At Thomson Reuters, Alison Frankel provides analysis of a recent Second Circuit decision:
Toward the end of the U.S. Supreme Court's 2011 majority decision in Wal-Mart v. Dukes, Justice Antonin Scalia, who wrote the opinion, spent a little time chastising the reasoning of the en banc 9th Circuit, whose class certification ruling the Supreme Court overturned. The circuit court had acknowledged that former employees do not have standing to bring classwide injunction or declaratory claims, Scalia wrote, so it held that employees who'd left Wal-Mart as of the time the complaint was filed couldn't be in the class. That didn't make sense, Scalia said, because women who left Wal-Mart's employ after the complaint was filed were similarly "ineligible for classwide injunctive or declaratory relief."
Does that language constitute binding Supreme Court precedent on the standing of former workers to demand reforms, via injunctions or declaratory rulings, from their onetime employers? The class standing of former workers didn't determine the ultimate resolution in Dukes, in which the court shut a back door to money damages by ruling that Wal-Mart women could not obtain back pay via class certification under the looser standard for an injunctive class. Scalia's opinion focused on the individualized issues inherent in claims for back pay. Nevertheless, in July 2012, when U.S. District Judge Leonard Sand was considering the certification of an injunctive class in a now famous gender discrimination case against Goldman Sachs, he found that under Dukes, former employees can't request companywide reforms on behalf of all current workers. Sand expressed "significant reservations" about his holding, which he said addressed an issue of first impression in the 2nd Circuit. But he said he was bound by Dukes.
"The Supreme Court's analysis of this issue, and its blanket denial of standing to ex-employees, is not dictum: It was necessary to the resolution of this case insofar as it undergirded the invalidation of the 9th Circuit's 'predominance test' and foreclosed certification," Sand wrote, noting that even the dissenters in Dukes didn't contest the majority's passing reference to the standing of former employees. "We are therefore obligated to follow the rule, notwithstanding misgivings about its wisdom."
Sand's ruling is not, however, the last word on this question. Last week U.S. District Judge Jesse Furman looked again at whether Dukes precludes standing for former employees to bring classwide injunctive claims - and said that it does not. Furman's very thoughtful 38-page decision, denying KPMG's motion to dismiss a gender discrimination class action, says that Dukes does not compel a blanket finding that former employees don't have standing, as long as those former employees want to be reinstated in their old jobs.
"This court respectfully disagrees with Judge Sand," Furman wrote. "In fact, there are several reasons that the language from Dukes ... should not be read to hold categorically that a former employee seeking reinstatement can never seek injunctive or declaratory relief against his or her former employer - a holding that would apply not only in the class action context, but also to individual Title VII claims."
Furman said that because the Supreme Court's Dukes ruling did not depend on the standing of former employees, "there is a strong argument that the passage quoted above is indeed dictum."