Decades ago, Rolls-Royce drew some attention for contending that its cars did not “break down,” but, rather, “failed to proceed.”   In a recent case from the Seventh Circuit, a putative class action against that company not only “failed to proceed,” but broke down utterly.

In Randall v. Rolls-Royce Corporation.pdf., Case No. 10-3446 (7th Cir. Mar. 30, 2011), two female Rolls-Royce employees brought a putative class action against the company for sex discrimination.  While claims arising from the production of Rolls-Royce luxury cars might have had more panache, their claims actually arose from an Indiana plant that manufactured  aircraft, commercial, and marine engines.  They contended that the plant paid women less money for the same job categories, and also that the company discriminated against them in promotions.  They sought to assert class action claims under both Title VII and the Equal Pay Act, 29 U.S.C. section 206(d)(1) on behalf of 500 women.  Many of the jobs at stake were high-paid, professional positions, earning well in excess of $100,000 per year. (we authored a related blog post on the Randall decision on April 7, 2011).

The district court denied certification and granted summary judgment for the defendants.  It also denied a request from the plaintiffs to permit female employees with stronger claims to intervene. 

The case could have produced interesting issues involving the EPA.  The EPA does not use Title VII’s enforcement mechanisms, but instead incorporates those under the Fair Labor Standards Act, which do not provide for class actions.  In light of problems with the lead plaintiffs’ claims, however, the court never had to reach those issues.

As to the unequal compensation claim, Rolls-Royce, like many employers, had set broad pay ranges for each class of employees. Within those pay bands, the company made adjustments based on the market demands for employees with particular skills.  In the case of certain positions, the market demands could result in wide variations, even within a salary band.  The company also made pay adjustments based upon performance.  The court ultimately found that while, on average, men made slightly more than women, the named plaintiffs were unable to identify any man that had the same equality of job skills making more than they did, making summary judgment on the EPA claim appropriate.  As to the Title VII claim, the defendant retained an expert who demonstrated that once differences in the actual jobs performed by men and women were accounted for, there was no pay disparity.  One example was the case of personnel officers and aeronautical engineers – while both were of value to the company, the company was required to pay more in the market place for one than the other, and its recognition of that fact was not sex discrimination.  The plaintiffs’ expert, the court found, failed to account for these differences and made other errors as well.

The court also dismissed the claims for sex discrimination in promotions based on testimony of the same defense expert.  That expert found that women were actually promoted more quickly than men.

The court likewise denied the plaintiffs’ motion to intervene to include women with stronger cases, as that motion was filed four years after the case was filed and only after certification was denied.

The Seventh Circuit affirmed.  Judge Posner, writing for the majority, analyzed the strategy employed by both parties.  His frank post-mortem provides a nice primer of the strategic concerns of both sides in such a case, and that discussion alone makes it worthwhile to read the opinion .  He noted that the plaintiffs had moved for certification under Rule 23(b)(2), a decision he described as a “risky strategy” given the more limited notice and opt-out rules.  On the flip side, he questioned whether the company should even have opposed the motion given the weakness of the lead plaintiffs’ claims since it could have obtained a no-opt-out judgment as to the entire class.  Given the unpredictability of litigation, we are not sure this might be the best strategy, irrespective of Judge Posner’s otherwise pragmatic opinion.  He concluded  that the proper course for the plaintiffs would have been to seek certification under Rule 23(b)(3), requiring notice to the class and giving potential class members the opportunity to opt out and to pursue their own, stronger claims, if they believed they had one.

Even had the plaintiffs filed such a motion, the Seventh Circuit’s opinion makes it obvious that certification would have been properly denied.  The court criticized the plaintiff’s counsel for the “almost imperceptible pace” of their prosecution of the case. Infused throughout the opinion was also concern over a class being bound by an unfavorable judgment due to the questionable cases of the named plaintiffs.

The court also criticized the late effort to have plaintiffs with stronger cases intervene, commenting:  “Intervention shouldn’t be allowed just to give class action lawyers multiple bites at the certification apple, when they have chosen, as should have been obvious from the start, patently inappropriate candidates to be the class representatives.”

The Bottom Line:  Not every case is a class action.  Plaintiffs seeking to pursue classes to bolster weaknesses in their own claims may find themselves worse off.  Statistical experts for both sides must perform an apples-to-apples analysis comparing the right groups of employees.