Can Mega-Class Adjudication of Discrimination Claims Ever Be Fair to Employers?

Mega class-actions attempting to adjudicate discrimination claims on behalf of thousands or tens of thousands of class members are often fundamentally unfair to employers and violate their right to due process. The recent $250M jury verdict against Novartis (5,200 potential class members) and the affirming of a class certification order of up to 1.5 million Wal-Mart workers for various pay and promotional practices highlight the threat that mega-class actions can pose to large employers.

Large class actions adjudicating the claims of hundreds or thousands of employees may be fairly tried when they adjudicate a specific, objective written policy of an employer and significant variables are absent.  However, when large class actions attempt to adjudicate claims involving inherently subjective components (such as unwritten rules or practices with dozens, if not hundreds of variables); individual issues must predominate.  This is especially true when the issue may involve hundreds or thousands of discrete decisions made by different decision-makers (e.g., promotions or job assignments).  A class trial of thousands of discrimination claims tends to devolve into evidence of the personal experiences of a hand-full of class representatives based on a few anecdotal (and usually extreme) examples of conduct (e.g., the Novartis baby-carriage rhyme).  This process deprives an employer of being able to defend the individual employment decisions on a case-by-case basis and sacrifices the employer's right to due process in the name of perceived efficiency or economy.  

 

The trial of a mega-class action to adjudicate the claims of 1.5 million employees reminds me of Isaac Asimov's 1955 short story "Franchise".  In Franchise, a futuristic United States turns to electronic democracy. Rather than conducting political elections, a supercomputer, Multivac, selects a single "most representative" person from the population. Multivac then questioned the “most representative” person to determine the overall electorate orientation. All elected offices are then filled by candidates the computer deems acceptable to the populace as determined by the "most representative" person.

 

It would be fundamentally un-American to choose our elected officials by selecting a "single most representative" voter.  It similarly violates fundamental notions of due process and fairness to hold employers liable for wide-spread, systematic discrimination involving dozens of variables in a trial that considers the stories of only a handful of the potential class members.  Courts should reexamine whether an employer's due process rights can be adequately preserved in the collective adjudication of mega-class action of discrimination claims.

A Non-Employment Case Important to Employment Lawyers

In a non-employment case of significant importance to employers and employment lawyers, the U.S. Supreme Court held today that imposing class arbitration on parties who have not agreed to class arbitration is inconsistent with the Federal Arbitration Act and is therefore not permitted.  This case arose out of an MDL antitrust case alleging that certain competitors were engaged in a price-fixing scheme.  The parties to the underlying transaction were signatories to an arbitration agreement that was silent on whether the arbitrator had the authority to conduct class action arbitrations. For a more detailed review of the factual and procedural background of the case, see the SCOTUS Wiki on the case here

The significance of this case to employers is that many employment agreements containing arbitration provisions are also silent on the issue of class arbitration (and some specifically exclude class action arbitration).  Without doubt this opinion will be used to argue that an arbitrator lacks the authority under the FAA to arbitrate class action employment disputes where the parties' agreement, or other probative evidence, fails to establish that the parties agreed to arbitrate those claims collectively.