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Posts Tagged ‘employment discrimination’

According to Pete Kasperowicz at The Hill’s Floor Action Blog, Senator Al Franken (D-Minn.) and Representative Rosa DeLauro (D-Conn.) have introduced legislation in Congress intended to reverse limitations on employment discrimination class actions recognized in the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes

A fact sheet available on Senator Franken’s official website describes the key provisions of the bill as follows:

The Equal Employment Opportunity Restoration Act will restore workers’ ability to challenge discriminatory employment practices on a class-wide basis. It adds to Title 28 of the U.S. Code a new section 4201, which does the following:

  • Section 4201(a) creates a new judicial procedure – called “group actions” – that workers can use when bringing employment discrimination cases. The requirements for establishing a group action are the same as the pre-Dukes requirements for maintaining a class action under Rule 23 of the Federal Rules of Civil Procedure—namely, clarifying that the merits of the case need not be proven to certify the group action.
  • Section 4201(b) provides that group actions can be used regardless of whether the group is challenging an objective employment practice, a subjective employment practice, or a mixed employment practice (such as the use of a written test to qualify for an interview).  It also provides that employers’ written anti-discrimination policies can be considered as a defense to certification only insofar as the employer demonstrates that the policy actually has been implemented in practice.
  • Section 4201(c) says that the group actions authorized by this section are subject to the same procedural requirements as class actions authorized by Rule 23. These include notice and opt-out requirements. This section also preserves the application of the Class Action Fairness Act and the availability of appeals.
  • Section 4201(d) says that courts can use statistical analyses and any other procedures they deem necessary to provide justice to prevailing plaintiffs.

It does not appear from Senator Franken’s fact sheet that the bill has significant bipartisan support, and having just been introduced, there is no telling how far it will go towards becoming law in its present form.  However, we’ll keep an eye on any future developments here at CAB.

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For those readers who are interested in additional insights on Judge Posner’s opinion in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 11-3639 (7th Cir., Feb. 24, 2012), which was the subject of Wednesday’s CAB post, here’s a link to an insightful executive alert on the decision, which was authored by colleagues in Baker Hostler’s New York office, partner Deborah Renner and associate Matthew Moody.

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Last Friday, the Seventh Circuit Court of Appeals issued a significant employment class action decision that may challenge conventional wisdom about the impact of the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes.   The opinion, authored by respected Judge Richard Posner, is McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 11-3639 (7th Cir., Feb. 24, 2012).

The procedural history of McReynolds is interesting, because the plaintiffs had actually moved for reconsideration of an earlier denial of class certification after the decidedly pro-employer decision in Dukes was announced.  Although the trial court judge was unconvinced to change his earlier decision, he did agree that Dukes presented a good basis for reconsideration of the class action issue, and expressly stated in his decision that he believed the case was a good candidate for an interlocutory appeal under Rule 23(f).

The Seventh Circuit accepted the appeal, and reversed the denial of class certification.  The Seventh Circuit panel recognized that individualized issues would prevent certification of any claims for back pay or damages, but held that certification of the issue of whether the defendant’s challenged employment policies had an adverse impact on members of a protected class would still be appropriate under Rule 23(b)(2), which allows a class to be certified for the purpose of awarding injunctive relief, and Rule 23(c)(4), which allows certification of particular issues.  Essentially, the case would be certified for the purpose of deciding whether the defendant’s challenged policies created a disparate impact to members of a protected class and for the purpose of ruling on plaintiffs’ request to enjoin the practices.  Any claims for back pay, compensatory or punitive damages would then have to be brought as separate proceedings. 

In reaching its conclusion, the court drew a key factual distinction between the practices being challenged in the case before it and the practices that had been challenged in Dukes.  In McReynolds, the practice being challenged was the company-wide policy of “permitting brokers to form their own teams and prescribing criteria for account distributions that favor the already successfulthose who may owe heir success to having been invited to join a successful or promising team.”  The court distinguished this policy, which it characterized as a firm-wide policy of Merrill Lynch, from the allegations in Dukes, which were that the lack of a uniform corporate policy on discrimination created too much discretion in local managers to create locally discriminatory policies.

