McReynolds v. Merrill Lynch: Opinion by Posner Reverses Denial of Certification

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In an opinion authored by Judge Richard Posner, the Seventh Circuit has reversed a trial court’s order denying certification of Title VII race discrimination claims.  See McReynolds v. Merrill Lynch, No. 11-3639, (7th Cir. Feb. 24, 2012) (order reversing denial of certification) (available here).

In McReynolds, Merrill Lynch brokers alleged that their employer’s compensation policies had a discriminatory effect on African Americans.  Slip op. at 2.  Merrill Lynch argued that individualized circumstances predominated across the 700 class members, thereby precluding certification per Dukes v. Wal-Mart.  Slip op. at 17.

The plaintiffs had originally moved for class certification in 2010.  The district court denied that motion.  Slip op. at 3.  Then, in a seemingly counter-intuitive move, the plaintiffs renewed their motion based on the Supreme Court’s Dukes decision.  Slip op. at 11.  Again, the district court denied certification.  Slip op. at 11.  However, the district court also suggested that the plaintiffs appeal the ruling to determine how Dukes should affect the certification issue.  Slip op. at 11-12.  The Seventh Circuit accepted the Rule 23(f) appeal.

Writing for the Seventh Circuit, Judge Posner acknowledged that Dukes “may seem a perverse basis for a renewed motion for class certification, since the Supreme Court reversed a grant of certification in what the defendant in our case insists is just like this one.”  Slip op. at 11.  However, in contrast to Dukes, where “there was no company-wide policy to challenge,” Merrill Lynch’s policies were alleged to be company-wide and therefore better suited to a class action treatment.   Slip op. at 12-14.  The McReynolds panel rejected the defendant’s argument that any discrimination would result from the “local, highly-individualized implementation of policies rather than the policies themselves.”  Slip op. at 17.  Even assuming that the defendant’s policies were not intended to discriminate against African American employees, “[t]he incremental causal effect . . . of those company-wide policies—which is the alleged disparate impact—could be most efficiently determined on a class-wide basis.”  Slip op. at 17-18.

Should the plaintiffs succeed in their challenge, each of the class members may have to prove their compensation was adversely affected by the corporate policies in separate, individual actions.  Slip op. at 20-21.  Even so, the Seventh Circuit reasoned that judicial efficiency favored certification:

Obviously a single proceeding, while it might result in an injunction, could not resolve class members’ claims . . . . So should the claim of disparate impact prevail in the class-wide proceeding, hundreds of separate trials may be necessary. . . . But at least it wouldn’t be necessary in each of those trials to determine whether the challenged practices were unlawful.

Slip op. at 18-19. 

In addition to a significant holding that surprised many by reversing the denial of certification, the McReynolds decision also shows an unexpected side of Seventh Circuit Judge Richard Posner, owing to Judge Posner’s reputation as a “conservative.”  However, this opinion, together with Posner’s other judicial opinions, scholarship, and public pronouncements, indicates that he is perhaps more of an iconoclast than a conservative.  

The McReynolds opinion leaves open the prospect of class certification, where it might have otherwise been barred by Dukes, and as such may be influential beyond the Seventh Circuit.