Summary
denying class certification for lack of commonality and typicality where plaintiffs proposed class included employees who "worked in several different departments and on different "teams," and employees "who were both management level and non-management level
Summary of this case from Webb v. Merck & Co., Inc.Opinion
Civ. No. 3:98-CV-1876-L.
Filed March 31, 2000.
MEMORANDUM OPINION AND ORDER
Before the court are Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations, filed October 2, 1998; Plaintiffs' Motion for Class Certification, filed November 9, 1998; Plaintiffs' Motion to Stay Discovery, filed January 15, 1999; and Defendant's Motion for Rule 16(a) Conference, filed February 25, 1999. The court has carefully considered the motions, responses, replies, and the pleadings on file in this case. For the following reasons, Plaintiffs' Motion for Class Certification is denied; Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations is granted; Plaintiffs' Motion to Stay Discovery is denied as moot; and Defendant's Motion for Rule 16(a) Conference is denied.
Defendant filed its Motion to Strike and Dismiss Plaintiffs' Class Action Allegations on October 2, 1998, in response to Plaintiffs' Original Complaint. On September 21, 1999, Plaintiffs filed their First Amended Complaint, adding Plaintiff James White as a party. Because Plaintiffs' class action allegations were unchanged by the First Amended Complaint, the court will consider Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations with respect to the First Amended Complaint.
I. Factual and Procedural Background
Plaintiffs are a group of past and present African-American employees of Defendant who allege that they have been harmed by Defendant's alleged racially discriminatory policies and practices with respect to hiring, promotion, compensation and other employment related matters. As a group, Plaintiffs have alleged claims of race discrimination and retaliation in violation of Title VII, 42 U.S.C. § 2000e, et seq., and 42 U.S.C. § 1981. Plaintiffs seek injunctive and declaratory relief, back pay, interest on back pay, front pay, damages for lost compensation and benefits, compensatory damages, punitive damages, pre and postjudgment interest, and attorneys' fees. Plaintiffs further contend that this case should be certified as a class action pursuant to Fed.R.Civ.P. 23.
Plaintiff Gina Riley also alleges a constructive discharge claim pursuant to both Title VII and section 1981.
Plaintiffs' First Amended Complaint ("Complaint") at pp. 20-21.
II. Plaintiffs' Motion for Class Certification
A class action may be certified by the court when the prerequisites of Fed.R.Civ.P. 23(a) have been satisfied. These requirements are:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Fed.R.Civ.P. 23(a). Additionally, the class must qualify for certification by meeting at least one of the prerequisites of Rule 23, subsection (b). Plaintiffs have moved for class certification, contending that the proposed class meets the requirements set out in Rule 23(a) and (b)(2), or alternatively, (b)(3).
Plaintiffs' first task under Rule 23(a) is to show that joinder of all class members is impracticable due to the numerosity of the potential class. Plaintiffs estimate that the class would be comprised of approximately 500-1000 members who are geographically dispersed in cities across the United States, including Dallas, Boston, Pittsburgh, Seattle, Cleveland, and Oakland, California. They therefore contend that joinder of all members is impracticable for a class this large that is geographically dispersed throughout the country. Defendants respond that Plaintiffs have not met the numerosity requirement because Plaintiffs have not presented any evidence supporting their estimate of class size and geographic dispersion. Plaintiffs point out, however, that information regarding the true number of potential class members is solely within the control of Defendant, and Defendant has not made any effort to dispute Plaintiffs' estimate. Plaintiffs have not had the opportunity to conduct class discovery in this matter. At this stage of the proceedings, the court will assume that Plaintiffs have met Rule 23(a)'s numerosity requirement.
Next, Plaintiffs must show that there are questions of law or fact present that are common to the proposed class, and that their claims are typical of the claims of the other class members. These two requirements have a tendency to merge, see General Telephone Co. v. Falcon, 457 U.S. 147, 158 n. 13 (1982), and the burden imposed on Plaintiffs is heavy. As the Supreme Court stated in Falcon, an allegation of class wide discrimination does not conclusively establish that class certification is appropriate. 457 U.S. at 157. Conceptually, there is a "wide gap" between an individual's discrimination claim and the "additional inferences" that this discriminatory treatment is typical of the employer's practices, that the employer's practices are generally motivated by a pervasive intent to discriminate, and that the particular policy of discrimination is manifested in all of the employer's policies and practices such as hiring, firing, promotion, and compensation. Id. at 158. Class 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. at 155 (emphasis added).
