9TH CIRCUIT OVERTURNS LOWER COURT RULING ON COMMONALITY IN CLASS ACTION CERTIFICATION IN AN ADEA ADVERSE IMPACT CLAIM

The case is Stockwell v. City & County of San Francisco decided on April 24, 2014 [749 F.3d 1107].  First the facts.  In the early 1980s, the City of San Francisco settled a Title VII adverse impact case in a consent decree that was terminated in 1998.  Under the continued supervision of the district count, the San Francisco Police Department (SFPD) created a promotion test for Assistant Inspector (the Q-35) on the stipulation that the first 175 appointments be made in strict rank order followed by a sliding band procedure that included secondary criteria.  A total of 229 officers were promoted by 2008, at which time, the SFPD created a new promotion exam (the Q-50).  The issue in this case, raised by a class of 29 officers who passed the original exam, was whether being forced to take the new exam created adverse impact on officers (sergeants) who were over the age of 40 at the time of the new exam.

The district court ruled against class certification due to (among other things) lack of commonality.  However, the problem as the 9th Circuit saw it was that this ruling was based on merits not on commonality under Federal Rule 23(a)(2).  More specifically, the district court ruled that the statistical analysis offered by the class failed to control for factors other than age (i.e., covariates) which, of course, would require a regression analysis.  However, a three-judge panel of the 9th Circuit ruled that the question of covariates other than age speaks to the merits of the case, which is irrelevant in determining commonality.   According to the 9th Circuit’s interpretation of the Wal-Mart v. Dukes case,

Rule 23(a)(2) is not "a mere pleading standard," so establishing commonality sometimes requires affirmative evidence, which the courts must subject to "rigorous analysis." Wal-Mart, 131 S. Ct. at 2551 (quoting Falcon, 457 U.S. at 161). Such rigor often "will entail some overlap with the merits of the plaintiff's underlying claim." Id. While some evaluation of the merits frequently "cannot be helped" in evaluating commonality, Id., that likelihood of overlap with the merits is "no license to engage in free-ranging merits inquiries at the certification stage."  Instead, as the Supreme Court clarified last year, "[m]erits questions may be considered to the extent -- but only to the extent  [*11] -- that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." ….. "[W]hether class members could actually prevail on the merits of their claims" is not a proper inquiry in determining the preliminary question "whether common questions exist

As dictated by the Supreme Court in Smith v. City of Jackson (2005), and reinforced in Meacham v. KAPL (2008), proof of adverse impact (based on age or anything else) requires identifying a specific employment practice that, statistically, falls more harshly (in this case) on older workers than younger workers.  The 9th Circuit acknowledged, even suggested that the statistical evidence was weak, but at the same time saw it as a “single, well enunciated, uniform policy” because it used the Q-50 list and each class member was on the Q-35 list.

The implication here is that the district court will have no choice but to affirm class certification, even though the statistical analysis was rudimentary.  Some have commented that the SFPD could have used that fact to discredit the statistical expert in a Daubert challenge, thus defeating class certification in that way.  It’s an interesting prospect to be sure.  In the meantime, others suggest that the ruling softens the impact of the Wal-Mart decision, something I find highly unlikely.  Had there been a “single uniform policy” in that case, there might have been commonality regardless of the class size.  Obviously, that was not the case and was the major foil for the Dukes plaintiffs.

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

Stay in the Know!