On September 29, 2013, Chief Judge Sharon Lovelace Blackburn of the U.S. District Court for the Northern District of Alabama in Bryant, et al. v. Southland Tube, No. 2:10-CV-3215, 2013 U.S. Dist. LEXIS 141607 (N.D. Ala. Sept. 29, 2013), denied plaintiffs’ motion for class certification finding plaintiffs failed to satisfy Rule 23(a)’s commonality and typicality requirements. The plaintiffs sought to certify a class of over one-hundred African-American workers, alleging Southland’s selection system for promotions, pay increases and training discriminated against African-American employees. Southland’s system gave supervisors wide discretion to select employees for promotions, trainings and pay increases.
This decision is a must read for employers facing class actions based on a company practice or policy that gives decision-makers wide discretion to make promotion and compensation decisions. Judge Blackburn’s opinion demonstrates that merely showing the existence of a subjective policy, without strong statistical proof and anecdotes, will be insufficient to meet Rule 23(a)’s commonality requirement.
Background Of The Case
Eleven named plaintiffs brought suit against Southland Tube, which manufactures an electric resistance welded tubular product, alleging Southland’s system for selecting employees for promotions, trainings and pay increases had a disparate impact on African-Americans. Id. at *1. The plaintiffs are current and former employees of Southland who worked on the production side of its operations, referred to as “the Mill.” Id. at *6. Within the Mill, there are three layers of management — the Operations Manager, who is responsible for the entire operations of the Mill, five Superintendents, who are each responsible for one of the five distinct areas of the Mill, and Frontline Supervisors, who each oversee a particular shift within one of the five areas of the Mill. Id. at *6-7.
Under Southland’s pay and promotion system, significant weight was placed on the Frontline Supervisors’ promotion, training and compensation recommendations, although the Operations Manager ultimately approved the decisions. Id. at *8-12. Southland, however, provided only vague and subjective standards for making the recommendations, gave supervisors no written instructions pertaining to the qualifications necessary for promotions, and did not notify hourly employees of open training and promotion opportunities. Id.
After a period of discovery, the plaintiffs filed their motion for class certification motion, seeking to certify a class of African American employees who worked at Southland Tube at any time between 2006 to the present. Id. at *30. In support of their motion, the plaintiffs filed an expert report setting forth three main findings: (1) the distribution of hourly wage rates among African-American employees fell primarily in the lower part of the range, whereas the distribution of hourly wage rates among white hourly employees fell more evenly over the range; (2) more African-American employees were earning below the median hourly wage than were earning above the median hourly wage, whereas the opposite was true for white employees; and (3) when comparing African-American employees to white employees with the same job and years of experience, the African-American employees earned, on average, a lower hourly rate and smaller bonuses than white employees in all years except 2007. Id. at *28-29.
The Court’s Rule 23 Analysis
In considering the plaintiffs motion for class certification, the Court found that the plaintiffs satisfied Rule 23(a)’s numerosity and adequate representation requirements. Id. at *32, 46. However, the Court found the plaintiffs failed to satisfy both Rule 23(a)’s commonality and typicality requirements. Id. at *32-46.
As to the commonality requirement, the Court first noted that the “prosecution of disparate treatment claims, ‘while not dispositive, weighs against finding the commonality and typicality required by Rule 23’” because disparate treatment claims are by their very nature individual. Id. at *34. Even if a disparate treatment claim lends itself to class treatment, the Court noted, the plaintiffs must show that the intentional discrimination was the employer’s standard operating procedure through a combination of statistics and anecdotes. Id.
The Court, relying heavily on the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2001), found that plaintiffs failed to make this showing. Id. at *36-37. The Court reasoned that merely proving an employer’s decision makers made selections based on unrestrained discretion does not show that decision makers acted with discriminatory motive toward the class as a whole. Id.
The Court then analyzed the plaintiff’s statistical evidence, opining that it was not sufficient to support a finding that discrimination was Southland’s standard operating procedure. Id. at *41-42. Although the evidence showed that more African-Americans were paid below the median wage rate and African-Americans with the same years of service and in the same position were paid less than their white counterparts, the plaintiffs’ expert testimony was “worlds away from significant proof” that Southland operated under a general policy of discrimination. Id. at *43. The Court also noted plaintiffs produced no evidence of a disparity between African-American and white employees with regard to promotions and training. Id.
The Court concluded Plaintiff’s common contention that Southland used unfettered discretion of its supervisors and lack of established procedures to intentionally discriminate against African-American employees, without any showing of statistically significant disparities between African-American and white employees, does not resolve any issue central to the validity of the class members’ pattern or practice of disparate treatment claims. Id. at *43-44. Accordingly, the Court held the plaintiffs failed to establish commonality under Rule 23(a). Id. at *44.
Turning to the typicality requirement, the Court noted that although all the plaintiffs worked in a single location and the decisions at issue were approved by the Operations Manager, the named plaintiffs’ claims of disparate treatment are primarily individual claims. Id. The Court reasoned that some plaintiffs were employed in different positions, desired different promotions, and had different disciplinary records. Id. at *44-45. Because their experiences at Southland were varied, the Court found resolution of their claims will require numerous factual determinations, and thus do not meet Rule 23(a)’s typicality requirement. Id. at *45.
Implications For Employers
The Southland decision demonstrates a judicial unwillingness to certify a class based on a disparate treatment theory where the statistical evidence does not provide significant proof that a defendant operated under a general policy of discrimination. The Court in Southland relied heavily on the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes in denying class certification, finding that just as in Wal-Mart, the statistical evidence did not paint a clear picture of discrimination. The Court noted that “subjective reasons are not the red-headed stepchildren of proffered nondiscriminatory explanations for employment decisions. Subjective reasons can be just as valid as objective reasons.” Id.