McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc. , 672 F.3d 482 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-3639
G EORGE M C R EYNOLDS, et al., on behalf
of themselves and all others similarly situated,
Plaintiffs-Appellants,
v.
M ERRILL L YNCH, P IERCE, F ENNER & S MITH, INC.,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 6583—Robert W. Gettleman, Judge.
A RGUED JANUARY 13, 2012—D ECIDED F EBRUARY 24, 2012
Before P OSNER, W OOD , and H AMILTON, Circuit Judges.
P OSNER, Circuit Judge. The plaintiffs have filed a class
action suit that charges Merrill Lynch with racial dis-
crimination in employment in violation of Title VII of
the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The
plaintiffs ask that a class be certified for two purposes:
deciding a common issue, Fed. R. Civ. P. 23(c)(4)—whether
2 No. 11-3639
the defendant has engaged and is engaging in practices
that have a disparate impact (that is, a discriminatory
effect, though it need not be intentional) on the members
of the class, in violation of federal antidiscrimination law;
and providing injunctive relief. Fed. R. Civ. P. 23(b)(2).
They also want damages. But while they asked the dis-
trict court to certify the class for purposes of seeking
compensatory and punitive damages, see Rule 23(b)(3),
at argument the plaintiffs’ lawyer said she wasn’t
asking—not yet anyway—for such certification, though
her opening brief had suggested that if we found that
the district court had erred in refusing to certify for
class treatment the disparate impact issue and injunctive
relief, we should order the court to “consider [on remand]
the extent to which damages issues also could benefit
from class treatment, consistent with Allen v. International
Truck & Engine Corp., 358 F.3d 469 (7th Cir. 2004).” We
defer that question to the end of our opinion. But we
note here that without proof of intentional discrimina-
tion, which is not an element of a disparate impact
claim, the plaintiffs cannot obtain damages, whether
compensatory or punitive, but only equitable relief
(which might however include backpay, and thus have
a monetary dimension). 42 U.S.C. § 1981a(a)(1); Kolstad
v. American Dental Association, 527 U.S. 526, 534 (1999).
Section 1981a(a)(1) is explicit that damages cannot be
awarded in respect of “an employment practice that
is unlawful because of its disparate impact.”
The district court denied certification, and the plain-
tiffs asked this court for leave to appeal the denial. A
motions panel granted leave, but the defendant argues
No. 11-3639 3
that the panel erred—that the appeal is untimely. We
begin with that question.
Rule 23(f) of the civil rules permits appeals from
orders granting or denying class certification despite
the general policy (though one with many exceptions)
against allowing interlocutory appeals in the federal
court system. A denial of class certification often dooms
the suit—the class members’ claims may be too slight
to justify the expense of individual suits. Conversely,
because of the astronomical damages potential of many
class action suits, a grant of certification may place enor-
mous pressure on the defendant to settle even if the
suit has little merit. See, e.g., CE Design Ltd. v. King Archi-
tectural Metals, Inc., 637 F.3d 721, 723 (7th Cir. 2011). And
because class actions are cumbersome and protracted, an
early appellate decision on whether a suit can be main-
tained as a class action can speed the way to termination
of the litigation by abandonment, summary judgment,
or settlement. E.g., Blair v. Equifax Check Services, Inc.,
181 F.3d 832, 834-35 (7th Cir. 1999); Newton v. Merrill
Lynch, 259 F.3d 154, 162-65 (3d Cir. 2001).
But Rule 23(f) requires that leave to appeal be sought
from the court of appeals within 14 days of the entry of
the order granting or denying certification. The district
court denied the plaintiffs’ initial motion for class certif-
ication in August 2010. In July 2011 the plaintiffs filed
an amended motion for class certification, which the
district judge denied in September, and within 14 days
of that denial the plaintiffs sought our leave to ap-
peal. The defendant asks us to treat the request for
4 No. 11-3639
leave to appeal as an untimely request to appeal the
August 2010 denial of certification. That would amount
to treating the plaintiffs’ second motion for certification
as an untimely motion to reconsider the denial of
the first motion.
