Class Certification

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fingerprintBy Gerald L. Maatman, Jr., Thomas E. Ahlering, and Alex W. Karasik 

Seyfarth Synopsis:  In a class action alleging that the criminal background policy of Washington D.C.’s local transit authority had a disparate impact on African-Americans, a federal district court recently certified three classes of African-American employees and applicants despite the employer’s workforce being 75% African-American. The ruling – in Little v. Washington Metropolitan Area Transit Authority, No. 14-1289, 2017 U.S. Dist. LEXIS 48637 (D.D.C. Mar. 31, 2017), is a “must read” for employers that use hiring screens.

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One of the hottest areas in workplace class actions involves criminal background checks used by employers.  On one end of the spectrum, employers want to be sure they are not subjecting their businesses, employees, and clients to any potential criminal conduct by their own workers.  On the other hand, many prospective employees with criminal backgrounds may have been adequately rehabilitated through the criminal justice system and merely need an opportunity to prove they can be counted on as an employee.  In Little v. Washington Metropolitan Area Transit Authority, No. 14-1289, 2017 U.S. Dist. LEXIS 48637 (D.D.C. Mar. 31, 2017), Plaintiffs alleged that a criminal background check policy used by the Washington Metropolitan Area Transit Authority (“WMATA”) to screen candidates and employees was facially neutral, but had a disparate impact on African-Americans.  After the Plaintiffs moved for class certification , Judge Collyer of the U.S. District Court for the District of Columbia granted Plaintiffs’ motion in part and certified three classes pursuant to Rule 23(b)(2) and 23(c)(4), finding that Plaintiffs had satisfied Rule 23’s requirements with respect to liability and the availability of injunctive or other declaratory relief, but that the proposed classes failed to meet the predominance requirement of Rule 23(b)(3) because the case involved “more than just the individual determination of damages.”  Id. at *65. 

The Little ruling puts employers on notice that even if their workforce is predominately made up by one protected class, their criminal background policies can still be challenged as having a disparate impact on that class for purposes of class certification.

Case Background

WMATA, the primary public transit agency for the Washington D.C. metropolitan region, adopted its Policy 7.2.3 to govern how and when individuals with criminal convictions can obtain or continue employment with WMATA and its contractors and sub–contractors.  Id. at *4-5.  Plaintiffs alleged that although the policy was facially neutral, it had a disparate impact on African-Americans.  WMATA argued that the policy was adopted as a business necessity.  Id. at *6.  Further, WMATA  argued that the make-up of its employee and contractor workforce, which included 12,000 individuals, was 75% African-American, thus demonstrating that no discrimination occurred.

Plaintiffs moved for certification of a hybrid Rule 23(b)(2) and Rule 23(b)(3) class, seeking both injunctive and individual monetary damages for the alleged discriminatory policy.  Id. at *16.  Alternatively, if the Court determined monetary damages were not suitable for class-wide determination, Plaintiffs proposed certification under Rule 23(b)(2) for liability and injunctive relief determinations and the application for Rule 23(c)(4) to allow the question of liability to be answered on a class-wide basis (but with individual hearings on damages owed to each specific class member).

The Court’s Decision

The Court held that certification was proper under Rule 23(b)(2) and Rule 23(c)(4) and certified three classes for a determination of liability and injunctive relief under Rule 23(b)(2), but withheld any individual damages determinations.  Id. at *46.  Beginning with its Rule 23(a) analysis, the Court first noted that as WMATA did not dispute Plaintiffs’ assertion that the overall class included over 1,000 individuals, and each sub–class included at least 200, the Court found that Plaintiffs satisfied the numerosity requirement.  Further, the Court determined that Plaintiffs satisfied the commonality requirement since the policy at issue was mandated for non-discretionary application to all hiring decisions regard the class members, regardless of whether the candidates applied for positions with different contractors, sub–contractors, or directly with the WMATA.  Id. at *50.  Regarding typicality, the Court concluded that the class representatives’ claims were typical of the class as they addressed each part of the policy with the exception of one policy appendix, for which Plaintiffs did not present a class representative.  Finally, regarding adequacy, the Court rejected WMATA’s argument that the proposed named Plaintiffs were inadequate because they lacked standing, noting the merits of their allegations were not to be considered as part of the class certification calculus.  Id. at *56-57.

Next, the Court analyzed Plaintiffs’ motion for certification of a hybrid Rule 23(b)(2) and (b)(3) class.  WMATA argued that Plaintiffs failed to identify which parts of Policy 7.2.3 produced a disparate impact, and their failure to identify the particular challenged employment practice prohibited certification.  Noting that each appendix to the policy constituted a separate employment practice, and that Plaintiffs identified three appendices to the policy that allegedly had a disparate impact on African-Americans, the Court found that Plaintiffs satisfied their burden under Rule 23(b)(2).  Id. at *59-60. 

However, the Court held that Plaintiffs failed to meet the predominance requirement under Rule 23(b)(3) and therefore refused to certify the class for monetary damages.  Id. at *65-66.  Specifically, the Court reasoned that the case involved “more than just the individual determination of damages” – namely, the trier of fact must also determine, for each individual class member, whether that class member was not hired or fired due to the Policy 7.2.3., or for some other reason.  Accordingly, the Court granted in part Plaintiffs’ motion for class certification and certified three classes under Rule 23(b)(2) and Rule 23(c)(4) with respect to liability and the availability of injunctive relief.

Implications For Employers

This ruling illustrates that even if a majority of an employer’s workforce is part of a protected class, an employer’s policies potential can still be considered to have a disparate impact on that class for purposes of Rule 23 class certification.  Plaintiffs will likely use this ruling in subsequent motions for class certification in class actions involving the disparate impact of criminal background policies.  As such, employers should be cognizant of the effect of its policies, and continue to ensure they are neutrally applied.

 

#16-3881 2016 Certification Motions For Employment Discrimination, FLSA, And ERISA R5Surveys of corporate counsel confirm that complex workplace litigation – and especially class actions and multi-plaintiff lawsuits – are one of the chief exposures driving corporate legal budgetary expenditures, as well as the type of legal dispute that causes the most concern for their companies.

As profiled in our Workplace Class Action Report for 2017, federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar in 2016 than in past years. The prime concern in that array of risks is now indisputably wage & hour class action and collective action litigation.

In this video, the third in our continuing series outlining the key findings of the Workplace Class Action Report, we examine the story behind the class certification statistics and what that means for employers.

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#16-3836 2017 WCAR Front Cover for Word In the third post of our series on workplace class action issues, this blog posting focuses on the statistical study of class certification rulings throughout the Unites States in 2016. Not unlike real estate, location – in terms of venue, the assigned judge, and applicable circuit case law – is an all-important factor in class certification dynamics.

