Opinion
01-CV-2909 (JG)
January 26, 2004
REPORT AND RECOMMENDATION
Currently pending before this Court, on a referral from the Honorable John Gleeson, is a motion by plaintiffs Frank Warren, Clifford Brooks, Alicia Dean-Hall, Kenneth Jimerson, Dora Miller, and Gene Simms ("plaintiffs") for class certification pursuant to Rule 23 of the Federal Rules of Civil Procedure. Defendant Xerox Corporation ("defendant" or "Xerox") opposes the motion. For the reasons that follow, it is the recommendation of this Court that plaintiffs' motion for class certification be granted for the purpose of determining liability on plaintiffs' disparate impact and treatment claims.
FACTUAL BACKGROUND
The six named plaintiffs are black sales employees of Xerox who worked at various locations throughout the United States, including New York and California. See Class Action Complaint and Jury Demand ("Compl.") at ¶¶ 6-11. In their Complaint, plaintiffs allege that from February 1997 through the filing of the complaint in 2001, Xerox carried out a continuing pattern and practice of race discrimination and retaliation by: "(i) systematically assigning black salespeople to inferior sales territories, often located in low-income or minority neighborhoods; (ii) refusing to promote them or to transfer them to more lucrative territories no matter how hard they work or how well they perform; (iii) denying them sales commissions they have rightfully earned; and (iv) retaliating against black salespeople who assert their civil rights."Id., at ¶ 1; see id., at ¶ 130. Xerox's employment policies and practices, plaintiffs contend, violated various federal and state civil rights laws. See id. at ¶ 2.
Procedural History
On February 17, 2000, plaintiff Kenneth Jimerson filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"), claiming that he and a class of African-American sales representatives were being discriminated against by Xerox on account of their race.See EEOC Charge, attached as Exhibit B to Affidavit of Eugene D. Ulterino, Esq., dated July 15, 2003 ("Ulterino Aff."). Later that year, Jimerson filed a second charge with the EEOC, this time asserting a claim of retaliation pertaining only to himself. See Charge of Retaliation [DX C]. The EEOC issued a Determination and Right to Sue letter to Jimerson on February 9, 2001. See Determination and Right to Sue Letter [DX D]. In that letter, the EEOC concluded that the "[e]vidence shows that [Xerox] relied on a nondiscriminatory reason for assigning [Jimerson] to public sector accounts rather than assigning a female who had more public sector accounts prior to the 2000 restructuring." Id. at 1.
Exhibits to the Ulterino Affidavit will hereinafter be referred to as "DX [letter]."
The EEOC's letter did not address Jimerson's retaliation or class allegations. See Determination and Right to Sue Letter [DX D].
On August 7, 2002, in response to charges filed by other African-American sales representatives employed by Xerox, the EEOC issued a "reasonable cause" determination that Xerox had engaged in a pattern or practice of discrimination on the basis of race. See EEOC Amended Determination, attached as Exhibit 3 to Affirmation of Douglas Hoffman, Esq., dated May 30, 2003 ("Hoffman Aff.").
Exhibits to the Hoffman Affirmation will hereinafter be referred to as "PX [number]".
The six named plaintiffs filed this suit against Xerox on May 9, 2001, claiming that their employer conducted "a continuing pattern and practice of race discrimination and retaliation" against black sales representatives. Compl. at ¶ 1. In their Complaint, plaintiffs allege three theories of liability: (1) disparate treatment; (2) disparate impact; and (3) retaliation. See id.; Transcript of Oral Argument dated October 14, 2003 ("10/14/03 Tr.") at 29-30. Counts I and II allege violations of federal law under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., and under 42 U.S.C. § 1981 et seq. See Compl, at ¶¶ 141-49. Counts III, IV, and V charge that Xerox's conduct violated state and city municipal codes, to wit, N.Y. Executive Law § 296, Title 8 of the Administrative Code of New York City, and the California Fair Employment and Housing Act. See id., at ¶¶ 150-65,
After completion of the first phase of discovery, pertaining solely to class certification issues, this Court conducted settlement discussions on April 16, 2003, which were unsuccessful at resolving the case.See Docket Sheet at Docket No. 19. On May 30, 2003, plaintiffs moved to certify this suit as a class action. See Notice of Motion, attached to Hoffman Aff. Following Judge Gleeson's referral of the motion (see Order endorsed on Letter from Christopher D'Angelo, Esq., dated May 9, 2003), this Court heard oral argument on plaintiffs' motion for class certification on October 14, 2003,See 10/14/03 Tr. At the conclusion of the hearing, the Court again conducted settlement discussions that proved unproductive. See id. at 86-87.
Plaintiffs seek an order certifying their entire case as a class action, with the class defined as "[a]ll black individuals employed at Xerox Corporation in the United States as a salesperson at any time from February 1, 1997 to the present, or who will be employed as a salesperson between the date of the filing of the Complaint in this action and the date of judgment." Notice of Motion, attached to Hoffman Aff., at 1;see also Compl, at ¶ 130. Plaintiffs contend that the class action is maintainable under Rule 23(b)(2) of the Federal Rules of Civil Procedure, or alternatively, Rule 23(b)(3). See Compl, at ¶¶ 138-39. They also request certification of three subclasses within the proposed class, comprising black salespersons employed by Xerox in the State of New York, City of New York, and State of California, respectively. See id. at ¶¶ 131-33.
Specifically, plaintiffs Warren, Dean-Hall, and Brooks seek certification of the claims in Count III of the Complaint, on behalf of a subclass of "all black individuals employed at Xerox in the State of New York as a salesperson at any time from May 9, 1998 to the present, or who will be employed as a salesperson between the date of the filing of the Complaint and the date of judgment in this action" ("New York State Subclass"). Plaintiffs' Memorandum of Law in Support of Motion for Class Certification ("Pl. Mem.") at 3-4; see also Compl, at ¶ 131. The same three plaintiffs request that a second subclass be certified for Count IV of the Complaint, consisting of "all black individuals employed at Xerox in the City of New York as a salesperson at any time from May 9, 1998 to the present, or who will be so employed as salespeople between the date of the filing of the Complaint and the date of judgment in this action" ("New York City Subclass"). Pl. Mem. at 4;see also Compl, at ¶ 132. Finally, plaintiff Simms seeks certification of the claims in Count V of the Complaint on behalf of a subclass of "all black past, present and future salespeople employed at Xerox in the State of California since May 9, 2000, or who will be employed as a salesperson between the date of the filing of the Complaint and the date of judgment in this action" ("California Subclass"). Pl, Mem. at 4; see also Compl, at ¶ 133.
Summary of Plaintiffs' Proof
All six named plaintiffs provide similar anecdotal accounts of racially discriminatory territory assignment. See generally PX 4 (Warren Affidavit); PX 5 (Dean-Hall Affidavit); PX 6 (Simms Affidavit); PX 7 (Brooks Affidavit); PX 8 (Miller Affidavit); PX 13 (Excerpts from the Deposition Transcript of Kenneth Jimerson). Plaintiffs allege that they were initially assigned to small, unprofitable territories while their white counterparts were given lucrative territories with established accounts. See, e.g., Compl, at ¶¶ 41-42 (Warren); 56 (Brooks); 72-73 (Dean-Hall); 86 (Jimerson); 105 (Miller); 119 (Simms). Five of the six contend that when they applied for promotions or better positions, they were rejected in favor of less qualified white co-workers. See id. at ¶ 43, 45, 47-48 (Warren); 58 (Brooks); 79-82 (Dean-Hall); 112 (Miller); 121-22 (Simms). Several state that the explanation given for such racially disparate treatment was that the plaintiff was not "the right fit" (id. at ¶ 82 (Dean-Hall); Dean-Hall Aff. [PX 5] at ¶ 13; Compl, at ¶ 120 (Simms); Simms Aff. [PX 6] at ¶ 9) or that the white employee "fit in better with the team." Compl, at ¶ 46 (Warren); Warren Aff. [PX 4] at ¶ ll. Additionally, four plaintiffs complain that Xerox moved them to worse territories or stripped the best accounts from their territories. See Compl, at ¶¶ 65 (Brooks); 74 (Dean-Hall); 89, 91 (Jimerson); 106, 117 (Miller). Two plaintiffs, Brooks and Jimerson, further allege that Xerox attempted to deny them commissions they earned on accounts that were either rotated out of their territories or taken over by white colleagues.See id. at ¶¶ 57 (Brooks); 90 (Jimerson).
