Monday, August 29, 2011

A Tale of Two Class Actions

The recent decision by Judge Loretta Preska in New York that blew up the EEOC’s discrimination case against Bloomberg Financial News Service is worth reading, despite its length, for what it says about large scale employment discrimination cases. It's particularly worth reading along with the Supreme Court’s decision in Dukes v. Walmart, another large scale case that fell apart after a rational judicial assessment of the basis for the class claims.  

Both cases involved large numbers of female class members alleging that gender discrimination was the norm at their employers. The Walmart group was gigantic – more than a million members – and was brought as a true class action. Bloomberg, on the other hand, involved only some 600 employees who took maternity leave during a 7-year time period (the EEOC claimed Bloomberg discriminated against pregnant women and mothers). Both cases, however, alleged that individual employment decisions made by Walmart and Bloomberg management were permeated with bias--against women generally, or against pregnant women in particular. Both cases ultimately fell apart because of the inability of the plaintiffs to provide valid statistical evidence to support their claims and because the plaintiffs relied on  individual anecdotal statements that ultimately could not support the wide scale relief that they sought.

The plaintiffs  used different approaches in each case. As noted above, the Walmart plaintiffs filed their case under traditional class action principles; the EEOC went after Bloomberg using a quasi- class action process by alleging a “pattern or practice” charge, and claiming that it was the normal process at Bloomberg to discriminate against pregnant employees.

Both plaintiffs groups were betting that they could overcome the normal problems associated with  filing discrimination claims on behalf of large numbers of employees by using a mix of unreliable statistical comparators, coupled with what were supposed to be fairly graphic claims of employment discrimination against individual class members. Although the Walmart plaintiffs were successful in getting passed the 9th Circuit with their statistical nonanalysis, the Supreme Court  made short work of it on review. The Court noted that for the statistics to have any meaning, the individual plaintiffs must have been subjected to a  common decision-making system. In this case, what was alleged was actually a non-systematic approach to employment decisions, namely that the company delegated wide latitude to individual store managers with respect to promotions, hiring, and compensation. The Walmart plaintiffs then made the ironic logical jump (for a discrimination claim, at least) that because the decision makers were for the most part male, they would necessarily be biased against women. The Supreme Court vitiated this analysis on several levels, noting in particular that a policy of not having a policy was not, in fact, a policy. It also blew up the statistical analysis, which could not do anything more than state that it was a possibility that discrimination would result in a system with wide latitude at the individual store manager level.

In Bloomberg, the judge precluded the EEOC from even getting its statistical analysis into evidence. Amazingly, the court called the EEOC on a fundamental error in its statistical work; namely that the EEOC’s statistical expert compared women who took maternity leave not against other employees who took similar long term leaves of absence for reasons other than maternity, but rather against the work force that did not take leave at all. This is a fundamental and surprising error for a federal employment agency to make. In fact, the judge noted that it was not illegal for a company to discriminate against people who took absences for extended periods of time in terms of compensation and promotion as long as the company was not singling out people who missed work for protected reasons such as pregnancy. As the court noted, the law does not require that pregnant women be treated better than their co-workers, or given more advantages, it only requires that they not be treated worse than other employees who are not pregnant but similarly situated in their ability or inability to work. Indeed, the Civil Rights Act says as much in its section on pregnancy discrimination.

Finally, Judge Preska’s opinion should be read for what it says about the legal requirements of the modern workplace and so-called “work life balance.”  The judge cites former GE CEO Jack Welch: “There is no such thing as work life balance. There are work life choices, and you make them, and they have consequences.” The judge then went on to say that the law does not mandate that employees offer a work life balance and does not require companies to ignore an employee’s family-work  tradeoffs when deciding about employee pay and promotion. Employees who make decisions that preference family over work must understand that those decisions come with consequences, and as long as those consequences occur for anyone who takes significant time away from the company, then the company’s policies are legal.

It's unusual to get such solid and thoughtful guidance in opinions written by often harried federal judges. Judge Preska has done everyone a favor by taking the time to do so here.

1 comment:

  1. This decision is so disappointing on so many levels.