ABA EEO Committee Mid-Winter Meeting Rancho Mirage, CA March 27, 2014

ABA EEO Committee
Mid-Winter Meeting
Rancho Mirage, CA
March 27, 2014
Class Actions: Alive and Kicking
Christine E. Webber 1
Cohen Milstein Sellers & Toll PLLC, Washington, D.C.
Reports of the death of class actions are greatly exaggerated. Wal-Mart Stores Inc. v.
Dukes represented a significant change in the standard applied to class certification, and
thus required adjustment in how class cases are presented. However, the new standards
are coming into focus and they permit class attacks on systemic discrimination, even if
they require some adjustment in tactics. Class certification was denied in some
employment discrimination cases prior to Wal-Mart, and class certification will continue
to be denied in some cases following Wal-Mart – and granted in other cases.
Commonality & Predominance – Liability Questions
What Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) did and did not say
The Court held that simply identifying questions common to the class is
not sufficient; rather commonality is satisfied only where there is a
“common contention” that is “capable of classwide resolution – which
means that determination of its truth or falsity will resolve an issue that is
central to the validity of each one of the claims in one stroke.” Wal-Mart,
131 S. Ct. at 2545. Although the Court recognized that a single common
question will satisfy Rule 23(a)(2), the Court explained that the common
question must “produce a common answer to the crucial question why was
I disfavored.” Id. at 2552, 2556.
In order to move from the individual level to a class action involving
millions of individual employment decisions, the Court stated that
plaintiffs had to present “some glue holding the alleged reasons for all
those [employment] decisions together.” Id. at 2552.
In pattern or practice disparate treatment cases, Wal-Mart requires
“significant proof that [an employer] operated under a general policy of
discrimination.” Id. at 2553 (citation omitted).
This paper draws upon a prior presentation from my colleague Joseph Sellers, as well as
more recent work by Aniko Schwarcz.
For disparate impact claims, the plaintiffs must typically identify a
specific employment practice or practices that adversely affected those
advancing the claim. Id. at 2555-56. Where the disparate impact claim
challenges discretionary decision-making, the continuing vitality of which
the Wal-Mart Court expressly endorsed, 2 those seeking certification must
also show evidence of a “common mode of exercising [this] discretion.”
Id. at 2554-55.
The description for this panel suggested that when Wal-Mart referred to
class members suffering “the same injury” that might require a “common
contention that will resolve each claim for all class members.” But while
the common contention must resolve a central question, such as “why was
I disfavored,” it need not resolve every element of every claim on a
classwide basis. Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S.
Ct. 1184, 1196 (2013) (“Rule 23(b)(3) ... does not require a plaintiff
seeking class certification to prove that each ‘elemen[t] of [her] claim [is]
susceptible to classwide proof.’”).
How Wal-Mart has been applied – class cert decisions
McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482
(7th Cir. 2012)
The Seventh Circuit in McReynolds reversed an order denying
class certification involving employment policies authorizing use
of discretion alleged to have an adverse impact on AfricanAmerican brokers and provided significant guidance on the
application of Wal-Mart to disparate impact claims that challenge
discretionary decisionmaking. Applying Wal-Mart, Judge Posner
wrote for a unanimous panel that plaintiffs’ claims should have
been certified, at least as to liability and injunctive relief under
Plaintiffs challenged two companywide policies: 1) permitting
brokers to form their own teams, and 2) distributing accounts to
brokers based on their past revenue. Id. at 483, 488-89. The
Seventh Circuit found these discrete personnel policies applicable
companywide within which employees were permitted broad
discretion to satisfy the commonality requirement of Rule 23. The
See id. at 2554 (citing Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988)); see also
Calibuso v. Bank of Am. Corp., 893 F. Supp. 2d 374, 390 (E.D.N.Y. 2012) (Wal-Mart “did not
foreclose all class action claims where there is a level of discretion afforded to individual
managers and supervisors”); Kassman v. KPMG, LLP, 925 F. Supp. 2d 453, 463 (S.D.N.Y.
2013) (“Significantly, however the Court [in Wal-Mart] did not close the door altogether on the
possibility of certifying a class based on a policy of giving discretion to lower-level
existence of a companywide personnel policy distinguished the
employment practices challenged in McReynolds from the
“delegation of discretion” in Wal-Mart, which failed to qualify as a
discrete, company personnel policy. Notably, while the policies at
issue in McReynolds permitted the exercise of discretion, which
plaintiffs contended contributed to discrimination, the Seventh
Circuit found dispositive that the discretion was exercised “within
a framework established by the company” and influenced by
company-wide policies. McReynolds, 672 F.3d at 488-90. This
framework distinguished the case from the delegation of discretion
challenged in Wal-Mart.
Note that the policies challenged depended on discretionary
decision-making at local levels by 135 directors and teaming
decisions made by thousands of employees in 600 branch offices
scattered around the country. Id. at 483, 488. The court explained
that Wal-Mart helps “to show on which side of the line that
separates a company-wide practice from an exercise of discretion
by local managers this case falls.” Id. at 490. The court found that
whether the policies cause racial discrimination and whether they
are justified by business necessary are issues common to the class.
While Bolden called this a “paper thin” distinction, McReynolds
recognized the difference between a formal policy adopted by an
employer that grants discretion within a framework, and the
absence of a policy, leading to a general delegation of discretion.
Bolden v. Walsh Constr. Co., 688 F.3d 893 (7th Cir. 2012)
The district court in Bolden v. Walsh Group, 282 F.R.D. 169 (N.D.
Ill. 2012), applied Wal-Mart and McReynolds to grant Rule
23(b)(3) certification of a disparate impact challenge to
discretionary decisonmaking in promotions and assignment of
overtime as well as to hostile work environment claims by Black
journeymen in the Chicago area, while denying certification of a
disparate treatment class. Id. at 181.
The Seventh Circuit reversed, finding that the broad delegation of
discretion with no identification of top-down direction or discrete
challenged policies did not meet Wal-Mart’s standards for
establishing commonality. Moreover, the court found that
plaintiffs’ statistical analyses were flawed because plaintiffs’
expert assumed that the appropriate unit of analysis was all of
Walsh’s Chicago-area sites. Then he made no attempt to control
for variables other than race (such as a “stewards-first” clause)
which would have accounted for some of the disparity found in the
statistics. 688 F.3d at 896-97.