Plaintiff Dean-Hall states that she was initially assigned to a team known as the "soul train,' with six of its eight members African-American. See Compl, at ¶ 72 (Dean-Hall); Dean-Hall Aff. [PX 5] at ¶ 5, According to plaintiff Warren, a Xerox Vice President suggested that the assignment of another black sales representative to a less lucrative territory in the Bronx may have been based on the assumption that "a black person would be well suited for it." Compl. at ¶ 51 (Warren); Warren Aff. [PX 4] at ¶ 18.
Plaintiffs also detail instances of discriminatory disciplinary and/or retaliatory conduct by Xerox. Three plaintiffs — Brooks, Jimerson, and Miller — claim they were disciplined for performance deficiencies although similarly situated white colleagues were not punished. See id. at ¶¶ 59-61 (Brooks); 96 (Jimerson); 109-10, 113-14, 116 (Miller). All six plaintiffs assert that they complained to Xerox of discrimination, either to a superior (Sales Manager or Vice President), Human Resources Manager, or both.See id. at ¶¶ 44, 46 (Warren); 66, 69 (Brooks); 93-94 (Jimerson); 123-24 (Simms); Excerpts from the Deposition Transcript of Dora Miller ("Miller Dep.") [PX 15] at 31-34; Excerpts from the Deposition Transcript of Alicia Dean-Hall [PX 10] at 48-49. Three plaintiffs — Brooks, Jimerson, and Miller — allege that Xerox subsequently retaliated against them for either complaining of discrimination or supporting the allegations of other black sales representatives. See Compl, at ¶¶ 61-62 (Brooks); 100-01 (Jimerson); Miller Dep. [PX 15] at 31-36, 42.
In addition to anecdotal evidence of discrimination, plaintiffs rely on an analysis conducted by their statistical expert, Dr. Leonard Cupingood.See Pl. Mem. at 2. After analyzing compensation data on an aggregate, company-wide basis, Dr. Cupingood concluded that during the relevant time period, and controlling for salary grade, sales experience at Xerox, and seniority, black salespeople at Xerox earned "statistically significantly less total compensation than white commission sales employees in each year from 1997 to 2001." Statistical Analysis of Commission Earnings and Total Compensation Among Commission Sales Employees at Xerox During the Period 1997-2001, by Dr. Leonard Cupingood dated February 21, 2003 ("Cupingood Report") [PX 2] at 2. The statistical significance of the disparity in average per-person compensation varied from year to year, but, according to Dr. Cupingood, reached a high of $15,483 in 2000, representing a difference of 6.4 standard deviations. See Pl. Mem. at 2.
Other minorities appear to be classified as "Other" and were excluded from Dr. Cupingood's analysis. See Table 1, attached to Cupingood Report [PX 2].
Two standard deviations is sufficient to warrant an inference of discrimination. See Smith v. Xerox Corp., 196 F.3d 358, 366 (2d Cir. 1999).
Xerox's Organizational Structure
In opposing plaintiffs' motion, defendant proffers evidence to establish the decentralized and multifaceted process through which assignments are made at Xerox and compensation determined. Plaintiffs do not at this point refute the defense accounts but instead challenge their legal significance.
Defendant manufactures, develops, and markets a range of document solutions, services, and systems, including various kinds of printers, presses, and copiers. See Affidavit of John DiVincenzo dated July 14, 2003 ("DiVincenzo Aff.") at ¶ 2. Nationwide, Xerox employs approximately 2,500 sales representatives, who work at 31 sales operations. See id.
Between 1997 and 2001, Xerox on several occasions significantly restructured its direct sales operations. See id., at ¶ 6. From 1997 to 1999, direct sales were handled by two separate organizations within Xerox, United States Customer Operations ("USCO") and Xerox Business Services ("XBS"). See id. USCO, which mainly sold and leased document processing machines, systems, and equipment-services contracts, divided its sales operations into geographic or industry-focused entities, which were further divided into several dozen Customer Business Units ("CBUs").See id. at ¶ 7. The CBUs, which functioned as separate business organizations, were each managed by a Vice President/General Manager and were responsible for meeting centrally determined overall revenue goals. See id. at ¶¶ 7, 30.
XBS primarily sold on-site document management services contracts.See Affidavit of Kevin Zielinski dated July 9, 2003 ("Zielinski Aff.") at ¶ 5. XBS was divided into geographic regions, each overseen by a Vice President/Region General Manager. See id., These regions were further divided into several dozen local sales operations with responsibilities similar to CBUs for "implementing sales activities" in their region and meeting overall revenue goals.See id. Each year, XBS developed its own strategies for territory coverage, marketing, and account management, and promulgated and implemented its own sales coverage guides, quota methodologies, and compensation plans, with input from Xerox corporate executives; subject to centrally determined principles and guidelines, local management was vested with considerable discretion in determining territory configuration and assignments. See id. at ¶¶ 6-7, 16-26.
In January 1999, Xerox formed the North American Solutions Group ("NASG") and created, within USCO, a Public Sector entity, which grouped governmental, public, and academic institutions accounts. See id., at ¶ 8; DiVincenzo Aff. at ¶¶ 6-7, 10, A year later, the sales operations of USCO and XBS were merged into NASG.See DiVincenzo Aff. at ¶¶ 6, 9; Zielinski Aff. at ¶ 8. This reorganization took place pursuant to a change in Xerox's direct sales strategy from a geographic, or horizontal, focus to an industrial, or vertical, focus. See DiVincenzo Aff. at ¶ 8; Zielinski Aff. at ¶ 8. As part of the reorganization, XBS local sales operations and USCO CBUs were consolidated into larger business units, which were realigned to service specific industry sectors. See DiVincenzo Aff. at ¶ 9.
As soon became evident, the vertical realignment process disrupted customer relationships, adversely affected Xerox's sales, and caused substantial dissatisfaction across Xerox's sales force. See id. As a result, prior to the end of the second quarter of 2000, Xerox reorganized some of the vertical entities back into geographic sales operations. See id. at ¶ 10. The only entity that was not subsequently reorganized was the Public Sector entity, which remained unchanged. See id. By September 2000, Xerox had fully implemented its new reorganization back to a horizontal sales strategy. See id.
Compensation of Sales Representatives
Although a number of elements influenced the compensation of Xerox sales representatives, four factors predominated, namely "base salary, sales territory, territory quota or budget, and individual performance (revenue produced)." Id., at ¶ 15. Sales representative compensation typically comprised two elements: a fixed base salary and a "pay-at-risk" portion, the latter of which an employee could influence through performance. Id. at ¶¶ 1516. The specific base salary for a sales representative was set by Xerox at the local level by the sales manager for that (NASG/USCO) CBU or (XBS) local sales operation (hereinafter collectively referred to as "the local sales entities"), within centrally determined parameters and with instructions and guidance from Xerox's Human Resources Department. See id. at 15; Affidavit of Edward Ciaschi dated July 11, 2003 ("Ciaschi Aff.") at ¶¶ 23-26. Thus, each sales position or title was assigned a salary grade, and the base salary would be set at the local level within the predetermined salary range for that grade. See Ciaschi Aff. at ¶¶ 23. The pay-at-risk element of compensation was composed of commission rates and bonuses based on the sales representative's individual performance. See DiVincenzo Aff. at ¶ 16. NASG/USCO and XBS each issued written directives specifying the "typical base/at-risk compensation split and the formulas for commissions and bonuses for each type of sales position." Id. The salary/incentive ratios ranged from the "most common" ratio for NASG/USCO — sixty percent salary/forty percent incentives, see id. at ¶¶ 16, 24 — to XBS's "typical" ratios, ninety (or seventy) percent salary/ten (or thirty) percent incentives, depending upon the job position or title. See Zielinski Aff. at ¶ 9.
