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United States of America v. the City of New York

June 6, 2011

UNITED STATES OF AMERICA,
v.
THE CITY OF NEW YORK, DEFENDANT.



The opinion of the court was delivered by: Nicholas G. Garaufis, United States District Judge.

MEMORANDUM & ORDER

In this Opinion the court decides Plaintiff-Intervenors' motion for remedial-phase class certification. The court also discusses several other issues affecting the individual claims process that flow from these decisions and from the court's analysis of certain provisions of the United States' Revised Proposed Relief Order. In light of the court's rulings in this Opinion, the court outlines its plan for the remedial phase of the litigation.

I.BACKGROUND

On May 21, 2007, the United States of America sued the City of New York alleging that the City's use of four employment practices-the pass/fail and rank-ordering uses of two written examinations-to screen and select entry-level firefighters had an unlawful disparate impact on black and Hispanic applicants for that position, and constituted race discrimination in violation of the disparate impact provisions of Title VII of the Civil Rights Act of 1964 ("Title VII").*fn1

(USA Compl. (Docket Entry # 1).) The United States sought equitable compliance and make-whole relief, including backpay and hiring preferences for victims of the four discriminatory employment practices. (Id. at 11-12.)

The Vulcan Society, Inc. (the "Vulcan Society"), Marcus Haywood ("Haywood"), Candido Nunez ("Nunez"), and Roger Gregg ("Gregg") (collectively, "Plaintiff-Intervenors"), moved to intervene as individual plaintiffs as of right under 42 U.S.C. § 2000e-5(f)(1), on September 25, 2007. (Int. Compl. (Docket Entry # 48.) ¶ 8.) In addition to the disparate impact allegation in the United States' Complaint, Plaintiff-Intervenors' Complaint alleged that the City's actions demonstrated a pattern or practice of intentional discrimination on the basis of race in violation of the disparate treatment provisions of Title VII, the Fourteenth Amendment to the United States Constitution, and New York State law. (Id. ¶ 3.) Plaintiff-Intervenors sought compensatory damages for non-economic losses caused by the City's pattern or practice of intentional discrimination, and sought additional forms of compliance and affirmative relief. (Id. ¶¶ 1, 4.) Plaintiff-Intervenors filed the action seeking to represent the interests of a class of black persons harmed by the City's discrimination. (Id. ¶¶ 9-10.)

Because the United States Department of Justice has independent statutory authority under 42 U.S.C. § 2000e-5(f)(1) to bring an employment discrimination action against the City and to seek relief for the victims of such discrimination, the United States is not required to move for class certification in order to seek relief for the black and Hispanic applicants harmed by the City's four challenged employment practices. See General Telephone Co. of the Northwest, Inc., v. EEOC, 446 U.S. 318, 323-326 (1980) ("General Telephone"). Plaintiff-Intervenors, however, are required to satisfy the requirements of Federal Rule of Civil Procedure 23 in order to represent the interests of black firefighter applicants harmed by the City's challenged employment practices and the City's pattern or practice of intentional discrimination. On May 11, 2009, pursuant to the Second Circuit's guidance in Robinson v. Metro-North Commuter Railroad Co., 267 F.3d 147 (2d Cir. 2001), the court bifurcated the case into liability and remedial phases; certified, for the liability phase only, a Rule 23(b)(2) mandatory class of black firefighter applicants who sat for the two written examinations and were harmed by the City's challenged employment practices; and indicated that it would revisit the propriety of class certification if the United States and Plaintiff-Intervenors prevailed on the question of the City's liability. (Liability Cert. Order (Docket Entry # 281) at 33-34.)

The court subsequently found the City liable for disparate impact discrimination on July 22, 2009 (Disparate Impact Op. (Docket Entry # 294) ("DI Op.")), and for engaging in a pattern or practice of intentional discrimination against black firefighter applicants on January 13, 2010 (Disparate Treatment Op. (Docket Entry # 385) ("DT Op.")). As a result of these findings, the parties entered the remedial phase of the litigation and, on September 10, 2009, the United States filed its Proposed Relief Order ("PRO") (Docket Entry # 315-1), in which it set out its plan for remedial-phase proceedings. Plaintiff-Intervenors filed their motion for continued class certification on October 7, 2009 (Int. Mot. for Cont'd Class Cert. (Docket Entry # 329)), and the United States responded on November 10, 2009 (USA Response to Continued Class Cert. (Docket Entry # 354)).