The question of timeliness may seem to be about juris-
diction, since most deadlines for appeals from a district
court have been held to be jurisdictional. But as we
noted recently in In re IFC Credit Corp., 663 F.3d 315, 319-
20 (7th Cir. 2011), the Supreme Court has been moving
toward a definition of the subject-matter jurisdiction of
the federal courts that includes all cases that these courts
are “competent,” in the sense of legally empowered, to
decide. This implies that deadlines for appealing are not
jurisdictional, since they regulate the movement upward
through the judicial hierarchy of litigation that by def-
inition is within federal jurisdiction. Yet appeal dead-
lines either found in statutes or adopted by courts by
direction of a statute continue to be treated as jurisdic-
tional—though not all of them; the Supreme Court re-
cently rejected such a “bright line” rule in favor of re-
quiring a “clear indication” that the deadline was
intended by Congress to be jurisdictional. Henderson v.
Shinseki, 131 S. Ct. 1197, 1203 (2011). (The power of Con-
gress to impose such limits on the jurisdiction of the
federal courts is not questioned.) But because no “clear
indication” is to be found in the pertinent statutory texts,
see, e.g., 28 U.S.C. §§ 2101(c), 2107(a), (c), the Court has
found itself saying such things as that Congress is not
required to “use magic words in order to speak clearly
on this point” and that “context, including [the Supreme
No. 11-3639 5
Court’s] interpretation of similar provisions in many
years past, is relevant.” Henderson v. Shinseki, supra, 131
S. Ct. at 1203, quoting Reed Elsevier, Inc. v. Muchnick, 130
S. Ct. 1248 (2010).
What we take away from this formula is that if the
Court has traditionally treated a particular statu-
tory deadline as jurisdictional it will go on doing so, id. at
1203-06; John R. Sand & Gravel Co. v. United States, 552
U.S. 130, 134 (2008); Bowles v. Russell, 551 U.S. 205, 209-10
and n. 2 (2007); In re Caterbone, 640 F.3d 108, 111-13
(3d Cir. 2011), even though doing so doesn’t comport
with the new “competence” standard. Deadlines for ap-
pealing are just a type of statute of limitations, as acknowl-
edged in John R. Sand & Gravel v. United States, supra, 552
U.S. at 133, and statutes of limitations ordinarily are
affirmative defenses rather than jurisdictional bars. A
deadline for bringing or appealing a federal case presup-
poses that the case is within the competence of federal
courts to decide.
We declined in Asher v. Baxter Int’l Inc., 505 F.3d 736, 741
(7th Cir. 2007), to rule on whether the deadline in
Rule 23(f), though it is promulgated by the Supreme
Court under the authority of the Rules Enabling Act,
29 U.S.C. § 2072, rather than found in or directed to be
adopted by a statute, is jurisdictional. But by now it is
clear that it is not jurisdictional—that the exception to
the “competence” standard is limited to statutory dead-
lines, United States v. Neff, 598 F.3d 320, 322-23 (7th
Cir. 2010), for how can a court contract or expand
its jurisdiction except by force of a constitutional
6 No. 11-3639
or statutory provision? If the deadline was made by
Congress, then whether it is jurisdictional depends on
congressional intent, and, the Supreme Court appears to
be saying, in the absence of any clues to that intent
on whether the courts traditionally have treated the
deadline as jurisdictional. The time limit in Rule 23(f),
having been created by the Court rather than by
Congress (no time limits are specified in the Rules
Enabling Act—the Act is an enabler, not a specifier), is
governed by the “competence” standard and therefore
is not jurisdictional, for obviously the suit from which
the appeal is sought to be taken is within the jurisdiction
of the federal courts.
But suppose our understanding of the evolving
Supreme Court doctrine is wrong, and the deadline in
Rule 23(f) is jurisdictional. The only difference between
a deadline that is jurisdictional and one that is not is
that a litigant cannot lose the benefit of the former
type (until judgment becomes final after exhaustion of
appellate remedies) by failing to assert it, or because
the other party’s failure to comply would in
nonjurisdictional settings be excused by such doctrines
as equitable estoppel or equitable tolling. The defendant
has from the outset vigorously contested the timeliness
of the appeal, and the plaintiffs are not arguing that they
should be excused for having missed the deadline. Even
if not jurisdictional, a deadline is mandatory in the sense
that if invoked by a party in timely fashion the court
is bound by it. Eberhart v. United States, 546 U.S. 12, 19
(2005) (per curiam); Asher v. Baxter Int’l Inc., supra, 505 F.3d
at 741; Maxwell v. Dodd, 662 F.3d 418, 421 (6th Cir. 2011);
Wilburn v. Robinson, 480 F.3d 1140, 1146-47 (D.C. Cir. 2007).
