QUINTON BROWN; JASON GUY; ALVIN SIMMONS; SHELDON SINGLETARY; GERALD WHITE; RAMON ROANE; JACOB RAVENELL, individually and on behalf of the class they seek to represent, Plaintiffs - Appellants,
NUCOR CORPORATION; NUCOR STEEL-BERKELEY, Defendants - Appellees
Argued September 17, 2014
[Copyrighted Material Omitted]
Appeal from the United States District Court for the District of South Carolina, at Charleston. (2:04-cv-22005-CWH). C. Weston Houck, Senior District Judge.
VACATED IN PART, AND REMANDED WITH INSTRUCTIONS.
Robert L. Wiggins, Jr., WIGGINS, CHILDS, QUINN & PANTAZIS LLC, Birmingham, Alabama, for Appellants.
Lisa Schiavo Blatt, ARNOLD & PORTER LLP, Washington, D.C., for Appellees.
Armand Derfner, D. Peters Wilborn, Jr., DERFNER, ALTMAN & WILBORN, Charleston, South Carolina; Ann K. Wiggins, WIGGINS, CHILDS, QUINN & PANTAZIS LLC, Birmingham, Alabama, for Appellants.
Cary A. Farris, John K. Linker, J. Shannon Gatlin, ALANIZ SCHRAEDER LINKER FARRIS MAYES, LLP, Houston, Texas; Dirk C. Phillips, Sarah M. Harris, ARNOLD & PORTER LLP, Washington, D.C.; J. Tracy Walker, IV, Robert L. Hodges, Matthew A. Fitzgerald, MCGUIREWOODS, LLP, Richmond, Virginia, for Appellees.
Before GREGORY, AGEE, and KEENAN, Circuit Judges. Judge Gregory wrote the opinion, in which Judge Keenan joined. Judge Agee wrote the dissenting opinion.
GREGORY, Circuit Judge.
This case concerns the certification of a class of black steel workers who allege endemic racial discrimination at a South Carolina plant owned by Nucor Corporation and Nucor Steel Berkeley (collectively, " Nucor" ). Plaintiffs-appellants (" the workers" ) accuse Nucor of both discriminatory job promotion practices and a racially hostile work environment under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The district court originally denied class certification for both claims, and this Court reversed. See Brown v. Nucor Corp., 576 F.3d 149 (4th Cir. 2009) (" Brown I" ).
The district court has revisited certification and decertified the promotions class in light of the Supreme Court's opinion in Wal-Mart Stores, Inc. v. Dukes,
__ U.S. __, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). We thus again confront the question of whether the workers' have presented a common question of employment discrimination through evidence of racism in the workplace. Despite Wal-Mart's reshaping of the class action landscape, we hold that the district court has for a second time erred in refusing to certify the workers' class, where (1) statistics indicate that promotions at Nucor depended in part on whether an individual was black or white; (2) substantial anecdotal evidence suggests discrimination in specific promotions decisions in multiple plant departments; and (3) there is also significant evidence that those promotions decisions were made in the context of a racially hostile work environment.
Against that backdrop, the district court fundamentally misapprehended the reach of Wal-Mart and its application to the workers' promotions class. We thus vacate the district court's decision in part and remand for re-certification of the class.
The Nucor plant encompasses six production departments that work together to melt, form, finish, and ship steel products to customers. See Brown I, 576 F.3d at 151. At the start of this litigation, 611 employees worked at the plant. Seventy-one (11.62%) were black. There was, however, at most one black supervisor in the production departments until after the Equal Employment Opportunity Commission (" EEOC" ) initiated charges that preceded the putative class action.
The workers' promotions claim rests on alternative theories of liability under Title VII, which prohibits employment discrimination because of an individual's " race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2. The promotions claim first alleges a pattern or practice of racially disparate treatment in promotions decisions. See Teamsters v. United States, 431 U.S. 324, 336, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977). Second, it charges that Nucor's facially neutral promotions policies and procedures had a racially disparate impact. See Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971);
Wal-Mart, 131 S.Ct. at 2554.
Both theories are grounded in a statistical analysis of racial disparities in job pro
motions at the plant combined with anecdotal evidence of discrimination. The workers' statistical evidence spans the four-year period preceding the litigation, between December 1999 and December 2003. Because Nucor destroyed and/or discarded the actual bidding data for the period before 2001, the workers' experts established an alternative benchmark using 'change-of-status' forms filed by the company whenever a promotion took place at the plant. The experts extrapolated comparative statistics for that period using an assumption that the racial composition of the bidding pool for those jobs was the same as for the post-2001 jobs analyzed (when Nucor retained actual bidding records).
