Amicus Curiae Brief — General Electric Capital Corp., Dba Ge Capital v. Thiessen

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FER 1 2 2002 -

re No. 01-881

IN THE

Supreme Court of the United States

GENERAL ELECTRIC CAPITAL CORP., and

MONTGOMERY WARD CREDIT SERVICES, INC.,

Petitioners,

v,

GARY A. THIESSEN,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

MOTION FOR LEAVE TO FILE AND BRIEF AMICUS

CURIAE OF THE UNITED STATES CHAMBER OF

COMMERCE IN SUPPORT OF PETITION

FOR A WRIT OF CERTIORARI

STEPHEN A. BOKAT ZACHARY D. FASMAN*

Rosin S. CONRAD PATRICK W. SHEA

JosHuA A. ULMAN CaRLA R. WALWORTH

NATIONAL CHAMBER LITIGATION Nea D. MOLLEN

CENTER, INC. PauL, HASTINGS, JANOFSKY

1615 H Street, N.W. & WaLKER LLP

Washington, D.C. 20026 75 East 55th Street

(202) 463-5337 New York, NY 10022

(212) 318-6000

* Counsel of Record

172315 ce

COUNSEL PRESS

(800) 274-3321 = (800) 359-6859

1

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE IN SUPPORT OF PETITION FORA

WRIT OF CERTIORARI

Pursuant to S. Ct. Rule 37.2, the Chamber of Commerce

of the United States (the Chamber) moves for leave to file a

brief amicus curiae in support of the Petition for a Writ of

Certiorari to the Tenth Circuit. A copy of the proposed brief

is attached. The Chamber is filing this Motion because

Respondent has refused to consent to the filing of this brief.

In further support of this Motion, the Chamber notes the

following:

1. The Chamber is the world’s largest federation of

business companies and associations, with an underlying

membership of nearly 3,000,000 businesses and professional

organizations of every size, in every industry sector, and every

region of the country. An important function of the Chamber

is to represent the interests of its members by filing amicus

curiae briefs in cases involving issues of concern to American

business.

2. One continuing concern of the American business

community has been the proper interpretation and application

of the employment discrimination laws in general, and the

conduct of employment discrimination litigation in particular.

The Chamber of Commerce, with the consent of the parties

or the Court, has filed amicus curiae briefs in the Court in

numerous recent employment discrimination cases, including

Toyota v. Williams, 122 S. Ct. 681 (2002); Circuit City Stores

v. Adams, 532 U.S. 105 (2001); Reeves v. Sanderson

Plumbing Products, Inc., 530 U.S. 133 (2000); Sutton v.

United Air Lines, Inc., 527 U.S. 471 (1999); Burlington

Industries, Inc. v. Ellerth, 524 U.S. 742 (1998); and F aragher

v. City of Boca Raton, 524 U.S. 775 (1998).

il

3. The decision below creates and deepens significant

and mature circuit splits of authority in an area of particular

concern to the Chamber and its members — class action

employment discrimination litigation. The Tenth Circuit, in

contrast to decisions in other circuits, mandated the

application of the two-stage proof paradigm established by

the Court in Jeamsters v. United States, 431 U.S. 324 (1977),

to this case, a collective action brought under the Age

Discrimination in Employment Act, and to virtually every

other type of employment discrimination class action.

The decision below raises significant Seventh Amendment

and due process issues by mandating the continuing

applicability of a bifurcated trial procedure that was adopted

before jury trials were available in employment

discrimination class actions. The Tenth Circuit also joined

several sister circuits by precluding lower courts from

conducting any meaningful analysis of evidence proffered

by class representatives at the certification stage, claiming

that such analysis is forbidden by the Court’s decision in

Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974).

4. In combination, the rulings below eliminate any

judicial discretion on the part of the lower courts when

determining whether to proceed with a class action, rendering

such decisions little more than formalities. They also reflect

the disarray in which the lower courts find themselves on

the most fundamental questions posed in multi-party

employment discrimination litigation. The Chamber believes

that the instant case, as well as Robinson v. Metro-North

Commuter R.R. Co., 267 F. 3d 147 (2d. Cir.), pet. for cert.

filed, 70 U.S.L.W. 3429 (2001) (No. 01-908), in which a writ

of certiorari also is being sought with the Chamber’s support,

present exceptionally significant issues in this area with great

clarity. The Chamber submits that its views on these issues

would be useful to the Court in determining whether to grant

the Petition, and in deciding the issues posed in the event

that review is granted.

il

Accordingly, the Chamber respectfully moves the Court

to grant this Motion and allow the filing of the attached brief.

