UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK PLAINTIFFS BRIEF ON TRIAL MANAGEMENT PLAN

Transcription

1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK AMY VELEZ, PENNI ZELINKOFF, MINEL HIDER TOBERTGA, MICHELLE WILLIAMS, JENNIFER WAXMAN-RECHT, KAREN LIGGINS, LORI HORTON, HOLLY WATERS, WENDY PINSON, ROBERTA VONLINTEL, CATHERINE WHITE, KELLY CORBETT, JAMIE HOLLAND, JOAN DURKIN, SIMONA LOPES, MARYANNE JACOBY, and MARTA DEYNE, Individually and on Behalf of Others Similarly Situated, PLAINTIFFS, v. NOVARTIS PHARMACEUTICALS CORPORATION, DEFENDANT. 04 Civ (CM PLAINTIFFS BRIEF ON TRIAL MANAGEMENT PLAN

2 TABLE OF CONTENTS Page I. Summary of Plaintiffs Trial Management Plan... 1 II. Factual and Procedural Background... 1 III. Theory of the Case... 3 A. Disparate Treatment... 4 B. Disparate Impact... 6 IV. Relevant Law: Trial of a Certified Rule 23(b(2 Class Action... 6 A. Punitive Damages in a Disparate Treatment Trial... 8 B. Compensatory Damages on Disparate Treatment... 9 C. Formula Back Pay (Pettway... 9 V. Conclusion and Recommendations A. Disparate Treatment...10 B. Disparate Impact... 10

3 I. Summary of Plaintiffs Trial Management Plan Because the parties differ regarding how this trial should be managed, the Court, at the final pre-trial conference on March 23, 2010, asked for briefing on trial-management issues. In accordance with this Court s rulings, Judge Lynch s certification decision, and applicable Second Circuit law, Plaintiffs propose the following trial plan: a jury trial on class-wide disparatetreatment liability, class-wide punitive damages, and the individual compensatory damages of the testifying plaintiffs, with the Court deciding both disparate-impact liability and injunctive and equitable relief. After the jury returns a disparate-treatment verdict, the issues will be sharpened and the Court can then determine the method and procedure for adjudicating class-wide compensatory damages. If the jury finds against disparate-treatment liability, there will be no damages and the Court can decide the disparate-impact claims based on the evidence presented at trial. Under the facts and circumstances herein, and Plaintiffs theory of the case, if there is a finding of pattern-or-practice (disparate treatment liability, disparate impact is virtually a foregone conclusion. In order to find disparate treatment (pattern-or-practice liability on a class-wide basis, the jury will have likely found (1 that Novartis employs overly subjective decision-making processes in pay and/or promotions; (2 that this subjectivity caused or contributed to significant statistical disparities in pay and/or promotions between the class of female sales employees and their male counterparts; and (3 based upon the level of statistical disparity, the anecdotal evidence presented by the testifying plaintiffs, or the other evidence presented at trial, that discrimination therefore amounted to Novartis standard operating procedure. (If the jury finds a gross class-wide statistical disparity that is not explained by factors other than discrimination, it must find a pattern-or-practice of discrimination. Factual findings (1 and (2 are the components necessary to establish a disparateimpact claim and the Court would essentially be bound to find disparate-impact liability if they are made; the third disparate-treatment finding, an inference of systemic intent is not required. II. Factual and Procedural Background Plaintiffs filed their gender discrimination Class Action Complaint on November 19,