For example, until XBS ceased to exist in January 2000 (see Zielinski Aff. at ¶ 8), XBS account managers were compensated on a ninety/ten compensation split, while the three other XBS sales positions were compensated on a seventy/thirty split. See id. at ¶¶ 9, 11-14.
Pursuant to a "pay for performance" incentive, each sales representative was assigned a quota — "a specific numerical value that represented the revenue expectation of a given sales territory" — against which his or her performance would be measured to determine additional compensation above the base salary. DiVincenzo Aff. at ¶ 17. In theory, the sales quota was designed to ensure fairness in compensation by reflecting the revenue potential of the territory, with sales expectations rising in conjunction with revenue potential.See id., at ¶ 18. Commissions were calculated according to a base rate for all sales revenue up to the quota, with an overachievement rate applied to sales exceeding the quota. See id.
Although the local entities were provided headcount and sales goals,see DiVincenzo Aff. at ¶¶ 30-31; Zielinski Aff. at ¶¶ 16-17, 20, 22, they controlled, to a large extent, who would comprise their sales staff and how that staff would be compensated. See DiVincenzo Aff. at ¶ 33; Zielinski Aff. at ¶ 23. To that end, sales managers at the local entities determined and allocated territory configurations and quota assignments for their sales representatives, taking into account strategic business plans and revenue forecasts projected by Xerox headquarters. See DiVincenzo Aff. at ¶¶ 30-32; Zielinski Aff. at ¶¶ 16-17, 23. Territories were not usually configured or assigned from scratch, but, on an annual basis, were modified by managers from an existing territory base of accounts and establishments, with the modifications taking into account centrally determined sales coverage guidelines and marketing strategies for the upcoming year. See DiVincenzo Aff. at ¶¶ 31-32; Zielinski Aff. at ¶ 18.
After territories were configured, local entity sales managers set a "quota" (NASG/USCO) or "budget" (XBS) specific to each territory.See DiVincenzo Aff. at ¶ 34; Zielinski Aff. at ¶ 24, During the existence of XBS from 1997 through 1999, "[l]ocal management assigned a revenue budget for each account in accordance with nationally-published budget guidelines." Zielinski Aff. at ¶ 25. Within NASG/USCO, the quota or revenue target for that area often took into account important business metrics such as potential page volume, actual page volume, and historical revenue. See DiVincenzo Aff. at ¶ 34. Although a territory's quota was initially determined using a formula comprised of those business metrics, without any regard to the identity of the assigned sales representative, the local sales manager had the discretion to adjust the territory's quota in the event of "extenuating local circumstances." Id. at ¶¶ 34-35.
Quota adjustments were limited by the requirement that each local entity meet its overall revenue target, regardless of how the quota was allocated among sales representatives, making it a zero-sum process.See DiVincenzo Aff. at ¶ 35. Also, quota modification was sometimes proscribed where it involved adjustments between different categories of sales representatives (e.g., account manager versus specialist). See id.
While local sales managers typically made the final territory assignment decisions, their discretion to match sales representatives to territories was limited by a desire to minimize disruption of customer relationships. See DiVincenzo Aff. at ¶ 33; Zielinski Aff. at ¶ 20, 23. Therefore, once a sales representative was assigned to a territory, that assignment was unlikely to change significantly "unless the territory was eliminated, a new territory was created, the sales representative bid for and was awarded a new position . . . or a sales representative moved laterally into an open territory." DiVincenzo Aff. at ¶ 33; see also Zielinski Aff. at ¶ 23.
Company Policy Regarding Diversity
During the relevant time period (from 1997 to 2001), Xerox's formal human resource policy proscribed discrimination in all terms and conditions of employment on the ground of any protected class status, including race. See Human Resource Policy 201, attached as Exhibit A to Ciaschi Aff.; see also Ciaschi Aff. at ¶ 5. Xerox developed affirmative action plans for each organization, which were implemented and monitored by its Corporate Human Resources Affirmative Action/Equal Employment Opportunity ("EEO") Office.See Ciaschi Aff. at ¶ 8. Within the local entities, general managers, with the assistance of an assigned EEO/Affirmative Action Program Coordinator, were responsible for ensuring that those EEO policies were carried out. See id., at ¶ 9.
"In addition to its affirmative action efforts, Xerox since 1985 has implemented a comprehensive company-wide Balanced Work Force (BWF) strategy to ensure proportional representation of all affirmative action groups . . . and EEO categories . . . at all position levels and in all business divisions and operating units." Id. at ¶ 10. Between 1997 and 2001, this BWF strategy was applied to all Xerox sales organizations. See id., at ¶ 12. Senior managers were held accountable for achieving BWF goals for each sales operation, which targeted proportional representation for each employee group by salary grade level. See id. at ¶¶ 12-13. In addition, in determining compensation, including base pay, managers were required to consider BWF, along with an employee's "demonstrated sales skills, market knowledge, sales experience, and job performance."Id. at ¶ 26; see also id. at ¶ 24.
DISCUSSION
I. Class Certification
Rule 23 of the Federal Rules of Civil Procedure sets forth a two-step process for determining whether certification of a class action is appropriate. First, the party seeking class certification must establish the four requirements of Rule 23(a), i.e., that:
(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). Second, the party seeking class certification must satisfy one of the three subsections of Rule 23(b), only two of which — (b)(2) and (b)(3) — are relevant here.See Compl, at ¶¶ 138-39. Rule 23(b)(2) requires that "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2). Rule 23(b)(3) provides that a class action is maintainable if 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 the fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3).
The movant bears the burden of demonstrating that the criteria for class certification have been satisfied. See Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 291 (2d Cir. 1999); Fed.R.Civ.P. 23(a). The Court, in evaluating a class certification motion, must treat the complaint's allegations as true for that purpose.See Spinner v. City of New York, No. 01 Civ. 2715 (CPS), 2003 U.S. Dist. LEXIS 19298, at *7 (E.D.N.Y. Oct. 6, 2003). Because "Rule 23 is given liberal rather than restrictive construction," courts within the Second Circuit are afforded significant flexibility in deciding whether to grant certification. Marisol A. v. Giuliani, 126 F.3d 372, 377 (2d Cir. 1997) (internal quotation marks and citation omitted). To that end, courts must rigorously inquire whether the requirements of Rule 23 have been satisfied and may find it necessary to "probe behind the pleadings" in order to resolve the certification question. Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 157, 160 (1982). "Nevertheless, a motion for class certification is not an occasion for examination of the merits of the case." Caridad, 191 F.3d at 291. A. Plaintiffs' Disparate Impact and Disparate Treatment Claims
This Court will first address plaintiffs' disparate impact and disparate treatment discrimination claims, as their showing on these claims differs significantly from that on their retaliation claims.
In moving for certification, plaintiffs rely primarily on a handful of recent decisions by the Second Circuit and Southern District of New York, in which classes were certified in actions alleging racial discrimination. A brief discussion of the facts and holdings of three of those decisions will precede this Court's application of the Rule 23 criteria to the facts of the instant action.