No. 11-3639 7
Rather, the plaintiffs’ argument is that their 14 days to
seek leave to appeal ran anew from the denial of their
amended motion for class certification. The defendant
points out that a deadline for appealing cannot be ex-
tended by a motion for reconsideration of a previous
appealable order, Asher v. Baxter Int’l Inc., supra, 505 F.3d
at 739-40; Gary v. Sheahan, 188 F.3d 891 (7th Cir. 1999);
Jenkins v. BellSouth Corp., 491 F.3d 1288, 1290-92 (11th
Cir. 2007); McNamara v. Felderhof, 410 F.3d 277, 280-81
and n. 8 (5th Cir. 2005), unless the motion is made within
the time allowed for taking the appeal, Blair v. Equifax
Check Services, Inc., supra, 181 F.3d at 837, and this rule
applies to appeals under Rule 23(f). Id. Otherwise the
deadline for taking the appeal would be eviscerated.
And this is so even if the motion for reconsideration
doesn’t just say “and for the reasons stated in our
original motion we ask the court to reverse its ruling”
but adds “and by the way we have thought of some
clever new arguments for why our motion should have
been granted.” Carpenter v. Boeing Co., 456 F.3d 1183, 1190-
91 (10th Cir. 2006). For it is easy to think up new argu-
ments.
But it doesn’t follow that the failure to take a timely
appeal from one interlocutory order operates as a forfei-
ture, jurisdictional or otherwise, of the right to appeal
a subsequent order. For the later motion may not be,
either in form or, more important, in substance, a
motion to reconsider the previous denial. A rule
limiting parties to one interlocutory appeal from a grant
or denial of class certification would disserve Rule 23(f).
It is important that the question whether the case is to
8 No. 11-3639
proceed as a class action be resolved sooner rather than
later. So if it becomes clear in the course of the law-
suit, as a result of new law or newly learned facts, that the
denial of certification was erroneous, and if years of
litigation lie ahead before a final judgment can be
expected, and if therefore an appeal from the denial of
certification may either end the litigation or at least
place it on a path to swift resolution, the court of appeals
should have discretion to allow the appeal.
The fact that the appellate court has a discretionary
jurisdiction over Rule 23(f) appeals is important. Ap-
pellate jurisdiction in the federal system ordinarily is
mandatory. With few exceptions, we have to decide all
appeals that we have jurisdiction to hear; we do not
have a discretionary appellate jurisdiction like the
Supreme Court. But because our jurisdiction to hear
interlocutory appeals under Rule 23(f) is discretionary,
there is little danger that the filing in the district court of
a second motion for certification based on altered cir-
cumstances, followed if it is denied by a motion in
this court for leave to appeal, will either delay the
district court proceedings (Rule 23(f) provides that “an
appeal does not stay proceedings in the district court
unless the district judge or the court of appeals so orders”)
or burden us or the opposing party. If the movant is
playing a delay game, prompt denial by the motions
panel of leave to appeal probably will end it; if he
persists he will be courting sanctions in both the district
court and this court for filing frivolous pleadings.
And by the way, we do not permit a party to circumvent
the 14-day deadline in Rule 23(f) by appealing a denial of
No. 11-3639 9
class certification under 28 U.S.C. § 1292(b) (authorizing
interlocutory appeals that present a controlling issue of
law on which there is substantial room for disagreement
and prompt resolution would expedite the litigation),
Richardson Electronics, Ltd. v. Panache Broadcasting, 202
F.3d 957, 959 (7th Cir. 2000), which has no deadline.