I’ll be posting more on this decision within the coming week, so stay tuned…

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Class action news has slowed a bit over the Summer months, at least compared to the non-stop action we witnessed this Spring.  But one area that has seen continued development in the past few months has been the area of class arbitration waivers, where several lower court decisions have been issued in the wake of AT&T Mobility LLC v. Concepcion.  A view of the decisions shows that class actions are far from dead, despite the dire predictions of many experts following the decision.  As my partner, John Lewis, noted in a recent interview with the AmLaw Daily, “While many people thought Concepcion was the end of the line, now we’re seeing the reaction to Conception with district courts distinguishing it on various grounds.”  Here is a quick summary of several key decisions that have interpreted or applied Concepcion:

Chen-Oster v. Goldman Sachs, Inc. (link courtesy of Justia.com) – U.S. District Court for the Southern District of New York – July 7, 2011 – applying the federal common law of arbitrability in rejecting the argument that Concepcion required enforcement of class arbitration waiver in a gender discrimination pattern and practice case, holding that enforcement of the arbitration clause at issue would interfere with the enforcement of a federal substantive right.

Brown v. Ralphs Grocery Company (link courtesy of Impact Litigation Journal, which also has a  summary of the decision here) – California Court of Appeal – July 12, 2011 – holding that representative actions for state labor code violations under California’s Private Attorney General Act (PAGA) were not preempted by the FAA because Concepcion did not address preemption in cases involving PAGA’s statutory procedure and because the procedure did not involve many of the attributes of class action procedure that the Supreme Court had held were inconsistent with the purposes of arbitration.

Kanbar v. O’Melveny & Myers (link also courtesy of the AmLaw Daily) – U.S. District Court for the Northern District of California – July 21, 2011 –  holding in an employment discrimination case that notwithstanding Concepcion, an arbitration provision was unconscionable under California state law and that state law was not preempted under the FAA, but nonetheless compelling arbitration on the grounds that the plaintiff had waived her right to object to enforceability of the arbitration clause.

Cruz v. Cingular Wireless LLC – Eleventh Circuit Court of Appeals – August 11, 2011 – holding that Concepcion compelled the conclusion that arbitration clause was enforceable in a case involving the same exact arbitration clause that was at issue in Concepcion (the clause in AT&T’s mobile phone contract).

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Last week, Seventh Circuit Court of Appeals Judge Richard Posner authored an opinion addressing one of the key issues awaiting a ruling by the United States Supreme Court this term, holding that an employment discrimination class action seeking back pay could not be certified under FRCP 23(b)(2).   Here is a relevant excerpt from the opinion, Randall v. Rolls-Royce Corp., No. 10-3446, slip op.  at 12-14 (7th Cir., March 30 2011) (I have removed the internal citations for ease of reading),

[I]magine if the plaintiffs in this case were just seeking an injunction commanding basepay equalization between male and female employees.

But that’s not what they’re seeking, exclusively or even mainly; and indeed this isn’t a proper Rule 23(b)(2) suit.  Class action lawyers like to sue under that provision because it is less demanding, in a variety of ways, than Rule 23(b)(3) suits, which usually are the only available alternative. . . . Of particular significance, “plaintiffs may attempt to shoehorn damages actions into the Rule 23(b)(2) framework, depriving class members of notice and opt-out protections. The incentives to do so are large. Plaintiffs’ counsel effectively gathers clients—often thousands of clients—by a certification under (b)(2). Defendants attempting to purchase res judicata may prefer certification under (b)(2) over (b)(3).” . . . How far Rule 23(b)(2) can be stretched is the issue in the gigantic class action against Wal-Mart, Dukes v. Wal-Mart Stores, Inc. . . . now before the Supreme Court. The present case is not as big a stretch, but it is big enough. 