In Robinson v. Metro-North Commuter Railroad Co., 267 F.3d 147 (2d Cir. 2001), a Title VII action alleging race discrimination with respect to promotion and discipline, and in an earlier appeal in the same case, Caridad v. Metro-North Commuter Railroad, 191 F.3d 283, the Second Circuit twice reversed the district court's denial of a motion to certify a class and ultimately directed certification of the liability stage of the disparate impact pattern-or-practice claim, The plaintiffs in Robinson and Caridad challenged Metro North's company-wide policy of delegating to department supervisors discretionary authority to make employment decisions related to discipline and promotion. Relying on statistical and anecdotal evidence, the plaintiffs argued that this authority was exercised in a racially discriminatory manner and had a disparate impact on African-American employees.See Robinson, 267 F.3d at 155; Caridad, 191 F.3d at 286-89.
In Caridad, the Second Circuit rejected Metro North's challenge to the persuasiveness of the plaintiffs' statistical evidence, and held that such "statistical dueling" is not permitted on a certification motion. Cardidad, 191 F.3d at 292. The Court of Appeals further concluded in Caridad that the delegation of discretionary authority constituted a policy or practice sufficient to establish commonality under Rule 23(a). See Caridad, 191 F.3d at 291-92. In Robinson, the Second Circuit reaffirmed these principles, directing certification of the disparate impact claim on the basis of the plaintiffs' statistical report and anecdotal evidence, and directing that the trial court reconsider certification of the disparate treatment claim. See Robinson, 267 F.3d at 169-70.
In Robinson, the Court observed: "Plaintiffs have typically depended upon two kinds of circumstantial evidence to establish the existence of a policy, pattern, or practice of intentional discrimination: (1) statistical evidence aimed at establishing the defendant's past treatment of the protected group, and (2) testimony from protected class members detailing specific instances of discrimination." 267 F.3d at 158 (internal quotation marks and citation omitted);see Caridad, 191 F.3d at 292-93.
Judge Lewis A. Kaplan reached a similar result in Latino Officers Ass'n City of New York v. City of New York, 209 F.R.D. 79 (S.D.N.Y. 2002), which followed Caridad and Robinson. The plaintiffs in Latino Officers were Latino and African-American members of the New York City Police Department ("NYPD"), who, among other things, complained that grants of discretion to NYPD supervisors to administer discipline resulted in racially discriminatory disciplinary treatment and retaliation. The district court certified the class for liability purposes, rejecting a defense challenge to plaintiffs' statistical analysis. Whatever the "ultimate persuasiveness" of the plaintiffs' statistical evidence, Judge Kaplan found it sufficient to warrant class certification, in that "it tend[ed] to establish that being Latino or African-American ha[d] an effect on an officer's involvement and treatment in the NYPD's disciplinary system." 209 F.R.D. at 89.
The instant action presents many of the same issues addressed inRobinson, Caridad and Latino Officers.
1. Rule 23(a) Criteria
In connection with plaintiffs' disparate impact and treatment allegations, Xerox does not dispute that the requirements of numerosity and adequacy of representation have been met. See Defendant's Memorandum of Law in Opposition to Plaintiffs' Motion for Class Certification ("Def. Mem.") at 1. Given the size of the proposed class ("at least hundreds," Pl. Mem. at 15), and the adequacy of both the class representatives and plaintiffs' counsel (see id., at 22-23), this Court concurs that plaintiffs have satisfied their burden on those two elements. See generally In re Drexel Burnham Lambert Group. Inc., 960 F.2d 285, 291 (2d Cir. 1992) (adequacy of representation); Adames v. Mitsubishi Bank, Ltd., 133 F.R.D. 82, 89-90 (E.D.N.Y. 1989) (numerosity).
Of the four elements that plaintiffs are required to establish under Rule 23(a), Xerox challenges commonality and typicality.
a. Commonality
Commonality is established if class members present common questions of law or fact. See Fed.R.Civ.P. 23(a)(2). This condition, however, does not require that all class members make identical claims and arguments. See Trief v. Dun Bradstreet Corp., 144 F.R.D. 193, 198 (S.D.N.Y. 1992). Rather, it is sufficient if a single common issue is shared by the class. See id., Fox v. Cheminova, Inc., 213 F.R.D. 113, 126 (E.D.N.Y. 2003).
Defendant challenges commonality on several grounds. First, Xerox argues that plaintiffs' statistical evidence does not establish commonality across the proposed class. See Def. Mem. at 12-19. Second, defendant claims that its territory configuration and quota assignment processes were not "entirely subjective," id. at 19-23, and that its decentralized decisionmaking process negates commonality. See id., at 24-25. Third, defendant argues that the diversity of the proposed class detracts from commonality. See id. at 25-28.
(i) Statistical evidence
Defendant contends that the study submitted by plaintiffs' statistical expert, Dr. Leonard Cupingood, fails to establish commonality, because the data "neither establishes a common pattern or practice of pay differential for African-American sales representatives nor does it even attempt to demonstrate a nexus between the alleged pay differential and the decentralized practices of which they complain." Def. Mem, at 13. Xerox claims that because plaintiffs seek to certify a class based on discrimination arising from decentralized decisionmaking at the local entities, Dr. Cupingood erred in utilizing aggregate company-wide statistics; according to Xerox, Dr. Cupingood's "statistics do not address any one of those common questions," 10/14/03 Tr. at 33, and therefore do not constitute sufficient proof of a causal connection between the alleged pay differential and the challenged practices.See Def. Mem. at 13-14. Indeed, defendant goes so far as to argue that Dr. Cupingood's analysis is inadmissible as a matter of law because "it doesn't prove commonality of the issues which [plaintiffs] claim should be certified as a class." 10/14/03 Tr. at 36. Xerox contends that the CBU-by-CBU analysis conducted by its own expert, Dr. David Bloom, is methodologically superior and reveals statistically significant compensation disparities in only a small minority of organizational units.See Def. Mem. at 15.
Although defendant contends that Dr. Cupingood's report is inadmissible as a matter of law, Xerox has deferred moving to strike the report under Daubert v. Merrell Dow Pharmaceuticals. Inc., 509 U.S. 579 (1993). See 10/14/03 Tr. at 36-38.
Dr. Cupingood prepared a supplemental report, in which he took issue with Dr. Bloom's methodology and conclusions. See Comments on Statistical Analyses of Commission Earnings and Total Compensation Among Commission Sales Employees at Xerox During the Period 1997-2001, attached as Exhibit l to Reply Affirmation of Douglas J. Hoffman, Esq., dated August 28, 2003.
Xerox additionally noted that only one of the named plaintiffs, Jimerson in 1998, had been employed in a CBU with statistically significant disparities in total compensation, a fact that Xerox contends further negates any statistical inference of class-wide discrimination.See Def, Mem, at 15.
While statistical evidence offered by plaintiffs on a class certification motion should be rigorously analyzed by the Court,see Sheehan v. Purolator. Inc., 839 F.2d 99, 103 (2d Cir. 1988), such analysis does not extend to weighing the merits of expert reports. See In re Visa Check/Master Money Antitrust Litig., 280 F.3d 124, 135 (2d Cir. 2001) (trial court should not weigh conflicting expert evidence in deciding class certification), cert. denied sub nom. Visa U.S.A., Inc. v. Wal-Mart Stores. Inc., 536 U.S. 917 (2002). In the Second Circuit, "statistical dueling" is proscribed at the class certification stage. Caridad, 191 F.3d at 292;see In re Visa, 280 F.3d at 135. Therefore, the Court should analyze plaintiffs' expert report with the limited goal of ensuring "that the basis of the expert opinion [submitted in support of the motion for certification] is not so flawed that it would be inadmissible as a matter of law." In re Visa, 280 F.3d at 135.