Respectfully submitted,

ZACHARY D. FASMAN*

Patrick W. SHEA

CarRLA R. WALWORTH

NeAL D. MOLLEN

PauL, HASTINGS, JANOFSKY

& WALKER LLP

75 East 55th Street

New York, NY 10022

(212) 318-6000

* Counsel of Record

iv

TABLE OF CONTENTS

Page

Motion for Leave to File Brief Amicus Curiae in

Support of Petition for a Writ of Certiorari ..... i

ee ee II aoa bu hile a Coos awe WN eeew se ekns IV

Table of Cited Authorities .......ccccccecesces: vi

Interest of the Amicus ........cccccccccreccess l

I. Summary of Argument ...........-.eseeee: ]

I]. Statement of the Case .......cccccccerccess 5

Si: SEEN new west eo Grou nk dade awe oe ami 8

A. The Lower Court’s Requirement That A Class

Be Certified To Preserve A “Procedural

Advantage” Supposedly Derived From The

Court’s Decision In Teamsters Warrants

NEI usaccobce nase eben soe ease 8

1. The Decision Addresses An Issue Of

Critical Importance On Which There Is

Substantial Disagreement Among The

CONN Gir IS bk once veeceasess 8

2. The Lower Court’s Mandatory Resort To

Teamsters To Preserve A “Procedural

Advantage” For Plaintiffs Is Un-

Workable, Unfair And Unnecessary. .. -11

Contents

Page

B. The Court Should Resolve Whether A District

Court Is Required To Make Essential Findings

Of Fact At The Class Certification Stage Even

Though The Issues Overlap With The Merits

OF Tee Cee. noc ic ih es tecesses eastern 15

Comsteles nc. isda tense eee een 18

vi

TABLE OF CITED AUTHORITIES

Page

CASES

Adamson vy. Bowen,

855 F.2d 668 (10th Cir. 1988) ............... 15, 16

Allison v. Citgo Petroleum Corp.,

PISS Cote fe S. | Beery rere 4,9, 13

Amchem Products, Inc. v. Windsor,

Sa) Ue. FR8 Caprese hes ecerncsceveeteeeeee 2

Anderson v. City of Albuquerque,

690 F.2d 796 (10th Cir. 1982) ............... 15, 16

Ardrey v. United Parcel Service,

798 F.2d 679 (4th Cir. 1986) ........ re 12

Beck v. Boeing,

203 F.R.D. 459 (W.D. Wash. 2001) ........... 5

Blair v. Equifax Check Services Inc.,

181 F.3d 832 (7th Cir. 1999) ............ Pr 12

Blyden v. Mancusi, 186 F.3d 252 (2d Cir. 1999) ... 13

Burlington Industries, Inc. v. Ellerth,

Jae U.S. FUR CESSES ea banc vahat essere i

Caridad vy. Metropolitan-North R.R.,

191 F.3d 283 (2nd Cir. 1999), cert. denied,

S23 U.S. 1967 Gabber ss vi eee tae 16

vil

Cited Authorities

Page

Castano y. American Tobacco Co.,

84 F.3d 734 (5th Cir. 1996) ........- ee ee eees 13,17

Circuit City Stores v. Adams,

S39 U.S. 105 GOON) ic civcvdccwccevcersvenss i

Coates v. Johnson & Johnson,

756 F.2d 524 (7th Cir. 1985) ......- ee eee eee 12

Coopers & Lybrand v. Livesay,

E37 US. GES CASTE) cs cavesuvevvvvceevedes 15, 16

Deposit Guaranty Nat'l Bank v. Roper,

PY" gil By Ti erreee rere Tre 17

Eisen v. Carlisle & Jacquelin,

437 US. 156 (IGA) og ciccccsicsacvdndvedes ii, 3, 16

Faragher v. City of Boca Raton,

S26 US. TIS CIGGS) ov vice cecosnss ves cues sh 1

Furnco Construction Corp. v. Waters,

438 U.S. SET ISTE) oc cnecivcccecdvenswseeys 14

General Telephone Co. v. Falcon,

657 U.S. 147 (1GEZ) 2 vccccsvesceeveesss 2, 4, 15, 16

Johnston v. HBO Film-Management, Inc.,

265 F.3d 178 (3d Cir. 2001) .......-. eee ee eee 4,17

Lorrilard v. Pons,

PVRS Bey. 26. | meres ei 10

vill

Cited Authorities

Page

Love v. Turlington,

Tae Fae USGS (11 Civ. 1966) once ccccvees 17

Reeves v. Sanderson Plumbing Products, Inc.,

Pee A BO GROUD cs esccestearevercecse ees i

In re Rhone-Poulenc Rorer, Inc.,

51 F.3d 1293 (7th Cir.), cert. denied,

ek Re rere HM, 33, 37

Robinson vy. Metropolitan-North Commuter R.R. Co.,

267 F.3d 147 (2d Cir.), pet. for cert. filed, 70

RS es errr errr Ter Tere i, 3, 5,9

Rutstein v.. Avis Rent-A-Car Systems, Inc.,

211 F.3d 1228 (11th Cir. 2000), cert. denied, 121

i PO ro Seka esis a euvae ws abeede 9

St. Mary's Honor Center v. Hicks,

Pee ee NEE soc son cana vedvabounanes 14

Stastny v. Southern Bell Telegraph & Telegraph Co.,

628 F.2d 267 (4th Cir. 1980) ................ 17

Sutton v. United Air Lines, Inc.,

ge og P| errr rrr ere i

Szabo v. Bridegport Machines, Inc.,

249 F.3d 672 (7th Cir.), cert. denied, 122 S. Ct.

348 (2001) ........ PP ere rey eer T Tere 4,17

Teamsters v. United States,

See GRR ENTE 6 oui reseudcexvenceeees passim

ix

Cited Authorities

Page

Thiessen v. General Electric Capital Corp.,

267 F.3d 1095 (10th Cir. 2001), pet. for cert. filed,

70 U.S.L.W. 3410 (2001) «0... eee eee eens passim

Toyota v. Williams,

122 S. Ct. 681 (2002) .... eee rrcecreeeeecee i

In re Visa Check/Mastermoney Antitrust Litigation,

No. 00-7699, 2001 WL 1242717 (2d Cir. Oct. 17,

| AAP rr etre ee ee evens 17

Western Electric Co. v. Steen,

544 F.2d 1196 (3d Cir. 1976) «1... 02s eee eee 12, 13

Zachery v. Texaco Exploration

and Production, Inc.,

185 F.R.D. 230 (W.D. Tex. 1999) .....----5- 5

UNITED STATES CONSTITUTION

Seventh Amendment ........---+eeeeeeee i, 3, 11, i3

STATUTE

PDUS.C. SQIGD) onc cccccccccrrccecssevcers 6

RULES

RE! Co ce cssrceenenreerernsnecetee i

S&B s Serr ee 6, 7, 16, 17, 18

Fed. R. Civ. P. 23(b)(2) «0.0: ee cee cere rere eres 5

Wa es |) Pe Ata, 37

f

x

Cited Authorities

Page

SECONDARY SOURCES

Judicial Business of the United States: 2000 Report

of the Director, THOU A-4 2. cc ccc ccccvcceces 2

Judicial Business of the United States Courts:

2000 Annual Report of the Director, Table C-2 ... l

Keith R. Fentonmiller, Damages, Jury Trials and the

Class Action under the Civil Rights Act of 1991,

eee BF Siti. 1) PPePPerrrrerrerrreeee 9

Gary M. Kramer, No Class: Post-1991 Barriers to

Rule 23 Certification of Across-the-Board

Employment Discrimination Cases, 15 Lab. Law.

415 (Winter/Sprimg 2000) .....ccccccccecses 4,9, 11

Willging, Hooper & Niemic, Empirical Study Of

Class Actions In Four Federal District Courts

GPU. SINE Ae SHOE cccccctcrcsccecccses 11

DOJ Spec. Rep., Civil Rights Complaints in U.S.

District Courts 1990-1998 (January 2000) ..... l

Court Approves $192.5 Million Settlement In Race

Bias Class Action Against Coca-Cola, Daily Labor

Report (BNA) No. 127, 1-5 (July 3, 2001) ..... 2

Texaco Corp. Agrees To Spend $176 Million to Settle

Race Bias Suit, Daily Labor Report (BNA)

No. 222, D-4 (Nov. 18, 1996) ............... 2

xl

Cited Authorities

Judge Gives Final Approval to Settlement under

which Publix will pay $81.5 million, Daily Labor

Report (BNA) No. 102, D-26 (May 28, 1997) ..

Federal Court Certifies Boeing Class; Female

Employees Allege Job Disparities, Daily Labor

Report (BNA) No. 204, A-2 (Oct. 24, 2001) ....

Federal Judge Certifies Class Action In Black

Worker's Suit Against Publix, Daily Labor Report

(BNA) No. 57, A-3 (Mar. 25, 1999) .......-..

Page

l

INTEREST OF THE AMICUS

The Chamber of Commerce of the United States

(the Chamber) is identified in the preceding Motion for Leave

to File. Its interest in this matter is more completely expressed

in the preceding Motion for Leave to File and in the Summary

of Argument section below, and thus will not be restated at

further length in this section. '

I. SUMMARY OF ARGUMENT

1. Since 1991, when Congress first authorized the

recovery of compensatory and punitive damages and provided

for jury trials under Title VII of the Civil Rights Act, there

has been an explosion of employment discrimination

litigation in the federal courts. During the 1990’s, the number

of employment discrimination cases filed in the federal courts

nearly tripled,’ an increase matched by the number of

employment discrimination class actions filed annually in

the federal courts.’ There currently are 170 employment

discrimination class actions pending in the federal courts,

1. Pursuant to Sup. Ct. Rule 37.6, the Chamber affirms that

neither Petitioners nor Respondent has assisted the Chamber or its

counsel in any way (including but not limited to providing expenses)

in connection with the preparation or filing of this brief.

2. 8,413 civil rights employment cases were filed in the federal

courts in 1990; in 1998 23,375 such cases were filed. See DOJ Spec.

Rep., Civil Rights Complaints in U.S. District Courts 1990-1998,

(January, 2000), at 1-2 (concluding that “[t]he growth of civil rights

cases has been due largely to the increase in employment cases

between private parties.”). See also Judicial Business of the United

States Courts: 2000 Annual Report of the Director, at Table C-2

(reporting that 21,928 employment cases were filed in 2000).

3. See 1999 Federal Court Class Action Statistics, Class Action

Reports, Table 6 (employment class actions rose from a low of

30 filed in 1992 to 85 filed in 1998).

2

affecting the lives and livelihoods of tens of thousands of

American workers and their employers.* Many other

employment discrimination class actions are no longer

pending because they recently have been resolved through

widely reported multi-million dollar settlements, setting the

stage for additional class action litigation.°

2. Despite the substantial importance of these cases and

the profusion of new litigation, the Court has not addressed

employment discrimination class actions for two decades,

and never has opined upon how the expansion of relief, and

the availability of jury trials, affects multi-plaintiff

employment discrimination litigation. Unguided by any

recent rulings from the Court, the lower courts have failed

to deal consistently or adequately with many of the

exceptionally important legal issues that have arisen in such

large and significant cases.

3. For example, despite the Court’s specific admonition

in General Telephone Co. v. Falcon, 457 U.S. 147 (1982),

that the lower courts cannot certify a class action absent a

“rigorous analysis” to ensure that appropriate procedural

requirements have been met,° numerous appellate courts —

4. See Judicial Business of the United States: 2000 Report of

the Director, at Table X-4.

5. See generally Court Approves $192.5 Million Settlement In

Race Bias Class Action Against Coca-Cola, Daily Labor Report

(BNA) No. 127, at 1-5 (July 3, 2001); Texaco Corp. Agrees To Spend

$176 Million to Settle Race Bias Suit, Daily Labor Report (BNA)

No. 222, at D-4 (Nov. 18, 1996); Judge Gives Final Approval to

Settlement under which Publix will pay $81.5 million, Daily Labor

Report (BNA) No. 102, at D-26 (May 28, 1997).