True, the only monetary relief sought is back pay; true, too—contrary to the common but erroneous notion that courts of equity can’t award monetary relief—they can do so if the award is merely incidental to the grant of an injunction or declaratory relief: “incidental” in the sense of requiring only a mechanical computation. That is the “clean-up” doctrine of equity. . . . In such a case, to make the class representative bring a second suit, for damages, on top of his injunctive action would create pointless redundancy. . . .

The plaintiffs argue that if only equitable relief is sought, a class action suit may be maintained under Rule 23(b)(2) even if the equitable relief is mainly monetary. We disagree. To read “injunctive” in the rule to mean “equitable” is to become mired in sticky questions of differentiating between “legal” and “equitable” actions—and such questions abound. . . .  We can avoid the mire by recognizing that Rule 23(b)(2) class actions are limited to cases in which “final injunctive relief or corresponding declaratory relief” is appropriate, rather than extending to all cases in which any kind of equitable relief is sought. . . . The monetary relief sought in a case, whether denominated legal or equitable, may make the case unsuitable for Rule 23(b)(2) treatment. . . .  As this case illustrates: calculating the amount of back pay to which the members of the class would be entitled if the plaintiffs prevailed would require 500 separate hearings. The monetary tail would be wagging the injunction dog. An injunction thus “would not provide ‘final’ relief as required by Rule 23(b)(2). An injunction is not a final remedy if it would merely lay an evidentiary foundation for subsequent determinations of liability.”

Could it be that the resolution of this issue is as simple as the recognition that “equitable” doesn’t mean “injunctive” and that class actions seeking monetary relief, whether “equitable” or “legal” can only be brought under Rule 23(b)(3), not Rule 23(b)(2)?  The Supreme Court should have an answer within the next two months.

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The Wal-Mart v. Dukes argument was held as scheduled today.  Here is a Wal-Mart v. Dukes Oral Argument Transcript.  Some initial observations:

  • The beginning of the defendant’s argument was focused on the proper standard for reviewing whether the plaintiff had sufficiently common evidence of a uniform policy.
  • It was not until later in the defendant’s argument that the questioning turned to the question certified for review: whether a Rule 23(b)(2) class action should be certified in a class action seeking monetary relief in the form of back pay.  Questioning on this issue continued into the plaintiff’s argument, but then returned to questions of what standard should apply more generally in certifying an employment discrimination class action.
  • On balance, the tougher questioning of the defendant’s attorney was from the more liberal faction of the court, and the tougher question of the plaintiff’s attorney was from the more conservative faction of the court. 
  • However, to the extent the questions can be a sign of a potential split in the Court (always a dangerous assumption), it is interesting that Justice Ginsburg seemed particularly troubled by the plaintiff’s position on the applicability of Rule 23(b)(2) to the back pay claims.
  • Overall, the sentiment seemed to be against allowing Rule 23(b)(2) to be used as a vehicle to resolve individual back pay claims (again, recognizing that the nature and tone of oral argument questions is not a very reliable way to predict outcomes).  However, there seemed to be some support among several Justices for the possibility that a case could be certified under Rule 23(b)(2) for injunctive relief only, on the ground that hiring policies are discriminatory because they are excessively subjective.

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Can plaintiffs seek back-damages using a class action vehicle that’s built for righting wrongs in equity through remedies like injunction?  In the biggest work place class action ever, the United States Supreme Court has granted cert on the question of whether plaintiffs can use the Rule 23(b)(2) injunctive class procedure as a vehicle to seek money damages.  Why does it matter?  Because injunctive classes are much easier to certify than damages classes.  Usually, when plaintiffs seek damages as their primary remedy they pursue class certification through Rule 23(b)(3), the money damages class, which has significantly more burdensome procedural requirements to achieve class certification than its injunctive counterpart.  The high court should have an answer by June of 2011.

For an accessible preview check out Lyle Denniston’s article at Scotus Blog.  Read the 9th Circuit opinion here.  Check out other comments by Supreme Court watchers:  David G. Savage has an article in the L.A. Times; Jess Bravin and Ann Zimmerman have this piece in the Wall Street Journal; Adam Liptak and Steven Greenhouse file this report in the New York Times.

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