In this case, plaintiffs' evidence reveals a statistically significant disparity between the earnings of black and white salespersons at Xerox, after controlling for salary grade, sales experience at the company, and seniority. See Cupingood Report [PX 2] at 3-8. In arguing that this disparity vanishes when considered on a CBU-by-CBU basis, defendant prematurely challenges the merits of plaintiffs' discrimination claim. This critique should not be considered on a class certification ruling, as plaintiffs "need not demonstrate at this stage that they will prevail on the merits." Caridad, 191 F.3d at 292.
In fact, during oral argument, defendant conceded that the issue of aggregation versus breakdown into smaller units was one of "dueling experts." See 10/14/03 Tr. at 48.
In a related vein, Xerox argues that the Cupingood report fails to establish a nexus between "the decentralized territory configuration practices of which [plaintiffs] complain and the claimed disparities" in compensation. Def. Mem. at 16; see 10/14/03 Tr. at 33-36. Specifically, defendant faults the Cupingood report for failing to analyze the relationship, if any, between the alleged pay disparity and defendant's practices in assigning territories, setting quotas, and making promotion decisions. See Def. Mem. at 16-17; 10/14/03 Tr. at 35-36.
This argument is but a variant of the defense challenge to Dr. Cupingood's use of company-wide statistics. It is not the Court's role at this stage to determine the ultimate persuasiveness of plaintiffs' statistical analysis. See Caridad, 191 F.3d at 292-93. Moreover, commonality can be established by statistical evidence tending to show that "being [African-American or black] has an effect on" a salesperson's compensation. Latino Officers, 209 F.R.D. at 89; see Wright v. Stern, No. 02 Civ. 4699 (DC), 2003 WL 21543539, at *5-6 (S.D.N.Y. July 9, 2003). The fact that one class member may have been given a less desirable territory, while another was denied a promotion, "is of little moment. Both allegedly were injured by discriminatory acts of" Xerox, resulting from the overarching practice challenged by plaintiffs: decentralized, subjective decisionmaking at the managerial level. Latino Officers, 109 F.R.D. at 88.
In Latino Officers, the court rejected a similar defense challenge to commonality in that "one plaintiff may have been transferred to an undesirable position while another perhaps was denied a transfer. . . ." 109 F.R.D. at 88.
Equally unavailing is Xerox's argument that its "highly complex" compensation system distinguishes it from "a run-of-the mill salary or promotion case." 10/14/03 Tr. at 33. To be sure, the total compensation of a Xerox sales representative depends on a combination of factors — territory, quota, position, and performance, see id., at 33; DiVincenzo Aff. at ¶ 15 — and, as in any employment situation, individual employees may have their own preferences. Nevertheless, defendant concedes that, as a general matter, one can reasonably assume that employees seek to maximize their compensation and that the pay disparity found by Dr. Cupingood is not attributable to employee preferences. See 10/14/03 Tr. at 44-46. Consequently, whatever elements may enter into Xerox's "complex" compensation system, only one is cited by Xerox as a possible explanation for any statistically significant disparity in earnings: performance. See id., at 38; Def. Mem. at 17. However, any suggestion that black employees are inferior performers goes to the merits of plaintiffs' discrimination claims and may not be considered on this motion.
Although the defense initially suggested that an employee's degree of risk aversion could affect his or her ratio of base salary to commission and thus compensation, Xerox conceded that it has no evidence, statistical or otherwise, to establish that black salespersons as a group are more or less risk averse than their white counterparts. See generally 10/14/03 Tr. at 65-73.
Indeed, if an assertion of inferior performance were sufficient to defeat a certification motion, few, if any, classes would ever be certified in employment discrimination cases. See 10/14/03 Tr. at 39.
In short, consistent with the decisions in Robinson,Caridad, and Latino Officers, where, as here, plaintiffs' statistical and anecdotal evidence tends to show that being a member of a racial minority has a negative effect on compensation, that showing suffices to demonstrate a common question of fact concerning defendant's employment practices, within the meaning of Rule 23(a).See also Wright, 2003 WL 21543539, at *6 (where statistics showed 6.12 standard deviations between minority and Caucasian compensation, court held that "plaintiffs' statistics demonstrate common questions of fact because they tend to show that being African-American or Hispanic has an effect on an employee's promotion, compensation, and geographic assignment."); McReynolds v. Sodexho Marriott Servs., Inc., 208 F.R.D. 428, 443-44 (D.D.C. 2002) (rejecting "statistical dueling" and finding commonality where anecdotal evidence and statistical analysis, which controlled for race and seniority but not education and experience by position, supported plaintiffs' claim of discrimination against African-Americans in promotions).
(ii) Subjective and decentralized decisionmaking
Seeking to distinguish Caridad, defendant also argues that because its territory configuration and quota assignment processes are not "entirely subjective," but involve several objective variables and limitations, the process cannot be said to present common questions of fact. See Def. Mem. at 19-20; see also 10/14/03 Tr. at 62-65. Xerox also claims that its highly decentralized decisionmaking process precludes a finding of commonality. See Def. Mem. at 24-25.
The decisions in Caridad and Latino Officers are substantially on point. In Caridad, the African-American plaintiffs challenged the "subjective components of company-wide employment practices," which negatively affected blacks in terms of disciplinary and promotion decisions. 191 F.3d at 292 (emphasis added), Although Metro North, like Xerox, had promulgated policies that included objective variables, it was the application of those variables by individual managers to specific employees that allegedly injected subjectivity into the process. See id. at 286-87. The Second Circuit rejected the district court's ruling that such a decisionmaking process precluded a finding of commonality. See id. at 292-93. Similarly, in Latino Officers, a class was certified where, as here, the plaintiffs challenged, as racially discriminatory, the delegation of authority to supervisors to apply entity-wide objective rules and practices — there, involving disciplinary proceedings. See 209 F.R.D. at 81-83, 88-89.
In the instant case, the territory configuration and quota assignment processes allegedly took into account several objective variables.See Def. Mem. at 20. Nevertheless, Xerox provided only general goals, not specific formulas as to how those factors should be applied; even within BWF strategy, supervisors retained significant discretion.See 10/14/03 Tr. at 63-64; see also Ciaschi Aff. at ¶¶ 25-26. Caridad and Latino Officers likewise involved decentralized, subjective decisionmaking processes that, in theory, were supposed to apply objective factors. See also McReynolds, 208 F.R.D. at 442 ("Whether a particular manager uses objective criteria in making particular promotion decisions is irrelevant to the commonality analysis; instead, what is significant is that the determination of which criteria to use is left entirely to the individual manager."). Thus, the existence of some objective factors does not negate a claim that the process is "entirely subjective" where those variables are alleged to have been inappropriately applied.
Furthermore, the fact that company-wide policies may be implemented differently in local sales operations does not negate a finding of commonality where, as here, the policy or practice was applied to the entire class. See Spinner, 2003 U.S. Dist. LEXIS 19298, at *10-12 (finding commonality and certifying class where plaintiffs, whose individual strip searches varied, alleged a policy, practice, or custom); see also Marisol A., 126 F.3d at 377 (commonality found where "injuries derive from a unitary course of conduct by a single system"); McReynolds, 208 F.R.D. at 443 (rejecting defense view of commonality test that would "preclude class certification in an action against any company that has decentralized its personnel practices," as such a test "would run afoul of the purpose of Title VII. . . ."). Therefore, the subjective nature of the decentralized decisionmaking process does not prevent certification of plaintiffs' disparate impact and treatment claims.
(iii) Diversity of the proposed class
Finally, defendant contends that because plaintiffs worked in "entirely different sales organizations . . . and numerous different autonomous CBUs or sales operations within those organizations," they should not be certified as a class. Def. Mem. at 25; see also id., at 26-28. Plaintiffs respond that all black sales representatives, regardless of sales organization or operation, were subject to the same subjective, nationwide procedure for territory assignment. See Reply Memorandum in Further Support of Plaintiffs' Motion for Class Certification at 8-9.
