southern district new yorkBy Gerald L. Maatman, Jr. and Gina R. Merrill

In 2010, three women filed a class action suit against Goldman Sachs accusing it of gender bias and a “corporate culture” that allegedly favored men over women in determining pay and promotions.  After protracted battles over whether Goldman could compel individual arbitration and then over the scope of discovery, the issue of class certification was finally presented to the Court.  This week, in Chen-Oster, et al. v. Goldman Sachs, Case No. 10 Civ. 6950 (S.D.N.Y. Mar. 10, 2015), Magistrate Judge James C. Francis of the U.S. District Court for the Southern District of New York issued a report and recommendation response to plaintiffs’ motion and recommended that class certification be denied in its entirety.

We previously blogged about this case here, here, and here. Given the importance of the class certification ruling, it is a “must read” for corporate counsel facing employment discrimination class action litigation.


Plaintiffs are current and former female Associates and Vice Presidents in three divisions of Goldman Sachs who alleged claims of gender discrimination under both disparate impact and disparate treatment theories. Plaintiffs sought to certify a class for injunctive and declaratory relief pursuant to Rule 23(b)(2) and for monetary damages under Rule 23(b)(3), and in the alternative, Plaintiffs sought to certify a class for the sole purpose of establishing liability under Rule 23(c)(4). The primary employment practices under scrutiny were the employer’s 360-review process and an evaluation tool called “manager quartiling,” in which the manager of the business unit ranks each of his or her employees by placing them in one of five quartiles.

The Report and Recommendation

The most surprising aspect of Magistrate Judge Francis’s report – which recommends denying class certification altogether – is his statement that “ . . . I would recommend that the plaintiff class be certified pursuant to Rules 23(b)(2) and 23(c)(4) in order to obtain a final determination as to the allegedly discriminatory impact of the Goldman Sachs’ employee evaluation process.” Id. at 45.

So, why didn’t he?

The answer lies in the law of the case doctrine. The opening clause of that same statement reads, “But for the fact that the law of the case doctrine dissuades me from revisiting the appropriateness of injunctive relief ….” Id. In other words, Magistrate Judge Francis denied certification as to an injunctive relief class because he felt constrained by an earlier decision in the lawsuit. That decision, issued by Judge Leonard Sand, held that because the named plaintiffs were not current employees, the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes , 131 S. Ct. 2541 (2011), obligated a finding that injunctive relief was unavailable. See Chen-Oster v. Goldman, Sachs & Co., 877 F. Supp. 2d 113, 121 (S.D.N.Y. 2012). Three subsequent decisions in the Southern District of New York have declined to follow Judge Sand’s holding, but the ruling has not been overturned, and Magistrate Judge Francis stated that “I am not writing on a clean slate; Judge Sand’s determination is entitled to deference as law of the case.” Id. at 36.

With respect to the Rule 23(b)(3) monetary damages class, Magistrate Judge Francis found that even though the requirements of Rule 23(a) were met, Plaintiffs could not meet the predominance requirement because individualized issues overwhelmed common ones. Id. at 40-44. He therefore recommended denial of the class under that Rule.

Implications for Employers

Assuming Plaintiffs challenge the ruling and file Rule 72 objections and even if the District Court were to adopt the report of the Magistrate Judge, the decision would provide limited authority for other employers seeking to defend against injunctive relief classes because of the report’s heavy reliance on the law of the case doctrine. However, with respect to a monetary damages class, the report is a useful reminder that individual causation and damages issues are often the key to defeating class certification; its holding is a very strong rebuke to theories of the plaintiffs’ class action bar seeking to impose extensive monetary liability through Rule 23(b)(3).