On January 21, 2010, the court issued its Initial Remedial Order, in which it addressed some of the remedial phase issues raised in the PRO, continued the certification of the class with the Vulcan Society serving as class representative, and ordered conditional certification of the individual Plaintiff-Intervenors for the purposes of individual relief. (Initial Remedial Order (Docket Entry # 390) ("IRO") at 52.) The court expressed concerns, however, about potential antagonisms that might emerge during the remedial phase between black applicants who were not hired (the "non-hire victims") and those whose hiring was delayed (the "delayed-hire victims") because of the City's discriminatory employment practices. (Id. at 53.) The court observed that an incumbent black firefighter whose hiring was delayed "may prefer that non-hire victims not be awarded priority hiring or retroactive seniority." (Id. at 52.) Consequently, the court directed Plaintiff-Intervenors to renew their motion for continued class certification on issues of individual relief before the court entered a preliminary relief order so that the court could consider whether it would be necessary to certify subclasses corresponding to the particular remedial-phase interests of the putative class members. (Id. at 53.)

Subsequent to the IRO, the parties stated their views as to the propriety of continued class certification and the necessity of certifying subclasses for particular issues. (See Joint Stmt. on PRO Issues (Docket Entry # 400-1) at 64-72; Int. Mem. on Class-wide Compensatory Damages for Non-economic Losses (Docket Entry # 401) at 12-13 n.5.) On September 17, 2010, the United States and Plaintiff-Intervenors filed their motions for summary judgment as to the calculation of the aggregate amount of backpay and benefits lost by the black and Hispanic applicants who were victims of the City's four discriminatory employment practices. (See Docket Entry ## 536, 540.) On November 23, 2010, Plaintiff-Intervenors filed their motion for summary judgment as to the calculation of the aggregate amount of damages required to compensate the black victims of the City's pattern or practice of intentional discrimination for their non-economic losses. (Int. Non-economic Loss Mem. (Docket Entry # 577).) On December 9, 2010, Plaintiff-Intervenors moved for prospective injunctive relief and for service awards for the class representatives. (Int. Inj. Relief Mem. (Docket Entry # 596).) At a status conference on February 8, 2011, the court directed Plaintiff-Intervenors to submit a class-definition statement conforming to the requirements of Federal Rule of Civil Procedure 23(c)(1)(B). (See Supp. Br. Order (Docket Entry # 613).) Plaintiff-Intervenors filed a class-definition statement on February 18, 2011. (Int. Class Def. Stmt. (Docket Entry # 615).)

II.CLASS CERTIFICATION

A.Legal Standard

1. Rule 23(a) "In determining whether class certification is appropriate, a district court must first ascertain whether the claims meet the preconditions of Rule 23(a)*fn2 of numerosity, commonality, typicality, and adequacy." Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 201-02 (2d Cir. 2008) ("Bombardier"). "The numerosity requirement provides that the class must be 'so numerous that joinder of all members is impracticable.'" Brown v. Kelly, 609 F.3d 467, 475 (2d Cir. 2010) (quoting Fed. R. Civ. P. 23(a)(1)). "The commonality requirement is met if there is a common question of law or fact shared by the class." Id. "Typicality requires that the claims or defenses of the class representatives be typical of the claims or defenses of the class members. This requirement 'is satisfied when each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability.'" Id. (quoting Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d Cir. 1997)). "The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between named parties and the class they seek to represent. A class representative must be part of the class and possess the same interest and suffer the same injury as the class members." Amchem Products, Inc. v. Windsor, 521 U.S. 591, 625-26 (1997) (quotations, citations, and alterations omitted). The Supreme Court has observed that "[t]he adequacy-of-representation requirement 'tend[s] to merge' with the commonality and typicality criteria of Rule 23(a), which 'serve as guideposts for determining whether . . . maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.'" Amchem Products, 521 U.S. at 626 n.20 (quoting General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 157 n.13 (1982) ("Falcon")). The four explicit requirements of Rule 23(a) imply a fifth: that the identities of the class members are reasonably ascertainable by reference to objective criteria. See In re Initial Public Offerings Secs. Litig., 471 F.3d 24, 44-45 (2d Cir. 2006) ("In re IPO") (quoting In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liability Litig., 209 F.R.D. 323, 337 (S.D.N.Y. 2002) ("In re MTBE")).

