California Federal Court Reaffirms Standard for Establishing Commonality in Rule 23 Certification Under Title VII

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On March 9, 2021, the United States District Court, Northern District of California issued a ruling in Handloser v. HCL Technologies Ltd., 19-cv-01242-LKH, 2021 WL 879802 (Mar. 9, 2021), applying the 2011 Supreme Court standard established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011), for individuals to properly assert a Rule 23 class for Title VII of the Civil Rights Act of 1964 discrimination claims.

The named plaintiffs filed their complaint against HCL Technologies Ltd., an Indian consulting and information technology company, alleging that the company had discriminated against them and individuals similarly situated by utilizing a hiring process that prioritized visa-ready Indian candidates over United States citizen candidates. Plaintiffs alleged that this hiring process created a discriminatory effect based on race and national origin. Plaintiffs sought to represent the following class:

All individuals who: (a) are United States citizens, not of South Asian race, and not of Indian national origin; (b) who sought a position; (c) with HCL Technologies Limited or HCL America, Inc.; (d) in the United States; (e) that would have been Career Level 3 or above; (f) between March 7, 2015 and the date of class certification; and (g) were not offered employment.

Handloser, 2021 WL 879802, at *6. The named plaintiffs sought to resolve questions including whether HCL Technologies engaged in a pattern or practice of discrimination in hiring and staffing, whether these practices resulted in a disparate impact on the class, and the appropriate remedy for any violations of the law.

In ruling on the class certification motion, the court noted that the proposed class easily met the numerosity threshold with over 43,000 potential members. But the court held that the named plaintiffs were not able to establish commonality among the proposed class because they could not identify “some glue holding the alleged reasons for all those decisions together.”Id.

Plaintiffs had alleged commonality based on the companywide policy favoring visa-ready Indian candidates and statistical evidence, but the court found this fell short for various reasons. First, the court noted that the challenged practices were not the reason for several class members’ adverse employment decisions. Specifically, numerous job openings excluded visa holders from applying, the job opening permitted a client to reject an applicant, or the company simply never filled the job opening. Second, the court noted that hiring managers were permitted to exercise their own discretion in hiring decisions, which alone could result in dramatically different hiring practices. The hiring decisions occurred in over 47 different states and concerned approximately 200 different job types across 16,000 different job searches. Because plaintiffs challenged a companywide employment system that empowered hiring managers with discretion to make hiring decisions, plaintiffs needed to identify a common mode of exercising that discretion that pervades the entire company. Even though the company used a shared structure for considering job candidates and a shared database for hiring, these were not enough to show a centralized or standardized decision making process. In general, when allegedly discriminatory policies are highly discretionary, the court indicated that it would not find commonality among the individual employment decisions.

The court also found that the plaintiffs failed to establish both typicality and predominance because the named plaintiffs had unique experiences with the hiring practices of the company that would not be typical of the putative class. Accordingly, the questions of law and fact would not predominate over other questions affecting individual members of the class.

The decision in Handloser reaffirms that class cases, especially nationwide class cases, based on allegations of discriminatory hiring practices are difficult to certify due to issues of commonality. Employers should be certain that their hiring policies are clear regarding the discretion imbued to their hiring managers and should keep robust records throughout all hiring process so that individual hiring decisions can be distinguished should there be any class litigation.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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