Significantly, the Seventh Circuit found evidence of substantial
variation from site to site, based on plaintiffs own testimony:
“Several plaintiffs testified that many sites where they worked
were discrimination-free, while others were marked by severe
racial hostility.” Id. at 896. They also failed to challenge a
companywide policy that would reconcile the site-to-site variance.
The Seventh Circuit distinguished Bolden from McReynolds,
where plaintiffs challenged a companywide policy that was
adopted by top management and applied uniformly nationwide. Id.
at 898. By contrast, the only companywide policies cited in
Bolden were 1) an uncontested rule banning racial discrimination
and 2) the company’s policy granting discretion to superintendents
at individual sites, and giving them control over the challenged
practices of overtime assignments and working conditions. Citing
Wal-Mart, the Seventh Circuit held that “allowing discretion by
local supervisors over employment matters …is just the opposite
of a uniform employment practice that would provide the
commonality needed for a class action; it is a policy against having
uniform employment practices. Id. at 897 (citing Wal-Mart, 131 S.
Ct. at 2554).
Ellis v. Costco Wholesale Corp., 285 F.R.D. 492 (N.D. Cal. 2012), appeal
dismissed (Jan. 16, 2013).
In Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011),
the Ninth Circuit in its first decision after Wal-Mart explained that
district courts are required to resolve factual disputes regarding
whether there was a common pattern or practice that could affect
the class. The Ninth Circuit vacated the district court certification
order because it had not applied the “rigorous analysis” required by
Wal-Mart, and remanded for further consideration of whether
plaintiffs’ claims of discrimination based on gender stereotyping in
promotion nationwide could be certified under the standards of
Wal-Mart. Id. at 982-84. The Ninth Circuit rejected the
defendant’s argument that a “rigorous analysis” required the court
to examine the merits to determine whether the defendant “was in
fact discriminating against women,” and explained that the court is
required to examine the merits “only inasmuch as it must
determine whether common questions exist, not to determine
whether the class could actually prevail on the merits of their
claims. Id. at 983 n.8.
On remand, the U.S. District Court for the Northern District of
California certified challenges to discrete employment policies
under both pattern or practice and disparate impact theories of
liability. Ellis v. Costco Wholesale Corp., 285 F.R.D. 492 (N.D.
Cal. 2012). Like McReynolds, the Costco court found that the
exercise of discretion in decisions made pursuant to discrete
company policies satisfied the commonality requirement of Rule
23. Costco, 285 F.R.D. at 518.
The policies at issue included: a promotion-from-within
preference, a practice against posting management job vacancies,
and the absence of a formal application process for promotions to
assistant general manager and general manager positions. Id. at
In concluding that the plaintiffs had shown “a general policy of
discrimination” supporting certification of their pattern or practice
claim, the court found significant that high-level employees were
involved in the promotion process, and that there were (1)
common, but unvalidated, criteria for promotion, (2) anecdotal and
statistical evidence showing disparities adverse to women, and (3)
evidence of gender stereotyping within the upper management
ranks. Id. at 511-20.
Relying upon evidence of executive involvement in the relevant
decisions and recognition of a clear policy regarding promotions
companywide, to which discretionary decisions were tethered, the
court also concluded that the company’s management “utilizes a
common mode of exercising discretion.” Id. at 510.
The court certified disparate impact claims, finding satisfaction of
the commonality requirement “even clearer,” as the plaintiffs had
“identified specific employment practices they allege have caused”
the challenged disparity. Id. at 510.
Easterling v. Conn. Dep’t of Corr., 278 F.R.D. 41 (D. Conn. 2011)
The court denied defendant’s motion to decertify based on WalMart. The court had earlier certified a 23(b)(2) class of female
applicants for correction officer positions and granted summary
judgment on liability, finding that a running test, which was part of
a physical fitness requirement, had a disparate impact on women in
violation of Title VII. The court granted plaintiffs’ request to
modify its certification order to include only liability and classwide
declaratory and injunctive relief in a 23(b)(2) class. The court
observed that Wal-Mart did not overrule Second Circuit precedent,
recognizing that Rule 23(c)(4) authorizes issue certification to
reduce the disputed issues and achieve efficiencies. Id. at 47.
The court shifted claims for monetary and individualized
injunctive relief to a 23(b)(3) class. The court held that because it
was impossible to determine which class members would have
received a job offer absent the discriminatory requirement, an
aggregate calculation of backpay was appropriate to be distributed
among the class on a pro rata basis. Id. at 49-50. Each individual
claimant would still need to establish her membership in the class
in order to receive backpay. Id. at 50.
Cases involving disparate impact claims challenging the use of
tests are nearly universally acknowledged to be appropriate for
United States v. City of New York, 276 F.R.D. 22 (E.D.N.Y. 2011)
The court denied defendant’s post-Wal-Mart request to decertify
the liability phase class, which encompassed African American
and Hispanic applicants for entry-level firefighter positions
challenging: 1) two written examinations with a disparate impact
on the class; and 2) a pattern or practice of intentional
discrimination. The court had previously bifurcated liability and
damages, found the City liable on both claims, and proceeded to
the remedial phase.
The court rejected the City’s argument that certification under
23(b)(2) was inappropriate, reaffirming certification of liability
claims. Id. at 35. The Court explained that Wal-Mart had no
occasion to address 23(b)(2) certification of particular issues under
Rule 23(c)(4), and thus, Robinson v. Metro-North Commuter R.R.
Co., 267 F.3d 147 (2d Cir. 2001), which required Rule 23(b)(2)
certification of common liability phase questions, remained the law
in the Circuit. 276 F.R.D. at 33-34.