Introduction

Federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar in 2016 than in past years. Plaintiffs’ lawyers continued to craft refined and more successful class certification theories to counter the more stringent Rule 23 certification requirements established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). In the areas of employment discrimination, wage & hour, and ERISA class actions, the plaintiffs’ bar scored exceedingly well in securing class certification rulings in 2016. In sum, class actions continue to be certified in significant numbers and certain “magnet” jurisdictions continue to issue decisions that encourage – or, in effect, force – the resolution of large numbers of claims through class action mechanisms.

Anecdotally, surveys of corporate counsel confirm that complex workplace litigation – and especially class action and multi-plaintiff lawsuits – remains one of the chief exposures driving corporate legal budgetary expenditures, as well as the type of legal dispute that causes the most concern for their companies.

The prime concern in that array of risks is now indisputably wage & hour litigation.

Overall Certification Statistics

A circuit-by-circuit analysis of the 244 class certification decisions in all varieties of workplace class action litigation is detailed in the following map.

circuit courts graphic

Wage & Hour Certification Trends

While plaintiffs continued to achieve initial conditional certification of wage & hour collective actions in 2016, employers also secured significant victories in defeating conditional certification motions and obtaining decertification of § 216(b) collective actions.  The percentage of successful motions for decertification brought by employers rose by nearly 10% in 2016.

Most significantly, for the first time in over a decade, wage & hour lawsuit filings in federal courts decreased.

An increase in FLSA filings over the past several years, however, caused the issuance of more FLSA certification rulings than in any other substantive area of complex employment litigation, i.e., 224 certification rulings in 2016, as compared to the 175 certification rulings in 2015.

The analysis of these rulings shows that more cases are brought against employers in more “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. This trend is shown in the following map:

flsa

The map of FLSA certification rulings is telling.

First, it substantiates that the district courts within the Ninth Circuit and the Second Circuit are the epicenters of wage & hour class actions and collective actions.

More cases were prosecuted and conditionally certified – 33 certification orders in the Ninth Circuit and 29 certification orders in the Second Circuit – in the district courts in those circuits than in any other areas of the country. The district courts in the Fifth, Eleventh, and Sixth Circuits were not far behind, with 22, 12, and 11 certification orders respectively in those jurisdictions.

Second, as the burdens of proof reflect under 29 U.S.C. § 216(b), plaintiffs won the overwhelming majority of “first stage” conditional certification motions (147 of 195 rulings, or approximately 76%); in terms of “second stage” decertification motions, plaintiffs also prevailed in a slight majority of those cases (16 of 29 rulings, or approximately 55% of the time).

The “first stage” conditional certification statistics for 2016 are aligned to the numbers in 2015, when plaintiffs won 75% of “first stage” conditional certification motions. However, employers fared much better in 2016 on “second stage” decertification motions. Employers won decertification at a rate of 45%, which was up from 36% in 2015.

The following chart illustrates this trend for 2016:

 FLSA certification motionsThird, this reflects that there has been an on-going migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space. Securing initial “first stage” conditional certification – and foisting settlement pressure on an employer – can be done quickly (almost right after the case is filed), with a minimal monetary investment in the case (e.g., no expert is needed, unlike the situation when certification is sought in an employment discrimination class action or ERISA class action), and without having to conduct significant discovery (per the case law that has developed under 29 U.S.C. § 216(b)).

As a result, to the extent litigation of class actions and collective actions by plaintiffs’ lawyers is viewed as an investment, prosecution of wage & hour lawsuits is a relatively low cost investment, without significant barriers to entry, and with the prospect of immediate returns as compared to other types of workplace class action litigation. Finally, as success in litigation often begets copy-cat filings, the increase in top wage & hour settlements in 2016 to $695.5 million as compared to $463.6 million in 2015 is likely to prompt more litigation too.

Employment Discrimination & ERISA Certification Trends

At the same time, the rulings in Wal-Mart and Comcast also fueled more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2016.  The Supreme Court’s two Rule 23 decisions have had the effect of forcing the plaintiffs’ bar to “re-boot” the architecture of their class action theories. At least one result was the decision this past year in Tyson Foods, in which the Supreme Court accepted plaintiffs’ arguments that, in effect, appeared to soften the requirements previously imposed in Wal-Mart and Comcast for maintaining and proving class claims.

Hence, it is clear that the playbook on Rule 23 strategies is undergoing a continuous process of evolution. Filings of “smaller” employment discrimination class actions have increased due to a strategy whereby state or regional-type classes are asserted rather than nationwide mega-cases that Wal-Mart discouraged. In essence, at least in the employment discrimination area, the plaintiffs’ litigation playbook is more akin to a strategy of “aim small, miss small.”

In turn, employment-related class certification motions outside of the wage & hour area were a mixed bag or tantamount to a “jump ball” in 2016, as 4 of the 8 were granted and 4 were denied.

The following map demonstrates this array of certification rulings in Title VII and ADEA discrimination cases:

discrimination map

In terms of the ERISA class action litigation scene in 2016, the focus continued to rest on precedents of the U.S. Supreme Court as it shaped and refined the scope of potential liability and defenses in ERISA class actions.

The Wal-Mart decision also has changed the ERISA certification playing field by giving employers more grounds to oppose class certification.

The decisions in 2016 show that class certification motions have the best chance of denial in the context of ERISA welfare plans, and ERISA defined contribution pension plans, where individualized notions of liability and damages are prevalent.

Nonetheless, plaintiffs were more successful than defendants in ERISA class actions, as plaintiffs won 8 of 12 certification rulings in 2016.

A map illustrating these trends is shown below:

ERISA map

Overall Trends

So what conclusions overall can be drawn on class certification trends in 2016?

In the areas of employment discrimination, wage & hour, and ERISA, the plaintiffs’ bar is converting their case filings into certification of classes at a high rate.

Whereas class certification was a coin toss for employment discrimination cases (4 granted and 4 denied in 2016), class certification is relatively easier in ERISA cases (8 granted and 4 denied in 2016), but most prevalent in wage & hour litigation (with 147 conditional certification orders granted and 48 denied, as well as 13 decertification motions granted and 16 denied).

The following bar graph details the win/loss percentages in each of these substantive areas:

– a 50% success rate for certification of employment discrimination class actions (both Title VII and age discrimination cases);

– a 66% success rate for certification of ERISA class actions; and,

– a 76% success rate for conditional certification of wage & hour collective actions.

all cert graphic

Obviously, the most certification activity in workplace class action litigation is in the wage & hour space.

The trend over the last three years reflects a steady success rate of 70% to 76% for the plaintiffs’ bar that is tilted toward plaintiff-friendly “magnet” jurisdictions were the case law favors workers and presents challenges to employers seeking to block certification.