Courts within the Second Circuit have certified classes despite varying circumstances among the individual members of the proposed class.See In re Visa, 280 F.3d at 139 ("Common issues may predominate [for purposes of Rule 23(b)(3)] when liability can be determined on a class-wide basis, even when there are some individualized damage issues."); Wright, 2003 WL 21543539, at *5-6 (commonality satisfied inasmuch as claims of discriminatory promotion and compensation, asserted by class consisting of employees of city department of parks and recreation, was supported by statistical evidence and did not depend on employment terms of individual class members); Ingles v. City of New York, No. 01 Civ. 8279 (DC), 2003 WL 402565, at "1-5 (S.D.N.Y. Feb. 20, 2003) (class of inmates charging city prison officials with excessive force satisfied commonality requirement despite experiencing different instances and severity of violence); Latino Officers, 209 F.R.D. at 88-89 (commonality met although members of class of police officers were disciplined for different reasons and with varying outcomes). So long as a common question of law or fact binds the class together, it will be deemed to have met the requirement of commonality.See Fed.R.Civ.P. 23(a)(2) (requiring only that "there are questions of law or fact common to the class"). Although the sales positions of Xerox employees may differ in some respects, the general method by which salespersons are assigned to sales territories and are awarded compensation is the same. Because plaintiffs, however diverse, challenge a system, policy, or practice of discrimination,see Compl, at ¶ l, this case presents common questions of fact and law regarding these practices. Accordingly, plaintiffs' diversity does not preclude class certification.
See supra pp. 9-12.
b. Typicality
Defendant also alleges that the diversity of the proposed class members prevents a finding of typicality. See Def. Mem. at 28-37. Although the "commonality and typicality requirements of Rule 23(a) tend to merge," Falcon, 457 U.S. at 157 n. 13, the Court will separately address diversity as it applies to typicality.
To establish typicality, plaintiffs must demonstrate that "each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability."In re Drexel, 960 F.2d at 291; see also Fed.R.Civ.P. 23(a)(3). The factual background of each plaintiff need not be the same so long as the disputed issue of law or fact occupies "essentially the same degree of centrality to the named plaintiffs claims as to that of other members of the proposed class." Caridad, 191 F.3d at 293 (internal quotation marks and citation omitted). The primary consideration in assessing typicality is the "forthrightness and vigor" with which the named plaintiff will pursue the common interests of the class. Latino Officers, 209 F.R.D. at 89-90.
Defendant challenges typicality on many of the same grounds raised with respect to commonality. In particular, defendant contends that differences between plaintiffs' abilities and preferences will necessitate individualized inquiries regarding territory assignment, and that those inquiries are not susceptible to generalized proof or defenses. See Def. Mem. at 29-36. Nevertheless, whether a plaintiff is qualified for the desired position is a factual question that goes to the merits of the case and should not be considered for class certification purposes. See Avagliano v. Sumitomo Shoji Am., Inc., 103 F.R.D. 562, 575-76 (S.D.N.Y, 1984) (plaintiff need not establish, for class certification, that members were qualified for positions from which they claimed illegal exclusion). This principle applies with particular force where, as here, the named representatives of the proposed class allege a broad practice or policy of discrimination. See id. at 576. Although the factual circumstances of each class member may differ in this case, their overarching challenge is to what they contend is a company-wide system of "subjective and racially discriminatory policies and practices with respect to assignment of sales territories, promotion opportunities, compensation, and other terms of employment." Pl. Mem. at 21. As discussed previously, courts within the Second Circuit have repeatedly certified classes challenging discriminatory policies or practices, despite differing factual circumstances of the class members' claims. See Spinner, 2003 U.S. Dist. LEXIS 19298, at *10 (certifying class of persons subjected to policy or practice of strip search at booking facility although central policy may have been "carried out in a variety of different ways in different cases"); Wright, 2003 WL 21543539, at *7 (typicality satisfied when plaintiffs' allegations of disparate treatment are shared by the class although factual circumstances differ); Ingles, 2003 WL 402565, at *5 (plaintiff inmates with different accounts of violent conduct by prison officials met typicality requirement because their "claims [are] grounded in the same legal arguments and aris[e] from sufficiently similar events. . . ."); Latino Officers, 209 F.R.D. at 89 (typicality established even though plaintiffs felt different effects of discrimination and had different backgrounds).
Defendant also argues that because "any purported disparate treatment was not Xerox'[s] standard operating procedure" but instead was "committed by individual local sales managers" in autonomous sales organizations, the named plaintiffs are not typical of the geographical scope of the class they seek to represent. Def. Mem. at 36. In defining the appropriate class scope where purported class members are scattered in different locations or corporate divisions, courts have emphasized the importance of three factors: "(1) that a single policy prevails in several or all of defendant's subdivisions, or (2) that the subdivisions are not autonomous, or (3) where there are specific allegations pertaining to more than one location." Avagliano, 103 F.R.D. at 579 (certifying nationwide class of employees in various branch offices pursuant to strong showing on the first and second factors).
In this case, plaintiffs have made a significant showing in connection with the first and third factors. Plaintiffs allege that a company-wide policy or practice of discrimination exists and is implemented in a number of offices nationwide, as evidenced by the testimony of the variously located named plaintiffs. See Compl. at ¶¶ l, 6-12. Although defendant contends that each sales unit is autonomous (factor #2), plaintiffs have provided specific allegations regarding several Xerox sales units at different locations (factor #3).See id., at ¶¶ 6-12, 32. Considering plaintiffs' showing on two of the three factors, this Court is persuaded that a class nationwide in scope is appropriate at this juncture. Accordingly, Rule 23(a)(3) is satisfied.
2. Rule 23(b) Criteria
Plaintiffs, who request both injunctive relief and non-incidental monetary damages, seek certification under Rule 23(b)(2) or, alternatively, 23(b)(3). If certification under Rule 23(b)(2) is appropriate, it is unnecessary to consider certification under Rule 23(b)(3). See In re Visa, 280 F.3d at 147.
A class is appropriately certified under Rule 23(b)(2) "where broad, class-wide injunctive or declaratory relief is necessary to redress a group-wide injury." Robinson, 267 F.3d at 162. "Rule 23(b)(2) does not require that all plaintiffs be identically situated. What is important is that the relief sought by the named plaintiffs benefit the entire class." In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig., 209 F.R.D. 323, 342 (S.D.N.Y. 2002) (internal quotation marks and citation omitted). As the Second Circuit explained in Robinson:
The district court may allow (b)(2) certification if it finds in its informed, sound judicial discretion that (1) the positive weight or value [to the plaintiffs] of the injunctive or declaratory relief sought is predominant even though compensatory or punitive damages are also claimed, and (2) class treatment would be efficient and manageable, thereby achieving an appreciable measure of judicial economy.
Although the assessment of whether injunctive or declaratory relief predominates will require an ad hoc balancing that will vary from case to case, before allowing (b)(2) certification a district court should, at a minimum, satisfy itself of the following: (1) even in the absence of a possible monetary recovery, reasonable plaintiffs would bring the suit to obtain the injunctive or declaratory relief sought; and (2) the injunctive or declaratory relief sought would be both reasonably necessary and appropriate were the plaintiffs to succeed on the merits. Insignificant or sham requests for injunctive relief should not provide cover for (b)(2) certification of claims that are brought essentially for monetary recovery.267 F.3d at 164 (internal quotation marks and citations omitted).