The workers also presented abundant direct and circumstantial anecdotal evidence of discrimination in promotions, including:
* Anecdotal evidence provided by the seven named plaintiffs and nine other putative class members, claiming discrimination in specific promotions decisions in the Nucor production departments;
* A description of complaints, contained in affidavits and depositions, made to plant General Manager Ladd Hall, who the workers allege failed to meaningfully respond;
* Descriptions of retaliation against those who complained to management;
* A written copy of Nucor's promotions policy and testimony that the policy was largely ignored in favor of giving unbridled discretion to supervisors; and
* Testimony by a white supervisor that his department manager told him that " I don't think we'll ever have a black supervisor while I'm here."
The facts undergirding the workers' separate hostile work environment claim, not directly at issue in this appeal, also bear on the promotions analysis. Those facts are disquieting in their volume, specificity, and consistency. Supervisors allegedly routinely referred to black workers as " nigger" and " DAN (dumb ass nigger)," with one supervisor reportedly stating " niggers aren't smart enough" to break production records, while others tolerated the routine use of epithets like " bologna lips," " yard ape," and " porch monkey." These epithets and others were broadcast over the plant-wide radio system - comprising a network of walkie-talkies used to communicate - along with monkey noises and the songs " Dixie" and " High Cotton." The workers' declarations and depositions further suggest that departmental supervisors and the plant's general manager consistently ignored racial harassment carried out by white workers, including the circulation of racist emails, the prominent display of a hangman's noose, the commonplace showing of the Confederate flag, and an episode when a white employee draped a white sheet over his head with eyes cut out in the form of a KKK hood.
In 2007, the South Carolina district court denied the workers' motion for class certification for both the promotions and hostile work environment claims. In 2009, a divided panel of this Court reversed, concluding that the workers satisfied the threshold requirements of Federal Rule of Civil Procedure 23. We remanded the case " with instructions to certify the appellants' class action."
Brown I, 576 F.3d at 160.
On February 17, 2011, the district court followed our instructions to certify the class, concluding that the workers satisfied Rule 23(b)(3)'s requirements that common questions predominate and that the class action was superior to other litigation devices
to resolve the dispute. The district court later declined to stay the case pending a ruling in Wal-Mart, and it declined to reconsider its order certifying the class.
The Supreme Court decided Wal-Mart in June 2011, decertifying an unprecedented nationwide class of approximately 1.5 million female employees spread over 3,400 stores. Wal-Mart held that the plaintiffs had failed to present a " common contention" of employment discrimination capable of " classwide resolution," as required by Rule 23(a)(2).
Wal-Mart, 131 S.Ct. at 2551. Given the diffuse class and number of employment decisions at issue, the Supreme Court observed that " [w]ithout some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all class members' claims for relief will produce a common answer to the crucial question why was I disfavored." Id. at 2552 (emphasis in original). The plaintiffs, Wal-Mart concluded, failed to meet that standard when they premised liability on a company policy of decentralized subjective decision-making by local managers, combined with statistics showing gender-based employment disparities, limited anecdotal evidence, and expert testimony about a corporate culture that allowed for the transmission of bias. See id. at 2551, 2554-55.
On September 11, 2012, the district court relied on Wal-Mart to decertify the workers' promotions class, invoking the court's authority under Rule 23(c)(1)(C) to amend a certification order at any time before final judgment. Wal-Mart, the court observed, clarified and heightened the commonality requirement of Rule 23(a)(2), requiring the workers to present " significant proof" that Nucor " operated under a general policy of discrimination" and that they suffered a common injury. J.A. 10934 (quoting
Wal-Mart, 131 S.Ct. at 2553).
Under that standard, the district court concluded that decertification of the promotions class was required because: (1) this Court's examination of the workers' statistical analysis in Brown I was not sufficiently " rigorous" to assess whether it raised questions common to the class under Rule 23(a)(2); (2) the workers' statistical and anecdotal evidence failed to establish such commonality because it did not provide " significant proof" that there existed both a " general policy of discrimination" and a " common injury" ; (3) the delegation of subjective decision-making to Nucor supervisors was not, without more, a sufficiently uniform policy to present " 'common' issues appropriate for resolution on a class-wide basis" ; and (4) even if the workers had identified a common question of law or fact satisfying Rule 23(a)(2), they failed to independently satisfy Rule 23(b)(3)'s requirements that common issues predominate and that the class action is a superior litigation device.