The court modified its earlier 23(b)(2) certification of
compensatory damages for non-economic losses, finding that on
reconsideration after Wal-Mart, the common issues raised by these
individualized damage claims should instead be certified under
23(b)(3). The court permitted assessment of aggregated back pay,
retroactive seniority and priority hiring for several sub-classes on a
class basis, with pro rata distribution to eligible claimants, finding
it impossible to determine which class members would have
received offers in the absence of discrimination. Id. The court
found the issues of mitigation and calculation of non-economic
losses were not subject to certification and instead established an
individualized claims process, which encompassed potentially
more than 7,000 claimants. The court rejected the City’s argument
that 23(b)(3) certification was inappropriate because the claims
process would require thousands of proceedings, instead finding
these issues relatively insignificant to the litigation as a whole. Id.
at 48.
Moore v. Napolitano,No. 926 F. Supp. 2d 8, 29-30 (D.D.C. 2013)
(holding that plaintiffs’ identification of defendant’s promotions policy,
coupled with anecdotal and statistical evidence demonstrating the adverse
impact to African Americans caused by the policy, was sufficient to
establish commonality).
Valerino v. Holder, 283 F.R.D. 302 (E.D. Va. 2012) (denying
certification to a class of U.S. Marshals Service employees who alleged a
pattern or practice of denial of promotion or lateral transfer based on sex
discrimination and retaliation). Plaintiffs argued that the Merit Promotion
Process constituted a “companywide evaluation method” that provided a
“common mode of exercising discretion.” Id. at 311-13. The court
disagreed, finding that plaintiffs could not convert a completely
discretionary review into a biased testing procedure. The court found that
the challenge to discretion at several phases of the promotion process did
not satisfy commonality. The court concluded that although every
applicant was subject to a common promotion structure, that was true of
every applicant in Wal-Mart: “the Court must assess the specific thing that
a plaintiff claims creates bias and understand the way in which it is
common to the class.” Id. at 313-14.
Bennett v. Nucor Corp., 656 F.3d 802 (8th Cir. 2011) (affirming the denial
of certification to a putative class of black factory employees bringing
disparate treatment and disparate impact claims alleging that they were
denied promotions and training opportunities and subjected to a racially
hostile work environment in violation of Title VII). The Eighth Circuit
held that under Wal-Mart, plaintiffs were required to show “that all
supervisors ‘exercise[d] their discretion in a common way.’” Id. at 815
(quoting Wal-Mart, 131 S. Ct. at 2554-55). The court found that
defendant provided strong evidence that each department of the plant was
physically separate and treated differently, and thus, a plant-wide
statistical analysis was insufficient to demonstrate commonality among the
departments. The court concluded that because the district court was
presented with contradictory evidence, it did not clearly err in finding
plaintiffs had not satisfied their burden to establish commonality. Id. at
Tabor v. Hilti, Inc., 703 F.3d 1206 (10th Cir. 2013)
District court denied class certification on plaintiffs’ allegations of
gender discrimination in promotions made pursuant to the
employer’s Global Development and Coach Process (GDCP). The
court found that the employer did not keep good record of the
process and did not apply the promotion system consistently, so
that a substantial fraction of those who were promoted did not have
a record of the ratings required under the GDCP system. Id. at
The Tenth Circuit affirmed noting “The GDCP system allowed
supervisors and managers such broad discretion . . . in choosing
whether to assign a P rating, in determining what a P rating would
be, in allowing or not allowing employees to apply for promotions
based upon or even in spite of their P ratings, and in selecting
employees for promotion either because of or irrespective of P
ratings. Even under its own subjective definition of what made an
employee ‘qualified,” Hilti promoted dozens of employees who
were unqualified . . . .” Id. at 1224. This defeats commonality
insofar as “[Plaintiffs] … have not shown that Hilti maintained a
‘common mode of exercising discretion that pervade[d] the entire
company,’ 131 S. Ct. at 2554-55. To the contrary, the record
suggests that Hilti failed to maintain the GDCP system in any
uniform manner.” Id. at 1229 (emphasis added).
Parra v. Bashas', Inc., 291 F.R.D. 360, 374 (D. Ariz. 2013) (granting class
certification of pay discrimination claims where different, lower pay scales
were adopted for stores operated under the name Food City, where the
workforce was predominantly Hispanic, than the pay scales in effect at
stores operated under the name Bashas and A.J.’s, where the workforce
was predominantly white).
Dukes v. Wal-Mart Stores, Inc., 2013 WL 3993000 (N.D. Cal. Aug. 2,
The district court considered Plaintiffs renewed attempt to certify a
class following the Supreme Court’s reversal of the nationwide
class. This iteration narrowed the focus to three Wal-Mart regions
based in California. The district court noted that it has the “unique
benefit of the Supreme Court’s guidance,” on class certification,
and thus focused on whether the evidence was sufficiently
different from what the Supreme Court had previously found
inadequate. It found it was not, and denied class certification. See,
e.g., finding Plaintiffs effort to identify a common mode of
exercising discretion was “repackaged delegated discretion”
already rejected by the Supreme Court. Id. at *9.
The district court also found that some of the practices challenged
were not classwide, for example the relocation requirement applied
only to promotions to MIT/Assistant Manager, not to support
manager positions, and the failure to post policy was not in effect
for the entire class period for both promotion claims.
The district court also found the statistical evidence insufficient, as
discussed in detail in section D below regarding statistical
In re Countrywide Fin. Corp. Mortg. Lending Practices Litig., 708 F.3d
704 (6th Cir. 2013)
The Sixth Circuit held that the plaintiffs had failed to satisfy the
requirements for commonality laid down in Wal-Mart. However,
as the Sixth Circuit noted, its decision is not at odds with
McReynolds. Id. at 708-09.
This case concerned claims of race discrimination in lending,
based on the subjective component of the system used to arrive at
the interest rate offered to the borrower. Local agents had
authority under the subjective component to deviate from the APR
dictated by the objective component. Statistical evidence showed
that the result of their discretion was that African American and
Hispanic borrowers paid a higher APR than their white
Wal-Mart raised the issue of whether the local agents were
exercising their discretion in any common way. Plaintiffs argued
that the limits on the local actors discretion provided a common
mode of exercising discretion. But the court said that “conflates
range with mode.” Limits on discretion are not the same as
directing how discretion within those limits is meant to be
exercised. The latter could satisfy the “common mode” standard,
but not the former. Id. at 708.