2. Rule 23(b) "If those criteria are met, the district court must next determine whether the class can be maintained under any one of the three subdivisions of Rule 23(b)." McLaughlin v. Am. Tobacco Co., 522 F.3d 215, 222 (2d Cir. 2008), partially abrogated on other grounds by Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008). The Second Circuit summarized the requirements for certification under Rule 23(b)(2) and (b)(3), the only provisions of Rule 23(b) applicable here, in Brown v. Kelly:

Under Rule 23(b)(2), class certification is appropriate if "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole." Fed. R. Civ. P. 23(b)(2).

Under Rule 23(b)(3), class certification is appropriate if "the questions of law or fact common to class members predominate over any questions affecting only individual members, and . . . a class litigation is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). "As a general matter, the Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." In re Nassau County Strip Search Cases, 461 F.3d 219, 225 (2d Cir. 2006) (internal quotation marks omitted).

Brown, 609 F.3d at 476. The Second Circuit has explained that a class can be certified under Rule 23(c)(4) as to particular issues in order "to single out issues for class treatment when the action as a whole does not satisfy Rule 23(b)(3)['s predominance requirement]." In re Nassau County Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006) ("In re Strip Search Cases").

"[A] district judge may certify a class only after making determinations that each of the Rule 23 requirements has been met" and "only if the judge resolves factual disputes relevant to each Rule 23 requirement and finds that whatever underlying facts are relevant to a particular Rule 23 requirement have been established." In re IPO, 471 F.3d at 41. The court must make these findings by a preponderance of the evidence. Bombardier, 546 F.3d at 202. Where factual questions underlying a Rule 23 requirement overlap with merits questions, the court is obligated to decide them, but "a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement." In re IPO, 471 F.3d at 41.

B.Plaintiff-Intervenors' Proposed Class Definition

In their class-definition statement Plaintiff-Intervenors ask the court to certify a class of "all black firefighters or firefighter applicants who sat for either Written Exam 7029 or Written Exam 2043 and were harmed by the City's pass/fail or rank-ordered use of one or more of those examinations for the selection of entry-level firefighters." (Int. Class Def. Stmt. at 1-2.)

Plaintiff-Intervenors request that the class be certified with respect to three issues. First, they seek class certification with respect to "the scope of class-wide relief, including aggregate back pay and benefits for the class, the number of priority hires and the amount and applicability of retroactivity seniority." (Id. at 2.) They state that class treatment is not requested with respect to the determination of any individual class member's eligibility to receive a share of the damages, priority hiring, or retroactive seniority, nor is class treatment sought with respect to "issues relating to the creation of a process for identifying individual claimants eligible to receive" such as make-whole relief. (Id.) Plaintiff-Intervenors nevertheless anticipate that they will "continue to have the opportunity to provide input regarding those processes in their capacities as parties to the litigation." (Id.) With respect to this issue, the Vulcan Society asks to be appointed as class representative. (Id.)

Second, Plaintiff-Intervenors ask the court to certify the class with respect to the issue of class-wide prospective compliance, monitoring, and related injunctive relief, with the Vulcan Society serving as class representative for this issue.*fn3 (Id. at 3.) Third, they ask the court to certify the class with respect to "the calculation of the overall amount of [] class-wide compensatory damages, issues relating to the creation of a process for identifying claimants eligible to receive compensatory damages, and the determination that a particular class member is or is not eligible," with individual intervenors Haywood, Nunez, and Gregg serving as class representatives for this issue. (Id. at 3-4.) Plaintiff-Intervenors argue that the class should be certified under Rule 23(b)(2), but argue in the alternative that the class would also satisfy Rule 23(b)(3). ((Docket Entry # 329) at 2-3; (Docket Entry # 401) at 7-11.)

In response, the United States cryptically states that it relies on "the previously submitted agreed understanding between the United States and the Plaintiffs-Intervenors regarding the scope and contours of the Plaintiffs-Intervenors' proposed relief-phase class certification request," and "takes no position" on Plaintiff-Intervenors' class-definition statement. (USA Response to Class Def. Stmt. (Docket Entry # 618) at 1.) The United States' response references its October 29, 2010 response to Plaintiff-Intervenors' motion for summary judgment as to class-wide compensatory damages for non-economic losses. (See USA Stmt. on Remedial Phase Class Cert. (Docket Entry # 582).) In that memorandum, the United States stated its agreement with Plaintiff-Intervenors that no class would be certified as to issues of individual eligibility to receive compensatory damages, priority-hiring relief, or retroactive seniority. (Id. at 6-7.)

