Information and Commentary on Class Action Cases Affecting Employers

Employment Class Action Blog

Home | Employment Class Action Blog

<img class="wp-image-5527 alignright" src="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2018/12/Flowchart-organization-iStock-587529448_1200x630pixel.jpg" alt="" width="476" height="250" />

A claim is brought against a large employer contending that, although personnel decisions are made locally, it discriminates in pay and promotions on the basis of sex nationwide. Sound familiar? That was, essentially, the claim in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), that the Supreme Court held should not have been certified. And seven years later, it was the claim the Southern District of New York has now refused to certify in <a href="https://employmentclassactionreport.bakerhostetlerblogs.com/wp-content/uploads/sites/8/2018/12/11-cv-3743.pdf">Kassman v. KPMG LLP, Case No. 11-cv-3743</a> (Nov. 30, 2018).



The Kassman case was brought only days before the Supreme Court’s Dukes decision and was likely patterned on the Ninth Circuit decisions that the Supreme Court ultimately reversed. Unlike Dukes, it also included claims under the Equal Pay Act (EPA), whose remedial scheme is based on that under the Fair Labor Standards Act, and so is not strictly governed by Rule 23. The court had previously “conditionally certified” the EPA case, and approximately 1,100 class members had opted in (out of a total of roughly 10,000). As a factual matter, the employer used a largely decentralized system to make compensation decisions. The process as a whole was administered by a single committee, but individual decisions were purely made locally.

Although the court made a number of observations in its 61-page decision, the core analysis can be summarized briefly. It first found that a claim involving decentralized decision-making would be viable only if the plaintiff could show that local supervisors worked under “a common mode of exercising discretion that pervades the entire company.” Quoting Dukes, 564 U.S. at 352. To make that determination, it found that courts should examine four factors (possibly along with others):

(1) the nature of the purported class;

(2) the process through which discretion is exercised;

(3) the criteria governing the discretion; and

(4) the involvement of upper management.
(Slip Op. at 36)
The district court went on to find that none of these factors supported certification. The class was large, geographically diverse and encompassed a broad array of jobs at all levels. The compensation-setting system operated more as a framework than as a set of rigid guidelines, and encompassed many factors. The court similarly concluded in light of Dukes that the delegation of subjective decision-making authority did not itself support the notion of a class. Finally, the involvement of upper management related more to the total aggregate of compensation rather than to individual decisions.

The court also addressed a number of arguments that other courts have largely rejected following Dukes, including resolving issues relating to competing experts and statistical approaches. It also rejected the plaintiffs’ EPA class, finding that their focus was not on individual jobs, as the act envisioned, but in trying to import discredited notions of “comparable worth.”

The Kassman decision reflects a straightforward application of the Supreme Court’s Dukes decision, but is notable for the fact that it also addresses arguments and tactics plaintiffs have tried to use to get around the obstacles that decision created. Lost in these attempts, of course, is common sense; local decisions are just that – local – and cannot be said to be “common” or “typical” across a nationwide class.

The bottom line:

Following Dukes, plaintiffs will have an uphill battle when trying to challenge locally made decisions on a nationwide class basis.

Southern District of New York Denies Certification of Nationwide Case Alleging Sex Discrimination