Bolden v. Walsh Construction Co.

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-2205
W ALLACE B OLDEN , et al.,
Plaintiffs-Appellees,
v.
W ALSH C ONSTRUCTION C OMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 C 4104—Joan Humphrey Lefkow, Judge.
A RGUED JULY 24, 2012—D ECIDED A UGUST 8, 2012
Before E ASTERBROOK, Chief Judge, and P OSNER and
F LAUM, Circuit Judges.
E ASTERBROOK, Chief Judge. Walsh Construction Company
is one of the nation’s largest builders, erecting skyscrapers
and paving roads, among other projects. Walsh has
a central organization of permanent employees, in-
cluding superintendents dispatched to manage par-
ticular projects. These superintendents have discretion
over hiring and pay of the hourly workers who do most
2 No. 12-2205
of the tasks on-site. The central organization has a few
policies, including rules against racial discrimination
(with annual training in how to detect and prevent it),
and a requirement that superintendents honor collective
bargaining agreements, but for most other subjects the
superintendents are in charge. This is the norm in the
construction business, where the availability of labor
and the tasks to be performed change frequently,
making flexibility essential. When one phase of a
project is completed, Walsh needs journeymen in
different trades to handle the next phase. The superin-
tendent and foremen also must mesh the tasks assigned
to Walsh’s workers with those handled by subcontractors.
The 12 plaintiffs worked for Walsh Construction in
2002 and earlier; none has worked for it since mid-2002.
Plaintiffs filed suit against Walsh Group, which they
described as “doing business as Walsh Construction
Co.” That’s not accurate; the record does not imply that
Walsh Group, a holding company, and its subsidiaries,
including Walsh Construction, have failed to observe
corporate formalities. See United States v. Bestfoods, 524
U.S. 51 (1998). Everyone has treated the suit as one
directly against Walsh Construction Co., and we have
reformed the caption accordingly.
Plaintiffs contend that Walsh’s superintendents prac-
ticed, or tolerated, two kinds of racial discrimination: in
assigning overtime work, and in working conditions.
Plaintiffs submitted a statistical analysis to the effect
that white and Hispanic workers were more likely to
work overtime hours than black workers did. Plaintiffs
No. 12-2205 3
also contended that some superintendents and foremen,
at some of Walsh’s projects, used demeaning words
such as “nigger” or “coon” to refer to black workers, or
failed to prevent journeymen from doing so. Derogatory
graffiti appeared in portable toilets, and several plain-
tiffs said that hangman’s nooses had been placed in
toilets or break sheds. Walsh says that these were the
work of subcontractors’ employees, and that its super-
visors painted over the graffiti and removed the
nooses as they learned about them, but that potential
defense on the merits is premature at this phase of the
litigation.
Walsh observed that its many sites had different
superintendents whose practices (and tolerance for
the racism of others) differed. Plaintiffs nonetheless
asked the district judge to certify the suit as a class
action covering all of Walsh’s 262 projects in the
Chicago area since mid-2001. The district court granted
this request and certified two classes. 2012 U.S. Dist.
L EXIS 44352 (N.D. Ill. Mar. 30, 2012). One includes “[a]ll
blacks employed by Walsh on its construction sites in
the Chicago Metropolitan area during the time period
June 1, 2001, through the present.” The parties refer to
this as the hostile-work-environment class. The other
includes: “All blacks employed as journeymen by Walsh
in the Chicago Metropolitan area at any time during
the period June 1, 2001, through the present, who
were denied opportunities to work, not afforded
overtime hours or not afforded premium pay hours,
because of their race.” The parties refer to this as the
overtime class. Walsh sought to appeal the certification
4 No. 12-2205
order under Fed. R. Civ. P. 23(f), and a motions panel
granted the request.