The City agrees with Plaintiff-Intervenors' request to certify the class with respect to the issue of injunctive relief, and to appoint the Vulcan Society as class representative with respect to that issue. (NYC Response to Class Def. Stmt. (Docket Entry # 617) at 1.) The City argues, however, that subclasses are necessary for any class certified with respect to the issue of compensatory damages for non-economic losses, because of conflicts that may emerge between applicants who were not hired, and those whose hiring was delayed as a result of the City's pattern or practice of intentional discrimination. (Id. at 2.)

C.Application of Rule 23 to the Proposed Class

For the reasons set forth below, the class-definition statement submitted by Plaintiff-Intervenors suffers from certain defects and cannot be approved in its current form. The court concludes, however, that certification of a class broken into more narrowly defined subclasses is appropriate. Accordingly, the court first discusses the problems in Plaintiff-Intervenors' proposed class-definition statement on an issue-by-issue basis, and then proceeds to certify those subclasses that comply with the requirements of Rule 23.

1. Plaintiff-Intervenors' De Facto Subclass Structure Plaintiff-Intervenors' class-definition statement indicates that they seek certification of a single class, but ask for class treatment of four issues, with class representatives appointed to correspond to particular issues and not others. (See Int. Class Def. Stmt.) Plaintiff-Intervenors do not seek to have each of the four issue areas certified as subclasses-indeed, they argue subclasses are unnecessary. (Id. at 2 n.2.) Structuring the class in the manner Plaintiff-Intervenors propose, however, would effectively require the court to treat each issue as a separate class without explicitly certifying each issue as a separate subclass under Rule 23(c)(5). It is unclear from Plaintiff-Intervenors' proposal what responsibility, if any, class representatives appointed for a particular issue would owe to the class as a whole with respect to any other issues. Plaintiff-Intervenors do not explain how this procedure would affect the commonality, typicality, and adequacy inquiries required by Rule 23(a), and cite no authority for their proposal.

Rule 23(a)(4) requires class representatives to "fairly and adequately protect the interests of the class." Accordingly, class representatives assume fiduciary duties to absent class members, Martens v. Thomann, 273 F.3d 159, 173 n.10 (2d Cir. 2001), and are obligated to remain "alert for, and [] report to the court, any conflict of interest on the part of class counsel," Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1078 (2d Cir. 1995). But in order to appreciate whose interests they are bound to protect, class representatives must be able to identify the class for which they serve as representative parties. The de facto subclass structure proposed by Plaintiff-Intervenors is inappropriate because it creates uncertainty as to whether the class representatives are obligated to protect the interests of all black firefighter applicants harmed by the City's discriminatory uses of the two examinations, or only those black applicants affected by the particular issues for which the class representatives are appointed to serve as representative parties. Moreover, where a particular class member is an unsuitable class representative as to a particular issue, appointing that class member a representative party with respect to other issues raises the possibility that the class member may exert influence over class counsel with respect to the litigation of issues for which he or she would be an atypical or inadequate representative.

Together, issue certification under Rule 23(c)(4) and subclass certification under Rule 23(c)(5) are among the tools available to district courts to carry out their "ultimate responsibility to ensure that the interests of class members are not subordinated to the interests of either the class representatives or class counsel." Maywalt, 67 F.3d at 1078 (collecting cases); see, e.g., In re Flag Telecom Holdings, Ltd. Secs. Litig., 574 F.3d 29, 37 (2d Cir. 2009) (expressing confidence in district courts' "wisdom and ability to utilize the available case management tools to see that all members of the class are protected" including Rule 23(c)(5)); In re Strip Search Cases, 461 F.3d 219, 227 (holding "that courts may use subsection (c)(4) to single out issues for class treatment when the action as a whole does not satisfy Rule 23(b)(3)").

The de facto subclass structure proposed by Plaintiff-Intervenors circumvents the formalities of subclass certification under Rule 23(c)(5) and impermissibly deprives absent class members of the procedural protections those formalities provide. See Marisol A., 126 F.3d 372, 378-79 (criticizing district court for certifying one class "implicitly consist[ing] of two large subclasses," and ordering the district court to "engage in a rigorous analysis of the plaintiffs' legal claims and factual circumstances in order to ensure that appropriate subclasses are identified, that each subclass is tied to one or more suitable representatives, and that each subclass satisfies Rule 23(b)(2)."). For these reasons the court will approve the class structure requested by Plaintiff-Intervenors only if each issue is certified as a separate subclass. Accordingly, the court considers below whether each of the issue subclasses meets the requirements of Rule 23.