Although the court decertified the class for the promotions claim, it refused to do so for the hostile work environment claim. The district court reaffirmed that the workers had demonstrated that the " landscape of the total work environment was hostile towards the class." J.A. 10964 (quoting Newsome v. Up-To-Date Laundry, Inc., 219 F.R.D. 356, 362 (D. Md. 2004)). Unlike the promotions claim, the court determined that the hostile environment allegations required no showing of a company-wide adherence to a common policy of discrimination. Still, the court found that " there is significant evidence that management ignored a wide range of harassment" and that the workers " met their burden to present significant proof of a general policy of discrimination." J.A. 10968.
On September 30, 2013, the workers appealed the district court's decertification of the promotions class.
We typically review a district court's certification order for abuse of discretion. Doe v. Chao, 306 F.3d 170, 183 (4th Cir. 2002), aff'd on other grounds, 540 U.S. 614, 124 S.Ct. 1204, 157 L.Ed.2d 1122 (2004). We review de novo, however, whether a district court contravenes a prior express or implicit mandate issued by this Court. United States v. Bell, 5 F.3d 64, 66 (4th Cir. 1993); S. A. Ltd. P'ship of Tenn. v. Riese, 356 F.3d 576, 583 (4th Cir. 2004) (" We review de novo . . . whether a post-mandate judgment of a district court contravenes the mandate rule, or whether the mandate has been 'scrupulously and fully carried out.'" (quoting 2A Fed. Proc., L.Ed. § 3:1016)).
Determining the appropriate standard of review thus requires a two step approach. First, we examine de novo whether the district court's decertification order violated our mandate in Brown I to certify the workers' class. Second, if no such violation occurred, we must determine anew whether the district court abused its discretion in decertifying the promotions class.
As to the first question, an " extraordinary" exception to the mandate rule exists when there is " a show[ing] that controlling legal authority has changed dramatically."
Bell, 5 F.3d at 67 (alteration in original). Moreover, Rule 23(c)(1)(C) provides a district court with broad discretion to alter or amend a prior class certification decision at any time before final judgment.
Against that backdrop, the parties disagree about whether Wal-Mart provided sufficient justification for the district court to invoke its powers to revisit certification. Nucor maintains that Wal-Mart represents a " sea change" and that " class actions may proceed only in the most exceptional of cases." Resp'ts' Br. 15, 20. The workers suggest, however, that the Supreme Court instead largely reaffirmed existing precedent. Appellants' Br. 34.
The truth has settled somewhere in between. See Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 113-14 (4th Cir. 2013) (discussing limitations on the scope of Wal-Mart's holding); McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 487-88 (7th Cir. 2012), cert. denied, 133 S.Ct. 338, 184 L.Ed.2d 157 (2012) (finding that Wal-Mart provided the basis for a renewed class certification motion); DL v. District of Columbia, 713 F.3d 120, 126, 404 U.S. App.D.C. 316 (D.C. Cir. 2013) (surveying how Wal-Mart has changed the class action landscape); Elizabeth Tippett, Robbing A Barren Vault: The Implications of Dukes v. Wal-Mart for Cases Challenging Subjective Employment Practices, 29 Hofstra Lab. & Emp. L.J. 433 (2012) (using an empirical analysis to predict Wal-Mart's likely impact on class certifications in the future). At the very least, Wal-Mart recalibrated and sharpened the lens through which a court examines class certification decisions under Rule 23(a)(2), an impact plainly manifested by the number of certifications overturned in its wake. See, e.g., EQT Prod. Co. v. Adair, 764 F.3d 347 (4th Cir. 2014); Rodriguez v. Nat'l City Bank, 726 F.3d 372, 376 (3d Cir. 2013); M.D. ex rel. Stukenberg v. Perry, 675 F.3d 832, 839, 841-44 (5th Cir. 2012); Ellis v. Costco Wholesale Corp., 657 F.3d 970, 974 (9th Cir. 2011).
In that light, we find that the district court's decision to reconsider the certification of the workers' class did not itself violate our mandate in Brown I. Per this Court's original remand instructions, the district court certified both the promotions
and hostile work environment classes. Although the court had no discretion to then reconsider questions decided by this Court under then-existing facts and law, Wal-Mart provided a sufficiently significant change in the governing legal standard to permit a limited reexamination of whether the class satisfied the commonality requirement of Rule 23(a)(2). There are, however, instances described below when the district court unnecessarily revisited other discrete determinations made by this Court in Brown I, such as whether the Nucor plant should be treated analytically as a single entity, and whether the class independently met the requirements of Rule 23(b)(3). The reconsideration of those determinations was not compelled by Wal-Mart and contravened our mandate in Brown I.
