In the most recent application of the U.S. Supreme Court’s holding in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), the U.S. District Court for the District of New Jersey – in Bell, et al. v. Lockheed Martin Corp., Case No. 08-6292, 2011 U.S. Dist. LEXIS 143657 (D.N.J. Dec. 14, 2011) – granted a defense motion to deny class certification prior to the conclusion of discovery in a Title VII gender discrimination case. In Bell, the Court rejected Plaintiffs’ theory that an alleged disparate impact resulting from discretion exercised within the ambit of common company policies created a common question of law or fact under Rule 23(b) of the Federal Rules of Civil Procedure.
Bell represents an excellent template for employers to attack company-wide class claims. It further illustrates the power of Dukes in attacking such class claims. The Court’s ruling also provides excellent fodder for defense efforts to attack class claims in a pro-active fashion.
Key Facts At Issue
In Bell, Plaintiffs brought class action gender discrimination claims on behalf of a putative class of women employed by Lockheed Martin Corporation (“Lockheed”). Plaintiffs asserted that certain Lockheed policies and practices had a disparate impact on female employees’ compensation and advancement. Following some document and deposition discovery, Lockheed filed a motion to deny class certification. Relying on Dukes, the Court granted Lockheed’s motion.
Plaintiffs Were Not Entitled To Complete Discovery
First, the Court rejected Plaintiffs’ argument that Lockheed’s motion was premature because Plaintiffs had not had the opportunity to “fully develop” their claims through discovery. The Court noted that, even in a motion to deny class certification, “a Plaintiff bears the burden of providing prima facie evidence that the requirements of Rule 23 are satisfied or that discovery is likely to advance the class allegations.” Id. at *10. In this case, Plaintiffs had taken numerous depositions and obtained detailed discovery of Lockheed’s corporate hiring and promotion policies. In fact, Plaintiffs had served 12 sets of requests for production of documents, two sets of interrogatories, three sets of requests for admission; further, Plaintiffs had taken 13 depositions. The Court ruled that exhaustive discovery was not required prior to an adjudication of Plaintiffs’ class claims. To the contrary, “[a]ctive judicial supervision may be required to achieve the most effective balance that expedites an informed certification determination without forcing an artificial and ultimately wasteful division between ‘certification discovery’ and ‘merits discovery.” Id. at *25-26.
Plaintiffs Failed To Demonstrate A Common Claim Applicable To The Proposed Class
Second, the Court rejected Plaintiffs’ argument that they had identified a common issue under Rule 23. Plaintiffs pointed to four alleged Lockheed policies, including: (1) when hiring a new employee, a Lockheed hiring manager was free to deviate from the recommended compensation rate by as much as 5%; (2) when calculating merit pay raises, managers were allowed to deviate up to 2% from the recommended merit raise; (3) in the event of a promotion, managers were allowed to increase an employee’s salary up to 6%; and (4) corporate policy mandated company-wide posting of jobs at job levels L3 to L6 (below the director level) and permitted discretion for posting of L7 (director) positions. Id. at *18. Plaintiffs argued that these policies had a disparate impact on female employees at hire that was exacerbated during annual merit and promotion-based increases.
The Court found that Plaintiffs failed to establish the existence of a common question of law or fact under Rule 23(a)(2). Because the allegedly discriminatory Lockheed policies were “substantially similar” to Wal-Mart’s discretionary policies at issue in Dukes, the Court found that Lockheed’s policies were “entitled to a presumption of validity.” Id. at *20. Quoting Dukes, the Court noted that a “‘policy’ of allowing discretion by local supervisors over employment matters . . . is . . . a very common and presumptively reasonable way of doing business – one that we have said ‘should itself raise no inference of discriminatory conduct.'” Id. (quoting Dukes, 131 S. Ct. at 2554).
Plaintiffs attempted to rebut the presumptive reasonableness of Lockheed’s policies through statistical and anecdotal evidence of disparate impact. The Court again found this line of evidence similar to the evidence found insufficient in Dukes. Plaintiffs claimed that they would be able to demonstrate the disparate impact of the challenged Lockheed policies by presenting a regression analysis conducted by statistical experts and by presenting anecdotal evidence regarding how Lockheed identifies, addresses, and remedies other forms of discrimination. The Court rejected Plaintiffs’ class theories; it stated that “[b]ecause Plaintiffs’ claimed statistical and anecdotal proofs are substantially the same as the proofs rejected by the Dukes … , the Court holds that Plaintiffs are unable to establish the existence of a common question for the proposed class.” Id. at *24.
Finally, the Court also noted that Plaintiffs’ claims, which related to four different policies, were not subject to common answers. The women in the proposed class worked in different geographic locations, in different departments, had different titles, and reported to different supervisors. Lockheed employed more than 136,000 people in four business areas, each of which included multiple business units in multiple locations throughout the country. The Court reasoned that “Plaintiffs attempt to raise discrimination claims that depend on the discretion of individual managers in each of Lockheed’s facilities. . . . This is precisely the type of allegation that … Dukes … rejected when it explained that for a plaintiff to satisfy the commonality standard, the claim ‘must depend upon a common contention – for example, the assertion of discriminatory bias on the part of the same supervisor.'” Id.
Similar to Dukes, the Court found that Plaintiffs were unable to “identif[y] a common mode of exercising discretion that pervades the entire company.” Id. at *26 (quoting Dukes, 131 S.Ct. at 2554-55).
Implications For Employers
Bell is another important decision for employers because it demonstrates a broad application of Dukes. In Dukes, plaintiffs failed to challenge the impact of a specific employment practice and relied instead on a theory of adverse impact arising from discretionary, subjective decision-making – a theory that the Supreme Court largely rejected. In Bell, plaintiffs identified specific employment policies, which permitted some amount of subjective discretion, and argued that such discretion led to a disparate impact. The Court in Bell did not acknowledge any distinction that made a legal difference, and held that Dukes foreclosed certification of Plaintiffs’ proposed class.
Bell thus shuts down another potential nuance that the plaintiffs’ class action bar might utilize to find its way around some of the impediments to class certification created by Dukes.