Unlike in McReynolds, where the exercise of discretion was
influenced by two company-wide policies, the Countrywide
plaintiffs did not refer to any companywide policies that
contributed to the alleged disparate impact that arose from the
delegation of discretion to individual brokers. Id. at 709.
How Wal-Mart has been applied – motions to dismiss
As courts have long recognized, motions to dismiss or strike class
allegations prior to the conduct of discovery are highly disfavored. Many
courts have denied these post-Wal-Mart motions, finding that plaintiffs
should be entitled to conduct the discovery necessary to support their
claims as it is inappropriate to engage in a premature determination of the
merits of the claims. Indeed, courts have concluded that Wal-Mart
confirms that discovery should ordinarily be available where plaintiffs
have alleged a potentially viable class claim to permit a “rigorous
analysis” of Rule 23 factors. See, e.g., Burton v. District of Columbia,
277 F.R.D. 224, 230 (D.D.C. 2011) (denying motion to certify but
granting plaintiffs’ request for pre-certification discovery to support class
Chen-Oster v. Goldman, Sachs & Co., 2012 WL 205875 (S.D.N.Y. Jan.
19, 2012) (denying defendants motion to strike class allegations as
premature in Title VII gender discrimination action since plaintiffs may be
able to establish commonality with further discovery) (Francis, M.J.);
Chen-Oster v. Goldman, Sachs and Co., 877 F. Supp. 2d 113, (S.D.N.Y.
July 17, 2012) (Sand, J.)
In this Title VII challenge to Goldman’s promotion practices,
Judge Sand denied Goldman’s motion to strike on grounds of
23(a)(2) commonality, but found that the plaintiffs had no standing
for 23(b)(2) certification. 877 F. Supp. 2d at 118-119, 121.
The court distinguished Goldman’s promotion practices from WalMart’s, because the plaintiffs had identified a number of specific,
nationwide practices including: 360 degree review process, forced
quartile ranking of employees, and the “tap on the shoulder”
system for promotion. These specific practices, the court found,
tied the plaintiffs’ claims together. Id. at 118.
The court further distinguished this case from Wal-Mart by
emphasizing the difference in scale between the Wal-Mart
plaintiffs and the plaintiffs in Chen-Oster. Noting that the Supreme
Court repeatedly “circled back to the issue of scale,” the court
recognized that in the instant case, the plaintiffs were all in one NY
office, and all in a particular category of employment. Id. at 119.
Barghout v. Bayer Healthcare Pharms., 2012 WL 1113973 (D.N.J. Mar.
30, 2012)
The court denied defendants’ motion to strike class allegations and
partially dismiss the second amended complaint brought by a
putative class of current and former female professional employees
of a pharmaceutical company. Plaintiffs alleged a pattern or
practice of sex discrimination and disparate impact claims
challenging pay, promotion, pregnancy, sexual harassment, and
hostile work environment. Id. at *1, *9.
Defendants sought dismissal of claims prior to the class
certification, arguing that Wal-Mart “precludes certification
entirely because Plaintiffs do not state a classwide claim for
relief.” Id. at *11. Defendants argued that “highly individualized
and fact specific claims” precluded a commonality finding and that
claims for individualized monetary relief could not satisfy
23(b)(3). Id. at *9. The court held that defendants’ arguments
would be better made in a future motion to certify, not currently
before the court. “The timing issue is fatal to the instant motion by
Defendants.” Id.
Bell v. Lockheed Martin Corp., 2011 WL 6256978 (D.N.J. Dec. 14, 2011)
The court granted defendant’s motion to deny certification of a
class of female employees who alleged that defendant’s pay and
promotion policies had a disparate impact under 23(b)(2). The
court determined that discovery was substantially complete and
rejected plaintiffs’ argument that defendant’s motion was
The court found the pay and promotion policies plaintiffs
challenged were substantially similar to the policies at issue in
Wal-Mart and were “entitled to a presumption of validity.” Id. at
*7. The court found plaintiffs’ efforts to overcome this
presumption by relying on expert evidence and anecdotal evidence
of discrimination were insufficient because it was substantially the
same as the evidence rejected in Wal-Mart. Id. at *8. The court
also found that plaintiffs’ challenge to four different policies were
not subject to common answers.
Scott v. Family Dollar Stores, Inc., 733 F.3d 105 (4th Cir. 2013)
The district court in Scott v. Family Dollar Stores, Inc., 2012 WL
113657 (W.D.N.C. Jan. 13, 2012) granted defendants’ motion to
dismiss class allegations and deny plaintiffs’ motion to amend the
complaint, which alleged gender discrimination on behalf of
female store managers. The district court held that plaintiffs’
theory for class certification was foreclosed by Wal-Mart because
plaintiffs’ sex discrimination challenge was based on “subjective
decisions made at the local store level,” which could not satisfy
Rule 23(a) commonality. Id. at *4. For the same reason, the court
held that plaintiffs could not satisfy the similarly-situated standard
in order to certify a collective action under the Equal Pay Act. The
district court denied leave to amend the complaint because, inter
alia, it viewed the proposed amendments as failing to identify a
common discriminatory practice and concluded defendant would
be prejudiced by plaintiffs’ new theories that would require a
reopening of discovery.
The Fourth Circuit granted interlocutory review and reversed,
“Wal-Mart did not set out a per se rule against class certification
where subjective decision-making or discretion is alleged. Rather,
where subjective discretion is involved, Wal-Mart directs courts to
examine whether ‘all managers [] exercise discretion in a common
way with[] some common direction.’ Id. at 2554. Thus, to satisfy
commonality, a plaintiff must demonstrate that the exercise of
discretion is tied to a specific employment practice, and that the
‘subjective practice at issue affected the class in a uniform
manner.”’ 733 F. 3d 105 at 113 (citation omitted).
“Wal-Mart is limited to the exercise of discretion by lower-level
employees, as opposed to upper-level, top-management personnel.