6. 457 U.S. at 161. This admonition was repeated outside the

employment discrimination context in Amchem Products, Inc. v.

Windsor, 521 U.S. 591, 633-636 (1997).

3

including the court below — have hamstrung district judges

who have attempted to perform the required analysis by

preventing them from engaging in any meaningful factual

inquiry when deciding whether to proceed with a class action.

According to the court below, and to several sister circuits,’

virtually any analysis of facts in deciding whether to certify

a class is an improper inquiry into the merits of the case of

the sort forbidden by the Court in Eisen v. Carlisle &

Jacquelin, 417 U.S. 156 (1974), guaranteeing that mere

_ allegations made by the class plaintiffs will suffice to warrant

Class certification.

4. Similarly, the court below demanded that district

courts under its supervision apply the two-stage proof

paradigm derived from the Court’s decision in Jeamsters v.

United States, 431 U.S. 324 (1977), in virtually every

employment discrimination class or collective action.

By affording bare allegations of a pattern-or-practice of

discrimination talismanic significance, the court below

disposed of evident and troubling Seventh Amendment and

due process questions about the propriety of a bifurcated trial

procedure that was adopted by the Court under a different

statute for bench trials prosecuied by the government in a

representative capacity. The court of appeals gave no heed

to whether this model makes sense when money damages

are at issue, when the case is to be tried to a series of juries

seriatim, or where the lawsuit is an opt-in action and has no

representative character.

5. Where courts have adopted this uncritical approach

to class actions, the result has been to diminish and in some

cases al! but to eliminate the plaintiffs’ burden of proving

that a particular case is suitable for class treatment, a result

7. See, e.g., Robinson v. Metro-North Commuter R.R. Co.,

267 F.3d 147 (2d Cir.), pet. for cert. filed, 70 U.S.L.W. 3429 (2001)

(No. 01-908).

4

directly at odds with the Court’s ruling in Falcon and with

the law in several other circuits.* Certifications based upon

such questionable legal analysis have led to multi-million

dollar settlements in which employers, facing huge liabilities

and crushing legal fees following certification, have chosen

to settle rather than to fight.’

6. At the same time, in other circuits where the burden

of proof retains some rigor, class plaintiffs have attempted

to circumvent the complications attendant to trying damage

actions before juries by jettisoning any claim of absent class

members to pursue compensatory or punitive damages or, in

some instances, even trial by jury, opting instead to proceed

without full relief.'° The possibility that such a strategic

8. See, e.g., Allison v. Citgo Petroleum Corp., 151 F.3d 402,

422 (Sth Cir. 1998); Szabo v. Bridegport Machines, Inc., 249 F.3d

672, 675 (7th Cir.), cert. denied, 122 S. Ct. 348 (2001)

(“The proposition that a district judge must accept all of the

complaint’s allegations when deciding whether to certify a class

cannot be found in Rule 23 and has nothing to recommend it.”);

Johnston v. HBO Film Management, Inc., 265 F.3d 178 (3d Cir. 2001).

9. As one commentator recently observed, “[o]nce plaintiffs

obtain class certification, the defendant’s exposure, plus projected

costs of defending hundreds or thousands of individual claims, places

almost overwhelming and irresistible pressure on the defendant to

settle, regardless of the merits of the claims.” Gary M. Kramer,

No Class: Post-1991 Barriers to Rule 23 Certification of Across-

the-Board Employment Discrimination Cases, 15 Lab. Law. 415, 417

(Winter/Spring 2000). See also Fed. R. Civ. P. 23(f), Adv. Comm.

Notes (1998) (“An order granting certification ... may force a

defendant to settle rather than incur the costs of defending a class

action and run the risk of potentially ruinous liability.”).

10. Federal Court Certifies Boeing Class; Female Employees

Allege Job Disparities, Daily Labor Report (BNA) No. 204, at A-2

(Oct. 24, 2001) (attorney for class of Boeing employees noting that

the class had not requested compensatory damages to minimize

(Cont’d)

5

decision might foreclose absent class members from

obtaining full relief has led some courts to refuse to entertain

such efforts,'' while other courts have refused to allow the

recovery of back pay in certified actions where the right to

compensatory and punitive damages has been waived.'”

7. Neither class members seeking relief nor employers

facing enormous liability and huge legal fees are served by

such dramatic uncertainty in the law. Respectfully, the

Chamber submits that guidance by the Court on the impact

of trial by jury and expanded remedies upon the maintenance

and conduct of employment discrimination class actions 1s

desperately required. For reasons more fully developed below

and elsewhere, the instant case and the companion case of

Robinson v. Metro North Commuter R.R., No. 01-908, in

which a writ of certiorari also is being sought with the support

of the Chamber, are ideal vehicles for addressing these very

significant issues and bringing necessary clarity to this field.

Il. STATEMENT OF THE CASE

Respondent Gary A. Thiessen (“Respondent” or

“Thiessen”) is a former employee of Petitioners Montgomery

Ward Credit Services, Inc. (“*MWCS”) and General Electric

Capital Corp. (“GECC”). In 1996, Thiessen commenced an

age discrimination action on behalf of himself and other

(Cont'd)

certification problems under Fed. R. Civ. P. 23(b)(2)); Federal Judge

Certifies Class Action In Black Worker's Suit Against Publix, Daily

Labor Report (BNA) No. 57, at A-3 (Mar. 25, 1999) (class counsel

in suit against Publix commenting on decision to forego damages,

withdraw jury demand and strike employer's jury demand).

