9th_Cir_seal.jpgCo-authored by Brandon McKelvey and Fred Sanderson 

Citing the Supreme Court’s recent decision in Dukes v. Wal-Mart, on December 30, 2011, the Ninth Circuit vacated its prior decision reversing a district court’s denial of class certification under Federal Rule of Civil Procedure 23(b)(2). The Ninth Circuit’s unpublished memorandum in Sepulveda v. Wal-Mart Store, Inc., indicates that the Supreme Court’s decision in Dukes compelled the Ninth Circuit to reverse course.

The underlying case sought to certify a class of current and former assistant mangers of Wal-Mart who alleged they were misclassified as exempt from overtime requirements. Plaintiffs sought certification under Rule 23(b)(2) on grounds that class injunctive relief was appropriate, and under Rule 23(b)(3) on grounds that common questions of law and fact predominated on the misclassification issue. In 2006, a judge in the Central District of California denied class certification under both Rule 23(b)(2) and Rule 23(b)(3). As to Rule 23(b)(2), the court held that class certification was not appropriate because the monetary relief was not incidental to the injunctive relief sought, as plaintiffs were primarily seeking monetary relief in the form of overtime payments. On appeal, the Ninth Circuit reversed in part and held that the district court abused its discretion by denying class certification under Rule 23(b)(2) because it relied on the “not incidental test” not followed by the Ninth Circuit at the time. Wal-Mart then filed a petition for rehearing and the Ninth Circuit stayed its decision pending the Supreme Court’s decision in Dukes v. Wal-Mart.

Last Friday, the Ninth Circuit vacated its prior order, acknowledging that the Supreme Court in Dukes explicitly adopted the “not incidental” test for certification under Rule 23(b)(2), and clarified that Rule 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.” Because the putative class members primarily sought individual overtime payments and fewer than half of the putative class would benefit from injunctive relief, it was not an abuse of discretion for the district court to conclude that the monetary relief sought was not incidental to the injunctive relief.

The Ninth Circuit ruling ends plaintiffs’ quest for class certification against Wal-Mart on assistant manager misclassification claims. This decision is consistent with other recent rulings from other district courts in the Ninth Circuit denying class certification based on Dukes in manager-misclassification suits, including similar cases against Dollar Tree and WinCo previously reported on this blog.