By Gerald L. Maatman, Jr., Jennifer Riley, and Michael L. DeMarino

Seyfarth Synopsis: For nearly a decade, the aftershocks of the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc.  v. Dukes have curtailed the success of plaintiffs attempting to certify class discrimination claims in situations where the alleged discriminatory policy is highly discretionary. But Zollicoffer, et al. v. Gold Standard Baking, Inc., et al., No. 13 CV 1524, 2020 WL 1527903, at *1 (N.D. Ill. Mar. 31, 2020), demonstrates that discretionary hiring policies and supervisor autonomy will not necessarily defeat class certification where there is an overarching policy of discrimination. Armed with compelling expert statistics and some ugly facts, Plaintiffs successfully navigated the commonality hurdles articulated in Wal-Mart and secured class certification.  The U.S. District Court for the Northern District of Illinois found that this statistical and anecdotal evidence was proof of a general policy of discrimination that caused a common injury to the class, and this ultimately drove the district court’s decision to grant class certification.

This case is important and is a must read for employers, particularly companies in the staffing industry, because it demonstrates the need to maintain and enforce anti-discrimination polices and the fundamental role that expert testimony plays in deciding whether class certification is appropriate.

Background

In Zollicoffer, et al. v. Gold Standard Baking, Inc., et al., No. 13 CV 1524, 2020 WL 1527903, at *1 (N.D. Ill. Mar. 31, 2020), Plaintiffs filed a class action complaint against Most Valuable Personnel (“MVP”), a staffing company, and its client, Gold Standard Bakery (“Gold Standard”), alleging race discrimination in violation of 42 U.S.C. § 1981. Plaintiffs claim that MVP acted on Gold Standard’s discriminatory preferences when it referred disproportionately few African-American applicants to temporary assignments at Gold Standard’s Chicago facility.

After discovery, Plaintiffs moved to certify a class of African-Americans who sought, but were denied, referrals to Gold Standard as a result of Defendants’ allegedly discriminatory policies. In support of their bid for class certification, Plaintiffs offered expert reports prepared by their labor economist, Dr. Marc Bendick.  Over Defendants’ opposition and objection, the Court found that Plaintiffs’ expert report satisfied the criteria for admissibility under Daubert and Federal Rule of Evidence 702, and that Plaintiffs carried their burden under Rule 23 to show that class certification is appropriate.

The Decision

As a threshold issue, the Court addressed the admissibility of Dr. Bendick’s expert reports, and ultimately, it was Dr. Bendick’s analyses that drove the decision to certify the class. Dr. Bendick compiled compelling statistics that found that non-Hispanic, African-American applicants were referred to Gold Standard at a rate far below the expected referral rate during the class period.

Defendants primarily challenged Dr. Bendick’s reports on the basis that he failed to properly vet the original data files on which he relied.  Defendants argued that this rendered his conclusions faulty and unreliable.  The Court rejected the defense position. It concluded that the “reliability of data . . . used in applying a methodology is tested by the adversarial process and determined by the jury.”  Id. at *15 (citation omitted). “[T]he court’s role,” it explained, “is generally limited to assessing the reliability of the methodology — the framework — of the expert’s analysis.” Id. Hence, the Court concluded that although Defendants raised “valid criticisms” of the data, those critiques went to the weight of Dr. Bendick’s analysis, not its admissibility. Id.  In fact, the Court concluded that essentially all of the Defendants’ challenges went to the weight, and not the admissibility of Dr. Bendick’s testimony. Accordingly, the Court found Dr. Bendick’s reports were sufficiently reliable to consider as part of Plaintiffs’ motion for class certification.

Next, the Court considered whether class certification was appropriate under Rule 23. As with most class cases, the battleground centered around Rule 23(a)’s commonality requirement and Rule 23(b)’s predominance requirement. The Court started its analysis by creating some distance from Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). There, it noted commonality was lacking because the alleged discriminatory policy was highly discretionary and the plaintiffs failed to identify a common way in which the defendants exercised that discretion. Id. at *20The Court noted that “commonality will exist where allegedly discriminatory general policies are enforced at the corporate level rather than by individual supervisors, even where there is some discretion in the policies’ execution.” Id.

Against this backdrop, the Court rejected the Defendants’ argument that the Plaintiffs did not provide proof of a general policy of discrimination because MVP’s supervisors and dispatchers had individual discretion to hire and refer workers based on a number of factors.

The Court explained that “Dr. Bendick’s analysis provides persuasive evidence that disparities in hiring can be explained by a general policy of discrimination, rather than individualized processes.” Id. at *21. Moreover, “the fact that MVP utilized a decentralized decision-making process and MVP supervisors and dispatchers had a degree of autonomy to make referral decisions does not preclude plaintiffs’ claim because they challenge defendants’ overarching policy against hiring African-Americans.” Id. Ultimately, the Court concluded that commonality was satisfied because “the statistical evidence and anecdotes together provide ‘significant proof’ of a ‘uniform employment practice’ that caused a common injury to the class.” Id.

The Court likewise found that Plaintiffs satisfied Rule 23(b)’s predominance requirement. Defendants attempted to raise a litany of individualized issues such as when the laborer sought work at MVP, what shifts they were willing to work, whether Gold Standard needed employees on those particular days, and whether the laborers even qualified for positions at Gold Standard. Id. at 28. The Court, however, opined that these “questions are actually secondary to plaintiffs’ common claims” because, if the trier of fact determines that Defendants had a discriminatory policy against hiring African-Americans,  those individualized questions will largely bear on damages. Id.

Implications For Employers

This case is a reminder for employers that they are not necessarily immune from class discrimination claims simply because their employment-related policies require individualized discretion in executing them. Staffing companies, in particular, should ensure that their anti-discrimination polices address discriminatory directives or preferences of their clients.