Because the district court could reexamine whether the workers met the requirement of commonality, we review those findings under the abuse of discretion standard that typically applies to certification orders. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 630, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) ( " The law gives broad leeway to district courts in making class certification decisions, and their judgments are to be reviewed by the court of appeals only for abuse of discretion." );
Brown I, 576 F.3d at 152; Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 317 (4th Cir. 2006). A district court abuses its discretion when it materially misapplies the requirements of Rule 23. See Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 424 (4th Cir. 2003); Thorn, 445 F.3d at 317-18 (" A district court per se abuses its discretion when it makes an error of law or clearly errs in its factual findings." ). The decisive question here is whether the district court materially misapplied Rule 23(a)(2) to the facts at hand in light of Wal-Mart.
Rule 23(a)(2) establishes that a class action may be maintained only if " there are questions of law or fact common to the class." The district court determined that Wal-Mart required decertification of the workers' promotions class insofar as the Supreme Court's interpretation of the rule (1) emphasized the analytical rigor required to evaluate a plaintiff's statistical evidence of commonality at the class certification stage, (2) placed the burden on plaintiffs to provide " significant proof" of a " general policy of discrimination" and " common injury," and (3) relatedly established that a company's policy of discretionary decision-making cannot sustain class certification without a showing that supervisors exercised their discretion in a common way.
Each of these arguments is considered in turn.
Wal-Mart reaffirmed existing precedent that courts must rigorously examine whether plaintiffs have met the prerequisites of Rule 23(a) at the certification stage, an analysis that will often overlap with the merits of a claim.
Wal-Mart, 131 S.Ct. at 2551 (citing Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160-61, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). But as the Court later clarified, " Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage." Amgen Inc. v. Conn. Ret. Plans & Trust Funds,
__ U.S. __, 133 S.Ct. 1184, 1194-95, 185 L.Ed.2d 308 (2013). Instead, the merits of a claim may be considered only when " relevant to determining whether the Rule 23 prerequisites for class certification are satisfied." Id. at 1195.
This Court's precedent and its approach in Brown I are consistent with Wal-Mart and Falcon. See Gariety v. Grant Thornton, LLP, 368 F.3d 356, 366 (4th Cir. 2004) (observing that " while an evaluation of the merits to determine the strength of the plaintiffs' case is not part of a Rule 23 analysis, the factors spelled out in Rule 23 must be addressed through findings, even if they overlap with issues on the merits" ). In Brown I, this Court expressly invoked Falcon's requirement of a rigorous analysis to determine compliance with Rule 23. 576 F.3d at 152. More important, of course, we actually conducted such an analysis, providing a detailed evaluation of the workers' anecdotal and statistical evidence to ensure that it presented a common question under Rule 23(a)(2). Id. at 153-56.
Contrary to the dissent's assertion, we do not (and Brown I did not) suggest that Rule 23 is a mere pleading standard. See post at 92. Far from it. It is true that Brown I cautioned that " an in--depth assessment of the merits of appellants' claim at this stage would be improper." Id. at 156. Such a statement, however, is consistent with the Supreme Court's dictate in Amgen that a court should engage the merits of a claim only to the extent necessary to verify that Rule 23 has been satisfied.
Amgen, 133 S.Ct. at 1194-95. Brown I did precisely that.
Even evaluated in a still more painstaking manner, the workers' statistical evidence is methodologically sound while yielding results that satisfy Wal-Mart's heightened requirement of commonality discussed below. The parties' central dispute concerns the data used to analyze the period from December 1999 to January 2001, when Nucor failed to retain actual bidding records. For that period, the workers' expert developed an alternative benchmark that uses 27 relevant 'change-of-status' forms -- filled out when an employee
changes positions at the plant -- to extrapolate promotions data because actual bidding information was unavailable.
Of course, it belabors the obvious to observe that the alternative benchmark is a less precise measure than actual bidding data. It is also clear, however, that plaintiffs may rely on other reliable data sources and estimates when a company has destroyed or discarded the primary evidence in a discrimination case. More than two decades of this Court's precedent affirm as much. See Lewis v. Bloomsburg Mills, Inc., 773 F.2d 561 (4th Cir. 1985); United States v. County of Fairfax, 629 F.2d 932, 940 (4th Cir. 1980); see generally Ramona L. Paetzold & Steven L. Willborn, The Statistics of Discrimination: Using Statistical Evidence in Discrimination Cases § 4.03 (2014) (describing the use of proxy data when actual data is unavailable or unreliable). In Lewis v. Bloomsburg Mills, Inc., this Court approved the use of Census data to establish a hypothetical available pool of black female job applicants after a company discarded employment applications for the relevant period. 773 F.2d at 568. Plaintiffs then compared the " observed" annual rate of hires of black women with the " expected" rates based upon the proportional availability of black females in the labor pool. Id. We endorsed a similar use of proxy data in United States v. County of Fairfax, involving a county government that had destroyed three years of employment applications. 629 F.2d at 940. To analyze hiring during that time, plaintiffs assumed that the proportion of black and women applicants for those years was the same as in the first year for which the county retained records. Id. This Court approved, concluding the alternative benchmark was " the most salient proof of the County's labor market."