There are multiple problems with these class defini-
tions. One is that these 12 plaintiffs can’t represent either
class, since none of the 12 has worked for Walsh after
2002, even though the classes extend into the indefinite
future. The EEOC took a long time to issue right-to-sue
letters, so the suit is timely, but the dates of plaintiffs’
employment affect how a class should be defined. Federal
courts used to certify what were called across-the-
board classes, in which one worker who had experienced
any discriminatory practice could represent a class of
all employees who had experienced different kinds of
discrimination. But General Telephone Co. v. Falcon, 457
U.S. 147 (1982), held that across-the-board classes are
incompatible with Fed. R. Civ. P. 23. Given the employ-
ment history of these plaintiffs, the class definition
should not have extended past 2002. A second problem
is that the overtime class defines its members as
persons who did not earn more “because of their race.”
Using a future decision on the merits to specify the
scope of the class makes it impossible to determine
who is in the class until the case ends, and it creates
the prospect that, if the employer should prevail on
the merits, this would deprive the judgment of preclu-
sive effect: any other former worker could file a new
suit, given that the losing “class” lacked any members.
The parties have paid little attention to these prob-
lems, perhaps because they are reparable. The first
problem could be fixed by adding plaintiffs who have
No. 12-2205 5
worked for Walsh more recently (or are working for it
today). The second problem could be fixed by changing
the language “who were denied opportunities to work,
not afforded overtime hours or not afforded premium
pay hours, because of their race” to something like “who
sought but were denied opportunities to work, overtime
hours, or premium pay hours.” Then the litigation
could determine whether those events occurred because
of race.
Walsh directs its fire to something that cannot be fixed:
that both classes include workers at all of Walsh’s
Chicagoland sites since 2001. When the parties contested
this matter in the district court, there were 262 such
sites; today the number must be higher, because owners
continue to hire Walsh to construct new projects. The
sites had different superintendents, with different poli-
cies. Many superintendents moved to new sites
after finishing their projects, but, with the exception of
one concrete-pouring crew that stayed together as a
unit, superintendents used different groups of foremen
at different sites—and many of the allegedly discrim-
inatory practices depended on the foremen, who made
most overtime offers, chastised (or failed to chastise)
workers who used racially inflammatory language, and
so on.
Different sites had materially different working condi-
tions, as most of the plaintiffs conceded in their deposi-
tions. They acknowledged that most superintendents
they had worked with did not discriminate; their objec-
tions concerned a handful of superintendents and fore-
6 No. 12-2205
men, principally John Taheny, Robert Kuna, Arthur
Crummie, Robert DeBoer, and Jim Gumber. None
works for Walsh today. Taheny worked for Walsh only
briefly, and plaintiffs’ grievances about him concern a
single site, which the parties call Skybridge. Gumber
was the superintendent during later events at
Skybridge, and he may have failed to deal with an inher-
ited problem. Several plaintiffs testified that many
sites where they worked were discrimination-free,
while others were marked by severe racial hostility. The
large number of sites, and the fact that plaintiffs’ experi-
ences differ, raise the question whether the classes
satisfy Rule 23(a)(2), which says that a class may be
certified only if “there are questions of law or fact
common to the class”. To evaluate plaintiffs’ grievances
about Walsh, however, a court would need site-
specific, perhaps worker-specific, details, and then the
individual questions would dominate the common ques-
tions (if, indeed, there turned out to be any com-
mon questions).
Rule 23(a)(2) is the basis of the Supreme Court’s deci-
sion in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541(2011). In Wal-Mart, as here, the plaintiffs contended that
discretionary acts by local managers (of stores in Wal-
Mart, of construction sites here) produced discrimina-
tory effects. The Court held that Rule 23(a)(2) blocks
certification of such a class, because “[c]ommonality
requires the plaintiff to demonstrate that the class
members ‘have suffered the same injury’ ”. 131 S. Ct. at
2551, quoting from Falcon, 457 U.S. at 157. The Court
stated that Rule 23(a)(2) requires “a common conten-
No. 12-2205 7
tion—for example, the assertion of discriminatory bias
on the part of the same supervisor.” 131 S. Ct. at 2551.
But when multiple managers exercise independent dis-
cretion, conditions at different stores (or sites) do not
present a common question.
The sort of statistical evidence that plaintiffs present
has the same problem as the statistical evidence in Wal-
Mart: it begs the question. Plaintiffs’ expert, Stan V.
