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George Mcreynolds, Maroc Howard, Larue Gibson, Jennifer Madrid v. Merrill Lynch

February 14, 2011

GEORGE MCREYNOLDS, MAROC HOWARD, LARUE GIBSON, JENNIFER MADRID, FRANKIE ROSS, MARVA YORK, LESLIE BROWNE, HENRY WILSON, LEROY BROWN, GLENN CAPEL, CHRISTINA COLEMAN, J. YVES LABORDE, MARSHELL MILLER, CARNELL MOORE, MARK JOHNSON, CATHY BENDER-JACKSON, AND STEPHEN SMARTT, INDIVIDUALLY ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, DEFENDANT.



The opinion of the court was delivered by: Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiffs George McReynolds, Maroc Howard, Larue Gibson, Jennifer Madrid, Frankie Ross, Marva York, Leslie Browne, Henry Wilson, Leroy Brown, Glenn Capel, Christina Coleman, J. Yves Laborde, Marshell Miller, Carnell Moore, Mark Johnson, Cathy Bender-Jackson, and Stephen Smartt, individually and on behalf of all others similarly situated, have brought a two count second amended putative class action complaint on behalf of themselves and all others similarly situated against defendant Merrill Lynch, Pierce, Fenner & Smith, Inc., alleging racial discrimination in violation of Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e et seq. (Count I), and 42 U.S.C. § 1981 (Count II). The parties engaged in lengthy and often contentious discovery, after which plaintiffs moved to certify a class defined as:

African-American financial advisors ("FAs") and FA Trainees ("Trainees") who are or were employed in the retail brokerage unit, referred to as Global Private Client ("GPC") of defendant Merrill Lynch, Pierce, Fenner & Smith, Inc., from January 2001 to the present.

In a comprehensive opinion issued on August 9, 2010, the court denied plaintiffs' motion for class certification, concluding that plaintiffs had failed to established the requirements of Fed. R. Civ. P. 23(a)(2), (3) and Fed. R. Civ. P. 23(b). McReynolds v. Merrill Lynch, 2010 WL 3184179 (N.D. Ill. 2010). Plaintiffs seek reconsideration of that decision, and also seek to clarify and/or narrow their class definition. After another round of briefing the court heard oral argument, after which the parties submitted yet another round of briefing outlining a "trial plan" should the court agree with plaintiffs and certify a class. After reviewing everything the parties have submitted the court remains convinced that this case is not appropriate for class treatment and denies plaintiffs' motion to reconsider.

Plaintiffs' motion seeks reconsideration on two primary issues. First, plaintiffs argue that the court misunderstood aspects of their disparate impact claim and improperly held that to state a claim for disparate impact plaintiffs must establish a facially neutral policy that was also neutrally applied. Next, plaintiffs argue that the court rejected their expert evidence without ruling on defendant's motion under Daubert v. Merrell Dow Pharm, Inc., 509 U.S. 579 (1993).

With respect to the first issue, plaintiffs have misread the court's opinion. In that opinion the court recognized that Count I, which simply realleges the previous 47 paragraphs detailing numerous acts of intentional discrimination, was potentially broad enough to encompass both a pattern or practice discriminatory treatment claim and a discriminatory impact claim. The court then discussed the differences between the two types of claims, particularly with respect to the issue of commonality under Fed. R. Civ. P. 23(a)(2). When determining whether plaintiffs could establish commonality, the court first looked to the allegations of the complaint. The operative paragraphs of Count I allege that defendant engaged in "racially biased decision-making and treatment" and that defendant "is strictly responsible for the acts and conduct of its managers and knew [or] should have known of a culture created by its managers and employees that discriminated against and was hostile to African-Americans." Indeed, the complaint revolves around allegations of intentional discrimination:

C Approximately 75% of African-American trainee brokers were forced to leave Merrill Lynch as a result of discriminatory treatment prior to completing the training program. (¶ 11).

C Merrill Lynch intentionally perpetuates its own discrimination and any bias that may exist in society. (¶ 15).

C African-Americans are also treated with disrespect and experience a hostile work environment in Merrill Lynch's branch offices despite proclamations in the firm's internal materials and advertisements that it is built on the principal of "Respect for the Individual." (¶ 18).

C McReynolds and the other named plaintiffs have performed their jobs in an impressive manner but were subjected to and harmed by Merrill Lynch's ongoing, nationwide pattern or practice of systemic and pervasive racial discrimination. (¶ 23).

C The Nashville Complex recruits almost exclusively at predominately white colleges and universities. Well-qualified African-American graduates are not welcome at Merrill Lynch. (¶ 26).

C Plaintiffs, like other African-Americans at Merrill Lynch, also have been subjected to a hostile work environment where African-Americans are treated as inferior and are subjected to abusive and harassing treatment, comments and behavior. (¶ 39).

It was against this background that the court indicated that plaintiffs' statistics would be more compelling if plaintiffs were attacking the neutral application of a neutral policy. The court did not hold that a plaintiff cannot bring a disparate impact claim unless a neutral policy is neutrally applied. Obviously, Watson v. Forth Worth Bank and Trust, 487 U.S. 977 (1988), holds that in an appropriate case a disparate impact claim can be based on subjective or discretionary employment practices. But the mere fact that a plaintiff can state a disparate impact claim based on subjective employment practices does not mean that class treatment is always appropriate, particularly when those subjective decisions are made by hundreds of different individuals under different circumstances across the country.

Thus, contrary to plaintiffs' assertion, the court did not hold that plaintiffs cannot state a disparate impact claim. Instead, the court indicated that plaintiffs' statistical evidence would make a more compelling case for commonality and class certification if they were arguing that a neutral policy neutrally applied resulted in an adverse impact. That would indicate that the African-American FAs across the country all suffered from that same application or that the alleged policy manifested itself in the ...


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