11. See Zachery v. Texaco Exploration and Production, Inc.,

185 F.R.D. 230 (W.D. Tex. 1999).

12. See Beck v. Boeing, 203 F.R.D. 459 (W.D. Wash. 2001).

| |

6

“similarly situated” current and former employees of

Petitioners, alleging that Petitioners had developed a “blocker

policy” that was used to identify older workers who were

“blocking” younger workers from being promoted. Thiessen

v. General Elec. Capital Corp., 267 F.3d 1095, 1100 (10th

Cir. 2001). This alleged policy purportedly included the

creation of a list of “blockers” who were targeted for various

adverse employment actions, including negative employment

evaluations, demotions and termination. /d. at 1100-01.

In 1998, the district court conditionally certified a class

of opt-in plaintiffs under the Age Discrimination in

Employment Act (“ADEA”), 29 U.S.C. § 216(b)."° Although

the opt-ins alleged disparate adverse employment actions

reaching across a number of states, the court concluded that

Thiessen’s evidence of a company-wide policy of age

discrimination rendered the opt-ins “similarly situated” for

purposes of conditional certification. /d. at 1101. The court

indicated that it would reconsider certification after

discovery. /d. at 1101-02.

After discovery, the district court decertified the class

and dismissed the opt-in plaintiffs without prejudice to any

individualized claims they might later bring. The court found

that Thiessen was not “similarly situated” to the proposed

class, because there was no evidence linking the “blocker

13. The ADEA borrows the collective action framework

Congress first adopted for the Fair Labor Standards Act (“FLSA”),

rather than the class action procedures of Fed. R. Civ. P. 23. Under

the ADEA’s opt-in procedure, individuals with claims who are

“similarly situated” can affirmatively opt in to the litigation and have

their claims heard as part of the same suit. Although the terminology

and procedures used in the FLSA vary somewhat from those

applicable under Fed. R. Civ. P. 23, as the court of appeals

acknowledged, there is little practical difference between the ADEA’s

“similarly situated” test and Rule 23’s commonality and typicality

requirements. See Thiessen, 267 F.3d at 1105.

7

policy” and the challenged adverse employment actions.

Id. at 1103-04. Further, the court determined that individual

issues would predominate at trial given the individualized

defenses asserted by defendants. /d. at 1104. Finally, the court

held that plaintiffs’ proposed two-stage trial plan, based on

Teamsters v. United States, 431 U.S. 324 (1977), would

“render individualized consideration of the claims impossible

and impose extraordinary burdens on the jury.” /d. at 1105

(citation omitted).

Respondent appealed the decertification decision and the

Tenth Circuit reversed. Relying upon Rule 23 cases in that

circuit, the court below held that the district court erred

because its decision that the plaintiffs were not similarly

situated “encompass[ed] factual issues relevant to [the

pattern-or-practice] trial” on the merits, an inquiry forbidden

at this preliminary stage of the case. /d. at 1106.

The court also held that, given the pattern-or-practice

allegation, application of the two-stage trial plan outlined in

Teamsters was mandatory, because failing to follow the

Teamsters paradigm would “effectively deprive[] plaintiffs

of [the] procedural advantage” that, “if plaintiffs were able

to establish a pattern or practice of discrimination [in the

first stage of trial], they would be entitled to a presumption

that the individual employment actions taken against them

were the result of such discrimination.” /d. at 1107.'* At the

same time, to address the manageability issues raised by the

district court, the circuit court held that in Phase I of a

bifurcated trial in which plaintiffs sought to prove the

14. The court added that “[w]Je do not hold that whenever there

is evidence of a pattern-or-practice, a class must be certified.”

Id. at 1108. But this disclaimer rings hollow given the court’s holding

that: 1) application of the Teamsters paradigm is mandatory

in a pattern-or-practice case; and 2) as a result of the need to apply

this paradigm, the requirements for-a class action are satisfied.

See id. at 1106-07.

8

existence of a pattern-or-practice of discrimination,

Petitioners would be limited in their proof to evidence

concerning “a few common defenses.” /d. Individualized

proof concerning whether the “blocker” policy had been

applied to the particular class members would be relegated

to Phase II of the trial, assuming plaintiffs had successfully

proven a pattern-or-practice. The Tenth Circuit remanded the

case to the district court, directing that the matter proceed as

a collective action. A timely petition for a writ of certiorari

followed.

Ill. ARGUMENT

A. THE LOWER COURT’S REQUIREMENT THAT

A CLASS BE CERTIFIED TO PRESERVE A

“PROCEDURAL ADVANTAGE” SUPPOSEDLY

DERIVED FROM THE COURT’S DECISION IN

TEAMSTERS WARRANTS REVIEW.

1. The Decision Addresses An Issue Of Critical

Importance On Which There Is Substantial

Disagreement Among The Courts Of Appeals.

In Teamsters v. United States, 431 U.S. 324 (1977),

the Court endorsed a bifurcated proof scheme for managing

so-called “pattern-or-practice” cases brought by the federal

government under Title VII. Although the Court specifically

observed that “not all class actions will necessarily follow

{this} model,” 431 U.S. at 360, without any further guidance

from the Court as to how and where this paradigm might

profitably be employed, the lower courts have applied this

paradigm to very different kinds of cases. Teamsters was a

government action; the courts of appeals have applied it to

cases brought by private litigants. In ZJeamsters, the

government sought injunctive and other equitable relief;

several courts of appeals have applied it to damage actions.

9

Teamsters was tried to the bench; certain courts of appeals

have tried to force-fit Teamsters into the jury trial milieu.