Dicta in the Tenth Circuit’s opinion in Carpenter
v. Boeing Co., supra, go beyond the unexceptionable propo-
sition that merely presenting “new arguments” does not
change a motion for reconsideration of a grant or denial
of class certification into a motion that if denied is
appealable under Rule 23(f). The opinion states (456
F.3d at 1191) that
given the multifactor analysis that courts must apply
in deciding the propriety of class certification, [even
appellate review limited to whatever changed cir-
cumstances had given rise to the fresh motion for
certification] would often require contorted thinking
that exceeds the capacities of even appellate courts.
How can an appellate court say that one particular
new factor would require a different result re-
gardless of how the district court weighed the
factors presented originally? In stating that the
new factor required a different result, the appellate
court must engage in weighing the factors weighed
by the district court in its original ruling but
cannot know precisely how much weight the dis-
trict court granted to each. In particular, what if
the district court clearly erred in giving dispositive
weight to one factor? How is the appellate court to
10 No. 11-3639
ignore such error (in keeping with the presumption
that the original decision was correct) even when it
addresses a motion for reconsideration that raises
only a rather inconsequential new factor?. . . We are
not inclined to adopt a construction of Rule 23(f) that
would regularly require mental gymnastics just for
the purpose of giving litigants a second bite at the
interlocutory-appellate-review apple. We note that
the very absence of a prompt appeal by the party
aggrieved by the decision on certification suggests
that the concerns justifying Rule 23(f) are, at the
least, less significant in the particular case. If the
decision whether or not to certify the class was truly
outcome determinative, one would not expect the
losing party to continue the litigation for months
before launching a new challenge to the ruling. Any
value in permitting a belated interlocutory appeal
is overridden by the desirability of the district court’s
proceeding expeditiously.
A court of appeals is never obliged to engage in “con-
torted thinking” about a Rule 23(f) appeal, for it can
always deny leave to appeal, and should do so if it
would have to do mental contortions in order to make
up its collective mind whether appeal should be al-
lowed. And if the new motion for certification
“raises only a rather inconsequential new factor,” then
the failure of the plaintiffs to have sought inter-
locutory review of the denial of the original motion
for certification becomes a reason to deny leave to
appeal out of hand, without any “mental gymnastics.” As
No. 11-3639 11
for “not expect[ing] the losing party to continue the
litigation for months before launching a new challenge
to the ruling,” the new challenge is timely if filed as
soon as the development warranting a new motion for
certification occurs, but untimely if the plaintiff dawdles.
And if the appeal is not “belated,” but based on develop-
ments that may warrant certification, allowing the
appeal may very well speed up rather than slow down
the litigation. In effect the court held in Carpenter that
the new motion for certification was in substance an
untimely motion for reconsideration. The holding is
unexceptionable, but the dicta are not persuasive.
The basis of the plaintiffs’ renewed motion for class
certification in the present case was the Supreme Court’s
decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541(2011), handed down a month earlier. That was an im-
portant development in the law governing class certifica-
tion in employment discrimination cases—possibly a
milestone. It 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 a case just like this one. But the
district judge, though he again denied certification,
didn’t think the plaintiffs were perverse in basing their
new motion on Wal-Mart. On the contrary, he said
that “Wal-Mart does add a lot to the landscape under
Rule 23 . . . . I think this really cries out for a 23(f) appeal,
and I would support it. And I’m going to put that in
my order [denying the renewed motion for certifica-
tion—and he did] . . . . [T]his is one [case] that really cries
out for [a Rule 23(f) appeal] with the change in the land-
12 No. 11-3639
scape by the Wal-Mart opinion. Of course, you know,
most defendants think that the change is in their
interest, not in the plaintiffs’. But you’ve [the judge was
addressing the plaintiffs’ lawyer] made a good argument,
and I think it deserves to be put to rest one way or the
other.” The judge was right.
Wal-Mart holds that if employment discrimination
is practiced by the employing company’s local managers,
exercising discretion granted them by top management
(granted them as a matter of necessity, in Wal-Mart’s
case, because the company has 1.4 million U.S. employees),
rather than implementing a uniform policy established
by top management to govern the local managers, a
class action by more than a million current and former
employees is unmanageable; the incidents of discrim-
ination complained of do not present a common issue
that could be resolved efficiently in a single proceeding.
