The U.S. Court of Appeals for the Seventh Circuit, in an opinion written by Chief Judge Frank Easterbrook, reversed an Order certifying two multi-site classes of black construction workers alleging race discrimination based upon the U.S. Supreme Court’s decision in Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011).  In Bolden v Walsh Construction.pdf, (No. 12-2205, August 8, 2012) the Seventh Circuit panel found the 12 named plaintiffs failed to satisfy the requirement of Federal Rule of Civil Procedure 23(a)(2) that a class may be certified only if “there are questions of law or fact common to the class.”

The Background

The 12 plaintiffs had worked for Walsh Construction in the Chicago Metropolitan area in 2002 and earlier.  They contended that since 2001, the Company violated Title VII of the Civil Rights Act of 1964 by permitting its superintendents to engage in or tolerate two types of racial discrimination – one in assigning overtime and the other in working conditions at 262 work sites.  Plaintiffs presented statistical evidence, through an expert, Stan V. Smith, that black workers were less likely to work overtime than white or Hispanic workers.  They also contended that some superintendents and foremen used demeaning words or terms to refer to black workers and permitted derogatory graffiti and hangman’s nooses in toilets and break sheds.

Walsh countered that, among other things, its sites had different superintendents with different practices and that it quickly removed objectionable graffiti or objects.  Nevertheless, the District Court granted plaintiffs’ request and certified two classes covering all Walsh Construction’s 262 sites in the Chicago area since mid-2001.  One was referred to as a “hostile-work environment class” and the other as the “overtime class.”

Walsh appealed the district court’s certification decision pursuant to Federal Rule of Civil Procedure 23(f).

Problems With the Classes

The Seventh Circuit found problems abounded with the classes.  As a threshold matter, the class definitions were flawed.  First, the class definition should not have extended beyond 2002 given the named plaintiffs tenure with Walsh.  Second, the overtime class improperly defined its members as those who earned less “because of their race”:

Using a future decision on the merits to specify the scope of the class makes it impossible to determine who is in the class until the case ends, and it creates the prospect that, if the employer should prevail on the merits, this would deprive the judgment of preclusive effect: . . . .

The court described these problems as “reparable,” meaning the language could be modified.  Yet, other flaws could not be repaired.

The “Commonality” Problem

One irreparable problem was “commonality.”  The 262 or more sites had different superintendents with different policies.  Superintendents moved to new sites with different foremen and employees as projects were finished.  The sites had substantially different working conditions – most superintendents did not discriminate and those who were alleged to discriminate had left the Company.  The U.S. Supreme Court in Wal-Mart had held that Rule 23(a)(2) forecloses certification where plaintiffs allege that discretionary acts by managers resulted in the discrimination effects.  Following Wal-Mart, the Seventh Circuit explained: “Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.’”  So, “when multiple managers exercise independent discrimination, conditions at different stores (or sites) do not present a common question.’”

The plaintiff’s statistical evidence also had the same infirmity as in Wal-Mart.  Plaintiffs’ expert “assumed” the proper unit was all Walsh’s Chicago area sites but never attempted to establish it.  Nor did Mr. Smith “control for variables other than race.”  The panel did not determine whether the Smith study would have passed muster under Federal Rules of Evidence 702.  It was sufficient to find that the study did not identify any common issues that would support a multi-site class.

Premised on Wal-Mart Stores, the Seventh Circuit found that a multi-site class could only satisfy Rule 23(a)(2) if the company’s policy or procedures applied to all sites.  In Bolden, like Wal-Mart, the Company had a uniform policy against discrimination but plaintiffs argued permitting local managers to excise discretion undermined it.

The Seventh Circuit also followed Wal-Mart in denying plaintiffs’ contention that local discretion had a disparate impact that warranted class certification.  Indeed, Judge Easterbrook cited Wal-Mart for the proposition that “allowing discretion by local supervisors . . . is just the opposite of a uniform employment practice that would provide the commonality needed for a class action . . . .”  Thus, the appellate court concluded that a class including all Walsh’s 262 or more sites could not be certified.

Finally, the Bolden panel also found the hostile-environment class was not manageable, requiring at least one trial per site.

The Bottom Line:  Relying on Wal-Mart, the Seventh Circuit found that two classes of black workers could not demonstrate that their claims presented a common issue under the rigorous standard for Rule 23(a)(2) commonality established by the Supreme Court.  Once again, a court has invalidated broad classes without common, viable claims to bind them together.