This qualitative distinction is critical because typically, in
exercising discretion, lower-level employees do not set policies for
the entire company; whereas, when high-level personnel exercise
discretion, resulting decisions affect a much larger group, and
depending on their rank in the corporate hierarchy, all the
employees in the company. Consequently, discretionary authority
exercised by high-level corporate decision-makers, which is
applicable to a broad segment of the corporation's employees, is
more likely to satisfy the commonality requirement than the
discretion exercised by low-level managers in Wal-Mart.” Id. at
“The district court erred . . . because it failed to consider whether:
(1) in light of the discretion alleged, the discretion was exercised in
a common way under some common direction, or despite the
discretion alleged, another company-wide policy of discrimination
is also alleged; and (2) the discretionary authority at issue was
exercised by high-level managers, as distinct from the low-level
type managers in Wal-Mart.” Id. at 116.
Grogan, v. Holder, No. 1:08-cv-01747(BJR) (D.D.C. Sept. 27, 2012), Dkt.
The court denied defendant’s motion to dismiss where plaintiffs,
African American Deputy U.S. Marshals, had neither moved for
class certification nor had the opportunity to engage in class
discovery. In rejecting defendant’s argument that the Supreme
Court’s decision in Wal-Mart precluded claims challenging
discretionary decisionmaking, the court noted that District Judge
Charles Breyer rejected similar arguments made by Wal-Mart in
moving to dismiss plaintiffs’ amended complaint. Judge Breyer
found the Supreme Court’ rejection of the class “rested not on a
total rejection of plaintiffs’ theories, but on the inadequacy of their
proof’.” Id. at 6.
The court also found that plaintiffs’ amended complaint “plausibly
states that there may be a common mode of exercising discretion
that pervades USMS: a general policy of discrimination that stems
from ‘the good old boy’ social framework.” Id. at 7. Additionally,
“the policies and practices that Plaintiffs challenge, like those
controlling the Merits Promotion process and the process of
referring someone to the Office of Internal Investigations, could
conceivably be company-wide policies and practices.” Id. at 8. In
finding defendant’s arguments “premature” the court explained
that “the fact that the challenged policies and practices are highly
subjective does not immunize them under Wal-Mart from being
the target of a Title VII class action suit.” Id.
Calibuso v. Bank of Am. Corp., et al, 893 F. Supp. 2d 374 (E.D.N.Y.
Plaintiffs alleged that employment decisions were being made
based on “uniform, systematically documented, and unvalidated
company-wide procedures that favor male FAs over female FAs.”
Id. at 380.
The court denied defendant’s motion to dismiss female financial
advisors’ (“FAs”) discrimination claims, where plaintiffs’ claims
were distinguishable from the claims in Wal-Mart because unlike
in Wal-Mart, plaintiffs’ did not base their disparate impact claim
solely on the discretion afforded individual lower level
supervisors. Rather, plaintiffs argued that defendant’s “common
compensation and account distribution systems rely on criteria that
systematically favors male FAs” resulting in a discriminatory
impact on women. Id. at 389. The court found that this “critical
distinction” made plaintiffs’ case “more analogous” to McReynolds
I than to Wal-Mart, because plaintiffs in this case, like those in
McReynolds, allege that “it is the criteria used by the supervisors or
managers that leads to the disparate impact, not only the discretion
afforded to lower level supervisors.” Id. at 390.
Wal-Mart did not foreclose class certification of challenges to
subjective practices, but specifically permitted class certification
where “the subjective decisionmaking was ‘operated under a
general policy of discrimination.’” Id. at 377 (quoting 131 S. Ct. at
The court also distinguished Wal-Mart because plaintiffs here
argued that “the criteria used by individual managers is flawed”
and caused the disparate impact on women. Id. at 390.
Furthermore, the court found it plausible that plaintiffs’ could
demonstrate commonality consistent with Wal-Mart at the class
certification stage, and noted that “other federal courts in
analogous contexts have refrained from dismissing a class action
case at the motion to dismiss stage when the defendants have
challenged the class on Dukes grounds.” Id. at 390-91.
Statistical Analysis Issues
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2555 (2011) adopted new
standards for statistical evidence, requiring statistical analyses that
considered the decisionmaking level:
“‘Information about disparities at the regional and national level does not
establish the existence of disparities at individual stores, let alone raise the
inference that a company-wide policy of discrimination is implemented by
discretionary decisions at the store and district level.’ 603 F.3d, at 637. A
regional pay disparity, for example, may be attributable to only a small set
of Walmart stores, and cannot by itself establish the uniform, store-bystore disparity upon which the plaintiffs' theory of commonality depends.
Ellis v. Costco Wholesale Corp., 285 F.R.D. 492 (N.D. Cal. 2012), appeal
dismissed (Jan. 16, 2013)
The court focused on consistency of results being adverse to
women, rather than statistical significance in individual units,
holding “the data supports Plaintiffs’ contention that gender
disparities extend across all regions, and the absence of statistical
significance within each individual region is of limited value” Id.
at 523.
This was consistent with the Ninth Circuit’s guidance when it
remanded the case for further consideration. Ellis v. Costco
Wholesale Corp., 657 F.3d 970 (9th Cir. 2011), explained that if
plaintiffs were correct about a pattern of discrimination, that “one
would expect disparities in all, or at least most, regions,” without
ever referencing statistical significance. Id. at 983.
Dukes v. Wal-Mart Stores, Inc., 2013 WL 3993000 (N.D. Cal. Aug. 2,
Plaintiffs presented hourly pay regressions done at the store level,
as the store manager was the primary decisionmaker for hourly
employee pay. Analyses for promotion to MIT/AM were done at
the District level, where decisions were shared by District
Managers and the Regional Personnel Manager. Analyses for
promotion to support manager were done at the store level.
Further analyses of the store- or district-level outcomes identified
the overall patterns of disparity. However, the district court
criticized Plaintiffs’ statistical analyses saying, “They have not
identified statistically significant disparities in even a majority of
the relevant decision units in any region across the challenged pay
and promotion decisions.” Id. at *4. The court’s requirement of a
majority of units being statistically significant was unsupported by
either legal or statistical authority.