See also Lightbourn v. County of El Paso, 118 F.3d 421, 425-26 (5th Cir. 1997), cert. denied, 522 U.S. 1052 (1998) (both commonality and typicality requirements are satisfied by allegations of similar harm suffered under similar legal theories).
Plaintiffs allege that common questions of law and fact exist with respect to Defendant's "personnel system," whether Defendant's workforce is racially segregated, whether Defendant has a subjective, race-biased employment practices that emanate from its headquarters and that are applied company-wide, and whether Defendant intentionally discriminates against blacks with respect to promotions and compensation. The common issues of law asserted by Plaintiffs generally center on the legality of these alleged policies and whether they are entitled to injunctive or declaratory relief
The court is unclear as to what Plaintiffs mean by the term "personnel system," but assumes that Plaintiffs mean to describe Defendant's personnel policies and practices in general.
While Plaintiffs have generally alleged that Defendants' employment policies and practices discriminate against African-Americans, they have failed to identify specific policies that have adversely impacted each class member in the same way. See Falcon, 457 U.S. at 155. A review of Plaintiffs' Complaint reviews that even with respect to the nine Plaintiffs who have sued Defendant to date, each individual's claims will necessarily depend on their own discrete factual scenarios. For example, the nine Plaintiffs worked in several different departments and on different "teams." Some Plaintiffs received promotions, while others did not; some are management-level employees, and others are not; some complain of discharge or constructive discharge, while others are still working for Defendant. These factual disparities will be exponentially increased by the addition of 500-1000 class members as envisioned by Plaintiffs. Even when the common issues are considered, the individualized facts relevant to each class member's situation are an unavoidable part of the fact finder's analysis. In other words, the common issues in this case are not "applicable in the same manner" to each potential class member. See Falcon, 457 U.S. at 155. Because this individualized proof is necessary, a class action "is not an economical or efficient way of processing the complaints of the proposed class." Trevino v. Holly Sugar Corp., 811 F.2d 896, 905 (5th Cir. 1987) (affirming denial of class certification because commonality and typicality requirements not met). As demonstrated by the allegations in Plaintiffs' Complaint, the proposed class cannot be certified because the commonality and typicality elements of Rule 23(a) have not been met.
Finally, Rule 23(a) requires Plaintiffs to show that they will fairly and adequately represent the interests of the class as named Plaintiffs. From a practical standpoint, this requirement also tends to merge with the commonality and typicality requirements, although it also raises issues regarding the competency of class counsel, and whether any conflicts of interest are present between the representative Plaintiffs and the class. Falcon, 457 U.S. at 158 n. 13. The court does not doubt the competency of Plaintiffs' counsel to litigate an employment discrimination class action. The court is concerned, however, that given the unavoidable factual disparities that will necessarily impact the success or failure of each Plaintiff's claims, the nine Plaintiffs will not adequately represent the hundreds of diverse factual situations that are relevant to each class member's right of recovery under either Title VII or section 1981. A class representative must possess the same interest and suffer the same injury as the class members. East Texas Motor Freight System, Inc. v. Rodriguez, 431 U.S. 395, 403 (1977). For the same reasons that the court finds the proposed class does not meet the commonality and typicality requirements of Rule 23(a), Plaintiffs have not shown that they will adequately represent the interests of all potential class members, and a class cannot be certified.
Plaintiffs also have the burden of showing that class certification is appropriate under at least one subsection of Fed.R.Civ.P. 23(b). Here, Plaintiffs urge the court to hold that class certification is warranted because the potential class meets the requirements of Rule 23(b)(2), or alternatively, Rule 23(b)(3). The court holds that for the reasons expressed by the Fifth Circuit in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998), class certification is not appropriate under either Rule 23(b)(2) or (3).
Plaintiffs attempt to argue that the holding of Allison is mere dicta, relying on the Fifth Circuit's order denying the Allison plaintiffs' petition for rehearing. In passing, the Fifth Circuit stated that the trial court's decision to manage that case by consolidation was not an abuse of discretion. It is clear from the Fifth Circuit's opinion in that case that the issue on appeal was the propriety of class certification. The court's comment on the district court's decision to utilize consolidation in that case has no impact on its analysis of the class certification issue. Moreover, the Fifth Circuit has applied the reasoning in Allison in subsequent cases, which supports its continued validity. See Washington v. CSC Credit Services, Inc., 199 F.3d 263, 269-70 (5th Cir. 2000).