Yet, in 2016, employers increased their odds of decertifying wage & hour cases to 45% as compared to 36% in 2015.

Comparatively, the trend over the past three years for certification orders is illustrated in the following chart:

FLSA 3 year graphic

While each case is different and no two class actions or collective actions are identical, these statistics paint the all-too familiar picture that employers have experienced over the last several years. The new wrinkle to influence these factors in 2017 is the Supreme Court’s recent ruling in Tyson Foods. To the extent it assists plaintiffs in their certification theories, future certification decisions may well trend further upward for workers.

Lessons For Employers From 2016

There are multiple lessons to be drawn from these trends in 2016.

First, while Wal-Mart undoubtedly heightened commonality standards under Rule 23(a)(2) starting in 2011, and Comcast tightened the predominance factors at least for damages under Rule 23(b) in 2013, the plaintiffs’ bar has crafted theories and “work arounds” to maintain or increase their chances of successfully securing certification orders.  In 2016, their certification numbers were up to the highest levels in the last three years.

Second, the defense-minded decisions in Wal-Mart and Comcast have not taken hold in any significant respect in the context of FLSA certification decisions for wage & hour cases. Efforts by the defense bar to use the commonality standards from Wal-Mart and the predominance analysis from Comcast have not impacted the ability of the plaintiffs’ bar to secure certification orders under 29 U.S.C. § 216(b).

Third, there are “cracks in the defense wall” appearing in the case law relative to efforts by employers to create sustained barriers to class certification. The Supreme Court’s decision in 2016 in Tyson Foods is the most prominent example of how “work arounds” are taking place to enable plaintiffs’ lawyers to achieve class certification.

Fourth, while monetary relief in a Rule 23(b)(2) context is severely limited, certification is the “holy grail” in class actions, and certification of any type of class – even a non-monetary injunctive relief class claim – often drives settlement decisions. This is especially true for employment discrimination, ERISA, and wage & hour class actions, as plaintiffs’ lawyers can recover awards of attorneys’ fees under fee-shifting statutes in an employment litigation context. In this respect, the plaintiffs’ bar is nothing if not ingenuous, and targeted, strategic certification theories (e.g., issue certification on a limited discrete aspect of a case) are the new norm in federal and state courthouses.

Fifth, during the certification stage, courts are more willing than ever before to assess facts that overlap both certification and merits issues, and to apply a more practical assessment of the Rule 23(b) requirement of predominance, which focuses on the utility and superiority of a preclusive class-wide trial of common issues. Courts are also more willing to apply a heightened degree of scrutiny to expert opinions offered to establish proof of the Rule 23 requirements.

In sum, notwithstanding these shifts in proof standards and the contours of judicial decision-making, the likelihood of class certification rulings favoring plaintiffs are not only “alive and well” in the post-Wal-Mart and Comcast era, but also thriving.

blue-1326154__340

Seyfarth Synopsis:  After certifying a class of Haitian blueberry pickers who asserted Title VII discrimination claims, Judge James Moody of the U.S. District Court for the Middle District of Florida issued a sua sponte order decertifying the class because it had become apparent to the Court that the class members’ claims for compensatory damages were too individualized for class treatment.

This ruling is a reminder that courts have broad discretion to revisit and change an earlier class certification ruling — even when a party has not requested it. The lesson learned is that it’s not over until it’s over and employers should not be afraid to file renewed motions for decertification, particularly when new evidence of individualized damages surfaces.

Case Background & Decision

In Shelene Jean-Louis, et al. v. Clear Springs Farming, LLC, No. 13-3084 (M.D. Fla. Dec. 6, 2016), plaintiffs were seasonal workers that were hired by defendants to pick blueberries from defendants’ berry fields during harvesting season. After reporting to work and being sent home without any compensation, plaintiffs filed a class action complaint in the U.S. District Court for the Middle District of Florida, alleging that the defendants discriminated against them because of their race, color, and national origin. Id. at 1. Although the Court initially certified plaintiffs’ proposed class and denied the defendants’ motion to decertify the class, the Court later determined  – in a sua sponte order – that plaintiffs’ bid for compensatory damages was inappropriate for class treatment. Id. Accordingly, on December 6, 2012, the Court issued an order to decertify the class. Id.

In its decertification order, the Court explained that Federal Rule of Civil Procedure 23(c)(1)(C) allows the Court to alter or amend a class certification ruling so long as a final judgment has not been entered. Id. at 2. The Court explained that at the time plaintiffs moved to certify the class, only the named plaintiffs’ depositions had been taken and that, on this record, common questions predominated regarding whether discrimination had occurred. Id.

However,“[a]s the case has proceeded,” the Court noted, “it has become clear that Plaintiffs seek” back pay and compensatory damages, including out of pocket costs and emotional distress. Id. at 3. The Court explained that these “individualized damages require an inquiry into the specific circumstances of each individual class member . . . .” Id. The Court reasoned that that this would result in a number of “mini-trials,” and therefore precluded class treatment under Rule 23. Id. As a result, the Court ordered decertification of the class. Id. at 5.

Implication For Employers

In the class action arena, employers should not forget that the potential for individualized issues to predominate when plaintiffs seek compensatory damages is another possible basis to attack the appropriateness of class treatment. An employer should also keep in mind that, short of a Rule 23(f) appeal, employers can renew a motion to decertify a class because Rule 23(1)(C) allows a judge to alter or amend a class certification ruling before final judgment.

th2H4JI06DSeyfarth Synopsis:  African American pipefitters filed a class action against their labor union based on its allegedly discriminatory system for referring jobs to union members.  Despite the fact that third-party employers retained sole discretion in deciding whether to hire a union referral, the U.S. District Court for the Northern District of Illinois found that such discretion, and the individual hiring determinations resulting therefrom, did not destroy commonality for the claims of the class members.  The Court based its conclusion on the notion that the union’s job referral system was “the first allegedly discriminatory step that tainted the entire job assignment and hiring process.”  The ruling is an important one for employers on discrimination liability for policies delegating decision-making authority to local managers or third parties.

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In Porter et al. v. Pipefitters Ass’n Local Union 597, No. 12-CV-9844 (N.D. Ill. Sept. 20, 2016), a group of African American pipefitters filed a class action against their labor union, alleging racial discrimination in the union’s job referral system.  Under the system, while third-party employers retained sole discretion in the ultimate decision to hire a union referral, union members were supposed to obtain employment based on race-neutral factors like length of time spent waiting for a job and having the requisite skills.  However, Plaintiffs alleged that the union’s policies enabled employers to circumvent the system and hire union members directly, which resulted in white members disproportionately obtaining employment over African American members.