4 (Velez, et al. v. Novartis Pharma. Corp. (Velez. The extant Complaint contains class-wide allegations of gender discrimination brought by 19 class representatives, all female, who are current and former Novartis sales employees from across the United States. Those class representatives bring their claims both in their individual and representative capacity. (Currently, there are 17 class representatives. Plaintiffs allege that Novartis discriminates against female sales force employees in pay, promotion, and with respect to female sales employees who become pregnant. Plaintiffs seek classwide injunctive relief, a declaratory judgment, equitable relief in the form of back pay, and compensatory and punitive damages. Plaintiffs have prosecuted their case in reliance on two theories: pattern-or-practice (disparate treatment and disparate impact. On July 31, 2007 Judge Lynch certified a class of over 5600 Novartis female sales employees under Fed. R. Civ. P. 23(b(2. The Court held that the requirements of Rule 23(b(2 are satisfied and the class will be certified under that provision. Because the Court finds that plaintiffs meet the requirements of Rule 23(b(2, it is unnecessary at this point to determine whether class certification under Rule 23(b(3 would also be warranted. Velez v. Novartis, 244 F.R.D. 243, (S.D.N.Y (applying Robinson v. Metro-North Commuter R.R., 267 F.3d 147 (2d Cir ( Robinson. Robinson, the controlling Second Circuit precedent on Title VII employment discrimination class actions, allows compensatory and punitive damages in a (b(2 class. An entire Title VII action involving both equitable and compensatory relief may therefore proceed under (b(2, when the court finds on an ad hoc balancing test that (1 declaratory and injunctive relief is predominant and (2 class treatment would be efficient and manageable, furthering judicial economy. Robinson, 267 F.3d at 164. Any due process concerns regarding the absent class members interests can be resolved by providing a notice and opt-out procedure before proceeding to class-wide damages, pursuant to the court s discretion under Rule 23(d(2. Id. at See also Fed. R. Civ. P. 23(c(2(A(as amended, Applying the Robinson balancing test including its factors for determining whether injunctive relief predominated Judge Lynch expressly found that (b(2 certification was appropriate despite Plaintiffs request for individual and class-wide compensatory and punitive damages: 2

5 .The central goal of this lawsuit is to alter practices at NPC that plaintiffs believe are discriminatory. If plaintiffs prevail on the merits, that injunctive relief will be appropriate and reasonably necessary, because it would serve little purpose to award money damages for discrimination without addressing the institutional structure that perpetuates it. Defendants are alleged to have acted on grounds generally applicable to the class and plaintiffs seek to reform defendants practice to provide for equitable opportunities and compensation for women. Velez, 244 F.R.D. at 271 (citing Hnot v. Willis Group Holdings, Ltd. 228 F.R.D. 476, 486 (S.D.N.Y (Lynch, J.. In Hnot, a similar gender discrimination class action, Judge Lynch further noted that the primary monetary relief sought, damages for back pay awarded under Title VII, is considered equitable relief. 228 F.R.D. at 486. The law of this case is consequently clear: injunctive and equitable relief (including institutional reform as well as back pay predominate over monetary damages (compensatory damages for emotional and psychological harm. For other employment cases applying Robinson to certify b(2 classes with compensatory damages, see, e.g., Ebbert v. Nassau Cty., 2007 WL (E.D.N.Y. Aug. 9, 2007; Wright v. Stern, 2003 WL (S.D.N.Y. July 9, 2003; Latino Officers Ass n v. City of New York, 209 F.R.D. 79, (S.D.N.Y The mode of trial is ultimately left to the discretion of the trial judge. See, e.g., Johnson v. Celotex Corp., 899 F.2d 1281, 1289 (2d Cir. 1990; Getty Petroleum Corp. v. Island Transp. Corp., 862 F.2d 10, 15 (2d Cir. 1988, cert. den, 490 U.S (1989. During the first pre-trial conference on October 21, 2009, this Court declined to bifurcate the trial and held that all relevant and admissible facts supporting claims of discrimination (on both disparate treatment and impact theories and damages will be heard. The Court has allowed Plaintiffs two weeks to put on their case in chief and two weeks for Novartis to mount its defense. Plaintiffs will call some of the class representatives and class members to testify about facts underlying their claims and supporting damages. III. Theory of the Case Plaintiffs claim that Novartis grant of discretionary authority to supervisory employees, most of whom are male, either results in a pattern and practice of gender discrimination (disparate treatment or adversely affects female sales employees (disparate impact. See, e.g., Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 286, (2d Cir. 1999; Velez, 244 F.R.D. at ; 3