Plaintiffs' argument that Allison is not good law because the Fifth Circuit's prior holdings with respect to certification of Title VII class actions have not been overruled by an en banc decision of the Fifth Circuit is equally unavailing. The Allison case was the first to examine the impact of the "fundamental changes" effected by the Civil Rights Act of 1991 on certification of a Title VII class action. 151 F.3d at 410 n. 1 (noting that the issue was one of first impression at the appellate level).
1. Rule 23(b)(2)
A class action may be maintained under Fed.R.Civ.P. 23(b)(2) where the party opposing the class has acted or refused to act on grounds generally applicable to the class, making class-wide declaratory or injunctive relief an appropriate remedy. Defendant contends that a class cannot be maintained under Rule 23(b)(2) because it has not acted or refused to act on grounds generally applicable to the class. The court agrees. Each Plaintiffs individual discrimination and retaliation claims do not appear to arise out of any common policy, decision, or action by Defendant. Although Plaintiffs vaguely allege that Defendant maintains a centralized and discriminatory human resources process, this is not enough to establish that Defendant's decisions and actions with respect to each of the Plaintiffs' employment were uniform. Therefore, Plaintiffs have not carried their burden of showing that Defendant acted or refused to act on grounds generally applicable to the entire class.
The next issue presented by Rule 23(b)(2) is whether Plaintiffs' claims for monetary relief predominate over their claims for injunctive and declaratory relief. Allison, 151 F.3d at 410. Because the Civil Rights Act of 1991 ("1991 Act") substantially changed the monetary remedies available to Title VII litigants and granted them the previously unavailable right to a jury trial, the Allison court held that in the class action context, potential manageability problems were created from both a practical and legal standpoint. Id.
Here, Plaintiffs seek ample monetary relief, including compensatory and punitive damages. The Fifth Circuit permits litigants to seek such relief in a class action certified under Rule 23(b)(2) so long as the predominant relief sought is injunctive or declaratory." Id. at 411. Therefore, whether certification is proper will turn on whether Plaintiffs seek primarily injunctive and declaratory relief versus monetary damages.
The predomination requirement of Rule 23(b)(2) serves the function of keeping the litigation concentrated on common questions of law and fact involving uniform group remedies. Id. at 414. Monetary remedies are more often related to the disparate merits of individual claims, where as a (b)(2) class should be "a homogeneous and cohesive group." Id. at 413. Where monetary damages are sought, thus reducing the cohesiveness of the class and making procedural safeguards such as notice and opt-out necessary, a (b)(2) class becomes less appropriate. Id. Because the availability of a monetary remedy strongly depends on the individual merits of each class member's case, "the underlying premise of a (b)(2) — class that its members suffer from a common injury properly addressed by class-wide relief — begins to break down when the class seeks to recover back pay or other forms of monetary relief to be allocated based on individual injuries." Id. (quoting Eubanks v. Billington, 110 F.3d 87, 95 (D.C. Cir. 1997). Rule 23(b)(2) classes are properly certified for those cases where no specific inquiry into each class member's case is required and no complex individual damages calculations must be performed. Id. at 414.
Based upon these principles, the Allison court held that monetary relief predominates in Rule 23(b)(2) class actions unless it is incidental to the requested injunctive or declaratory relief Id. at 415. Incidental damages are those that flow directly from liability to the class as a whole on the claims forming the basis for injunctive or declaratory relief. Id. Such damages should be calculable using objective standards and cannot depend on the individual subjective differences in each class member's circumstances. Id. Calculation of incidental damages should not introduce new and individualized factual or legal determinations and should be in the nature of a group remedy, as contemplated by Rule 23(b)(2). Id.
Here, Plaintiffs' claims for monetary relief include back pay, front pay, damages for lost compensation and benefits, compensatory, and punitive damages. As a matter of law, entitlement to compensatory damages cannot be presumed from a constitutional or statutory violation. Id. at 416-17. Specific individualized proof is needed, including proof of actual injury, which often requires medical or psychological evidence unique to each individual's circumstances. Id. at 417. These individualized inquiries unavoidably introduce new and substantial legal and factual questions. Id. For these reasons, compensatory damages are an individual remedy, rather than classwide remedy that can be calculated using objective standards. Id. Thus, they are not incidental to the class-wide injunctive and declaratory relief normally sought in a Rule 23(b)(2) class action.