In granting Plaintiffs’ motion and certifying a class, Judge Sara Ellis of the U.S. District Court for the Northern District of Illinois rejected the union’s argument that individual issues relating to the hiring decisions of third-party employers precluded a finding of commonality.  The union’s referral system, which enabled employers to circumvent race-neutral criteria for hiring, was “the first allegedly discriminatory step that tainted the entire job assignment and hiring process” and “allowed and endorsed” discrimination.  Plaintiffs could prove the discriminatory nature of the policy across the class with statistical evidence.

The ruling is significant in that it limits the impact of Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), wherein the U.S. Supreme Court found that an employer’s policy of giving discretion to local managers in employment decisions destroyed commonality among employees’ discrimination claims.

Case Background

In Porter, Plaintiffs filed a class action lawsuit against their union based on its allegedly discriminatory system for referring jobs with third-party employers to Union members.  Id. at 1.  Plaintiffs alleged that the Union’s policies enabled employers to bypass the race-neutral referral system negotiated and hire Union members directly.  According to Plaintiffs, this resulted in African American members receiving fewer work hours than their white counterparts.  Id.

The Union’s job referral system had a history of discriminating against African Americans.  In 1990, a jury found that rather than operate, as negotiated, a system by which members received jobs on a first-come, first-serve basis, the Union actually operated a word-of-mouth referral system disproportionately favoring whites.  Id. at 2-3.  Based on the jury’s finding, the Court issued a consent decree requiring the Union to assign jobs from an out-of-work list on a first-on, first-off basis.  Id. at 3-4.  However, employers retained sole discretion in deciding whether to hire referrals.  Id. at 4.  In addition, written exceptions to the system allowed employers to circumvent the out-of-work list and continue to hire Union members directly.  Id.  In 1996, the court terminated the consent decree.  Id. at 5.  Evidence showed that, by 2004, less than 20% of jobs were filled from the out-of-work list.  Id.

In 2004-2005, the Union negotiated a new job referral system whereby members could either find employment directly with an employer or find employment through the out-of-work list.  Id.  While the Union implemented quotas to ensure appropriate levels of hiring from the out-of-work list, evidence showed those quotas were not met.  Id. at 5-6.

Based on the above, Plaintiffs alleged discrimination in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981 as well as breach of the union’s duty of fair representation under the Labor Management Relations Act of 1947.  Id. at 1. Plaintiffs moved to certify a class of current and former African American members of the Union who had faced and continued to face such violations.  Id.

The Decision

Judge Ellis certified a class of current and former African American members of the union pursuant to Rule 23(b)(3) to recover money damages.  The Court withheld ruling on certification of a class under Rule 23(b)(2) for injunctive relief.

The Court’s Analysis Under Rule 23(a)

The Court’s analysis under Rule 23(a) focused on Plaintiffs’ showing of “commonality,” which required Plaintiffs to identify an issue central to all class members’ claims that the Court could decide “in one stroke” for the entire class.  Id. at 12 (internal quotations and citations omitted).  The Court explained that challenging the existence of a discriminatory policy may provide commonality, depending on the degree of discretion involved in the policy’s application.  Id. at 12-13  Relying in particular on the U.S. Supreme Court opinion in Wal-Mart along with recent Seventh Circuit precedent, the Court opined that commonality is absent where the policy is “highly discretionary and plaintiffs do not identify a common way in which defendants exercise that discretion.”  Id. at 13.  However, if plaintiffs show that a defendant enforces the policy at the corporate level and the policy affects class members in a common manner, some discretion by employees or third parties in actually applying the policy will not necessarily defeat commonality.  Id. at 13.

Based on those principles, the Court ruled that Plaintiffs had shown commonality based on the existence of the union’s job referral system, which “allowed,” “endorsed,” and “exacerbated” discrimination against African American pipefitters.  Id. at 14-15.  The Court rejected the union’s contention that the independent hiring decisions of third-party employers destroyed commonality.  Indeed, such discretion did “not matter because Plaintiffs challenge [the union]’s overarching policies, which influenced the entire job assignment and hiring process.” Id. at 15 (citation omitted).  Such policies were “the first allegedly discriminatory step that tainted the entire job assignment and hiring process.”  Id.

In addition, the Court found that Plaintiffs had easily satisfied the remaining requirements of numerosity, typicality, and adequacy of representation under Rule 23(a).  Id. at 11-12, 17-19.

The Court’s Analysis Under Rule 23(b)

Having found Plaintiffs satisfied Rule 23(a), the Court addressed whether Plaintiffs had satisfied Rule 23(b)(2) for certification of an injunctive relief class and Rule 23(b)(3) for monetary relief.

The Court explained that Rule 23(b)(2) allows certification of an injunctive relief class where the defendant “has acted or refused to act on grounds that apply generally to the class” such that the Court can appropriately  fashion relief for the class as a whole.  Id. at 20 (quoting Fed. R. Civ. P. 23(b)(2)).  Injunctive relief is not appropriate if a court must make individual determinations to fashion relief for individual class members.  Id.  Plaintiffs’ proposed injunctive relief — a ban on the current job referral system and implementation of a new system — “appear[ed] proper.”  Id.  However, because Plaintiffs did not appear to be current members of the Union and, thus, would not suffer the Union’s policies going forward, they had no basis to request injunctive relief.  Id. at 20-21.  Accordingly, the Court reserved ruling on certification under 23(b)(2) to allow Plaintiffs to show that they were current Union members or to substitute someone who is a current member.  Id. at 22.

The Court next addressed whether Plaintiffs satisfied the “predominance” and “superiority” requirements under Rule 23(b)(3). In particular, class certification is proper if “questions of law or fact common to class members predominate over any questions affecting only individual members, and . . . a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”  Id. (quoting Fed. R. Civ. P. 23(b)(3)).

The Court determined that Plaintiffs can satisfy Rule 23(b)(3)’s predominance requirement by showing that “common questions [among class members] represent a significant aspect of a case” and can be proved by common evidence.  Id. at 22-23. Plaintiffs argued that they could demonstrate the discriminatory impact of the job referral system on all class members by using statistical evidence adduced by its expert.  Id. at 23.  The union argued that predominance did not exist because: (a) Plaintiffs’ statistical evidence was “unrepresentative, inaccurate, [and would only] undermine” Plaintiffs’ claims; and (b) the union did not have a uniform policy because third-party employers made hiring decisions.  Id.  The Court agreed with Plaintiffs, finding that the Union’s arguments only underscored the predominance of common issues because, even if the Union was correct, the claims of the entire class would fail together.  Id. at 24.

