court2.bmpBy Gerald L. Maatman, Jr. and Chris Palamountain

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), continues to be a focal point in appellate review of class certification decisions, and federal appellate courts are rejecting attempts to limit or distinguish the Supreme Court’s latest jurisprudential guidelines. Employers should note, however, that what the Supreme Court’s decision gives in terms of restrictions on class claims, lower courts may take away by allowing employees to use evidence of discrimination against third parties in presenting the merits of their individual claims. 

A recent decision from the Eighth Circuit illustrates both points. In Bennett, et al. v. Nucor Corporation, Nos. 09-3831/3834, 2011 U.S. App. LEXIS 19395 (8th Cir. Sept. 22, 2011), the Eighth Circuit reviewed a judgment in favor of six African-American employees working in the roll mill department of a steel manufacturing plant in Arkansas. In addition to their individual claims, plaintiffs had sought to certify a class of African-Americans employed at the plant since 1999. Prior to Dukes, the district court had denied class certification on grounds that plaintiffs failed to satisfy the commonality and typicality requirements of Rule 23(a). At trial, the district court permitted plaintiffs to introduce a 1995 EEOC complaint against Nucor and a 2002 letter Nucor employees wrote to the EEOC, as well as affidavits from non-party employees. Plaintiffs appealed the denial of class certification, and Nucor appealed the decision to admit evidence of third party testimony into the record after a plaintiffs’ verdict on the individual claims. 

On review, the Eighth Circuit noted that the district court based its denial of class certification on the fact that Nucor had “presented overwhelming evidence” of “[d]ecentralized decision making” and that “the diversity of  employment practices, job classification, and functions among the production departments [at Nucor], standing alone, precludes a finding that the commonality and typicality requirements are met in this case.” Id. at *20. Based upon the “sizable and sometimes-contradictory record” that the parties created, the Eighth Circuit found that it “cannot say” that the district court “clearly erred in finding that employment practices varied substantially across the plant’s various production departments.” Id. at *23. 

In so holding, the Eighth Circuit rejected plaintiffs attempts to limit Dukes by arguing that Nucor’s promotion practices were not “entirely subjective” and that Nucor applied such objective criteria and experience, training, disciplinary history, and test scores. The Eighth Circuit pointed out that, the mere fact that Nucor used some objective criteria in promotion decisions, the application of objective factors to promotion practices “differed throughout the plant, with some departments emphasizing test scores, others placing great weight on specialized training, and still others using unique scoring systems to evaluate candidates for promotion.” Id. at *24-25. 

At the same time, the Eighth Circuit also upheld the individual verdicts for the named plaintiffs and endorsed their use of limited third party evidence to support the individual claims. Noting that the Supreme Court had refused to create a per se rule of admissibility or inadmissibility of the testimony of third parties – in Sprint/United Management Co. v. Mendelsohn, 552 U.S. 379 (2008) – the Eighth Circuit found that the district court had not created such a per se rule in admitting the EEOC materials. The Eighth Circuit cited with approval the district court’s admonitions that “the key” to its decisions concerning whether or not it admitted such testimony was “whether it’s the same place, the same time, the same decision makers, or whether it’s such that the people who are making the decisions reasonably should have known about the hostile environment.” Id. at *10. The Eighth Circuit did not explain how a 1995 EEOC Complaint and 2002 letter from Nucor employees to the EEOC satisfied this standard; instead, the Eighth Circuit perfunctorily stated that such evidence was “relevant to the credibility of the plaintiffs’ allegations.” Id. at *12. 

Given the litigation tactics of the EEOC – as previously discussed in our blog – employers should be prepared to question whether or not EEOC third party evidence is reliable enough to have any probative value that outweighs its prejudicial effect.  More importantly, employers will want to ensure that their designated representatives are fully prepared to testify about prior discrimination complaints. The contents of questionable third party documents were permitted in evidence after Nucor’s designated representative purportedly opened the door to such testimony by“disavow[ing] knowledge of their existence.” Id. at *14. The Eighth Circuit found that [e]vidence of managerial knowledge [or lack thereof] and motives can be important in hostile work environment cases, particularly when punitive damages are at issue.” Id.

Nucor provides a cautionary tale of why employers should not read Dukes as the end of discrimination litigation based upon harm to others. Even if class-wide relief is only available under a narrower range of circumstances, courts may be willing to permit individuals who purportedly experienced discrimination to prove their claims in part through the use of evidence of the treatment of other members of their protected class even after their class claims are defeated. Employers will want to keep this possibility in mind when defending against EEOC complaints and designating third party witnesses to help them defend against individual claims.