On May 27, 2014, the U.S. District Court for the Northern District of Illinois handed a major win to the Chicago Board of Education in its battle with the Chicago Teachers Union over the selection of 10 schools for turnaround in 2012, which affected the jobs of over 200 African-American teachers and para-professionals.  The decision – Chicago Teachers Union v. Board of Education of Chicago, No. 12-CV-10311 (N.D. Ill. May 27, 2014) - is reflective of a growing trend that raises the Rule 23 class certification bar in employment discrimination class actions.

In an important lesson for all employers, the Court held that the Board’s rigorous, individualized assessment of the schools considered for turnaround meant that the case was unsuitable for class treatment of plaintiffs’ discrimination claims.

Background

Under the Illinois School Code, schools may be subject to a “turnaround” if they had been on probation for at least one year and have failed to make adequate progress in correcting deficiencies. In a turnaround, the Board of Education takes control of the school and removes all staff. Affected teachers and para-professionals are either placed in a reassignment pool or a substitution pool with different rights to salary and other benefits depending on their tenure status and job position.

In 2011, the Board began considering which school should be turned around in 2012. The process started with an initial list of 226 schools. That list was reduced to 74 schools based on composite standardized test scores and graduation rates.  Subsequently, a qualitative “in-depth investigation process” began for the remaining 74 schools. This involved school visits, additional data collection, and meetings with a variety of school representatives and community members. No written policy applied to the turnaround decision and no one set of factors was applied to determine whether a turnaround was appropriate for a particular school. Some of the factors considered were: the academic culture of the school, whether quality instruction was being provided, the quality of the leadership, and the academic trends of the school.

After reviewing the information, the Board ultimately voted to turnaround 10 schools. The schools were located exclusively on the south and west sides of Chicago where African-Americans made up 40.9% of tenured teachers. The total percentage of African-American tenured teachers at the 10 schools selected for turnaround was approximately 51%, while the total percentage of African-American tenured teachers in the entire Chicago public school system was only 25%.

The Chicago Teachers Union and three African-American tenured teachers brought suit against the Chicago Board of Education alleging that the board’s decision to turn around ten Chicago public schools was racially discriminatory. Plaintiff sought to certify a class consisting of all African-American teachers or para-professionals in any school subjected to the 2012 turnarounds.

The Certification Decision

The Court held that the individualized, qualitative nature of the Board’s selection process made the case unsuitable for class certification. Relying on Wal-Mart v. Dukes, 131 S. Ct. 2541 (2011), the Court held that it could not resolve “in one stroke” the question of whether the Board’s turnaround policy was discriminatory as applied to all class members because that would require an examination of the rationale behind the decisions to turnaround each of the 10 schools selected for turnaround in comparison with the decisions concerning the remaining 63 schools that had not been selected. The Court noted that its decision may have been different if schools had been selected based solely on objectively measurable criteria applied across the board, which would have eliminated the need for further review into how the criteria were applied to individual schools.

Although the commonality question drove its decision, the Court went on to analyze the other class certification requirements. In particular, the Court found that plaintiffs had failed to establish that they met the requirements of Rule 23(b)(2) or the predominance requirement of Rule 23(b)(3).

The Court held that plaintiffs’ claims for relief were not amenable to certification under Rule 23(b)(2) because the injunctive and declaratory relief sought by plaintiffs would merely initiate a process through which highly individualized determinations of liability and remedy would have to be made. The relief would be class-wide in name only, and could not be final without further individualized inquiries involving, for example, placement of individual class members in specific jobs based on their qualifications or providing them with back pay and front pay if no positions were available.

With respect to Rule 23(b)(3), the Court held that the case was unsuitable for class treatment because individualized questions of liability and damages would predominate over common questions. Because the selection process involved a qualitative review, claims would have to be resolved on a school-by-school basis, eliminating any efficiencies gained by certifying the matter as a class action. The Court went on to note, however, that the mere fact that damages may be individualized would not preclude certification. Distinguishing the Supreme Court’s decision in Comcast v. Behrend, 133 S. Ct. 1426 (2013), the Court held that it was enough for class certification purposes that all putative class members attributed their damages to the turnaround decisions. Although the extent to which individual class members were able to mitigate their damages would involve individualized inquiries, those were not enough to merit departure from the prevailing rule that individualized damage issues will not preclude class certification.

Implications For Employers

This case is another interesting decision in the line of cases interpreting Wal-Mart Stores, Inc. v. Dukes. The Court applied the reasoning of Wal-Mart to hold that a policy of selecting schools for turnaround that relied on the individualized application of common criteria was not enough of a common policy such that the claims of all class members could be resolved in one stroke. In other words, because each school got a separate, fact-intensive and individualized review, there was no one common question that could provide a common answer on an essential question of liability for the entire class.

This has important implications for all employers who are considering any kind of mass lay-offs. Common, across-the-board numerical or objective criteria that are applied to select individuals for termination are going to make the company’s actions more easily challenged on a class-wide basis. To the extent that an employer utilizes and can document a more searching, qualitative selection process, this decision supports that approach as a process that may be better immunized from attack on a class-wide basis.