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McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc. - 672 F.3d 482 (7th Cir. 2012)

Rule:

Wal-Mart holds that if employment discrimination is practiced by the employing company's local managers, exercising discretion granted them by top management rather than implementing a uniform policy established by top management to govern the local managers, a class action by more than a million current and former employees is unmanageable; the incidents of discrimination complained of do not present a common issue that could be resolved efficiently in a single proceeding. Fed. R. Civ. P. 23(a)(2). Not that the employer would be immune from liability even in such a case; if the local managers are acting within the scope of their employment in discriminating against their underlings on a forbidden ground, the employer is liable for their unlawful conduct under the doctrine of respondeat superior. But where there is no company-wide policy to challenge, there is no common issue to justify class treatment.

Facts:

Employees, brokers who worked for defendant employer filed a class action that charged the employer with racial discrimination in employment in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C.S. § 1981. They sought class certification for (1) deciding whether the employer had engaged and was engaging in practices that had a disparate impact on the class members, in violation of federal antidiscrimination law, and (2) providing injunctive relief. They also wanted damages. The United States District Court for the Northern District of Illinois, Eastern Division denied class certification.

Issue:

Should class certification be granted?

Answer:

Yes.

Conclusion:

The appellate court noted that Fed. R. Civ. P. 23(c)(4) provided that when appropriate, an action may be brought or maintained as a class action with respect to particular issues. The practices challenged in this case presented a pair of issues that could most efficiently be determined on a class-wide basis rather than in 700 individual lawsuits. It ruled that the district judge erred in deciding to the contrary. The district judge exaggerated the impact of the fact that exercise of discretion at the local level was undoubtedly a factor in the differential success of brokers on the feasibility and desirability of class action treatment. Lastly, it noted that without proof of intentional discrimination (which was not an element of a disparate impact claim) plaintiffs could not obtain damages, whether compensatory or punitive, but only equitable relief, 42 U.S.C.S. § 1981a(a)(1).

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