6 Hnot I, 228 F.R.D. at , , 485; Hnot II, 241 F.R.D. 204, , 210 & n.13 (S.D.N.Y On a disparate-impact theory, subjectivity is a facially-neutral policy resulting in an adverse impact on female sales employees; on either theory, it is a common element holding the class together. The excessive subjectivity ultimately causes disparate pay to women, a failure to promote women relative to men, and discriminatory terms and conditions imposed on pregnant women. Plaintiffs will demonstrate class wide-discrimination through both statistical evidence and anecdotal evidence at trial, in addition to other testimonial and documentary evidence that will explain the challenged practices and their effect. As Judge Lynch noted [w]here the decision-making process is difficult to review because of the role of subjective assessment, significant statistical disparities are relevant to determining whether the challenged employment practice has a class-wide impact. Velez, 244 F.R.D. at (citing Caridad, 191 F.3d at 292. A. Disparate Treatment On their disparate treatment claims, Plaintiffs intend to demonstrate that Novartis had overly subjective employment policies resulting in a pattern or practice of adverse outcomes for the class of female sales employees as compared to their male peers. In addition: To succeed on a pattern-or-practice claim, plaintiffs must prove more than sporadic acts of discrimination; rather they must demonstrate that intentional discrimination was the defendant s standard operating procedure. Robison, 267 F.3d at 158 (citations omitted. Plaintiffs have typically depended on two types of circumstantial evidence to establish the existence of a policy, pattern, or practice of intentional discrimination: (1 statistical evidence aimed at establishing the defendant s past treatment of members of the protected group, and (2 testimony from protected class members detailing specific instances of discrimination. Id. Gross statistical disparities may alone prove a pattern-or-practice of discrimination. Id. at (citing cases; Hazelwood Sch. Dist. v. U.S., 433 U.S. 299, (1977; EEOC v. O&G Spring & Wire Forms Specialty Co., 38 F.3d 872, (7th Cir Plaintiffs multiple regression analysis need not eliminate all potential non-discriminatory explanations for such disparities but only the most 4

7 significant. Bazemore v. Friday, 478 U.S. 385, 400 (1986. See also Wright v. Stern, 450 F.Supp.2d 335, 364 (S.D.N.Y ( errors in statistical evidence do not necessarily render them meaningless. The magnitude of the disparity must be sufficient to show that the detrimental treatment was likely the result of a routine operating procedure of discrimination. Statisticians have conventionally ruled out random chance when the disparities reach 1.95 standard deviations, or a 5% likelihood that non-discriminatory factors are responsible. The Supreme Court has held that unlawful discrimination may be suspected as the cause of underrepresentation of a protected class if the difference between the expected value and the observed number is greater than two or three standard deviations. Hazelwood, 433 U.S. at 309 n.14 (citing Castaneda v. Partida, 430 U.S. 497 n.17 ( In this case, Plaintiffs statistical expert has found standard deviations of greater than 6 in both pay and promotion; the probability that such a pronounced level of disparity would result from random chance is infinitesimal, less than a trillion to one. This level of disparity has been held to be plainly sufficient to establish a prima facie case of disparate treatment and give rise to a rebuttable presumption of discrimination. See U.S. v. The Vulcan Society, Inc., 2010 WL , at *16 (E.D.N.Y. 2010(collecting cases (disparities of 6.5 and up well in excess of benchmarks needed for statistics alone to constitute prima facie proof of pattern or practice; Cook v. Billington, 1992 WL , at *3 (D.D.C. Aug. 14, 1992(standard deviations of 4.48 and up clearly sufficient to establish prima facie case by demonstrating with near certainty that deviations are not random. Hence, the cases support two avenues for a finding of disparate-treatment liability: (1 if the jury finds gross disparities that defendant is unable to successfully rebut (i.e. by undermining the validity of Plaintiffs statistical analysis or by attributing disparities to non-discriminatory factors, it has necessarily found a pattern-or-practice of discrimination; (2 if the jury finds substantial but not 1 See also Benson v. Tocco, 113 F.3d 1203, 1209 (11th Cir (standard deviations of 2.66 and 3.04, representing.8% (8/1000 and.2% (2/1000 chance of random causes, supported inference of systemic discrimination; Wright v. Stern, 450 F.Supp.2d 335, 363 (S.D.N.Y (two standard deviations generally considered statistically significant ; McReynolds v. Sodexho Marriott Servs. Inc., 349 F. Supp.2d 1,8 (D.D.C (statistical disparity of greater than 1.96 standard deviations sufficient to raise an inference of discrimination. Based on the evidence presented at trial, the jury may equate sufficiently significant statistical disparities with a pattern-or-practice of discrimination. 5

