Seyfarth Synopsis: In Handloser v. HCL Technologies LTD, No. 19-CV-1242, 2021 U.S. Dist. LEXIS 45183 (N.D. Cal. Mar. 9, 2021), Plaintiffs alleged that an Indian-based company with its U.S. headquarters in California gave preferential hiring treatment to foreign visa-holders over U.S. citizens. Citing the U.S. Supreme Court’s landmark decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 352 (2011), a California federal court denied Plaintiffs’ motion for class certification, holding that plaintiffs seeking to litigate a class action involving a large number of individual employment decisions must establish “some glue holding the alleged reasons for all those decisions together” in order to satisfy the commonality requirement of Rule 23(a)(2). Id. at *9.
For employers facing class actions alleging discriminatory hiring practices, this ruling provides an excellent roadmap to defend such cases, especially when hiring decisions are made by a large number of managers across a vast geographic area.
Defendants were an Indian consulting and information technology company, with their headquarters in Noida, India, and their United States headquarters in Sunnyvale, California. Plaintiffs, a group of job applicants from the United States who did not obtain positions, alleged that during the hiring process Defendants screened local applicants through “culture fit interviews.” Id. at *3. According to Plaintiffs, “culture fit” was a pretext for screening out non-Indian local candidates. Plaintiffs further alleged that Defendants employed a uniform, companywide policy regarding how to prioritize candidates for open onsite positions, gave first consideration for open positions to visa-ready Indian candidates, and only considered local United States candidates if no visa-ready Indian candidates were available.
Plaintiffs filed a lawsuit against Defendants on March 7, 2019, alleging three claims, including: (1) disparate treatment on the basis of race and citizenship in violation of 42 U.S.C. § 1981; (2) disparate treatment on the basis of race and national origin in violation of 42 U.S.C. § 2000e, et seq.; and (3) disparate impact on the basis of race and national origin in violation of 42 U.S.C. § 2000e, et seq. Id. at *5.
Plaintiffs moved for class certification, seeking to represent a class comprised of, “[a]ll individuals who are not of South Asian race, or Indian national origin, or visa holders who applied for positions with (or within) HCL in the U.S. and were not hired.” Id.
The Court’s Decision
The Court denied Plaintiffs’ motion for class certification. First, the Court held that Plaintiffs satisfied numerosity under Rule 23(a)(1) since Plaintiffs alleged that the putative class would have roughly 43,000 members. Id. at *8. Defendants did not dispute that Plaintiffs’ putative class was sufficiently numerous under Rule 23(a)(1).
Most significantly, however, the Court held that Plaintiffs failed to establish commonality under Rule 23(a)(2). Id. at *9. Citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 352 (2011), the Court explained that in the context of an employment discrimination class action, plaintiffs seeking to litigate a class action involving a large number of individual employment decisions must establish “some glue holding the alleged reasons for all those decisions together” in order to satisfy the commonality requirement of Rule 23(a)(2). Id. at *9-10. Plaintiffs argued that they had established commonality for the putative class for both their disparate treatment and disparate impact claims by alleging that: (1) Defendants had a companywide policy of prioritizing visa-ready Indian candidates when filling open United States positions at HCL; (2) when hiring United States job applicants, Defendants had a companywide policy of screening out non-Indian local candidates through “culture fit” interviews; and (3) gross statistical disparities evinced the systematic discrimination at HCL.
The Court rejected Plaintiffs’ arguments and held that they did not establish commonality, “for at least seven reasons.” Id. at *11. Some of those reasons included: (1) over 1,000 job requests during the proposed class period explicitly excluded visa holders from consideration, including some that were required by law to be filled with a citizen or green card holder; (2) for roughly 50% of job requests, HCL did not fill an open position with any candidate because either the client withdrew the job request, the client filled the job request with its own direct applicant, or the position was filled by a competitor; (3) there were reasons that job candidates were not hired that are independent of Defendants’ alleged discriminatory hiring practices; (4) Plaintiffs failed to provide the requisite “glue” because Defendants’ hiring processes took different forms for job candidates depending on the positions for which they applied and the different hiring managers involved; (5) Defendants utilized roughly 1,800 different hiring managers across the country, each of whom was empowered with discretion to make staffing and hiring decisions; (6) employment decisions took place in 47 states, involved roughly 16,000 job searches, and concerned approximately 200 job types; and (7) Plaintiffs failed to establish that Defendants’ employment policies and procedures constrain discretion or follow a “common direction” from HCL’s management. Id. at *11-15. Accordingly, the Court held that Plaintiffs failed to establish commonality under Rule 23(a)(2).
The Court also opined that Plaintiffs failed to establish typicality under Rule 23(a)(3). One named Plaintiff worked in sales since 2003, had experience with the outsourcing services offered by HCL, and unsuccessfully applied to work at HCL five times between 2017 and 2018. The second named Plaintiff was an engineering professional with 35 years of experience, who unsuccessfully applied to work at HCL on four occasions between 2018 and 2019. The Court held that the named Plaintiffs failed to establish that they were injured by the same conduct that injured other class members. Id. at *17 (citations omitted). Accordingly, the Court held that because Plaintiffs have failed to satisfy the requirements Rule 23(a)(3).
The Court further concluded that Plaintiffs failed to establish predominance under Rule 23(b)(3). Id. at *18. The Court determined that the unique experiences of the two named Plaintiffs alone exemplified the need for individual inquiries, which would predominate over common questions of law or fact to the putative class. Id. at *18-19. The Court further noted that many putative class members were evaluated by an HCL client as part of the hiring process, and the candidate’s adverse employment decision may be attributable to a client’s feedback. Accordingly, the Court held that individual inquiries will predominate over common questions of law or fact to the putative class. Id. at *19-20.
Finally, the Court ruled that Plaintiffs failed to satisfy the requirements of Rule 23(c)(4), which provides that, “when appropriate, an action may be brought or maintained as a class action with respect to particular issues.” Id. at *20 (citing Fed. R. Civ. P. 23(c)(4).) The Court noted that Plaintiffs devoted only a single paragraph to their justification for certification under Rule 23(c)(4), which it found to be a perfunctory argument.
In sum, the Court denied Plaintiffs’ motion for class certification, holding they failed to satisfy the requirements of Rules 23(a)(2), 23(a)(3), and 23(b)(3) with respect to their putative class, and that Plaintiffs likewise failed to satisfy the requirements of Rule 23(c)(4). Id. at *21-22.
Implications For Employers
The decision in Handloser v. HCL Technologies LTD is noteworthy for employers for two primary reasons. First, it signals that the U.S. Supreme Court’s landmark Wal-Mart v. Dukes decision from 2011 remains a primary defense in major employment discrimination class actions. When plaintiffs attempt to increase the size of such cases by seeking to certify nationwide classes with thousands of putative class members who were allegedly harmed by thousands of managers, employers can point to Wal-Mart v. Dukes (and now, the decision here) to illustrate why class treatment is not appropriate.
Second, the facts in Handloser involved an emerging trend of reverse discrimination lawsuits. Some businesses, especially in the technology sector, have been confronted with similar lawsuits alleging that visa-holders from foreign countries are given preferential treatment in hiring situations over United States citizens. Businesses defending such claims would be prudent to keep this decision tucked away in the event they are faced with a similar class action.