In Ellis v. Costco Wholesale Corp., 2011 U.S. App. LEXIS 19060 (9th Cir. Sept. 16, 2011), the Ninth Circuit reviewed the standards for class certification in an employment class action following the U.S. Supreme Court’s decision in Dukes v. Walmart. In Ellis,three named plaintiffs sought injunctive relief, compensatory damages, and backpay on behalf of a nationwide class of female employees who the plaintiffs claimed had been denied promotion because of their gender. The district court granted class certification. In reviewing the certification order, the court provided guidance for class action litigation in the Ninth Circuit following Walmart.

 The court held that:

  • Only current or former employees who face a real and immediate threat of repeated injury from the alleged unlawful actions have standing to seek injunctive relief.
  • The district court must engage in a rigorous analysis of the four required Rule 23(a) factors of numerosity, commonality, typicality, and adequacy of representation.
  • To analyze commonality, plaintiffs must establish more than that the action raises questions common to the putative class members. Plaintiffs must demonstrate “the capacity of classwide proceedings to generate common answers apt to drive the resolution of the litigation.” 
  • The district court must consider the merits of the class claims to the extent they overlap the court’s analysis of the Rule (23)(a) requirements. In Ellis, the district court did not have to determine the ultimate question of whether Costco discriminated against plaintiffs, but the district court was required to determine whether there was “significant proof that [Costco] operated under a general policy of discrimination.” That meant the plaintiffs had to present significant evidence of nationwide discrimination to certify a nationwide class.
  • A rigorous analysis of typicality requires an examination of whether individualized defenses that might be raised against a class representative will create “a danger that absent class members will suffer if their representative is preoccupied with defenses unique to [her].” Former employees cannot provide adequate representation for a class that includes current employees who seek injunctive relief. 
  • Class certification under Rule 23(b)(2) is not appropriate “when each class member would be entitled to an individualized award of monetary damages.” Such claims are only appropriate for a Rule 23(b)(3) class. 
  • Members of a Rule 23(b)(2) class may seek punitive damages because punitive damages “do not require an individual determination” of the harm to class member employees.

The court directed the district court to consider whether plaintiffs could certify a class under Rule 23(b)(3) to address their backpay and compensatory damages claims but did not provide guidance for certifying a Rule 23(b)(3) class. The court vacated the district court’s class certification order and remanded the case for reconsideration in light of its opinion.