8 gross disparities, it may infer a standard operating procedure of discrimination from the totality of the evidence. See, e.g., Robinson, 267 F.3d at ; Ottaviani v. SUNY New Paltz, 875 F.2d 365 (2d Cir (declining to set a specific threshold at which statistical disparities automatically give rise to a rebuttable presumption of discrimination; without such presumption, statistics are persuasive rather than dispositive evidence; U.S. v. The Vulcan Society, Inc., 2010 WL , at *14-15 (E.D.N.Y (if plaintiffs meet their burden by introducing evidence of gross disparities and defendant does not sustain its burden to rebut, judgment must be entered for the plaintiffs. See also Pitre v. Western Elec. Co., 843 F.2d 1262, (10th Cir (totality of evidence, including statistics, supported verdict where disparities did not rise to level of statistical significance. B. Disparate Impact On a disparate-impact theory, Plaintiffs need not establish discriminatory intent i.e. a patternor-practice of discrimination amounting to the employer s standard operating procedure. Instead, Plaintiffs need only: (1 identify a facially neutral employment policy; (2 demonstrate the existence of substantial or significant disparities between the class of female sales employees and their male counterparts; and (3 establish a causal relationship between the two. Robinson, 267 F.3d at 160. The same type of statistical and anecdotal evidence used as circumstantial evidence of a pattern-or-practice violation is commonly used to prove an impact claim. See, e.g., id. at On disparate impact claims, the substantiality of a disparity is evaluated on a case-by-case basis ; a disparity of 2 standard deviations (or approximately 95% certainty is regarded as statistically significant and may generally suffice to show a disparate impact. See Smith v. Xerox Corp., 196 F.3d 358, (2d Cir IV. Relevant Law: Trial of a Certified Rule 23(b(2 Class Action The 1991 Amendments to Title VII permit disparate-treatment plaintiffs to seek compensatory and punitive damages in jury proceedings. Back pay and front pay, as well as injunctive relief, remain equitable and the province of the judge. See Pollard v. E.I. Du Pont, 532 U.S. 843 (2001. The premise underlying Rule 23(b(2 is that class members, who share an interest in obtaining injunctive relief, are sufficiently cohesive and homogenous that class treatment is justified. 6

9 Robinson, 267 F.3d at & n.10. As explained above, under Rule 23(b(2, plaintiffs may obtain monetary relief (compensatory and punitive damages in a class action as long as the predominant relief sought is injunctive or declaratory. Id. The Robinson Court held that the district court may afford[] notice and opt out rights to absent class members on the damages phase so that those class members may continue in or opt out of the proceedings, or personally intervene in order to actively participate on their own behalf, with a full disclosure of their rights and options. Id. at 166. See also Rule23(c(2(A. Robinson stated that when, as here, a pattern-or-practice claim seeking compensatory damages is pled with a disparate impact claim, the pattern-or-practice claim must be tried first to a jury if there are common factual issues necessary to the resolution of each claim. Id. at 170. The rationale for deferring adjudication of the disparate impact claim until the disparate treatment claim is resolved is to avoid a potential Seventh Amendment problem. See id. The judge is bound by the jury s findings of fact on overlapping issues, framed through the use of special interrogatories. Id.; Fletcher v. LeBlanc, 67 F.3d 412, 432 (2d Cir. 1995; Wade v. Orange Cty. Sheriff s Office, 844 F.2d 951 (2d Cir The Seventh Amendment provides that no fact tried by a jury shall be otherwise reexamined in any Court of the United States. U.S. Const. Amend VII. However, as recognized by the Second Circuit, the so-called reexamination clause does not prevent adjudication of different issues or claims by different tribunals. See Robinson, 267 F.3d at 169 n.13; Taylor v. Dist. of Columbia Water & Sewer Auth., 205 F.R.D. 43, (D.D.C. 2002; Butler v. Home Depot, 1996 WL , at *6 (N.D. Cal. Jan. 25, 1996; Simon v. Philip Morris, Inc., 200 F.R.D. 21 (E.D.N.Y This clause merely disallows a second court from reexamining issues determined in an earlier proceeding; the evidence considered by the tribunals may overlap. Robinson, 267 F.3d at 170 n.14; Taylor, 205 F.R.D. at While Robinson holds that the treatment claim must be tried to a jury first, this admonition takes place in the context of a discussion regarding two trials one jury trial on the treatment claim (in liability and damages phases, and a subsequent bench trial on the impact claim. Because this matter involves a trial of common issues relating to both claims, and all facts relevant to each are common, there is no need to have a second, separate trial. The Court may rule on the impact claims after 7