Punitive damages also cannot be assessed class-wide based upon a finding of liability for discrimination. Id. "Such a finding establishes only that there has been general harm to the group and that injunctive relief is appropriate." Id. (citing Price Waterhouse v. Hopkins, 490 U.S. 228, 266 (1989) (O'Connor, J., concurring in the judgment)). Punitive damages must be reasonably related to the alleged reprehensible conduct of the defendant and to the compensatory damages awarded to the plaintiffs. Id. at 417-18. Punitive damages are also non-incidental because they require proof of discrimination against each individual, again introducing new and substantial legal and factual issues. Id. at 418. Due to the nature of Plaintiffs' compensatory and punitive damages claims, this case does not qualify for Rule 23(b)(2) class certification.
2. Rule 23(b)(3)
Plaintiffs further contend that certification of the proposed class is appropriate under Fed.R.Civ.P. 23(b)(3). This subsection of Rule 23 states that a class maybe certified when "the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for a fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3). Under Rule 23(b)(3), the factors relevant to this inquiry are:
(A) the interests of the members of the class in individually controlling prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) concentrating the litigation of the claims in a particular forum; (D) the difficulties likely to be encountered in management of a class action.
In Allison, the district court found that due to the plaintiffs' compensatory and punitive damages claims, individual issues dominated the case. 151 F.3d at 419. Because these claims focus almost entirely on individual-specific facts and issues, the class action "would degenerate in practice into multiple lawsuits separately tried." Id. (quoting Castano v. American Tobacco Co., 84 F.3d 734, 745 n. 19 (5th Cir. 1996)). The predominance of these individual issues detracts from a class action's superiority over other methods of adjudicating the controversy. Id. The manageability problems presented by such a situation would further decrease the usefulness of the class action device, and create potential Seventh Amendment problems as well. Id. at 420; Castano, 84 F.3d at 750-51. As is established above, this case also presents hundreds, if not thousands of individual issues. Therefore, this rationale applies equally here to suggest that a class action is not a superior method of adjudicating Plaintiffs' claims against Defendant. Moreover, by statute each Plaintiff is potentially entitled to recover up to $300,000 plus attorneys' fees, so this is not a "negative value" suit most efficiently litigated in a class action. Allison, 151 F.3d at 420. Certification of a Rule 23(b)(3) class in this case cannot be justified.
Concisely stated, the pervasive individual issues necessarily involved in a case such as this one precludes certification of a class. As the Fifth Circuit stated in Allison, Plaintiffs' argument that their case centers around Defendant's centralized subjective decision-making process "fails to appreciate the overwhelming number of individual-specific issues in this case." For all of the reasons stated herein, the court finds class certification improper. Plaintiffs' Motion for Class Certification is denied.
III. Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations
For the same reasons stated in the court's analysis of Plaintiffs' Motion for Class Certification, Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations is granted.
IV. Plaintiffs' Motion to Stay Discovery
Plaintiffs have asked the court to stay discovery in this case until its ruling on Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations. Because the court has now ruled on Defendant's motion, Plaintiffs' Motion to Stay Discovery is hereby denied as moot.
V. Defendant's Motion for Rule 16(a) Conference
Defendant's Motion for Rule 16(a) Conference is denied. Now that the court has had the opportunity to resolve the pending class certification issues, the pretrial scheduling of this case should be significantly simplified. The court will issue a status report order in the near future, asking for the parties' input on scheduling matters in light of the fact that this case will not be certified as a class action.
VI. Conclusion
As is previously stated herein, class certification is not an appropriate method of adjudication of this case. Accordingly, Plaintiffs' Motion for Class Certification is denied, Defendant's Motion to Strike and Dismiss Plaintiffs' Class Action Allegations is granted, and Plaintiffs' Class Action Allegations are hereby stricken from Plaintiffs' First Amended Complaint. Furthermore, Plaintiffs' Motion to Stay Discovery is denied as moot, and Defendant's Motion for Rule 16(a) Conference is denied.
It is so ordered this 31st day of March, 2000.