“Vanishing” Job-Bias Lawsuits Keep On Not Really Vanishing

Remember all the hand-wringing about how the Supreme Court in Wal-Mart v. Dukes had choked off the chance for lawyers to file company-wide class actions claiming workplace discrimination? Sen. Al Franken (D-Minn.), for example, in introducing a bill meant to overturn the decision, charged that it established an “impossible standard” for lawyers to meet.

Someone forgot to tell the plaintiff’s lawyers who just settled a race discrimination case against Bank of America’s Merrill Lynch brokerage for a reported $160 million. That’s being called the biggest-ever payout in a case charging race bias against a big corporation.

Under discrimination law’s disparate-impact theory, no actual intent to discriminate is needed to find liability; it is enough (to simplify) that a challenged policy results in worse outcomes for employees of one race and cannot be justified by business necessity.

As Alison Frankel points out at Reuters, the named plaintiffs claimed “a disparate racial impact from Merrill’s policies of permitting brokers to form their own teams and of permitting managers to distribute client accounts to brokers based on past successes and failures.” Black brokers on average tended to be poor producers at Merrill, a problem the company’s CEO conceded might in part be owing to the industry practice of letting clients (who at Merrill, as at most firms, are predominantly white) pick their own brokers.

Plaintiff’s lawyers charged that Merrill’s management unlawfully ignored chances to address these disparities by adopting different company policies. Part of the high court’s Wal-Mart holding was that company-wide class actions are generally suitable only when a company-wide policy is being challenged, but in a ruling by Judge Posner, the Seventh Circuit agreed that the Merrill Lynch case fit that pattern.

This isn’t the only instance in which the Supreme Court’s supposed abolition of some class of employment lawsuits turns out to be nothing of the sort. On Tuesday the Times suggested that the 2009 high court decision of Gross v. FBL Financial Services has made it nearly impossible to pursue age-bias lawsuits — even though, as employment-law blogger Daniel Schwartz points out, the number of age bias charges at the Equal Employment Opportunity Commission (EEOC) has in fact gone up since 2009, not down.