The court below went as far as it is possible to go with

Teamsters; it compelled the district courts it supervises to

use the framework even in ADEA collective actions, which

are brought under an entirely different statute and have no

representative character at all.

The Tenth and the Second Circuits effectively require

that their district courts apply the Jeamsters paradigm in

virtually every multi-plaintiff employment discrimination

class action. See Robinson v. Metro-North Commuter R.R.,

267 F.3d 147, 169 n.13 (2d Cir. 2001). The Fifth and Eleventh

Circuits, by contrast, have held that the Jeamsters framework

is largely unworkable when applied to large-scale class

actions where substantial damages are sought and there is a

right to trial by jury. See, e.g., Allison v. Citgo Petroleum

Corp., 151 F.3d 402, 419 (Sth Cir. 1998); Rutstein v. Avis

Rent-A-Car Systems, Inc., 211 F.3d 1228 (11th Cir. 2000),

cert. denied, 121 S. Ct. 1354 (2001). Commentators have

repeatedly questioned whether Jeamsters is applicable in

cases where damages are sought or where a jury trial is

required.'®

The substantial disagreement among the circuits is not

surprising when one recalls that the Teamsters paradigm was

developed almost 25 years ago, when damages were not

available under Title VII of the Civil Rights Act of 1964,

15. See generally Kramer, supra, note 9, at 475-76 (Teamsters

paradigm not automatically applicable in cases involving jury trials

and legal relief); Keith R. Fentonmiller, Damages, Jury Trials and

the Class Action Under the Civil Rights Act of 1991, 12 Lab. Law.

421, 441-42 (1997) (“it is questionable whether the Jeamsters

approach of bifurcating liability and damages issues is constitutional

now that Title VII affords a right to jury trial and damages.”).

10

before jury trials were held available under the ADEA,"* and

when large scale jury trials in employment discrimination

cases were essentially non-existent. The fundamental

nature of employment discrimination cases has since changed

drastically, particularly following enactment of the

Civil Rights Act of 1991, which makes damages and jury

trials generally available in disparate treatment cases. In light

of this sea change, the Court urgently needs to address the

issues arising from the attempts of lower courts, including

the Tenth Circuit, to superimpose the framework for equitable

relief endorsed in Jeamsters on this new legal landscape.

The need for review is all the more acute given the rising

tide of employment discrimination class actions noted above.

The split among the circuits presents a particularly serious

problem for Chamber members with nationwide operations,

as sophisticated class action counsel can and will engage in

forum shopping when launching a nationwide class action.

In such cases, the geographic breadth of the Second and Tenth

Circuits offers ready access to the de minimis class

certification standards recognized in Thiessen and Robinson.

The fundamentals of federal law should not depend on

geographic happenstance. There is an acute need for review

by the Court to secure uniformity of decision on this

important issue.

16. The Court first held that jury trials were available in ADEA

cases in Lorrilard v. Pons, 434 U.S. 575 (1978).

1]

2. The Lower Court’s Mandatory Resort To

Teamsters To Preserve A “Procedural Advantage”

For Plaintiffs Is Unworkable, Unfair And

Unnecessary.

By insisting that the lower courts apply the proof

paradigm derived from Jeamsters in every class action in

which a pattern-or-practice of discrimination is alleged, the

court below has created intractable legal problems that

warrant review by the Court. The ZJeamsters model cannot

be administered in a case like this without impairing a

defendant’s rights under the Seventh Amendment and the

Due Process Clause.

As the district court noted, a trial of a class action

involving as many as 30 opt-in plaintiffs will require

individualized consideration of widely varying adverse

employment actions spanning nearly ten years. See Thiessen,

267 F.3d at 1101-04. Attempting to try this multitude of

issues in a single action is usually completely unworkable.

As a consequence, once a broad-based class action is

certified, a settlement becomes mandatory; there is no

practical alternative. See Jn re Rhone-Poulenc Rorer, Inc.,

51 F.3d 1293, 1298-99 (7th Cir.), cert. denied, 516 U.S. 867

(1995) (noting the “intense pressure to settle” imposed by

the possibility of a huge judgment); Kramer, supra, note 9,

at 417. This conventional wisdom among practitioners is

confirmed by the limited empirical evidence that is available.

Diligent research has disclosed no reported case in which a

Teamsters-type action of any size was tried to the completion

of Phase II proceedings before a jury. See also Willging,

Hooper & Niemic, Empirical Study Of Class Actions In Four

Federal District Courts, at 66-67 (Fed. Judicial Ctr. 1996)

(study of all class actions terminated during a two year period

in four judicial districts reported only one certified Teamsters

class action, which settled after “protracted” proceedings).

12

To avoid the multitude of individualized claims that the

district court properly believed made this case unsuitable for

class or collective treatment, the Terith Circuit ordered a Phase

I jury trial of plaintiffs’ so-called pattern-or-practice claims

limited to the question of whether “a pattern or practice of

discrimination [existed] and whether it continued after the fall

of 1994.” Thiessen, 267 F.3d at 1107. On this critical issue, the

court intimated that Petitioners could only present evidence

concerning “a few common defenses” and would be precluded

from presenting “‘highly individualized’ defenses to each of

the incidents of individual discrimination alleged by

plaintiffs. .. .” Jd.