Smith, assumed that the appropriate unit of analysis
is all of Walsh’s Chicago-area sites. He did not try to
demonstrate that proposition. If Walsh had 25 super-
intendents, 5 of whom discriminated in awarding over-
time, aggregate data would show that black workers
did worse than white workers—but that result would
not imply that all 25 superintendents behaved similarly,
so it would not demonstrate commonality. Smith’s
analysis has additional problems. For example, he did
not attempt to control for variables other than race.
Walsh’s collective bargaining agreements require it to
offer overtime opportunities first to union stewards. If
these stewards are more likely to be white than
other journeymen, that could explain the data without
any need to impute discrimination to Walsh’s super-
intendents. Smith did not attempt to determine the
effect of the stewards-first clause. We need not
determine whether Smith’s study should have been
excluded under Fed. R. Evid. 702. It is enough to say
that it does not show any common issue that would
allow a multi-site class.
Relying on Falcon, the Court in Wal-Mart explained
that a multi-store (or multi-site) class could satisfy
8 No. 12-2205
Rule 23(a)(2) if the employer used a procedure or
policy that spanned all sites. In Wal-Mart, as here, the
plaintiffs conceded that the employer has a policy for-
bidding discrimination but contended that reposing
discretion in local managers permitted that policy to
be undermined. According to plaintiffs—in Wal-Mart
and this case alike—local discretion had a disparate
impact that justified class treatment. But Wal-Mart dis-
agreed, observing that “[t]he whole point of permitting
discretionary decisionmaking is to avoid evaluating
employees under a common standard.” 131 S. Ct. at 2553.
It continued: “allowing discretion by local supervisors
over employment matters … is just the opposite of a
uniform employment practice that would provide the
commonality needed for a class action; it is a policy
against having uniform employment practices.” Id. at 2554(emphasis in original).
Although the Court recognized that discretion might
facilitate discrimination, see Watson v. Fort Worth Bank
& Trust, 487 U.S. 977 (1988), it also observed that some
managers will take advantage of the opportunity to
discriminate while others won’t. “[D]emonstrating the
invalidity of one manager’s use of discretion will do
nothing to demonstrate the invalidity of another’s.” 131
S. Ct. at 2554. This meant, the Court held, that a class
including all stores could not be certified. One class
per store may be possible; one class per company is not.
And that’s equally true of Walsh’s 262 (or more) sites.
The district court stated that Wal-Mart was about the
requirement of Rule 23(b)(3)(D) that class litigation be
No. 12-2205 9
manageable. 2012 U.S. Dist. L EXIS 44352 at *15–20. As
the district court saw matters, the problem in Wal-Mart
was that the class included thousands of stores and
millions of workers, while the classes certified here
include only hundreds of sites and thousands of work-
ers. Yet that’s not what the Supreme Court held. Wal-Mart
was decided under Rule 23(a)(2). It could not
have been about Rule 23(b)(3)(D), because the class had
not been certified under Rule 23(b)(3). The district
court had used Rule 23(b)(2) in an effort to sidestep
the complexities entailed in giving individual notice
to class members and allowing them to opt out. The
Supreme Court found that use of Rule 23(b)(2) to be a
second reversible error. 131 S. Ct. at 2557–61.
When treating Wal-Mart as a decision about manage-
ability rather than commonality, the district court relied
on McReynolds v. Merrill Lynch, Pierce, Fenner & Smith,
Inc., 672 F.3d 482 (7th Cir. 2012). Our opinion remarked
that the class in Wal-Mart would not have been manage-
able, id. at 488, but we did not suggest that this was
the basis of the Court’s decision; we just observed that
the class certified there had problems in addition to
Rule 23(a)(2), and that company-wide suits that do
present common issues therefore may be certified (if
they are manageable, as Wal-Mart would not have been).
In McReynolds the plaintiffs contested (among other
things) a national policy allowing brokers to form and
distribute commissions within teams. Under that policy,
brokers could decide for themselves whether to form
teams—and, having formed a team, which other brokers
10 No. 12-2205
to admit. Plaintiffs contended that this national policy
had a disparate impact, because some successful
teams refused to admit blacks. We held that a national
class could be certified to contest this policy, which
was adopted by top management and applied to all of
Merrill Lynch’s offices throughout the nation. This
single national policy was the missing ingredient in Wal-
Mart. The Court had said that a single policy spanning
all sites could be contested in a company-wide class, 131
S. Ct. at 2553, consistent with Rule 23(a)(2), if all other
requirements of Rule 23 also were satisfied; we took
the Justices at their word.