Fed. R. Civ. P. 23(a)(2). Not that the employer would
be immune from liability even in such a case; if the
local managers are acting within the scope of their employ-
ment in discriminating against their underlings on a
forbidden ground (sex, alleged in Wal-Mart, race in our
case), the employer is liable for their unlawful con-
duct under the doctrine of respondeat superior. But
because there was no company-wide policy to challenge
in Wal-Mart—the only relevant corporate policies were
a policy forbidding sex discrimination and a policy of
delegating employment decisions to local managers—there
was no common issue to justify class treatment.
The district judge thought this case like Wal-Mart be-
cause Merrill Lynch, accused of discriminating against
No. 11-3639 13
700 black brokers currently or formerly employed by
it, delegates discretion over decisions that influence
the compensation of all the company’s 15,000 brokers
(“Financial Advisors” is their official title) to 135
“Complex Directors.” Each of the Complex Directors
supervises several of the company’s 600 branch offices,
and within each branch office the brokers exercise a
good deal of autonomy, though only within a frame-
work established by the company.
Two elements of that framework are challenged: the
company’s “teaming” policy and its “account distribu-
tion” policy. The teaming policy permits brokers in the
same office to form teams. They are not required to form
or join teams, and many prefer to work by themselves.
But many others prefer to work as part of a team.
Team members share clients, and the aim in forming or
joining a team is to gain access to additional clients, or
if one is already rich in clients to share some of them
with brokers who have complementary skills that will
secure the clients’ loyalty and maybe persuade them to
invest more with Merrill Lynch. As we said, there are
lone wolves, but there is no doubt that for many
brokers team membership is a plus; certainly the plain-
tiffs think so.
The teams are formed by brokers, and once formed
a team decides whom to admit as a new member.
Complex Directors and branch-office managers do not
select the team’s members.
Account distributions are transfers of customers’ ac-
counts when a broker leaves Merrill Lynch and his cli-
14 No. 11-3639
ents’ accounts must therefore be transferred to other
brokers. Accounts are transferred within a branch
office, and the brokers in that office compete for the
accounts. The company establishes criteria for deciding
who will win the competition. The criteria include the
competing brokers’ records of revenue generated for
the company and of the number and investments of
clients retained.
The Complex Directors, as well as the branch-office
managers, have a measure of discretion with regard to
teaming and account distribution; they can veto teams
and can supplement the company criteria for distribu-
tions. And to the extent that these regional and local
managers exercise discretion regarding the compensa-
tion of the brokers whom they supervise, the case is
indeed like Wal-Mart. But the exercise of that discretion
is influenced by the two company-wide policies at
issue: authorization to brokers, rather than managers, to
form and staff teams; and basing account distributions
on the past success of the brokers who are competing
for the transfers. Furthermore, team participation and
account distribution can affect a broker’s performance
evaluation, which under company policy influences
the broker’s pay and promotion. The plaintiffs argue
that these company-wide policies exacerbate racial dis-
crimination by brokers.
The teams, they say, are little fraternities (our term but
their meaning), and as in fraternities the brokers choose
as team members people who are like themselves. If
they are white, they, or some of them anyway, are more
No. 11-3639 15
comfortable teaming with other white brokers. Obviously
they have their eyes on the bottom line; they will join
a team only if they think it will result in their getting
paid more, and they would doubtless ask a superstar
broker to join their team regardless of his or her race.
But there is bound to be uncertainty about who will be
effective in bringing and keeping shared clients; and
when there is uncertainty people tend to base decisions
on emotions and preconceptions, for want of objective
criteria.
Suppose a police department authorizes each police
officer to select an officer junior to him to be his partner.
And suppose it turns out that male police officers never
select female officers as their partners and white
officers never select black officers as their partners. There
would be no intentional discrimination at the depart-
mental level, but the practice of allowing police officers
to choose their partners could be challenged as enabling
sexual and racial discrimination—as having in the
jargon of discrimination law a “disparate impact” on a
protected group—and if a discriminatory effect was
proved, then to avoid an adverse judgment the depart-
ment would have to prove that the policy was essential
to the department’s mission. 42 U.S.C. § 2000e-2(k)(1)(A)(i);
Ricci v. DeStefano, 129 S. Ct. 2658, 2672-73 (2009); Bryant
v. City of Chicago, 200 F.3d 1092, 1098-99 (7th Cir. 2000).