The Court also found that Plaintiffs had shown the “superiority” of a class action under the circumstances because it “would be more efficient than proceeding with hundreds of individual suits” challenging the same job referral system.  Id. at 24.  As such, the Court certified a class of current and former African American Union members to seek monetary relief under Rule 23(b)(3).

Implication For Employers

Jude Ellis’ decision is decidedly friendly for Plaintiffs. Based on the ruling in Porter, even after Wal-Mart Stores, Inc. v. Dukes, an employer may be held liable for the discretionary decisions of local managers or third parties if those decisions are discriminatory and the product of an employer’s policy which “allowed” or “exacerbated” the discrimination.  Such a policy can provide the “glue” to hold together a class action where the independent decisions of local managers or third parties would otherwise destroy it.  While the facts in Porter — namely, that a predecessor of the challenged policy had been found discriminatory by a jury — may limit its impact, employers would be wise to monitor policies giving lower level employees decision-making authority to ensure such policies are not allowing or contributing to a pattern of discrimination.

Washington-westernBy Laura Maechtlen and Julie G. Yap

In Rollins v. Traylor Brothers, Case No. 14-CV-1414 (W.D. Wash. Jan. 21, 2016),  Judge John Coughenour of the U.S. District Court for the Western District of Washington certified the claims of a class of workers alleging claims of discrimination under both disparate impact and disparate treatment liability theories. Id. at 6-12, 18. The Court also approved plaintiffs’ request to proceed through a two-stage trial process, whereby if plaintiffs established a discriminatory policy or disparate impact during stage one, “each class member would be awarded a rebuttable inference that all class members were victims of defendants’ allegedly discriminatory practices and/or suffered a disparate impact” in stage two. Id. at 16.

The Court’s order serves as another reminder that, even after Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), judges may still certify a discrimination class action based on subjective decision-making, at least when presented with the types of facts before the Court in this case.

Case Background

In Rollins, defendants were contractors for the Sound Transit “University Link” light-rail projects, which included making hiring and firing decisions for laborers the Union dispatched to the Project. In response to “allegations of discrimination and harassment” by black laborers, Sound Transit hired an investigator and statistician, who made findings and prepared a report concluding that the defendants’ “subjective decision-making had a disparate impact on black laborers.” Id. at 2. Specifically, the statistician concluded that black laborers dispatched to defendants’ site had a “threefold higher risk” of not being hired or of being terminated and that, on average, white and Hispanic laborers worked twice as many hours a week as black laborers. Id. Notably, while it expressly disavowed relying on the report’s ultimate conclusion, the Court referenced the report and its factual findings throughout the decision.

The District Court’s Certification Decision

To certify the class, the Court first undertook its own modifications to the class definition. The Court rejected plaintiffs’ proposed “class of laborers of African-American decent with dark skin and/or appearing African American” — a description the Court noted that one of the named plaintiffs may not fit. Instead, the Court defined the class as “laborers who identify as black or believe that Defendants perceived them as black.” Id. at 4. Similarly, the Court also rejected as potentially ambiguous plaintiffs’ inclusion of laborers “who were dismissed shortly after being hired, dismissed after working only a few shifts, and/or otherwise treated unfairly.” Id. Rather, the Court, on its own initiative, reformulated the description to include laborers who “were not hired after being dispatched, were hired but later terminated, and or believe they were otherwise treated unfairly.” Id.

The Court’s certification decision focused a substantial amount of its analysis on findings supporting commonality. Specifically, the Court concluded that substantial anecdotal and statistical evidence supported both disparate treatment and disparate impact theories of liability.  For example, the Court detailed a number of racially insensitive and derogatory comments made by supervisors tasked with hiring and firing decisions. The Court also noted instances that could be interpreted as retaliation for complaining about unfair treatment. The Court also highlighted the statistical disparity between terminations and hours worked by black laborers and white laborers. The Court rejected defendants’ contention that black laborers were simply less qualified, comparing the statistics at defendants’ site to that of related project site run by a different contractor utilizing the same Union dispatch process where the racial disparities were substantially less. Accordingly, based on what the Court described as “substantial anecdotal and statistical evidence that site-wide discrimination affected employment decisions,” the Court concluded that plaintiffs established common questions of liability relating to the specific project site. Id. at 9, 11.

In certifying the class, the Court also rejected defendants’ administrative exhaustion argument.  Defendants argued that plaintiffs could not bring claims under a disparate impact theory because this theory was not alleged in any of the prerequisite EEOC charges. The Court concluded, however, that plaintiffs’ disparate impact theory was not procedurally barred because it “could reasonably be expected to grow out of the charge of discrimination.” Id. at 13. The Court emphasized that in this case, both the disparate treatment and disparate impact theories were “connected to Defendants’ alleged failure to institute policies to guide their managers’ discretionary decision-making,” and thus, “it would be reasonable to expect that EEOC investigators would look into Defendants’ job assignment, discipline, and termination policies” that the plaintiffs contended support the disparate impact theory. Id.

The District Court’s Trial Plan

Finally, the Court approved plaintiff’s bifurcated trial plan. In stage one, plaintiffs would bear the burden of establishing liability, by a preponderance of the evidence, on their disparate treatment and disparate impact claims, as well as the availability of punitive damages. The Court noted that “if successful on these claims, Plaintiffs would be awarded a rebuttable inference that all class members were victims of Defendants’ allegedly discriminatory practices and/or suffered a disparate impact from its neutral employment policies.” Id. at 16. In stage two, the Court noted that it would hold individual hearings before a separate jury, in which each individual class member would need to show that “he suffered an adverse employment decision or was adversely affected by a challenged policy or practice.”  The burden would then shift to defendants to show that any such adverse action was taken for legitimate reasons or to raise any other applicable affirmative defenses.

Implications For Employers

The Court’s decision highlights that, despite the hurdles to certifying class actions alleging discrimination under Title VII after Wal-Mart, courts may be willing to certify class actions where the action is defined to a specific job location and where the plaintiffs can bring forth “substantial” statistical and anecdotal evidence.

However, the Court’s decision still leaves ambiguity regarding how a trial of such claims can proceed. While the Court laid out the general procedures for the bifurcated trial, the Court emphasized that it had not determined “the exact details of how trial will proceed.” Id. at 17-18.  Accordingly, the Court ordered further briefing on the issue. Id. at 18. As such, despite the Court’s extensive order, there are still open questions regarding how this matter will be tried in a manner that comports with due process. We will continue to follow developments as the parties file their briefs and keep our readers informed.