Plaintiffs contend that McReynolds supports their posi-
tion. It doesn’t. Walsh had no relevant company-wide
(or Chicago SMSA-wide) policy other than (a) its rule
against racial discrimination, and (b) its grant of discre-
tion to superintendents in assigning work and coping
with offensive language or bigoted conduct. The first of
these policies presents no problem (plaintiffs certainly
don’t contest it), and the second—the policy of on-site
operational discretion—is the precise policy that Wal-
Mart says cannot be addressed in a company-wide
class action. Plaintiffs’ brief on appeal contends that
Walsh has 14 policies that present common questions,^ but
^
Here is a sample (citations omitted):
1) Policy/Practice of allowing foremen and superintendents
to assign work hours and overtime without reference to
any objective criteria.
(continued...)
No. 12-2205 11
all of these boil down to the policy affording discretion
to each site’s superintendent—and Wal-Mart tells us
that local discretion cannot support a company-wide
class no matter how cleverly lawyers may try to repack-
age local variability as uniformity.
What we have said applies to both the overtime class
and the hostile-work-environment class. There are
other problems with the hostile-work-environment class,
which is not compatible with Falcon even apart from
the fact that none of the plaintiffs has worked at
(...continued)
2) Policy/Practice of allowing foremen and supervisors to
make promotion decisions without reference to any
objective criteria.…
5) Policy/Practice not to discipline or reprimand superin-
tendents and foreman that engage in discriminatory
actions (racial slurs, race-based assignment of work, etc.)
6) Policy/Practice that journeymen cannot request or chal-
lenge whether decisions involving distribution of over-
time are being done fairly; rather, the decision of
the superintendent or foreman is final and unchallenge-
able. . . .
9) No Policy/Practice to investigate claims of race discrimi-
nation.
10) No Policy/Practice to discipline superintendents and fore-
man for race discrimination. . . .
14) No Policy/Practice of analyzing their own employment
data to determine whether complaints of racial disparities
(as early as 2002) were actually occurring and addressing
any such disparities.
12 No. 12-2205
Walsh since 2002. The 12 plaintiffs did not experience
the working conditions at all 262 sites either
individually or collectively, and a given plaintiff’s bad
experience with one of the five supervisors we have
named does not present any question about the con-
duct of Walsh’s many other superintendents and fore-
men. The hostile-environment class not only fails
Rule 23(a)(2) but also is not manageable. It would
require at least one trial per site (to ascertain site-
specific conditions) and perhaps one trial per week or
month per site (because construction crews are constantly
changing, and workers on site while concrete was being
poured may have encountered working conditions dif-
ferent from those that prevailed when cabinet work
was being installed).
Wal-Mart observes that it may be possible to contest,
in a class action, the effect a single supervisor’s conduct
has on many employees. 131 S. Ct. at 2551. Our plain-
tiffs have not proposed the certification of superintendent-
specific classes. Many single-site or single-superin-
tendent classes would flunk Rule 23(a)(1), which
provides that a class action may be certified only if “the
class is so numerous that joinder of all members is im-
practicable”; the travelling concrete-pouring crew, for
example, had between 7 and 15 members from 2000 to
2002. A class that small won’t fly—but all three black
members of the crew (through 2002) are plaintiffs and
may pursue their claims against Walsh individually.
Some of the sites, including Skybridge, had enough
workers that the numerosity requirement could be met.
Plaintiffs may choose to propose site- or superintendent-
No. 12-2205 13
specific classes, which the district court may certify if all
requirements of Rule 23(a) and Rule 23(b)(3) are met.
But we urge the parties and the judge to act with dis-
patch. It has been a decade since any of the plaintiffs
worked for Walsh, and the case is six years old. It
should not be allowed to gather moss.
The order certifying two multi-site classes is reversed.
8-8-12