The critical question is thus not whether the data used is perfect but instead whether it is reliable and probative of discrimination. To that end, a court must examine whether any statistical assumptions made in the analysis are reasonable. See Paetzold & Willborn, supra, § 4.16. The district court here identified two assumptions made by the workers' experts as problematic.
The district court first questioned the assumption that the job changes described on the 27 forms represent promotions. See J.A. 10942. As an example of clear factual error committed by the court, it quoted at length from the dissent in Brown I to argue that the forms may represent job changes unrelated to promotions. J.A. 10942 (quoting
Brown I, 576 F.3d at 167-68 (Agee, J., concurring in part and dissenting in part)). The forms cited in Judge Agee's original dissent, however, are plainly not among the 27
relied upon by the workers' experts in constructing the alternative benchmark. Compare J.A. 10942 (the district court's decertification order quoting the dissent in Brown I), with J.A. 11005-11032 (copies of the actual change-of-status forms used in the expert analysis). Worse still, the dissent in Brown I reached the question of whether the 27 forms represented promotions without the issue having been raised, much less analyzed, by the district court in its original order denying certification, see J.A. 8979, or by Nucor itself in its briefing before this Court in Brown I. The dissent in Brown I thus both engaged in sua sponte fact-finding to divine which forms were used, and then got the facts wrong. Using the flawed data, the dissent concluded in Brown I that " [o]n this record, it is difficult, if not impossible to discern whether the 2000 data based on the nebulous change-of-status forms proves those positions were promotion positions available for employee bidding and thus relevant to the formulation of statistical evidence for the appellants' claims."
Brown I, 576 F.3d at 168 (Agee, J., concurring in part and dissenting in part). The district court expressly embraced that conclusion in decertifying the promotions class after Wal-Mart. J.A. 10942.
Upon examining the correct change-of-status forms, discerning whether they represent promotions is a relatively straightforward enterprise. Nineteen of the 27 forms expressly state they are for a promotion, for a " successful bidder" on a " higher position," or for a new position that was " awarded" or " earned." Two of the forms describe changes in job classification accompanied by an increase in pay. One form notes that an inspector was a " successful bidder" on a mill adjuster job -- a move referred to on another change form as a promotion. Two forms are for a " successful bidder" on a new position where no new pay grade is noted. The remaining three forms appear to involve changes in positions or training that involved a decrease in pay, but there is no indication, or argument by Nucor or the district court, that the exclusion of those forms would substantially undermine the probativeness of the expert analysis.
The second assumption criticized by the district court was that the bidding pools for the 27 positions filled between December 1999 and January 2001 had the same average racial composition as the pools for similar jobs analyzed from 2001 to December 2003, when the company retained actual bidding data. Because of discovery limitations imposed by the district court, the information available regarding the 2001-2003 promotions was restricted to positions similar to ones bid on by the named plaintiffs, where there was at least one black bidder. However, because Nucor failed to retain bidding records for 1999-2000, the data from that period could not
be limited to positions where there was a known black bidder. Instead, the alternative benchmark had to assume that there was at least one black worker applying for each promotion analyzed -- an assumption that the district court concluded helped render the statistical analysis unreliable. But as we already determined in Brown I, the assumption does not fatally undermine the probativeness of the experts' findings. The workers' experts limited the records they analyzed to the same positions identified in the later period when bidding data was available, positions for which there was a black bidder. J.A. 1161-62. In its original order denying certification, the district court observed that the assumptions regarding bidding " may be reasonable and the statistics based thereon may be relevant to prove discrimination at the plant," but " the necessity of the assumptions diminishes their probative value."  J.A. 8987; see also Brown I, 576 F.3d at 156. As we previously concluded, an incremental reduction in probative value -- which is a natural consequence of the use of proxy data -- does not itself render a statistical study unreliable in establishing a question of discrimination common to the class.
Brown I, 576 F.3d at 156. Indeed, to conclude otherwise ...