In performing the balancing required under Rule 23(b)(2), a court should bear in mind the procedural aspects of a pattern-or-practice class action, which involves two phases: "the so-called liability and remedial phases." Latino Officers, 209 F.R.D. at 86; see also Robinson, 267 F.3d at 158. Typically, if, in the liability phase, the plaintiffs succeed in proving, by a preponderance of the evidence, that the defendant engaged in a pattern or practice of discrimination against the class, the Court may fashion class-wide injunctive relief. See Latino Officers, 209 F.R.D. at 86. If, in addition to injunctive relief, plaintiffs are seeking individual relief, such as back pay, compensatory, and/or punitive damages, the liability phase is then followed by a remedial phase to determine whether the individual plaintiff deserves any such relief. See Robinson, 267 F.3d at 159; Latino Officers, 209 F.R.D. at 86. Although "class members enjoy a presumption in their favor that any particular employment decision, during the period in which the discriminatory policy was in force, was made pursuant to that policy," a class member must nevertheless show, in the remedial phase, that he or she suffered an adverse employment decision. Latino Officers. 209 F.R.D. at 86-87 (internal quotation marks and citations omitted). Where an individual plaintiff succeeds in establishing an adverse employment action, the burden then shifts to the employer to show that the action taken was not unlawful. See id. at 87; see also Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 362 (1977). If the employer cannot establish a valid reason for the challenged action, the employee is entitled to individualized equitable relief, including back pay and front pay. See Robinson, 267 F.3d at 160; Latino Officers, 209 F.R.D. at 87. If further compensatory damages are requested, the class member will be required to prove that the discrimination caused the harm alleged. See Robinson, 267 F.3d at 160; Latino Officers, 209 F.R.D. at 87.
"[A]lthough the defendant's liability to the class as a whole is determined in the liability phase, the remedial phase implicates questions of liability as well, albeit liability to individual plaintiffs." Latino Officers, 209 F.R.D. at 86.
As the liability and remedial phases of a pattern and practice case require proof of different elements, the Court will separately consider class certification under Rule 23(b) for each of the two phases.
a. Liability Phase
Under the ad hoc balancing approach adopted by the Second Circuit inRobinson, the Court must "assess whether (b)(2) certification is appropriate in light of the relative importance of the remedies sought, given all of the facts and circumstances of the case."Robinson, 267 F.3d at 164 (internal quotation marks omitted);accord Parker v. Time Warner Entm't Co., L.P., 331 F.3d 13, 20 (2d Cir. 2003). "[T]he presence of a damages claim will not defeat maintenance of a class action under Rule 23(b)(2) when the requested . . . injunctive relief is a significant component of the overall relief which plaintiffs seek." In re Visa Check/Mastermoney Antitrust Litig., 192 F.R.D. 68, 88 (E.D.N.Y. 2000) (internal quotation marks and citation omitted), aff'd, 280 F.3d 124 (2d Cir. 2001), cert. denied sub nom. Visa U.S.A. Inc. v. Wal-Mart Stores. Inc., 536 U.S. 917 (2002).
In the instant case, plaintiffs' claim for equitable relief includes "an injunction that would require Xerox to change the method of assignment, in a way that would give less unfettered [discretion] and try to ensure some balance in the assignment of territories," with specific mechanisms and monitoring "to ensure that . . . African Americans are not, predominantly, assigned to . . . the less desirable territories." 10/14/03 Tr. at 14; see id. at 14-16, 20-22. Cognizant of the need for "fine-tuning and input from defendant,"id., at 20, plaintiffs specifically propose a mechanism for ranking territories within the different units, consistent with the BWF program and aided by computer software programs that use objective measures. See id. at 21-22.
Although, as defendant notes, see Def, Mem. at 38-39, plaintiffs do request significant monetary damages and other individualized relief, the Court may nevertheless certify a class action if, "(1) even in the absence of a possible monetary recovery, reasonable plaintiffs would bring the suit to obtain the injunctive or declaratory relief sought; and (2) the injunctive or declaratory relief sought would be both reasonably necessary and appropriate were the plaintiffs to succeed on the merits."Robinson, 267 F.3d at 164. If plaintiffs in this case succeeded in establishing a pattern or practice of racial discrimination, they would be entitled to class-wide injunctive relief of the kind they request, in order to eradicate that discrimination. See Wright, 2003 WL 21543539, at *8; Compl, at pp. 39-41. Such relief could result in the assignment of class members to more lucrative territories. Relief of this nature cannot be characterized as insignificant. In these circumstances, and consistent with the deposition testimony of a number of the named plaintiffs, the Court concludes that it is highly likely that plaintiffs would have pursued this action even if monetary relief were not available. See,e.g., Wright, 2003 WL 21543539, at *8; Latino Officers, 209 F.R.D. at 93; cf. Legrand v. New York City Transit Auth., No. 95 Civ. 333 (JG), 1999 WL 342286, at *7 (E.D.N.Y. May 26, 1999) (denying class certification where relief sought "relates predominantly to money damages," and plaintiff failed to satisfy numerosity requirement).
In addition to their demand for class-wide injunctive relief, plaintiffs also request "[a]n adjustment of the wage rates, benefits, and seniority rights," Compl, at p. 40; damages including "back pay, front pay, general and special damages for lost compensation, commissions and job benefits they would have received but for Xerox's discriminatory practices, and for emotional distress, humiliation, embarrassment, and anguish," id. at pp. 4041; and exemplary and punitive damages.See id. at p. 41. Plaintiffs also seek "positive injunctive relief, in terms of reassignment of African American employees to . . . the types of territories that they would have had, absent the discrimination." 10/14/03 Tr. at 14: see id. at 16-17.
See Pl. Mem. at 30-31 (citing deposition testimony of Jimerson, Dean-Hall, Warren, and Brooks).
Xerox also argues that calculating damages for each class member would entail too many individualized determinations for the class to be certified under either (b)(2) or (b)(3). See generally Def. Mem. at 38-40. However, this is a concern at the remedial phase, but not the liability stage, of the proceeding.See Wright, 2003 WL 21543539, at *8. Pursuant to Rule 23(c)(4)(A), the Court may sever the liability phase from the remedial, to allow class certification of particular issues. See Latino Officers, 209 F.R.D. at 93.
For the reasons discussed above, class treatment of the liability phase of trial is appropriate under Rule 23(b)(2).
b. Remedial Phase
Plaintiffs acknowledge that issues such as "damages for the past assignments" may require individualized determinations at the remedial phase. 10/14/03 Tr. at 17; see id., at 18-19. Because this Court concludes that damages arising out of past assignments, among other issues, may well require separate determinations for each class member, the remedial (monetary) phase should be severed from the liability and injunctive relief phase for class certification purposes. See, e.g., Robinson, 267 F.3d at 167 (district court erred in refusing to bifurcate pattern-or-practice claim and certify liability stage for (b)(2) class treatment); Latino Officers, 209 F.R.D. at 93 (certifying liability stage for class treatment and severing individual remedial stage);McReynolds, 208 F.R.D. at 448-49 (bifurcating case and certifying class under (b)(2) for liability phase where plaintiffs requested monetary damages, including back pay); Morgan v. UPS, 169 F.R.D. 349, 358 (E.D. Mo. 1996) (severing issues of liability and injunctive relief from damages phase of class action under Title VII and section 1981), If liability is found, the certification issue may be revisited in connection with the damages phase.
Plaintiffs add, however, that Dr. Cupingood's analysis could provide the basis for a formula that would allocate back pay among class members. See 10/14/03 Tr. at 17-20.
Plaintiffs also argue that this action may be certified under (b)(3), which is appropriate if "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 the fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3). This Court would not at this juncture opt to certify the remedial phase under (b)(3) because the questions common to the class will be addressed in the liability phase, as opposed to the remedial phase, where individual damages are calculated.
At that point, it might be appropriate to afford notice and opt-out rights to absent class members. See Latino Officers, 209 F.R.D. at 93; Wright, 2003 WL 21543539, at *8.