That case would not be controlled by Wal-Mart (al-
though there is an undoubted resemblance), in which
employment decisions were delegated to local managers;
it would be an employment decision by top management.
16 No. 11-3639
Merrill Lynch’s broker teams are formed by brokers, not
managers, just as in our hypothetical example police
officers’ partners are chosen by police officers, not super-
visors. If the teaming policy causes racial discrimination
and is not justified by business necessity, then it
violates Title VII as “disparate impact” employment
discrimination—and whether it causes racial discrimina-
tion and whether it nonetheless is justified by business
necessity are issues common to the entire class and there-
fore appropriate for class-wide determination.
And likewise with regard to account distributions: if
as a result of racial preference at the team level black
brokers employed by Merrill Lynch find it hard to join
teams, or at least good teams, and as a result don’t
generate as much revenue or attract and retain as many
clients as white brokers do, then they will not do well
in the competition for account distributions either;
and a kind of vicious cycle will set in. A portion of a
team’s pre-existing revenues are transferred within a
team to a new recruit, who thus starts out with that
much “new” revenue credited to him or her—an advan-
tage, over anyone who is not on a team and thus must
generate all of his own “new” revenue, that translates
into a larger share of account distributions, which in
turn helps the broker do well in the next round of such
distributions. This spiral effect attributable to company-
wide policy and arguably disadvantageous to black
brokers presents another question common to the class,
along with the question whether, if the team-inflected
account distribution system does have this disparate
impact, it nevertheless is justified by business necessity.
No. 11-3639 17
There is no indication that the corporate level of Merrill
Lynch (or its parent, Bank of America) wants to discrimi-
nate against black brokers. Probably it just wants to
maximize profits. But in a disparate impact case the
presence or absence of discriminatory intent is ir-
relevant; and permitting brokers to form their own
teams and prescribing criteria for account distributions
that favor the already successful—those who may owe
their success to having been invited to join a successful
or promising team—are practices of Merrill Lynch,
rather than practices that local managers can choose or
not at their whim. Therefore challenging those policies
in a class action is not forbidden by the Wal-Mart deci-
sion; rather that decision helps (as the district judge
sensed) to show on which side of the line that separates
a company-wide practice from an exercise of discretion
by local managers this case falls.
Echoing the district judge, the defendant’s brief states
that “any discrimination here would result from local,
highly-individualized implementation of policies rather
than the policies themselves.” That is too stark a dichot-
omy. Assume that with no company-wide policy on
teaming or account distribution, but instead delegation
to local management of the decision whether to allow
teaming and the criteria for account distribution, there
would be racial discrimination by brokers or local man-
agers, like the discrimination alleged in Wal-Mart. But
assume further that company-wide policies authorizing
broker-initiated teaming, and basing account distributions
on past success, increase the amount of discrimination.
The incremental causal effect (overlooked by the district
18 No. 11-3639
judge) of those company-wide policies—which is the
alleged disparate impact—could be most efficiently
determined on a class-wide basis.
We are not suggesting that there is in fact racial dis-
crimination at any level within Merrill Lynch, or that
management’s teaming and account distribution
policies have a racial effect. The fact that black brokers
have on average lower earnings than white brokers may
have different causes altogether. The only issue at this
stage is whether the plaintiffs’ claim of disparate impact
is most efficiently determined on a class-wide basis
rather than in 700 individual lawsuits.