Seal_of_the_U_S__District_Court_for_the_Northern_District_of_TexasBy Gerald L. Maatman Jr. and Christina M. Janice

In an order recently issued in James Robinson III, et al. v. General Motors Company, et al., Case No. 15-CV-158-Y (N.D. Tex. Oct. 21, 2015), Judge Terry R. Means of the U.S. District Court for the Northern District of Texas denied class certification to two employees of General Motors Company (“GM”), who sought to represent a nationwide class of employees seeking unpaid leave to observe religious holy days. The Court further granted GM’s motion to dismiss the class action complaint, but granted Plaintiffs leave to file an amended complaint.

This case is instructive for employers defending class actions and dealing with requests for religious accommodation in the workplace.

Case Background

In 2008, two employees of GM’s Arlington, Texas facility began making requests for unpaid leave to observe their respective religious holy days. GM employee James Robinson, III (“Robinson”) alleged that he requested and received unpaid leave for religious holy days, including Saturdays. Id. at 1 – 2. GM employee Chris Scruggs (“Scruggs”) alleged that he requested but was denied unpaid leave for religious holy days until GM began granting his requests for unpaid leave in 2010. Id. at 2. The two plaintiffs are of different faith communities; Robinson a member of the Seventh Day Sabbatarian community of Tyler Sabbath Fellowship, and Scruggs a member of Messianic Jewish Beth Yeshua Congregation. Id. at 1 – 2.

Plaintiffs alleged that in 2013 GM began denying Robinson’s requests for unpaid leave to observe holy days and, once Robinson’s attorney identified Scruggs as another employee being denied similar unpaid leave, that GM resumed denial of Scruggs’ requests for unpaid leave to observe holy days. Id. Plaintiffs filed their class action complaint against GM in March 2015, alleging that GM violated Title VII of the Civil Rights Act of 1964 by denying them the religious accommodation of unpaid leave to observe their respective holy days, despite the availability of volunteers to cover their shifts. The lawsuit demanded damages and a class-wide injunction ordering GM to allow unpaid leave on holy days, to inquire about the availability of volunteer coverage, and to seek no-cost methods of allowing religious leave. Id. at 2 – 3.

Plaintiffs sought certification of a class of “all General Motors workers within the United States subject to the 2011 UAW-GM National Agreement and who may seek unpaid leave for a holy day because of a religious belief.” Id. at 5. GM opposed the motion by arguing that the class that Plaintiffs purported to represent constituted an impermissible “hypothetical – – i.e., the possibility that GM employees may seek unpaid religious leave at some time the future,” and would require individualized inquiries not suited for class treatment. Id. (emphasis in original.)

The Court’s Decision

Finding that the Plaintiffs’ class definition “includes any GM employees who might request unpaid religious leave in the future,” the Court determined that the class was not adequately defined or ascertainable. Id. at 6. (emphasis in original.)  Noting that in this case the Court would be required to evaluate each class member’s religion, that religion’s holy days, and the days each member requested for leave, the Court determined that Plaintiffs failed to identify common questions of law or fact applicable to the class, and further failed to prove numerosity. Id. at 6, n. 1. The Court further observed that “[c]lass relief is most appropriate where the issues in the case turn on questions of law or fact ‘applicable in the same manner to each member of the class’” Id. (internal citations omitted).  The Court’s order, however, allows Plaintiffs until November 23, 2015, to file an amended complaint, and the opportunity to propose a definition of a more ascertainable class. Id. at 7.

Implications For Employers   

Religious accommodation under Title VII requires employers to engage in factual inquiries to determine if a requested accommodation is appropriate under Title VII or similar state law. For this reason, and as illustrated by the ruling in Robinson, these individualized factual inquiries precluded class-wide treatment of religious accommodation claims. Carefully articulating neutral policies and managing to consistent procedures for investigating and responding to requests for religious accommodation best enable employers both to respond to the needs of an increasingly diverse workforce, and to develop internal business records that may help avoid costly litigation.

200px-Ballroom_svgBy Gerald L. Maatman Jr. and Howard M. Wexler

In a case we previously blogged about here where the Court refused to grant Plaintiffs’ request for equitable tolling on their claims under the Equal Pay Act (“EPA”), Magistrate Judge Michael Dolinger recently issued a decision granting Plaintiffs’ motion for conditional certification of a collective action under the EPA to cover past/current female Sales Representatives who were employed between 2009 and 2014. The decision serves a primer as to the standard that courts in the Second Circuit utilize in deciding conditional certification motions brought under the Fair Labor Standards Act (and the EPA, which was enacted as an amendment to the FLSA).

Background To The Case

Eleven current/former female employees brought individual and class claims under the EPA and Title VII alleging disparate pay based on their gender in July of 2012. Id. at 1.  Ten of the Plaintiffs’ subsequently filed a motion for conditional certification of their EPA claims, as well as a proposed form of notice to be sent to potential opt-in plaintiffs. Id. 2

The Court’s Decision

The Court began by explaining the “two step method” adopted by the Second Circuit in deciding conditional certification motions under the FLSA (and EPA).  Id.  First, per that standard, Plaintiffs must make a “modest factual showing” that they and the potential opt-in plaintiffs, “together were victims of a common policy or plan that violated the law.”  Id. at 3.  If conditional certification is granted at the “first step,” then, following discovery, the Court – at the second step – will make a decision based “on a fuller record” as to whether the collective action may go forward by determining whether the plaintiffs who have opted-in are in fact “similarly situated” to the named plaintiffs.  Id.  The action may be decertified if the record reveals that the opt-in plaintiffs are not similarly situated to the named plaintiffs. Id.

In discussing the quantum of proof that must be established at “first step,” the Court noted that while the standard is a modest one, “unsupported assertions” of similarly situated employees are not enough. Id. at 4.

With respect to the pending motion, the Court reviewed certain pre-motion document production as well as an expert report offered by Plaintiffs, which allegedly demonstrated “a statistically significant difference between the pay of male and female Sales Representatives.” Id. at 4.  Plaintiffs also presented a list of comparators for each named Plaintiff, which they argues as proof of the pay disparity between male/female Sales Representatives.  Id.

Based on this evidence, the Court held that Plaintiffs met their modest burden.  The Court, however, was sure to note that it was neither resolving any factual disputes nor deciding any substantive issues.  To this end, the Court noted that “Plaintiffs’ own assertions of discrimination are conclusory…” Id. at 11.  However, the Court held that what Plaintiffs presented to the Court was enough to satisfy their stage one burden, even though Defendant came forward with evidence rebuking many of Plaintiffs’ assertions as such merit-based determinations are not appropriate at this juncture of the case.  Id. at 14-15.

