August 28, 2013

Largest Class Action Discrimination Suit Settled

On the day of the 50th Anniversary of Martin Luther King, Jr.’s I have a Dream Speech, the largest settlement ever reached in a federal discrimination case was announced.

In the settlement, which you can read more about here, approximately 700 current and former African American brokers at Merrill Lynch will be paid $160 million.  It is the largest race-based settlement ever reached with a U.S. employer under Title VII, the federal statute prohibiting certain discrimination against American employees.  The case was pending in the federal court system for eight years, including two successful appearances before the United States Court of Appeals for the Seventh Circuit, and two unsuccessful appeals to the United States Supreme Court.  Much of the dispute surrounded whether the 700 Merrill brokers could proceed as a class, rather than individually.  The stage was set by the case of Wal-Mart Stores, Inc. v. Dukes, a 2011 Supreme Court case which made it much harder for plaintiffs to obtain class certification.  Twice, however, the brokers in Merrill Lynch were able to convince lower federal courts to proceed with their case.

The brokers alleged that, as of 2005, when the suit was first filed, only about one of every 75 brokers at Merrill was black and most of them were considered poor producers. The lead plaintiff, George McReynolds, contended that black brokers received little help from their managers and were often ostracized by co-workers. The unequal treatment compounded their disadvantages year after year.  They also alleged that Merrill’s practice of encouraging brokers to form teams and letting departing brokers hand off customers to other team members had a disparate impact on black brokers.  (You can read more about the disparate impact theory here).  Black brokers were rarely invited to join teams and were too widely scattered to form their own teams (indeed, in some states, there were no more than one black broker in the entire state).  In February 2012, the U.S. Court of Appeals finally ruled that the brokers could pursue their claims as a class action.  You can read that decision here.  After Merrill Lynch’s request for certiorari was denied, the case was finally set for trial.  Rather than proceed to trial, Merrill Lynch folded, settling the case for $160 million.

Among many lessons to be learned from the case is this:  It takes guts and perseverance to prevail in a class action suit, or any suit for that matter, alleging discrimination.  If you are a federal, state or private employee, you need to remember that your case can take many years to wind its way through the courts.  If you have an employment matter you would like to discuss with an experienced employment attorney, please contact us.