by Art Gutman Ph.D., Professor, Florida Institute of Technology

The case Puffer v. Allstate Ins. Co. was handed down on March 27, 2012 [2012 U.S. App. LEXIS 6213]. The headline reads that the 7th Circuit upheld a lower court ruling rejecting class certification on technical grounds that the original prayer for certification was for pattern or practice, whereas the claim on appeal was for adverse impact. It’s a little more complicated than that, but in rendering the ruling, Judge Flaum, speaking for her two counterparts on a three-judge panel, made some important points relating to the role of the Supreme Court’s ruing in Dukes v. Wal-Mart in rejecting the original claim for class certification on the pattern or practice charge, and the distinction between pattern or practice and adverse impact theory. I think both points are important.

First the facts. Karen Puffer sued Allstate, alleging a pattern of discrimination under Title VII and the Equal Pay Act. On the Title VII claim, she alleged there was “gender-based earning disparities rooted in differential treatment and disparate impact theories based on Allstate's salary, promotion, and training policies, which left significant discretion in the hands of individual managers.” The district court denied certification twice, on the original charges, and on reconsideration based on the Ledbetter Act. Puffer focused her evidence on pattern or practice theory both times. She mentioned adverse impact theory, but presented no evidence on these issues. Puffer then settled her individual claims with Allstate, after which three members of the class intervened and appealed the second certification ruling (Karen Pell, Gail Howells & Mary Keith). However, they did so based on adverse impact theory which, Judge Flaum rejected because adverse impact played no role in either decision of the lower court to reject certification. In other words, even if the adverse impact claim had merits relating to a class action suit, it was no longer available.

Now the fun parts. First, on certification, Puffer identified a class of approximately 1,700 female managers who worked and continued to work for Allstate from May 9, 2001 to November 8, 2007 (when the suit was filed). Although the class size is much smaller, there are similarities to Dukes. The 1,700 women represented 275 different jobs at 100 offices across the country. Also, the claim, supported by sociologist, was that Allstate has a “strong paternalistic culture”, its “organizational structure vests all authority to choose, advance and compensate staff in the male-dominated, senior manager ranks", and these decision makers exercise discretion to the “systematic disadvantage of the female managers” on performance evaluation. The lower court judge (Magistrate Judge Schenkier) ruled that the plaintiffs satisfied two of the four criteria for certification under Federal Rule 23(a) (numerosity & adequacy). However, for the same reasons cited in Dukes, they failed on commonality (because the class was too heterogeneous) and typicality (because the claims would require individualized inquiries). Also as in Dukes, the plaintiffs failed on Federal Rule 23(b)(3) (for injunction) because there was prayer for substantial monetary remedy relating to back pay.

On the other issue, Judge Flaum provided a very clear statement on the distinction between pattern or practice and adverse impact theory, something I believe is a rarity in case law. I’ll let her words do the talking:

For disparate impact claims, a plaintiff must establish that a particular employment practice causes a disparate impact on a member of a protected class. 42 U.S.C.S. ß 2000e-2(k). To satisfy this burden, the plaintiff is responsible for isolating and identifying the specific employments practices that are allegedly responsible for any observed statistical disparities. …. Failure to identify the specific practice could lead to employers being held liable for the myriad of innocent causes that may lead to statistical imbalances. The plaintiff must also establish causation by offering statistical evidence of a kind and degree sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group.

Compare this to her description of Pattern or Practice:

Pattern-or-practice claims, like differential treatment claims, represent a theory of intentional discrimination. Pattern-or-practice claims require a showing that an employer regularly and purposefully discriminates against a protected group. Plaintiffs must prove that discrimination was the company's standard operating procedure--the regular rather than the unusual practice. … A pattern-or-practice claim has been referred to as a "systemic disparate treatment theory." The court has referred to a pattern-or-practice case as a means of proving intentional discrimination that is distinct from a disparate impact case, where the plaintiff need not make any showing of the employer's intent.

I have written about this before, so I won’t belabor it too much. Not all statistical disparities mean the same thing. Pattern or practice cases often rely on stock statistics and there is no obvious or stated cause beyond “subjectivity”, “paternalism”, “discretion”, etc. On the other hand, adverse impact cases usually rely on flow statistics, where an identifiable selection criterion (e.g., ability test, high school diploma, height/weight criteria) can be causally connected to a selection rate disparity.

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