Northern District of Illinois Denies Class Certification to Proposed Class of African American Financial Advisors at Merrill Lynch

by charlesjung

NEW YORK - JULY 18:  A man enters Merrill Lync...
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Judge Robert W. Gettleman denied class certification this week in McReynolds et al. v. Merrill Lynch, Pierce,  Fenner & Smith Inc., (N.D. Ill. Aug. 9, 2010), No. 05-06583, a case brought by 17 African American financial advisors who accused Bank of America Corp’s Merrill Lynch & Co. unit of racial discrimination in violation of Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000(e) et seq. (Count I), and 42 U.S.C. § 1981 (Count II). Plaintiffs moved pursuant to Fed. R. Civ. P. 23 to certify a class, defined as:

African-American financial advisors (“FAs”) and FA Trainees (“Trainees”) who are or were employed in the retail brokerage unit, referred to as Global Private Client (“GPC”) of defendant Merrill Lynch, Pierce, Fenner & Smith, Inc., from January 2001 to the present.   cannot have their cases tried together.

The Court found a lack of commonality because the “individuals worked in different offices, had different supervisors, and allegedly experienced vastly different forms of discrimination.”  The Court found also found a lack of typicality becuase the claims of the named plaintiffs and the declarations of putative class members showed variations which would “necessitate individual inquires to determine whether the individual suffered racial discrimination.”  Additionally, the Court found that that defendant would be able to present varying defenses to the plaintiffs’ claims.

Plaintiffs sought certification under a hybrid of Rule 23(b)(2) and 23(b)(3), but the Court concluded that the proposed class failed under both Rules.  With respect to 23(b)(2), the Court found that “the individual putative class members’ financial interests are too high to be considered incidental to the requested equitable relief. Consequently, opt out rights must be extended to the members, and certification under Rule 23(b)(2) is inappropriate.”

With respect to certification under Rule 23(b)(3), the court found predominance lacking “[b]ecause plaintiffs’ statistical evidence alone is insufficient to establish company-wide discrimination in a manner that affects each class member in the same way, each individual putative class members’ claim for liability and damages will have to be tried to a jury. These inquiries would involve different witnesses and proofs for each member to determine, among other things, the motivation of each supervisor who made the individual allegedly discriminatory decision.”

The Court also found inappropriate a “divided certification, with certification of a 23(b)(2) class for the equitable issues and certification of a 23(b)(3) class for the damages issues . . . .”  “There is no predominance of common issues to certify a 23(b)(3) class for any issue, and even if there were, because of the right to a jury trial the damages cases would all have to be tried first, eliminating any advantage to certifying the instant case as a class action.”

Finally, the Court rejected “certification under Rule 23(b)(2) for all issues, combined with notice and an opportunity to opt out as though certified under Rule 23(b)(3) . . . .”  The Court noted that “certification under this approach is advantageous to plaintiffs, because it avoids Rule 23(b)(3)’s requirement that common issues predominate and that a class action be the superior method of resolving the dispute.”  “This court agrees with Judge Kennelly, however, that the Seventh Circuit’s suggestion of this approach in Lemon and Jefferson was not intended to permit plaintiffs in a case involving significant damage claims to avoid consideration of whether a class action would be a manageable way to resolve the case.”  Citing Adams v. R.R. Donnelley & Sons, 2001 WL 336830 at *16 (N.D. Ill. 2001).

The court distinguished this case from one where individual issues were limited to damages.  In such a case, “there likely would be a proper way to structure a trial or trials with a minimum of inefficiency without doing violence to the parties’ Seventh Amendment rights.”

Here, however, the court concluded that there were “several separate layers of individual issues, including the variation in personnel practices among the various branch offices, and how various office managers and complex managers handle individualized personnel decisions. These extra layers of individualized issues lead the court to conclude that common issues do not predominate over individual issues, and that trial of the claims as a class action would be unmanageable.”  Accordingly, the court denied plaintiffs’ motion for class certification is denied.

Defendants were represented by Jared R. Friedman of Weil, Gotshal & Manges LLP,

Jeffrey Scott Piell of Lupel Weininger LLP and Stephen Michael Shapiro and Timothy Simon Bishop of Mayer Brown LLP.

By CHARLES H. JUNG

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