B. Plaintiffs' Retaliation Claims
Xerox challenges each of the Rule 23(a) elements in regard to plaintiffs' request for class certification based on retaliation.See Def. Mem. at 18 n. 18. Although it is plaintiffs' burden to establish the prerequisites to class certification, they now concede that retaliation "is always a difficult claim for class certification" (10/14/03 Tr. at 10) and, indeed, is "the weakest part" of their motion.Id. Expressing fear that the class representatives may face adverse consequences because of their participation in this lawsuit, plaintiffs characterize their retaliation claim "primarily, as a request for injunctive relief. . . ." Id. Whatever their characterization of that claim, plaintiffs nevertheless bear the burden of proving (among other things) the four elements of Rule 23(a): numerosity, commonality, typicality, and adequacy of representation.See Caridad, 191 F.3d at 291. Plaintiffs do not address, let alone establish, any of those elements with respect to their retaliation claim.
While "[c]ourts have not required evidence of exact class size or identity of class members to satisfy the numerosity requirement,"Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir. 1993), plaintiffs must show that "the class is so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). Here, only three of the named plaintiffs — Jimerson, Brooks, and Miller — claim to have suffered acts of retaliation. See 10/14/03 Tr. at ll. Because plaintiffs offer no other evidence of numerosity, other than a concern that "any African American who is a member of this class is potentially subject to retaliation," id. at 13, this element has not been satisfied. Nor have plaintiffs offered any proof to establish commonality or typicality, other than the testimony of three class representatives that each suffered what he or she believed to be retaliation; plaintiffs concede that they have no statistical evidence of retaliation or any other "evidence of class-wide" retaliation. Id. at 11;see id. at 13. Given plaintiffs' inadequate showing, their retaliation claims do not warrant class certification at this time. See, e.g., Sheehan v. Purolator, Inc., 103 F.R.D. 641, 652 (E.D.N.Y. 1984), aff'd, 839 F.2d 99 (2d Cir. 1988).
In Latino Officers, the court certified a class of police officers subjected to retaliation, where, in contrast to this case, the officers specifically alleged that all class members were "chilled in the exercise of their First Amendment rights by the threat of retaliation." 209 F.R.D. at 86 (emphasis added). Plaintiffs make no such allegation in this case.
II. Subclass Certification
Under Rule 23(c)(4), a court may divide a class into subclasses when all members of the class challenge the same conduct but assert differing specific interests and legal theories. See Fed.R.Civ.P. 23(c)(4); David Herr, Federal Judicial Center, Annotated Manual for Complex Litigation. Third 251-53 (2003). The trial court has broad discretion to decide whether subclasses are necessary based on the facts of the particular case. See id. at 252-53. A court is not obligated to create subclasses at the class certification stage of the litigation, but retains the "flexibility to certify subclasses as the case progresses and as the nature of the proof to be developed at trial becomes clear." Marisol A., 126 F.3d at 379.
Plaintiffs request the creation of three subclasses — the New York State, New York City, and California Subclasses — because "the laws of the States of New York and California are superior to federal law, in some respects." 10/14/03 Tr. at 25. Specifically, plaintiffs contend that the aforesaid state and local laws would result in different damages and statute of limitations calculations. See id. at 27.
Certification of subclasses requires fulfillment of the requirements for class certification generally. See Burka v. New York City Transit Auth., 110 F.R.D. 595, 601 (S.D.N.Y. 1986). To that end, a subclass must meet the Rule 23(a) requirements of numerosity, commonality, typicality, and adequate representation, as well as one of the maintainability conditions of Rule 23(b), See Burka, 110 F.R.D. at 600-01. Although plaintiffs have requested the creation of subclasses, they have neglected to include sufficient facts for the Court to conclude, at this point in the proceeding, that the prerequisites of Rules 23(a) and (b) are satisfied.
While the overall class of plaintiffs may number in the hundreds, the record is devoid of any information that would allow the Court to conclude that numerosity has been satisfied for each of the three subclasses plaintiffs request. See Pl. Mem. at 15; 10/14/03 Tr. at 52. Even accepting plaintiffs' contention that New York and California are two of the four largest states in which black Xerox sales representatives are employed, plaintiffs admittedly can provide no concrete information to support numerosity within the subclasses.See 10/14/03 Tr. at 26. Courts within the Second Circuit have refused subclass certification where, without more, the requirement of numerosity has not been met. See Ashe v. Bd. of Elections in City of New York, 124 F.R.D. 45, 52 (E.D.N.Y. 1989) (failure to satisfy numerosity resulted in refusal to certify subclass of eleven delegate candidate plaintiffs whose support was allegedly diminished by defendant's weakening of minority voting rights). Therefore, plaintiffs' deficient showing of numerosity is a sufficient basis for denying subclass certification.
In addition, in order to avoid any conflicts of interest, plaintiffs would have to identify separate class representatives or legal counsel for each of the subclasses. See Ortiz v. Fibreboard Corp., 527 U.S. 815, 856 (1999) (each subclass requires separate class representatives and counsel to eliminate conflicts of interest); In re Simon II Litig., 211 F.R.D. 86, 181 (E.D.N.Y. 2002) ("court must have 'structural assurance' of appropriate representation for all the subgroups and individuals involved in the class action.") (quoting Amchem Prods. v. Windsor, 521 U.S. 591, 627 (1997)). As plaintiffs have neglected to do so, they have not satisfied the adequacy of representation component of Rule 23(a).
II. Statute of Limitations
Defendant also raises a statute of limitations defense in regard to the scope of plaintiffs' class, which was proposed to run from February l, 1997. See Def. Mem. at 37-38. Specifically, Xerox argues that "non-retaliation claims [under Section 1981] may not extend beyond May 8, 1998" and that Title VII claims start from April 23, 1999. Def. Mem. at 37.
Defendant's statute of limitations defense implicates the so-called "continuing violation doctrine," Nat'l R.R. Passenger Corp., v. Morgan, 536 U.S. 101, 106-08 (2002), which in turn may necessitate a detailed analysis of the underlying facts. See Quarless v. Bronx-Lebanon Hosp. Ctr., 228 F. Supp.2d 377, 383 (S.D.N.Y, 2002),aff'd mem., 75 Fed. Appx. 846 (2d Cir. 2003);Branch v. Guilderland Cent. Sch. Dist., 239 F. Supp.2d 242, 254 (N.D.N.Y. 2003). Discovery has not been completed in this case (see 10/14/03 Tr. at 26-27), and both parties agree that there is no need for the limitations issue to be decided at this time.See id. at 28 (plaintiff states that "[w]hether the continuing violation theory would apply here . . . goes to the merits and that's appropriate for decision down the road, either on a summary judgment-type application or possibly even for the jury, if the judge decided that it raised factual questions."); id. at 60 (defense agrees "that that issue could be examined at a later date.");see also id. at 81-82), Accordingly, the District Court should defer resolution of this issue.
Both sides note that it is unclear how the continuing violations theory would apply to a Title VII pattern-and-practice discrimination case post-Morgan, 536 U.S. 101, and the Second Circuit has not yet decided this issue. See 10/14/03 Tr. at 55, 81.
CONCLUSION
For the foregoing reasons, it is the recommendation of this Court that the District Court bifurcate the liability and remedial phases of this litigation and certify the following class pursuant to Rule 23(b)(2), for liability and class-wide injunctive and declaratory relief on plaintiffs' disparate impact and treatment claims: all black Xerox sales representatives who (within the applicable statutes of limitation) have been, continue to be, or may in the future be, affected by defendant's alleged pattern and practice of racial discrimination in assignments of sales territories, promotions, and compensation.
Plaintiffs' requests for certification of their retaliation claim and for the creation of subclasses should be denied at this time.
Any objections to the recommendations contained herein must be filed with the Honorable John Gleeson on or before February 9, 2004. Failure to file objections in a timely manner may waive a right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72; Small v. Secretary of Health Human Servs., 829 F.2d 15, 16 (2d Cir. 1989).
The Clerk is directed to send copies of this Report and Recommendation by Federal Express to all counsel of record.
SO ORDERED.