Plaintiffs sought interlocutory review (subsequently denied),
noting that while Wal-Mart required consistent adverse results, it
did not insist, or even suggest, that the disparities be statistically
significant at each store, Wal-Mart, 131 S. Ct. at 2555, and that
Costco provided similar guidance (see above at D.2.b.) Just as in
Wal-Mart, the Costco ruling spoke of the consistency of the
disparity, not whether each decisionmaking unit exhibited
significant disparities. Id. On remand, the district court found a
pattern of disparities based on consistent adverse treatment, even
though the disparities in each unit were not individually
statistically significant. Ellis v. Costco Wholesale Corp., 285
F.R.D. 492, 523 (N.D. Cal. 2012), appeal dismissed (Jan. 16,
2013) (“the data supports Plaintiffs’ contention that gender
disparities extend across all regions, and the absence of statistical
significance within each individual region is of limited value … .”)
Even prior to Wal-Mart courts looking for a pattern of
discrimination did not require statistically significant results in
each individual sub-unit. See McReynolds v. Sodexho Marriott
Servs., Inc., 349 F. Supp. 2d 1, 14-16 (D.D.C. 2004), the court
certified a class where “73.7% (84 out of 114) of the [sub-units]
show[ed] a disparity (although not a statistically significant one)
… .” See Anderson v. Boeing Co., 222 F.R.D. 521, 532-34 (N.D.
Okla. 2004) (commonality found where analysis showed nonstatistically significant disparities in some subpopulations and
differences favoring women in some subunits)
Moreover, the rule adopted by the district court is contrary to
statistical authority which directs that when data has been stratified
into multiple subsets for analysis, that there be an overall summary
statistic reported and interpreted, not merely sub-unit results.
Ramona L. Paetzold and Steven L. Willborn, The Statistics of
Discrimination: Using Statistical Evidence in Discrimination
Cases 169-171 (West, 2012-2013 ed.); Joseph L. Gastwirth et al.,
Some Important Statistical Issues Courts Should Consider in Their
Assessment of Statistical Analyses Submitted in Class Certification
Motions: Implications for Dukes v. Wal-Mart, 10 Law, Probability
& Risk 225, 228, 234-35 (2011); Michael O. Finklestein & Bruce
Levin, Statistics for Lawyers 241-249 (Springer, 1990).
When there are numerous subgroups that are analyzed, “the
configuration of the individual groups in stratified data may not
allow statistical significance to be found in any single group;
however, the data as a whole provide very convincing evidence of
a system-wide disparity.” Gastwirth at 258. Professor Gastwirth
suggested that sign tests be used to determine how different the
actual distribution of subunit results are from the expected
distribution of subunit results. There are other approaches,
An amicus brief in support of the 23(f) petition was filed by 21
Statisticians or Economists, also attacked the district court’s
analysis of the statistical evidence as inconsistent with statistical
theory. Brief of Amici Curiae Statisticians and Other Employment
Analysts in Support of Plaintiffs’ 23(f) Petition, Case No. 1380184, dkt. 2 (9th Cir., Aug. 16, 2013)
The amicus illustrated the problem with the district court’s
approach nicely with a hypothetical company with “20 decisionmaking units, each with 100 similarly-situated employees, 50 men
and 50 women. Each unit grants ten promotions, with 7 going to
men and 3 to women. In each unit, the disparity between the
expected number of female promotions (5) and the actual number
(3) corresponds to 1.33 standard deviations, which falls short of the
1.96 standard deviation standard for statistical significance. . . .
Aggregated across units, however, the disparity between the
expected number of female promotions (100) and the actual
number (60) corresponds to 5.96 standard deviations, which is
highly statistically significant. Now alter this hypothetical so that
zero women are selected for promotion in 14 units and ten women
are selected in the other six units, producing the same overall 60
promotions of women. Under the District Court’s standard,
statistically significant disparities in the majority (70%) of units
would be evidence of a common issue. Yet, any rational analysis
would see that the first hypothetical provides far stronger evidence
of an issue common to the class.” Id. at 2-3.
The amicus also explained an alternative to using sign tests to look
at the issue, “If a sufficient number of units and employees are
available for analysis, statisticians expect a bell curve distribution
of the units in terms of gender disparities in pay. In the absence of
gender discrimination, the apex of this curve is expected to be
centered at zero; about 50% of the units would have disparities
adverse to women; and about 2.5% of the units would be adverse
to women to a statistically significant extent. If, instead, a policy
of gender discrimination uniformly affected all of a company’s
decision-making units, employment analysts would expect to see a
shift in the bell curve placing its apex adverse to women instead of
in a gender-neutral position. While the percentage of units with
disparities significantly adverse to women would increase, the
curve would not typically move so far that the majority of the units
would exhibit statistically significant disparities.” Id. at 7.
Predominance & Damages Issues
Wal-Mart and Damages Issues
The Court reasoned that back pay is an “individualized” rather than
“indivisible” remedy. It derived this distinction from Title VII itself,
which prohibits the award of relief, including back pay, “for any reason
other than discrimination . . .” 42 U.S.C. § 2000e-5(g)(2)(A). The Court
interpreted this provision as granting to an employer a right to “litigate its
statutory defenses to individual claims,” whether they are advanced by
employees individually or as members of a prevailing class. Wal-Mart,
131 S. Ct. at 2561. Thus, under Title VII, an employer is generally
entitled to individualized determinations of each employee’s eligibility for
back pay. Id. at 2560.
Most statutes do not include similar language regarding individualized
defenses, and thus many courts have found Wal-Mart changes nothing
about handling damages in such cases. Romero v. Fla. Power & Light Co.,
2012 WL 1970125, at *4 (M.D. Fla. June 1, 2012) (finding Wal-Mart
inapplicable in FLSA case); Driver v. Apple/Illinois, LLC, 2012 WL
689169, at *3 (N.D. Ill. Mar. 2, 2012) (holding that Wal-Mart’s “Trial by
Formula” language did not bar use of class-wide proof to determine
damages in wage and hour case). The Ninth Circuit decision in Wang v.
Chinese Daily News, 709 F.3d 829, 836 (9th Cir. 2013) initially appeared
to endorse individualized damages hearings in employee class actions, but
after a Petition for Rehearing, the panel issued a revised opinion
withdrawing any such suggestion. Wang v. Chinese Daily News, 737 F.3d
538 (9th Cir. 2013).