The most effective means of rebutting plaintiffs’ claim that

the “blocker” policy continued in effect after the fall of 1994,

however, will likely be to review individual employment

decisions that occurred after that date to demonstrate that they

were non-discriminatory. See Ardrey v. United Parcel Service,

798 F.2d 679, 683 (4th Cir. 1986) (recognizing employer’s right

to defend itself in pattern-or-practice case by proving that

individual actions were justified by non-discriminatory reasons);

Coates v. Johnson & Johnson, 756 F.2d 524, 532 (7th Cir. 1985)

(same). By precluding introduction of such highly probative

evidence at Phase I, the Tenth Circuit acted contrary to the

Court’s admonition in Jeamsters, 431 U.S. at 360 n.46 (noting

that in Phase I “[w]Je do not mean to suggest that there are any

particular limits on the type of evidence an employer may use”),

and established a procedure that will inevitably preclude the

defendant from presenting its most effective defense at the most

significant stage of the litigation, where an overbroad ordercan ~

“force a defendant to settle rather than incur the costs of

defending a class action and run the risk of potentially ruinous

liability.”'"’ This is a clear denial of due process. See Western

17. Fed. R. Civ. P. 23(f), Adv. Comm. Notes (1998).

This overwhelming pressure exists “even when the plaintiff’s

probability of success on the merits is slight.” Blair v. Equifax Check

Servs. Inc., 181 F.3d 832, 835 (7th Cir. 1999).

13

Electric Co. v. Steen, 544 F.2d 1196, 1199 (3d Cir. 1976)

(“[T]o deny [an employer] the right to present a full defense

on the issues would violate due process.”).

The Tenth Circuit’s procedure also threatens Petitioners’

jury trial rights. Under the Re-Examination Clause of the

Seventh Amendment,'® “[t]he right to a jury trial in federal

civil cases, conferred by the Seventh Amendment, is a right

to have juriable issues determined by the first jury impaneled

to hear them (provided there are no errors warranting a new

trial), and not reexamined by another finder of fact.” Rhone-

Poulenc, 51 F.3d at 1303. An employer thus has the right to

have a single jury consider all facts and evidence relevant to

the pattern-or-practice claim. See Allison v. Citgo Petroleum

Corp., 151 F.3d 402, 419 (Sth Cir. 1998) (affirming denial of

motion for class certification where potential overlap of

issues to be decided in bifurcated proceedings “implicated

significant Seventh Amendment” concerns). By asking one

jury to consider only generalized evidence concerning the

“blocker” policy and by demanding that a series of subsequent

juries consider the overlapping question of whether the policy

was ever applied to a particular class member, the lower

court’s decision strips the employer of this important

procedural protection and prevents it from presenting a

comprehensive defense to a single finder of fact. See also

Blyden v. Mancusi, 186 F.3d 252, 268 (2d Cir. 1999); Castano

v. American Tobacco Co., 84 F.3d 734, 750-51 (5th Cir. 1996).

This unfair and unworkable procedure is allegedly

justified to provide plaintiffs with a “procedural advantage”

allegedly derived from Teamsters which reduces their burden

of proof at the second stage of a bifurcated trial. But the

shifting burdens of proof outlined in Teamsters do not

18. See U.S. Const. Amend. VII (“[N]o fact tried by a jury, shall

be otherwise re-examined in any Court of the United States, than

according to the rules of the common law.”)

14

constitute a substantive right under the employment

discrimination laws. To the contrary, as the Court has

emphasized on a number of occasions, such presumptions

merely constitute possible methods of analyzing what is

always plaintiff’s fundamental burden — to prove intentional

discrimination. See St. Mary's Honor Center v. Hicks,

509 U.S. 502, 514 (1993) (observing that although the court

“may, according to traditional practice, establish certain

modes and orders of proof” such evidentiary aides do not

“substitute for the required finding that the employer’s action

was the product of unlawful discrimination.”); Furnco

Constr. Corp. v. Waters, 438 U.S. 567, 577 (1978) (stating

that the burden shifting test under McDonnell Douglas “was

never intended to be rigid, mechanized, or ritualistic. Rather,

it is merely a sensible, orderly way to evaluate the evidence

in light of common experience as it bears on the critical

question of discrimination.”).

Teamsters described an orderly mechanism for dealing

with a particular type of case. The court of appeals took this

helpful procedural tool, extended it to a type of case that

shares none of Jeamsters defining characteristics, and

transformed it into an inalienable right. Unfortunately, the

court of appeals is not alone; in the 25 years since Teamsters,

the tool has taken on a life of its own in the lower courts and

has assumed a role the Court never intended. The Court

should take this occasion to consider application of the -

Teamsters paradigm to circumstances never considered at the

time it was created.

15

B. THE COURT SHOULD RESOLVE WHETHER A

DISTRICT COURT IS REQUIRED TO MAKE

ESSENTIAL FINDINGS OF FACT AT THE CLASS

CERTIFICATION STAGE EVEN THOUGH

THE ISSUES OVERLAP WITH THE MERITS OF

THE CASE.

The district court found that this case could not proceed

as a Class action, because, inter alia, there was no common

policy linking the disparate employment actions plaintiffs

sought to challenge and there was no evidence that members

of the class had been impacted by an alleged “blocker” policy.

The Tenth Circuit reversed, concluding that although this

finding may have been necessary to determine if a class action

was proper, it overlapped with the merits of plaintiffs’ claims.

Relying on two earlier cases it had decided under Title VII,”

the court below held that fact finding at the class certification

stage is improper when the factual issues overlap with the

merits.

The Tenth Circuit’s decision is squarely contrary

to General Telephone Co. v. Falcon, 457 U.S. at 147 (1982).

In that case, the Court recognized that class certification

issues and merit issues often overlap. See id. at 160

(noting that “the class determination generally involves

considerations that are ‘enmeshed in the factual and legal

issues comprising the plaintiff’s cause of action.’”) (quoting

Coopers & Lybrand vy. Livesay, 437 U.S. 463, 469 (1978)).

