By Carlyn Kolker

(Reuters) - A recent decision from the 9th Circuit Court of Appeals undoing the class action certification of a wage dispute at a Chinese-language newspaper signals how Dukes v. Wal-Mart is calling into question a host of employment class action cases.

The opinion is "a very defense-minded ruling," Gerald Maatman, an attorney at Seyfarth Shaw who defends companies in employment litigation, told Reuters.

"The 9th Circuit is known as probably the most employee-friendly circuit in the United States and here is an instance where the 9th Circuit is overturning a liability award and a class certification," said Maatman. "It demonstrates the power of Dukes."

Courts have been "reluctant" to apply the Wal-Mart decision to wage-and-hour cases, he said, and this decision signals a new embrace of it.

The case was brought in March 2004 by current and former employees of the Chinese Daily News, claiming that the Los Angeles-based news organization failed to pay them for overtime and to fairly compensate them for meal and rest breaks.

The plaintiffs were certified as a class action of about 200 employees and the plaintiffs won more than $2.5 million in damages at trial in 2006. Chinese Daily News appealed to the 9th Circuit, which affirmed the decision in September 2010. But after the Supreme Court's decision in the Wal-Mart case in June 2011, which curtailed plaintiffs' ability to sue as a group, Chinese Daily News appealed to the high court. The Supreme Court vacated the 9th Circuit's decision and remanded it to the appeals court.

On Monday, the same three-judge panel that initially affirmed the class-action certification instead remanded it back to the district court to reconsider the question of class certification. The appellate panel, citing the Wal-Mart decision, vacated U.S. District Judge Consuelo Marshall's certification of the class under Rule 23(a)(2). That rule is the linchpin of many class action certifications, and in the Wal-Mart case, the Supreme Court raised the bar for plaintiffs to use it.

MONETARY DAMAGES

In addition, the 9th Circuit vacated the portion of the district court's certification of the class regarding meal and rest breaks. Since the trial court ruling, the California Supreme Court decided in Brinker Restaurant Corp v. Superior Court that employers don't have to ensure workers take their breaks.

"I'm delighted with the result," said Michael Berger of Manatt, Phelps & Phillips in Los Angeles, who represents Chinese Daily News.

As the case goes back to the district court, says Berger, there are "major issues that need to be dealt with."

In addition to the certification and meal break issues, the trial court must address how it calculates monetary damages, if it gets to that stage, said Berger. In its opinion, the 9th Circuit noted that the Supreme Court warned against the process of using a sample set of class members to determine damages and then applying it to the whole class.

"I think overall, the biggest impact is that plaintiffs need to be more open to the concept of bifurcating the damages phase from the liability phase, and being more creative in proposals to assess damages on a classwide basis," said Brendan Donelon, an attorney in Kansas City, Missouri, who represents plaintiffs in wage-and-hour cases around the country.

Della Barnett, an attorney with the Impact Fund who represents the employees, and Randy Renick of law firm Hadsell Stormer Richardson & Renick did not return calls for comment.

The case is Wang v. Chinese Daily News, U.S. Court of Appeals for the Ninth Circuit, No. 08-55483.

For the plaintiffs: Della Barnett of the Impact Fund and Cordelia Dai and Randy Renick of Hadsell Stormer Richardson & Renick.

For Chinese Daily News: Michael Berger, Benjamin Shatz, Yi-Chin Ho and Andrew Satenberg of Manatt, Phelps & Phillips.

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