Duane Morris Takeaways – In Chalmers, et al. v. City of New York, 22 Civ. 3389 (S.D.N.Y. Sept. 19, 2022), Judge Analisa Torres of the U.S. District Court recently certified a Title VII class action alleging race discrimination in pay for various positions involving fire protection inspectors in the City’s Fire Department. The decision in Chalmers is an important one for employers, as shows how plaintiffs’ class action lawyers are using certification theories to “work around” the seemingly impregnable barrier to class certification based on Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). Corporate counsel are well-served to heed the lessons of Chalmers in crafting their approaches to dealing with workplace class action litigation.

Background Of The Case

Over 500 African-American fire protection inspectors sued the City of New York on the basis that predominately Caucasian building inspectors received higher pay for performing essentially the same work. Plaintiffs sued for intentional disparate treatment discrimination and disparate impact discrimination under Title VII of the Civil Rights Act of 1964 and analogous New York state law. Their union – the AFSCME District Council 37/Local 2507 – joined in the lawsuit.

Plaintiffs alleged that they and other similarly-situated fire protection inspectors comprised nearly 69% to 72% of the slots within their department. They asserted that the Fire Department’s pay policies resulted in lower pay due to intentional discrimination or adverse impact against African-American fire protection inspectors.

After discovery and identification of expert witnesses, Plaintiffs moved for class certification under Rule 23 on behalf of a class of African-American fire protection inspectors, as well as a sub-class of African-American associate fire protection inspectors.

The Court’s Class Certification Ruling

In her 44-page order, Judge Torres analyzed the parties’ evidentiary submissions, their competing expert reports, and applicable case law. Over half of the opinion analyzed the admissibility of the expert evidence under the standards in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1991). Ultimately, the Court rejected the defense position that the reports of Plaintiffs’ experts were methodologically flawed and therefore insufficient to support the motion for class certification. In what might best be described as a “deep dive” into the statistical underpinnings of the experts’ reports, Judge Torres opined that the opinions of Plaintiffs’ experts were sufficient to survive the City’s Daubert challenges. At the same time, the Court determined that the defense expert testimony was flawed in multiple ways, and it granted the majority of Plaintiffs’ Daubert challenges to the City’s expert evidence.

As to Plaintiffs’ class certification motion, Judge Torres ruled that Plaintiffs presented a sound theory backed by evidence to establish all of the required elements under Rule 23. The Court found it significant that the identified pay disparities between African-American and Caucasian workers had existed for nearly 12 years. Further, the pay gap increased over time from $2,500 on average in 2008 to nearly $9,000 on average by 2019. Judge Torres opined that this statistical showing alone sufficed to show a common issue for all class members that Defendant knew of the pay disparity but took no steps to address or remedy it.

In addition, Judge Torres focused on three policies and practices that contributed to the alleged unlawful pay disparities. Those policies and practices included: (i) paying fire inspectors only the minimum required under their collective bargaining agreement (“CBA”); (ii) justifying the disparate pay because of the City’s view that the inspectors were civilian employees as opposed to uniformed workers entitled to higher pay under the CBA (despite the performance of basically the same type of work); and (iii) failing to monitor pay practices where two groups of employees did substantially similar work but were paid differently and one of the groups had a higher percentage of African-American workers. As to the last practice, Judge Torres deemed it to be tantamount to creation of a system of occupational segregation with substantially lower pay to protected category employees.

The Court held that the impact of these policies and practices could be proved by class-wide proof and that Plaintiffs had established all of the prerequisites to class certification (numerosity, commonality, typicality, adequacy of representation, predominance, and superiority per Rule 23). For these reasons, Judge Torres granted Plaintiffs’ motion.

Implications For Employers

In class actions, a decision on class certification is the holy grail of the lawsuit. A favorable ruling for Plaintiffs exponentially increases a defendant’s financial exposure and litigation costs. Conversely, denial of class certification obtained by the defense usually fractures the case and creates the conditions for bringing the litigation to an end.

The ruling in Chalmers underscores the importance of identifying and using qualified and skilled experts for either obtaining or preventing class certification. As the decision shows, an inadequate expert presentation can undermine a defendant’s efforts to fracture a case or prevent class certification.

Finally, after 11 years of dealing with the pro-defense ruling of Wal-Mart Stores, Inc. v. Dukes (which made it seemingly more difficult to certify classes in major employment discrimination litigation), the plaintiffs’ class action bar has re-booted their strategy playbook to forge viable certification theories to get around defense efforts to derail their certification theories. To that end, the Chalmers ruling ought to be required reading for any corporate counsel involved in class action litigation.