affirmed the district court's decision to certify the class under Rule 23(b)(2), but declined to address whether certification was appropriate under Rule 23(b)(3).
Given no guidance from the Supreme Court, it would be pure speculation how the Ninth Circuit will ultimately rule. However it rules, the Ninth Circuit’s ruling on remand will have an enormous impact upon the defense of wage-hour actions throughout the country. That impact could be short-lived, though. However the Ninth Circuit rules, we should not be surprised to see one party seeking to take the ruling up to the Supreme Court. And the Supreme Court reverses Ninth Circuit rulings in approximately 80% of the Ninth Circuit cases it hears.