Say It Again: No Common Question Binds a Class Subject to Thousands of Individualized Pay Decisions

Echoing an increasingly familiar refrain, another district court has declined to certify a class of women bringing pay equity claims on the basis that they did not present a common question capable of producing a common answer to “the crucial question why was I disfavored.” Relying largely upon Wal-Mart Stores, Inc. v. Dukes, the court found certification inappropriate because the putative class members were subject to countless independent decisions involving the judgment and discretion of individual managers. The case also serves as another reminder that courts (including California state courts) will not accept an overly simplistic analysis comparing broad job categories or titles, but will continue to look at actual business practices and job responsibilities to ensure comparators are “similarly situated” so a meaningful pay comparison can be made.  Plaintiffs in Kassman v. KPMG LLP proposed that a class of approximately 10,000 female employees had faced disparate impact in pay and promotions, despite the fact that those employees spanned numerous positions and service lines within the company, and numerous local managers exercised individual discretion in making decisions about their pay. They also brought a disparate treatment claim, alleging a systemwide pattern or practice of pervasive discrimination.

Key to the court’s class certification denial was the fact that plaintiffs were unable to provide sufficient evidence of “’some glue’ holding together the reasons for the countless individual employment decisions they challenge[d].”  The court further held that four non-exclusive factors should be considered in determining whether “a common mode of exercising discretion pervades the entire company:”

  1. the nature of the purported class (class size, location, job types, seniority levels)
  2. the process through which discretion is exercised (a process that constrains and channels the exercise of discretion may show sufficient common direction);
  3. the criteria governing the discretion (subjective criteria, prone to different interpretations, generally do not provide common direction); and
  4. the involvement of upper management.

With respect to the first factor, the court found the nature of the class made it less plausible that a common mode of exercising discretion could be demonstrated: the class consisted of at least 10,000 employees, spread out in locations across the country, and covering a myriad of job descriptions at varying levels of seniority. With respect to the second factor, the court found that “KPMG’s pay and promotion procedures act more as a framework that dictates who will make discretionary decisions rather than [constraining] how they will exercise their discretion.” With respect to the third factor, the court found that KPMG’s evaluation and promotion criteria did not constrain discretion because they were abstract and not sufficiently specific, including considerations of “professionalism,” “integrity,” “reputation” and potential to be a “partner candidate.” Finally, the court found that upper management “do not review or second-guess individual performance, pay or promotion decisions.” Thus, each of the factors demonstrated that the countless pay and promotion decisions of individual managers were sufficiently independent and discretionary to be incapable of resolution through a common answer to a common question.

The court further found that plaintiffs’ statistical analysis failed to consider relevant variables necessary to show disparate treatment through a “‘systemwide pattern or practice’ of pervasive discrimination.” Although plaintiffs’ expert plausibly demonstrated a pay gap between men and women who held the same job titles, the expert failed to account for the most logical reason for the gap—the types of jobs at issue. Indeed, as KPMG’s expert explained, the pay gap disappeared once the analysis accounted for the Service Lines for each job title. Similarly, when promotions were analyzed within each Service Line, there was no promotion disparity between men and women.

The court also denied final certification of a collective EPA action because the plaintiffs failed to show that members of the proposed class work at a “single establishment” (a requirement for EPA comparisons), and because the proposed class members were not similarly situated (instead, they worked in 80 offices, across various Service Lines; their job responsibilities varied extensively; and they were not subject to a uniform causal mechanism for determining pay and promotions).

On December 6, 2018, plaintiffs filed a motion for reconsideration in which they argue the court was incorrect in concluding their expert did not account for Service Lines, and further argue their evidence did, in fact, support a ruling in favor of certification. Orrick will continue to monitor any significant developments in this case, as well as how courts generally view individualized decision making and statistical analyses regarding pay in the context of class certification. Stay tuned here and to our Equal Pay Pulse.