Hilti, Inc. sells power equipment for use in construction sites. A quick trip through its website (http://www.us.hilti.com) reveals tools most people wouldn’t have in their home workshops, such as 1100-watt demolition hammers, gas-powered fasteners, and cordless drywall screwers. Given this product mix, as one might expect, an important part of its sales consists of direct marketing to contractors at their worksites. So, how can a company in that line of business best select its sales force?
In Tabor v. Hilti, Inc., Case No. 11-5131 (10th Cir. Jan. 15, 2013), the court addressed the issue of whether the company’s method for selecting employees for “Account Manager” positions that would actually visit construction customers discriminated against women. Hilti initially hires sales staff as inside sales representatives, who primarily provide sales and customer support by telephone. The company made decisions whether to promote such representatives to Account Manager positions through a process called “Global Develop and Coach Process”, or “GDCP.”
The core of the GDCP system was the assignment of a ranking to the employee, ranging from P1 (meaning readiness for promotion) through P5 (meaning the employee was ineligible for promotion). The system also took into account factors such as the employee’s willingness to relocate and their career goals.
The plaintiffs were two female inside sales representatives who sought unsuccessfully to become Account Managers. They brought suit under Title VII challenging the company’s failure to promote them. They cited statements made in job interviews reflecting stereotypes about the ability of women to relate to men in construction sites as well statistical evidence that the GDCP had a disparate impact on women. The district court granted summary judgment in the employer’s favor, and also denied certification of a class of approximately 300 women who sought to become Hilti Account Managers.
On appeal, the Tenth Circuit issued a split decision. Most of the opinion focused on the individual claims of sex discrimination by the two lead plaintiffs. It ultimately concluded that the district court had improperly granted summary judgment on most of their claims, relying largely upon the evidence of discriminatory statements during job interviews. The court also largely accepted the plaintiffs’ statistical evidence regarding the disparate impact of the GDCP.
The court’s opinion in that regard is a little curious. The court cited with some approval the 20% or 4/5 rule described in the EEOC guidelines, although other courts have found the test to carry less weight. See Isabel v. City of Memphis, 404 F.3d 404 (6th Cir. 2005) (rejecting result under 20% rule in favor of appropriate statistical analysis). After citing the test, however, the court notes that the plaintiffs’ statistician had conducted a proper regression analysis reflecting that the promotion rate for males was 60% higher than for females, so the reference to the 4/5 rule was likely irrelevant.
Although the court found questions of fact justifying reversal of summary judgment, the remainder of the opinion largely favored the defendant. Even though the court reversed as to one plaintiff, it noted that her disciplinary history might very well result in summary judgment being granted against her again.
As to the class certification issue, the Tenth Circuit affirmed the district court’s refusal to certify the class in light of the decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Given that the court spent almost 35 pages of its opinion analyzing the plaintiffs’ individual claims, it is not surprising that the court found that there was no commonality. It concluded that the decisions, including the development of the GDCP score, were made on an individual basis with largely subjective criteria and different factors went into each decision. Even if the plaintiffs had established commonality, the court found that the class issues, despite the statistical problems with the GDCP, did not predominate under Rule 23(b)(3). The court therefore found that the decision to deny certification was proper.
The bottom line: Even with statistical evidence and company policies alleged to have disparate impact, Dukes makes it difficult to certify classes when individual issues are still in play.