Implication For Employers

Although the Court granted Plaintiffs’ motion for conditional certification, it is clear that even at this early juncture of the case, the record was developed through some limited discovery concerning the basis of Plaintiffs’ claims, as well as expert reports from both sides.  Given the increasing number of EPA lawsuits, Plaintiffs are increasingly “jumping the gun” and trying to obtain conditional certification before any discovery has even taken place.  This decision should be used as employers facing such “shot gun” motions to demonstrate why it is appropriate for courts to allow discovery, even limited discovery, to take place prior to an employer having to fend off a conditional certification motion as it will help crystalize the issues for the Court given that the requisite showing, while “modest” cannot be met by mere unsupported assertions.

School desk with pencil and appleBy Christopher M. Cascino and Gerald L. Maatman, Jr.

In Chicago Teachers Union, Local No. 1, American Federation of Teachers, AFL-CIO v. Bd. of Educ. of the City of Chicago, Case No. 14-2843 (7th Cir. Aug. 7, 2015), the U.S. Court of Appeals for the Seventh Circuit reversed a district court decision we discussed previously here and certified the discrimination claims of a class of African-American Chicago teachers. The case is significant for employers in that the Seventh Circuit, as it previously did in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012), a case we discussed here, again certified a class even though the final alleged discriminatory decisions were based on subjective decisions by multiple decision-makers. In addition, the Seventh Circuit further limited Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and held that, even where the legality of final employment decisions cannot be decided on a class-wide basis because of individualized exercise of discretion, there are circumstances where the legality of intermediate decisions preceding the final alleged unlawful employment decision can nonetheless be decided on a class-wide basis.

Background Of The Case

Under the Illinois School Code, schools may be subject to a “turnaround” if they have been on probation for at least one year and have failed to make adequate progress in correcting deficiencies. In a turnaround, the Board of Education takes control of the school and removes all staff. Affected teachers and para-professionals are either placed in a reassignment pool or a substitution pool with different rights to salary and other benefits depending on their tenure status and job position.

In 2011, the Board began considering which schools should be turned around in 2012. There were three steps in this process. The process started with an initial list of 226 schools eligible for turnaround because they had been on probation for one year and had failed to make adequate progress in correcting deficiencies. That list was reduced to 74 schools based on composite standardized test scores and graduation rates. Subsequently, in the third step, a qualitative “in-depth investigation process” began for the remaining 74 schools. This involved school visits, additional data collection, and meetings with a variety of school representatives and community members. No written policy applied to the final turnaround decision. Some of the factors considered were: the academic culture of the school, whether quality instruction was being provided, the quality of the leadership, and the academic trends of the school.

After reviewing the information, several Chicago Public Schools officials decided to recommend that 10 schools should be turned around. The Board subsequently agreed. The schools were located exclusively on the south and west sides of Chicago. The total percentage of African-American tenured teachers at the 10 schools selected for turnaround was approximately 51%, while the total percentage of African-American tenured teachers in the entire Chicago public school system was only 25%.

The Chicago Teachers Union and three African-American tenured teachers brought a class action lawsuit against the Chicago Board of Education alleging that the board’s decision to turn around the 10 Chicago public schools was racially discriminatory. Plaintiff sought to certify a class consisting of all African-American teachers or para-professionals in any school subjected to the 2012 turnarounds. The U.S. District Court for the Northern District of Illinois denied class certification, and the Plaintiffs appealed.

The Seventh Circuit’s Decision

The Seventh Circuit began its analysis by noting that one of the purposes of class action litigation is to avoid repeated litigation of the same issues. Chicago Teachers Union, at 8. Then pointing out that the question on appeal was whether there were common issues of law or fact common to the class, the Seventh Circuit addressed the Board’s argument that, given that the third step in the turnaround decision-making process was qualitative and subjective, there was a lack of commonality under Wal-Mart. Id. at 12.

The Seventh Circuit reasoned that the first flaw in this argument was that it skipped to the third step of the decision-making process. It pointed out that the first two steps of the process were “clearly-objective steps.” Id. at 13. The Seventh Circuit opined that these first two steps could have resulted in disparate impact discrimination against African-Americans regardless of what happened at the third step. Id. For example, it hypothesized that, after the first two steps, it could be the case that all schools remaining under consideration for turnaround had 100% African-American teaching staffs, and that the first two steps would thus have had a disparate impact on African-Americans regardless of the third step. Id. The Seventh Circuit therefore found that the question of whether the first two objective steps had a disparate impact could be decided on a class-wide basis. Id. at 14.

The Seventh Circuit concluded that this result followed from its prior decision in McReynolds.  In McReynolds, the Seventh Circuit certified the disparate impact claims of a class of African-Americans even though the employment decisions at issue were made at the discretion of 165 separate individuals because two company-wide policies allegedly caused the 165 individuals to exercise their discretion in a common way that caused discrimination. Id. at 15-16. In Chicago Teachers Union, the Seventh Circuit held that McReynolds demonstrated “that a company-wide practice is appropriate for class challenge even where some decisions in the chain of acts challenged as discriminatory can be exercised by local managers with discretion[,] at least where the class at issue is affected in a common manner[,]” and that under this principle certification of a class to determine the disparate impact of the first two steps of the turnaround decision-making process was appropriate. Id. at 17-18.

The Seventh Circuit went on to consider whether a class could be certified to determine whether the third step of the decision-making process was discriminatory. It found that, despite the fact the Board “describe[d] numerous factors considered in the various schools” during the third step, “they could be boiled down to” 10 factors, including factors like “school culture” and “parent and community input.” Id. at 19-20. It found the fact that there were 10 factors that made the “case worlds away from that in Wal-Mart where a court could have no way of knowing why each of the thousands of individual managers made distinct decisions.” Id. at 22. It did so even though there were cases where only one of the 10 factors was determinative in deciding to turnaround a school.  Id.

The Seventh Circuit also emphasized the fact that there was one decision-making body that was “of one mind, using one process.” Id. at 23. It distinguished this situation from Wal-Mart, where there were “myriad actions of individual managers.” Id. It concluded that “[d]ecisions by myriad low-level managers are different than decisions made by . . . few concentrated top-level managers,” and thus that certification of claims based on the third stage of the decision-making process was appropriate. Id. at 23-24.

The Seventh Circuit also reaffirmed McReynolds’ holding that a class should be certified where liability can be determined on a class-wide basis even though individual trials as to damages would be needed. Id. at 32-33.