The district judge exaggerated the impact on the feasi-
bility and desirability of class action treatment of the
fact that the exercise of discretion at the local level is
undoubtedly a factor in the differential success of
brokers, even if not a factor that overwhelms the effect
of the corporate policies on teaming and on account
distributions. Obviously a single proceeding, while it
might result in an injunction, could not resolve class
members’ claims. Each class member would have to
prove that his compensation had been adversely affected
by the corporate policies, and by how much. So should
the claim of disparate impact prevail in the class-wide
proceeding, hundreds of separate trials may be neces-
sary to determine which class members were actually
adversely affected by one or both of the practices and if
so what loss he sustained—and remember that the class
has 700 members. But at least it wouldn’t be necessary
in each of those trials to determine whether the chal-
No. 11-3639 19
lenged practices were unlawful. Rule 23(c)(4) provides
that “when appropriate, an action may be brought or
maintained as a class action with respect to particular
issues.” The practices challenged in this case present a
pair of issues that can most efficiently be determined on
a class-wide basis, consistent with the rule just quoted.
As said in Mejdrech v. Met-Coil Systems Corp., 319 F.3d
910, 911 (7th Cir. 2003),
class action treatment is appropriate and is permit-
ted by Rule 23 when the judicial economy from con-
solidation of separate claims outweighs any con-
cern with possible inaccuracies from their being
lumped together in a single proceeding for decision
by a single judge or jury. Often, and as it seems to us
here, these competing considerations can be recon-
ciled in a “mass tort” case by carving at the joints of
the parties’ dispute. If there are genuinely common
issues, issues identical across all the claimants, issues
moreover the accuracy of the resolution of which
is unlikely to be enhanced by repeated proceedings,
then it makes good sense, especially when the class
is large, to resolve those issues in one fell swoop
while leaving the remaining, claimant-specific issues
to individual follow-on proceedings.
The kicker is whether “the accuracy of the resolu-
tion” would be “unlikely to be enhanced by repeated pro-
ceedings.” If resisting a class action requires betting
one’s company on a single jury verdict, a defendant may
be forced to settle; and this is an argument against defini-
tively resolving an issue in a single case if enormous
20 No. 11-3639
consequences ride on that resolution. In re Bridgestone/
Firestone, Inc., 288 F.3d 1012, 1020 (7th Cir. 2002); In re
Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1299-1300 (7th
Cir. 1995); contra, Klay v. Humana, Inc., 382 F.3d 1241,
1274 (11th Cir. 2004). But Merrill Lynch is in no danger
of being destroyed by a binding class-wide determina-
tion that it has committed disparate impact discrim-
ination against 700 brokers, although an erroneous in-
junction against its teaming and account distribution
policies could disadvantage it in competition with broker-
age firms that employ similar policies—though we have
no information on whether others do.
The Mejdrech decision, and Bridgestone/Firestone and
Rhone-Poulenc more fully, discuss the danger that
resolving an issue common to hundreds of different
claimants in a single proceeding may make too much
turn on the decision of a single, fallible judge or jury.
The alternative is multiple proceedings before different
triers of fact, from which a consensus might emerge;
a larger sample provides a more robust basis for an
inference. But that is an argument for separate trials on
pecuniary relief, and the only issue of relief at present
is whether to allow the plaintiffs to seek class-wide in-
junctive relief. There isn’t any feasible method—certainly
none has been proposed in this case—for withholding
injunctive relief until a series of separate injunc-
tive actions has yielded a consensus for or against
the plaintiffs.
As far as pecuniary relief is concerned, there may
be no common issues (though then again there may be,
No. 11-3639 21
see Allen v. International Truck & Engine Corp., supra,
358 F.3d at 472), and in that event the next stage of the
litigation, should the class-wide issue be resolved in
favor of the plaintiffs, will be hundreds of separate suits
for backpay (or conceivably for compensatory damages
and even punitive damages as well, if the plaintiffs aug-
ment their disparate-impact claim with proof of inten-
tional discrimination). The stakes in each of the plain-
tiffs’ claims are great enough to make individual suits
feasible. Most of Merrill Lynch’s brokers earn at least
$100,000 a year, and many earn much more, and
the individual claims involve multiple years. But
the lawsuits will be more complex if, until issue or
claim preclusion sets in, the question whether Merrill
Lynch has violated the antidiscrimination statutes
must be determined anew in each case.
We have trouble seeing the downside of the limited
class action treatment that we think would be appro-
priate in this case, and we conclude that the district
judge erred in deciding to the contrary (with evident
misgivings, however). The denial of class certification
under Rules 23(b)(2) and (c)(4) is therefore
R EVERSED.
2-24-12