10 considering all the overlapping evidence and the jury s relevant findings. A. Punitive Damages in a Disparate Treatment Trial If a jury determines that a defendant has engaged in a pattern of systemic discrimination and has done so with the requisite reckless indifference, the jury may award plaintiffs punitive damages to the class as a whole, without the need for individualized proof. See Dukes v. Wal-Mart, 222 F.R.D. 137, 172 (N.D. Cal. 2004( since the purpose of punitive damages is not to compensate the victim, but to punish and deter the defendant, a punitive damage claim focuses not on facts unique to each class member, but on the defendant s conduct toward the class as a whole. ; Palmer v. Combined Ins. Co of America, 217 F.R.D. 430, 438 (N.D. Ill. 2003; Olvera-Morales v. Int l Labor Mgmt. Corp., 246 F.R.D. 250 (M.D.N.C. 2007; Scott v. Family Dollar Stores, Inc., 2010 WL (W.D.N.C Thus, the court in Barefield v. Chevron, 1988 WL , at *4-5 (N.D.Cal held that the issue of punitive damages was properly decided along with liability and prior to compensatory damages; the jury would determine the propriety and amount of punitive damages, and the collective award would later be allocated in proportion to the class members actual damages. The allocation of any punitive damages award should be left to the discretion of this Court. Where a court awards back pay to class members who have suffered losses as a result of discrimination, the punitive damage award can be distributed pro rata based upon the amount of the back pay awards. See Barefield, supra; Dukes, 222 F.R.D. at 172 & n.46; Watson v. Shell Oil Co., 979 F.2d 1014, 1019 (5th Cir. 1992; Jenkins v. Raymark Indus., 782 F.2d 468, (5th Cir In the Second Circuit, punitive damages are not predicated on an award of compensatory or nominal damages. Cush-Crawford v. Adchem Corp., 271 F.3d 352, (2d Cir B. Compensatory Damages on Disparate Treatment Should class Plaintiffs prevail on their disparate treatment claims at trial, the court can order class-wide injunctive relief and proceed to the remedial phase. Robinson, at 170. That remedial phase should take the form this Court determines best under the circumstances of this case. The Court should defer this issue and revisit it following the jury s verdict on liability. See, e.g., Olden v. LaFarge Corp., 8