Implications For Employers

Plaintiffs’ class action lawyers will likely cite to this case as further support in their McReynolds-based arguments for class certification. Of particular concern to employers might be the fact that the Seventh Circuit found that decisions based on consideration of 10 non-enumerated factors – including factors like “school culture” that are far from objectively measurable – are the type of decisions that can support certification of a discrimination class action.  Moreover, this case provides an additional tool that plaintiffs’ lawyers are likely to use to try to certify classes where employment decisions are made in multiple stages. They will likely try to certify classes even where final decisions were highly individualized and discretionary by arguing that earlier steps leading to the final decision were uniformly applied and discriminatory. Employers should be on the lookout for how successful these attempts are in future litigation.

gavel on white backgroundBy William David and Laura J. Maechtlen

As we reported here to our loyal blog readers, in April 2014, the Ninth Circuit overturned an order denying class certification of age discrimination claims filed by a group of police officers in Stockwell v. City & Cnty. of San Francisco , 749 F.3d 1107 (9th Cir. 2014). On remand, the officers filed a third motion for class certification, and Judge Phyllis Hamilton of the U.S. District Court for the Northern District of California recently issued an order, denying (again) the officers bid for certification.

Background

To recap, traditionally, the City filled its investigative positions by promoting police officers over the age of 40 who took and passed a “Q-35” exam. In 2005, the SFPD abandoned use of the Q-35 exam in favor of a new “Q-50” Sergeant’s exam. Following the change, the City began assigning investigative duties to newly promoted Sergeants who had taken the Q-50 exam, rather than to Assistant Inspectors promoted from the Q-35 list. Plaintiffs alleged that the practice of filling investigative positions from the Q-50 list had a substantial adverse impact on officers over the age of 40.

Throughout this case, plaintiffs asserted two causes of action for age discrimination — one under California’s Fair Employment and Housing Act (FEHA), the other under the federal Age Discrimination in Employment Act (ADEA). The FEHA claim was asserted by five named representative plaintiffs on behalf of a putative class, and the ADEA claim was asserted by the same five plaintiffs in their individual capacities, as well as by 25 additional individual plaintiffs. Plaintiffs sought class certification under Rule 23(b)(3) on their FEHA claim only.

On two occasions, the Court denied the plaintiffs’ bid for class certification. On the second occasion, the Court denied certification because it found that the plaintiffs did not satisfy the commonality requirement under Rule 23(a). As mentioned earlier, the Ninth Circuit overturned this decision, suggesting that the district court judge overreached by going too far in its analysis of the merits. Instead, the Ninth Circuit found that the commonality prong was met simply because “the officers are challenging a single policy they contend has adversely affected them”, and remanded the case to consider whether the putative class satisfied the requirements of Rule 23(b)(3) for class certification.

The Recent District Court Decision

On remand, the Court evaluated whether plaintiffs met the requirements under Rule 23(b)(3).  The Court also reviewed plaintiffs’ claim for class certification under Rule 23(a) with the Ninth’s Circuit’s guidance in mind. Plaintiffs also presented the Court with additional points for consideration.  In their third motion seeking class certification, the plaintiffs acknowledged that even if the City had never undertaken the allegedly discriminatory hiring practice (i.e., making promotions to investigative positions from the Q-50 list), only 55 individuals from the Q-35 list could have been promoted. In light of this information, plaintiffs made two alternative arguments.  First, they argued that the damages from the 55 “but-for” promotions should be aggregated and divided pro rata among the 133 putative members.  Second, plaintiffs argued that the Court could certify a class of only 55 individuals by using the 55 highest-ranked officers on the Q-35 list. The Court then reviewed plaintiffs’ third motion for class certification for the two proposed classes of 133 and 55 under Rules 23(a) and 23(b)(3).

The Court found that plaintiffs satisfied all certification requirements under Rule 23(a). However, plaintiffs also needed to satisfy the Rule 23(b)(3) requirements for class certification. Rule 23(b)(3) requires plaintiffs to establish that questions of law or fact common to the class predominate, and that a class action is superior to other methods available for adjudicating the controversy at issue. Upon review, the Court denied plaintiffs’ third motion for class certification because it found that the plaintiffs did not satisfy either the “predominance” or “superiority” requirements under Rule 23(b)(3) for either of the proposed classes.

            Predominance

To support their argument for certification of a liability-only class of 133, plaintiffs primarily relied on Houser v. Pritzker, 28 F.Supp. 3d 222 (S.D.N.Y. 2014), which certified a class for liability purposes, but not for damages purposes. Houser expressly found that a damages class cannot be certified under Rule 23(b)(3) and certified a liability-only class only because the plaintiffs moved for such a class under Rule 23(b)(2). In denying certification in Stockwell, the Court differentiated Houser by indicating that the plaintiffs sought certification under Rule 23(b)(3) and did not invoke Rule 23(b)(2) as a basis for their motion. Further, the Court reasoned that because plaintiffs admitted that only 55 of the 133 proposed class members would have been promoted in the “but-for” scenario, the majority of the class would be made up of individuals with no claim for relief.

Next, the Court analyzed the class of 55 under the predominance test which requires that plaintiffs show that the proposed class of 55 actually suffered a common injury and that damages from the injury are measurable on a class-wide basis through the use of a common methodology. Under the first prong of the test, the Court inquired whether the proposed class of 55 actually suffered a common injury– that is, whether each of them would have been promoted but-for the City’s allegedly discriminatory policy. The Court found that the entire proposed class of 55 did not suffer a common injury for two reasons. First, based on plaintiffs’ admission, not every one of the 55 highest-ranked Q-35 officers would have been promoted to the 55 investigative positions that were filled during the last class period. Instead, at best, the Q-35 evidence suggested only that most of the 55 highest-ranked individuals would have eventually received a promotion. Second, the Court held that plaintiffs provided no basis for determining the size of the “band” from which the 55 promotions would have been made.

Under the second prong of the test, the Court expressed concern that plaintiffs’ claims would require individualized proof at trial rather than proof common to the class because the class members may have differing amounts of damages. As the defendant pointed out, some class members have taken the Q-50 exam and some even received Q-50 promotions, which would limit their recovery in this case.

            Superiority

The Court held that plaintiffs did not satisfy the superiority analysis, either. Unlike the predominance prong, the Court did not separate its analysis of both proposed classes here because it found no material difference in the outcome of its analyses of the two classes. In making its ruling, the Court noted that the current complaint includes 5 representative plaintiffs and 25 additional individual named plaintiffs, all of whom assert an ADEA claim. It further noted that plaintiffs sought certification of a FEHA-only class, which even if granted, would leave 30 ADEA claims to be individually litigated, all based on the same facts that underlie the FEHA claim. The Court also found that the plaintiffs failed to provide any explanation as to how the individual claims would be litigated alongside the class claim.  Id. at 38.

Implications for Employers

Though the Court denied class certification on remand, the Ninth Circuit’s decision still stands. Employers can expect plaintiffs to continue to challenge the Wal-Mart decision by arguing that courts have abused their discretion by delving too far into the merits of Rule 23 requirements. The extent to which courts can consider the merits is likely to continue to take shape as district courts evaluate more cases involving Rule 23 class certifications following the Ninth Circuit’s ruling in Stockwell.