Despite this overlap, the Court held that “we reiterate today

that a Title VII ciass action, like any other class action, may

only be certified if the trial court is satisfied, after a rigorous

analysis, that the prerequisites of-Rule 23(a) have been

satisfied.” 457 U.S. at 161.

19. Adamson _v. Bowen, 855 F.2d 668, 676 (10th Cir. 1988):

Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir. 1982).

16

By ignoring Falcon and prohibiting findings on class

certification that overlap with the merits, the Tenth Circuit

deepened a mature split among the circuits. The Second

Circuit, for example, has also held that “[in] deciding a

certification motion, district courts must not consider or

resolve the merits of the claims of the purported class.”

Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 293

(2d Cir. 1999), cert. denied, 529 U.S. 1107 (2000). The court

held that it was an abuse of discretion for the lower court to

consider the employer’s critique of statistics proffered by

the named plaintiffs in that case, recognizing that while this

critique “may prove fatal at the merits stage . . . this sort of

‘statistical dueling’ is not relevant to the certification

decision.” Jd. at 292.

In reaching these erroneous conclusions, both the Second

and Tenth Circuits have relied on a flawed reading of Eisen

v. Carlisle & Jacquelin, 417 U.S. 156 (1974).”° There, the

district court conducted a mini-trial to determine whether

plaintiffs stood a likelihood of succeeding on the merits in

order to determine which party would bear the expense of

giving notice to the class. Finding no provision in Rule 23

that could be read to authorize such a procedure, the Court

found its use improper, and added: “[N]othing in either the

language or history of Rule 23 . . . gives acourt any authority

to conduct a preliminary inquiry into the merits of a suit in

order to determine whether it may be maintained a a class

action.” Jd. at 177. The district court in Eisen, however,

determined the merits of the case frontally; it decided whether

the plaintiffs were likely to prevail on the merits in order to

decide a procedural motion that was not authorized by

Rule 23. By contrast, the Court’s subsequent decisions in

Livesay and Falcon squarely establish that a district court

may — indeed, must — determine whether the requirements

20. The court below did not expressly rely on Eisen, but its

earlier decisions in Adamson and Anderson did.

17

of Rule 23 have been met, even when that inquiry ov erlaps

with the merits. The majority of circuits have so held.2!

The question of the proper approach to fact finding on

class certification represents a critical issue that warrants

review by the Court. As the Court has noted, “{a] district

court’s ruling on the certification issue is often the most

significant decision rendered in these class-action

proceedings.” Deposit Guaranty Nat'l Bank v. Roper, 445

U.S. 326, 339 (1980). As noted above, if a class is certified,

a settlement is often compelled, even for cases that lack merit,

because continuing with litigation “run[s] the risk

of potentially ruinous liability.” See Fed. R. Civ. P. 23(f),

Adv. Comm. Notes (1998).

The issue presented by this case also has broad

applicability to cases outside the employment context.

Indeed, many of the cases that address whether a court may

make findings related to class certification that also overlap

the merits arise in such diverse areas as: the antitrust laws,

see In re Visa Check/Mastermoney Antitrust Litigation, No.

00-7699, 2001 WL 1242717 (2d Cir. Oct. 17, 2001); breach

of warranty claims, Szabo, 249 F.3d at 674-76; securities

violations, Johnston, 265 F.3d at 180; products liability

claims, Rhone-Poulenc, 51 F.3d at 1294; and mass torts,

Castano, 84 F.3d at 744.

In the Second and Tenth Circuits, the path to class

certification involves no “rigorous analysis,” only a pro forma

glance at the plaintiffs’ affidavits. Even if these affidavits

are implausible on their face and contradicted by compelling

21. See, e.g., Johnston v. HBO Film Management, Inc.,

265 F.3d 178 (3d Cir. 2001); Szabo v. Bridgeport Machs., Inc.,

249 F.3d 672, 674-76 (7th Cir. 2001); Love v. Turlington, 733 F.2d

1562, 1564 (11th Cir. 1984); Stastny v. Southern Bell Tel. & Tel. Co.,

628 F.2d 267, 274 (4th Cir. 1980).

18

evidence, the district court has no options; certification is

required. This should not be the law in any circuit. The Court

should address this recurrent issue and reemphasize that

compliance with class certification requirements must be

demonstrated, not presumed.

IV. CONCLUSION

In combination, the lower court’s two erroneous rulings

make the class certification process little more than a

formality. They also reflect the disarray in which the lower

courts find themselves on the most fundamental questions

posed in Rule 23. These problems are exacerbated by the

changes wrought by the Civil Rights Act of 1991, which at

once made employment law class actions more numerous,

the applicable law more complex, and the application of the

Court’s prior decisions less clear. As a result, the rule of law

applicable in a given case now depends upon where the

employer is located or, in the case of an employer with

nationwide facilities, on where the lawsuit happens to be

filed. The Chamber submits that this state of affairs is

untenable, and urges the Court to grant review in this case to

reestablish the ground rules applicable to employment

discrimination class actions.

Respectfully submitted,

STEPHEN A. BOKAT ZACHARY D. FASMAN*

Rosin S. ConrAD CaRLA R. WALWORTH

JosHuA A. ULMAN PATRICK W. SHEA

NATIONAL CHAMBER LITIGATION NEAL D. MOLLEN

CENTER, INC. PauL, HASTINGS, JANOFSKY

1615 H Street, N.W. & WALKER LLP

Washington, D.C. 20026 75 East 55th Street

(202) 463-5337 New York, NY 10022

(212) 318-6000

* Counsel of Record