11 383 F.3d 495, 509 & n.6 (6th Cir. 2004; Simon v. Philip Morris, Inc., 200 F.R.D. 21, 30 (E.D.N.Y Cf. Velez, 244 F.R.D. at 271 (deferring (b(3 certification until after liability. Possibilities for eventual consideration include the use of a Special Master (see, e.g., Olden, representative evidence and testimony, and/or statistical sampling. E.g. Hilao v. Estate of Marcos, 103 F.3d 767, (9th Cir. 1996; Dukes v. Walmart, 509 F.3d 1168, (9th Cir In suggesting that class members could intervene following notice, Robinson clearly did not contemplate that every class member must individually participate. See 267 F.3d at 166. The testifying class members may of course receive jury awards of compensatory damages at trial based on their own testimony, as in a non-class case. Any such awards may help to formulate a plan for further class-wide damages proceedings. C. Formula Back Pay (Pettway Should liability be found, courts routinely employ a formula to calculate a lump sum amount that represents the employer s total liability for backpay to the class. The formula approach is favored especially when holding individual hearings for the number of women entitled to backpay is impractical on its face. See Pettway v. Am. Cast Iron Pipe Co. (Pettway III, 494 F.2d 211, 261 (5th Cir. 1974( when the class size or the ambiguity of promotion or hiring practices or the multiple effects of discriminatory practices or the illegal practices continued over an extended period of time calls forth the quagmire of hypothetical judgment... a class-wide approach to the measure of back pay is necessitated.. See also In re Agent Orange Prod. Liab. Litig., 597 F. Supp. 740, (E.D.N.Y. 1984; Dukes, 222 F.R.D. at 172; Domingo v. New England Fish Co., 727 F.2d 1429, 1443 (9th Cir. 1984; EEOC v. O&G Spring & Wire Forms Spec. Co., 38 F.3d 872, & n.9 (7th Cir. 1994; Hameed v. Int l Ass n of Bridge Workers, Local 396, 637 F.2d 506, 520, 521 & n. 18 (8th Cir. 1980; Stewart v. Gen. Motors Corp, 542 F.2d 445, (7th Cir. 1976; EEOC v. Chicago Miniature Lamp Works, 668 F.Supp. 1150, (N.D. Ill V. Conclusion and Recommendations In light of the law of this case and the law of the Second Circuit as articulated in Robinson, 9

12 Plaintiffs urge this Court to adopt the following trial plan: A. Disparate Treatment 1. Allow the jury to render a verdict as to whether Novartis is liable to the class for pay discrimination, promotion discrimination and/or pregnancy discrimination due to disparate treatment (pattern or practice discrimination. 2. Should the jury find against Novartis as to one or more forms of disparate treatment class discrimination, allow the jury to award each testifying witness (class representative or class member compensatory damages for pain and suffering. 3. Should the jury find against Novartis as to one or more forms of disparate treatment class discrimination, allow the jury to award lump sum punitive damages against Novartis on behalf of the relevant class. The total verdict amount will be apportioned in accordance with the approach followed for back pay awards. 4. Should the jury find against Novartis as to one or more forms of disparate treatment class discrimination, the Court would determine the nature of the injunctive relief appropriate, determine the amount of back pay the class is entitled to receive based on the formula approach adopted by the Pettway Court, and issue a declaratory judgment. 5. Should the jury find against Novartis as to one or more forms of disparate treatment class discrimination, the Court would (a issue Court-supervised notice to the class, informing the class members of their rights, which include a right to opt out of the compensatory damages proceedings, and (b determine the nature and scope of those proceedings with the further input of the parties. B. Disparate Impact 6. The Court may determine the Class disparate impact claims on the same evidence heard by the jury on pattern and practice. Plaintiffs theories are interrelated and involve overlapping evidence. Both claims center on Novartis use of subjective criteria in employment decisions, and both will rely on statistical disparities between men and women at Novartis. In accordance with Robinson and similar authority, the Court will be bound by the jury s findings on predicate factual issues. (See Ex. A, attached, Plaintiffs proposed verdict form with special interrogatories Even if the jury finds disparate treatment liability, the Court s adjudication of disparate impact would not interfere with the factfinder s role on further damages proceedings. 7. If the Court holds that Novartis is liable for disparate impact discrimination, the Court would then determine the nature of the injunctive relief appropriate, determine the amount of back pay and front pay the class is entitled to receive based on the formula approach adopted by the Pettway Court, and issue a declaratory judgment. Plaintiffs proposed trial plan carries out this Court s management directives, is consistent with Robinson, and safeguards the rights of all parties while assuring a streamlined and efficient trial. 10