Due process does not bar the use of aggregate proof, which has been used
in a variety of contexts for eons, and Wal-Mart did not base its ruling on
any due process concerns.
Significantly, while Wal-Mart used the phrase “trial by formula” to
describe what it was rejecting, the plan – adopted by the Ninth Circuit, not
proposed by either party or set forth by the district court – actually did not
involve statistical formulas. Instead, the Ninth Circuit had said that a
sample of the class would be selected and discovery taken on their
individual claims, then a special master would decide which claims would
prevail and the lost wages, and the percentage of prevailing claims would
be multiplied by the number of unexamined class members and by the
average backpay award in the sample, to arrive at the class recovery
without any individualized consideration beyond the sample set. Thus,
what the Supreme Court rejected was far from the sort of aggregate proof
of lost wages based on statistical formulas incorporating individualized
information about all class members that Plaintiffs had proposed.
The use of statistical techniques to assess backpay has been acknowledged
to be “individualized.” Shipes v. Trinity Indus., 987 F.2d 311, 316-17 (5th
Cir. 1993) (approving calculation of back pay in a pay discrimination case
by calculating the average starting pay of white workers with
qualifications similar to those of each class member, and using the
difference between the class member’s wage rate and the average white
wage rate as a measure of damages). The individual pay rate and
qualifications of each class member is considered in calculating
individualized damages, without the need to have individual hearings.
Indeed, even after Wal-Mart adjudication of the aggregate amount of back
pay due to the class, followed by further proceedings to allocate that back
pay subject to individualized defenses has been approved.
For example, the court in United States v. City of New York, 276
F.R.D. 22 (E.D.N.Y. 2011), adopted this approach after Wal-Mart,
certifying pursuant to Rule 23(b)(2), claims for liability as well as
declaratory and injunctive relief alleged under both disparate
treatment and impact theories under Title VII. Id. at 30-31, 33-35.
Thereafter, the court bifurcated the case, establishing a separate
remedial phase. In the remedial phase, the court certified the
claims for back pay and other non-monetary relief pursuant to Rule
23(b)(3), finding that adjudication of the aggregate amount of back
pay awardable to the class could be achieved using a formula and
that the employer could assert defenses to the claims for each class
member in individual proceedings. Id. at 48. The court ordered
the balance of the back pay proceedings for the class with more
than 7000 members to be adjudicated individually to permit
consideration of any statutory defenses, such as mitigation of
damages, for each class member separately. Id.
The court adopted a similar approach in Easterling v. Connecticut
Dep’t of Correction, 278 F.R.D. 41 (D. Conn. 2011), granting
plaintiffs’ request to modify its certification order to a hybrid class
that would include in a 23(b)(2) class only liability and classwide
declaratory and injunctive relief under Title VII in a disparate
impact action. The court shifted claims for monetary and
individualized injunctive relief to a 23(b)(3) class. The court
determined that because it was impossible to determine which
class members would have received a job offer absent the
discriminatory requirement, an aggregate calculation of backpay
was appropriate to be distributed among the class on a pro rata
basis. Id. at 49-50. Each individual claimant would still need to
establish her membership in the class in order to receive backpay.
Id. at 40.
What Comcast did and did not say
In Comcast v. Behrend, 133 S. Ct. 1426 (2013) the Supreme Court
reviewed an anti-trust case in which class certification was granted on one
of four theories presented by plaintiffs. The plaintiffs’ expert, however,
presented a damages analysis which “did not isolate damages resulting
from any one theory of antitrust impact.” Id. at 1431. The Court held that
class certification should have been denied because the model for damages
was not tied to the only surviving theory of liability. The Court then used
defendants favorite language and said that damages must be “capable of
measurement on a class-wide basis.” Id. at 1433.
The reference to “damages” and to plaintiffs having conceded that
damages must be capable of measurement on a class-wide basis must be
understood in the context of antitrust law. Significantly, in antitrust law,
the existence of “antitrust impact” or “antitrust injury” is an element of
liability. The existence of damages (whether there is an “antitrust
impact”) is distinguished from the amount of damages. Newton v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 188 (3d Cir. 2001).
Nothing in Comcast changes the well-settled principle that proof of classwide damages is not a prerequisite to certification. “Recognition that
individual damages calculations do not preclude class certification under
Rule 23(b)(3) is well nigh universal.” Comcast, 133 S. Ct. at 1437
(Ginsburg and Breyer, JJ., dissenting) (citation omitted). Because Comcast
does not repudiate this precedent, the Comcast “decision should not be
read to require, as a prerequisite to certification, that damages attributable
to a classwide injury be measurable ‘on a class-wide basis.’” Id. at 1436
(Ginsburg and Breyer, JJ., dissenting).
Indeed, in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds,
133 S. Ct. 1184 (2013), a six-justice majority held that “Rule 23(b)(3) …
does not require a plaintiff seeking class certification to prove that ‘each
elemen[t] of [her] claim [is] susceptible to classwide proof.’” Id. at 1196.
Surely the Supreme Court did not change its view of the issue so
dramatically between Amgen and Comcast.
How Comcast Has Been Applied
In In re High-Tech Employee Antitrust Litigation, 289 F.R.D. 555, 582 (N.D.
Cal. 2013), the court held that Comcast did not preclude certification even in
an antitrust case. After noting that Comcast did not break new ground or
create new rules, the court found that the plaintiffs had satisfied their burden
under Rule 23(b)(3) because they “established a plausible method for
providing an estimate of damages . . . .” Id. As the Comcast majority
emphasized, a proposed method of class-wide damage “[c]alculations need
not be exact” to satisfy Rule 23(b)(3) -- it must only be consistent with the
plaintiffs' theory of liability. Comcast, 131 S.Ct. at 1433.
Gulino, et al. v. Bd. Of Educ. of New York, 2013 WL 4647190 (S.D.N.Y.
Aug. 29, 2013).