2. Backpay and Benefits, Retroactive Seniority, and Priority Hiring Subclass Plaintiff-Intervenors' proposed subclass as to issues of make-whole relief, including backpay and benefits, retroactive seniority, and priority hiring, suffers from three defects: (1) the court cannot certify a single subclass comprised of both delayed-hire and non-hire victims; (2) the Vulcan Society cannot serve as a representative of either the delayed-hire victim subclass or the non-hire victim subclass; and (3) fact questions relating to each individual claimant's efforts to mitigate his or her losses are not susceptible of class-wide proof, and the court cannot certify any subclass with respect to mitigation.

a.Separate Subclasses for Non-hire and Delayed-hire Victims Plaintiff-Intervenors' claims to retroactive seniority and priority-hiring relief implicate a conflict of interest between putative class members. Specifically, these claims implicate a conflict between the interests of the delayed-hire victims and the non-hire victims. If non-hire victims are awarded priority-hiring relief and retroactive seniority, that seniority will dilute the value of the seniority accumulated by delayed-hire victims and place the two groups in direct competition for the various employment benefits that greater seniority makes more accessible. Under the Revised Proposed Relief Order ("RPRO"), all non-hire victims who receive priority-hiring relief will be given retroactive seniority from their presumptive hire date. (See RPRO (Docket Entry # 619-4) ¶ 78.) Therefore, the greater the aggregate number of non-hire victims who obtain priority-hiring relief, the greater the dilutive effect on delayed-hire victims' seniority.

In General Telephone, 446 U.S. 318, 331, the Supreme Court addressed this precise situation in dicta:

[T]he adequate-representation requirement is typically construed to foreclose the class action where there is a conflict of interest between the named plaintiff and the members of the putative class. In employment discrimination litigation, conflicts might arise, for example, between employees and applicants who were denied employment and who will, if granted relief, compete with employees for fringe benefits or seniority. Under Rule 23, the same plaintiff could not represent these classes.

Rule 23(a)(4) precludes the court from certifying a class as to issues of retroactive seniority and priority hiring-even if only as to the aggregate amount of such relief-if it includes the claims of both non-hire victims and delayed-hire victims. A delayed-hire victim cannot adequately protect the interests of non-hire victims, nor can a non-hire victim protect the interests of delayed-hire victims.

Nonetheless, Plaintiff-Intervenors argue that the conflict is moot because the court has already decided to award priority-hiring relief and retroactive seniority, and because non-parties will have the opportunity to object under the RPRO. (Int. Class Def. Stmt. at 2 n.2) This characterization of the court's prior ruling is inaccurate; the court has not entered an order awarding priority-hiring relief or retroactive seniority to any claimant. Although the court anticipates that it will likely do so at the appropriate time, this expectation is largely based on the arguments presented by counsel for the single conditionally certified subclass and the United States. The purpose of certifying separate subclasses is to enable the representatives and counsel for the non-hire victim and delayed-hire victim subclasses to present their arguments to the court in a context in which there are no structural conflicts preventing them from fully and fairly representing the interests of their subclasses. But the court has not yet heard from these subclasses with respect to their views on priority hiring and retroactive seniority. Finally, a claimant's ability to object following a fairness hearing is no substitute for Rule 23's requirement that the class representatives be able to fairly and adequately protect the interests of all class members.

Consequently the court will certify two subclasses as to issues of make-whole relief-a subclass seeking backpay, benefits, retroactive seniority, and priority-hiring relief for non-hire victims, and a subclass seeking backpay, benefits, and retroactive seniority for delayed-hire victims.*fn4

b.Vulcan Society as Representative of Make-Whole Relief Subclasses Plaintiff-Intervenors have asked the court to appoint the Vulcan Society to act as class representative with respect to issues of make-whole relief, including "aggregate back pay and benefits for the class, the number of priority hires and the amount and applicability of retroactivity seniority."*fn5 (Int. Class Def. Stmt. at 2.) The court concludes that the Vulcan Society cannot represent the interests of either the non-hire victim or delayed-hire ...


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