Seventh Circuit Finds Wal-Mart v. Dukes Does Not Limit Certification of Impact Cases -- McReynolds v. Merrill Lynch

Judge Posner of the Seventh Circuit produces more than his fair share of insightful analysis in his opinions.  A case in point is McReynolds v. Merill Lynch.

The issue was whether Merill Lynch's policy of allowing its advisors to form self-selecting teams resulted in a harmful disparate impact on its black financial advisors.  Relying on Wal-Mart v. Dukes, the trial court denied class certification on the ground that the plaintiffs' theory turned on proof of individual acts of discrimination by the individual advisors who allegedly excluded blacks from their internal teams.

Posner's opinion reversed the denial of class cert.  In doing so, the Court made some potentially far-reaching points concerning the lessons of Wal-Mart, and the nature of class certification generally.

The crucial point about Wal-Mart is that there was no company-wide policy at issue.  Rather, it involved a theory of liability under which individual managers intentionally discriminated against women in violation of the company's policy.  Thus,

Wal–Mart holds that if employment discrimination is practiced by the employing company's local managers, exercising discretion granted them by top management (granted them as a matter of necessity, in Wal–Mart's case, because the company has 1.4 million U .S. employees), rather than implementing a uniform policy established by top management to govern the local managers, a class action by more than a million current and former employees is unmanageable; the incidents of discrimination complained of do not present a common issue that could be resolved efficiently in a single proceeding.

 By contrast, a different analysis applies where the plaintiffs are challenging the (intentional or unintentional) effect of a class-wide policy.  As the Court explained with the following hypothetical example: 

Suppose a police department authorizes each police officer to select an officer junior to him to be his partner. And suppose it turns out that male police officers never select female officers as their partners and white officers never select black officers as their partners. There would be no intentional discrimination at the departmental level, but the practice of allowing police officers to choose their partners could be challenged as enabling sexual and racial discrimination—as having in the jargon of discrimination law a “disparate impact” on a protected group—and if a discriminatory effect was proved, then to avoid an adverse judgment the department would have to prove that the policy was essential to the department's mission.  [Citations.]  That case would not be controlled by Wal–Mart (although there is an undoubted resemblance), in which employment decisions were delegated to local managers; it would be an employment decision by top management.

The main take-away point for class certification is significant because it applies to the entire spectrum of putative class claims, including wage and hour claims: individual intent cannot be determined on a class-wide basis but the impact of a policy can be determined on a class-wide basis, even if its impact is partly due to the intentional acts of individuals.     


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