The district court certified a liability class and prescribed a twostage remedial phase. In 2001, Plaintiffs’ class was certified under
23(b)(2). In 2012, post-Wal-Mart, this court partially decertified
the 23(b)(2) class “to the extent it sought damages and
individualized injunctive relief,” but the class survived “to the
extent that Plaintiff sought relief that may be awarded under Rule
23(b)(2), including a declaratory judgment regarding liability and
classwide injunctive relief.” Id. at *1
In the most recent decision, the court approved class certification
under Rule 23(b)(3) even though the remedial phase “is typically
dominated by individualized proof.” Id. at *10. The court
explained that, “[c]lasses certified under Rule 23(b)(3) necessarily
involve some individual issues; the question before the Court is
whether those predominate over common issues, or vice versa.”
Id. at *11 (citing Wal-Mart, Costco, and Teamsters).
In re Whirlpool Corp. Front-Loading Washer Prods Liab., 722 F.3d 838
(6th Cir. 2013), cert denied, Whirlpool Corp. v. Glazer, 2014 WL 684064
In this consumer case concerning moldy washers, class claims
were bifurcated between liability and damages issues, and,
pursuant to Rule 23(c)(4), certified for liability only. 722 F.3d at
The court explained that Comcast does not change the outcome of
the Rule 23 analysis: in Comcast, neither the district court nor the
Third Circuit required plaintiffs to link each liability theory to a
damages calculation because they found doing so would
necessitate inquiry into the merits, which had no place in the class
cert decision. Id. at 860. Comcast rejected those lower court
decisions as violating Wal-Mart and improperly allowing a
damages model that was not tied to the liability theory to be
offered at the class cert stage. The absence of an appropriate
damages model precluded a finding that the predominance
requirement had been satisfied. Id.
Here the court certified only a liability class and reserved damages
for individual determination. “To the extent that [Comcast]
reaffirms the settled rule that liability issues relating to injury must
be susceptible to proof on a classwide basis to meet the
predominance standard, our opinion thoroughly demonstrates why
that requirement is met in this case” Id.
Butler v. Sears, Roebuck and Co., 727 F.3d 796 (7th Cir. 2013), cert.
denied, 2014 WL 684064 (2014).
Another moldy washing machine case in which the court certified
a class to determine liability, to be followed by individual hearings
to determine damages sustained by each class member. Id. at 798799.
The Seventh Circuit explained that the expert in Comcast failed to
link the plaintiff’s injury (damages) to the accepted theory of
Comcast’s alleged antitrust violation, as opposed to other theories.
By contrast, here “there is no possibility in this case that damages
could be attributed to acts of the defendants that are not challenged
on a class-wide basis; all members of the mold class attribute their
damages to mold, and all members of control-unit class to a defect
in the control unit.” Id. at 800.
Furthermore, “Sears compares the design changes that may have
affected the severity of the mold problem to the different antitrust
liability theories in Comcast. But it was not the existence of
multiple theories in that case that precluded class certification; it
was the plaintiffs’ failure to base all the damages they sought on
the antitrust impact – the injury – of which the plaintiffs were
complaining. In contrast, any buyer of a Kenmore washing
machine who experienced a mold problem was harmed by a breach
of warranty alleged in the complaint.” Id. at 800.
Butler rejects the interpretation of Comcast that says predominance
cannot be met unless every member of the class has identical
damages. The Seventh Circuit emphasizes the relative importance
of common issues over the sheer quantity of common vs.
individual issues: “It would drive a stake through the heart of the
class action device, in cases in which damages were sought rather
than an injunction or a declaratory judgment, to require that every
member of the class have identical damages. If the issues of
liability are genuinely common issues, and the damages of
individual class members can be readily determined in individual
hearings, in settlement negotiations, or by creation of subclasses,
the fact that damages are not identical across all class members
should not preclude class certification. Otherwise defendants
would be able to escape liability for tortious harms of enormous
magnitude but so widely distributed as not to be remediable in
individual suits.” Id. at 801.
The Ninth Circuit reversed the district court’s denial of class
certification in a state wage and hour case.
With respect to predominance, the lower court applied the wrong
legal standard. Since the amount of pay owed was the only
individualized factor that the district court identified, “damage
calculations alone cannot defeat certification.” Id. at 513 (quoting
Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087, 1094 (9th
Cir. 2010)). Moreover, “[t]he potential existence of individualized
damage assessments…does not detract from the action’s suitability
for class certification.” Id. at 514.
Consistent with Wal-Mart, the Ninth Circuit held that “the
presence of individualized damages cannot, by itself, defeat class
certification under Rule 23(b)(3)” because 23(b)(3) is the section
under which individualized monetary claims are properly
considered. In addition, pursuant to Comcast, “a model purporting
to serve as evidence of damages in this class action must measure
only those damages attributable to that theory.” Id. at 514 (citing
Comcast, 133 S. Ct. 1426 at 1433). Since the court found the
evidence in this case included mechanisms for measuring the effect
of defendant’s unlawful practices on individual employee wages,
this case was well suited to accurate calculation of individual
damages. Thus, the class action model is superior to alternatives,
none of which were even suggested in the lower court. Id. at 51415.
Lessons Learned, Where are we now?
Leyva v. Medline Indus., Inc., 716 F.3d 510 (9th Cir. 2013)
Disparate Impact
Disparate impact claims that do not challenge subjective decisionmaking –
basically untouched, except for changes to the remedies phase – see
Vulcan, Easterling
Disparate impact claims that do challenge subjective decisionmaking –
either show a common mode of exercising discretion (e.g. Costco) or a
centrally established practice (e.g. McReynolds) or a single/small group of
decisionmakers (e.g. Moore, Family Dollar)
Disparate Treatment
Plaintiffs must show significant proof of a general policy of discrimination
to certify a disparate treatment claim. (e.g. Costco)
Examples of practices that are susceptible to class certification
policy and practice to not post vacancies (simply not requiring posting so
practice is inconsistent is not enough, must be consistently not posted) –
Chen-Oster, Costco
discretion exercised by a single person or small group of decisionmakers –
Costco, Moore, Family Dollar
merit percentage increases, so start low = stay low
360-degree evaluation system; forced quartile ranking of employees –
common mode of exercising discretion – e.g. Costco