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Multi-party litigation arising from corporate disasters and catastrophes is commonplace. A corporate crisis may derive from events or persons outside of a company’s control. Saboteurs, product tamperers, and arsonists are but a few examples. Class action employment practices liability litigation also represents an increasingly common type of corporate crisis. A crisis situation can develop overnight when front-page headlines in the Wall Street Journal or other major publications report that a corporation has been named as a defendant in a multi-party lawsuit alleging that it violated employment laws and discriminated against its employees. As the recent experience of Texaco illustrates, allegations of discrimination in employment litigation invariably hamper a corporation’s ability to function and impact its bottom line, thereby undermining its most valued assets such as corporate reputation and credibility. Large verdicts and hefty settlements in employment cases are a central focus of intense media scrutiny. Employment discrimination class actions invariably receive the most attention from the press and the public. Various Fortune 1000 corporations have been the subject of adverse publicity in this regard over the past few years. With the focus of the U.S. Equal Employment Opportunity Commission (EEOC) being on “high impact cases,” employers will continue to experience class action filings in the years ahead. Employment discrimination class actions generally require employers to accelerate tough litigation decisions. Defense strategy, settlement options, and information and document retention cannot be delayed or deferred until later in the litigation as is sometimes the case in single-plaintiff lawsuits. These issues are front and center for an employer as soon as a class action is filed. Potential class certification is the first important detour from the merits of a case presented in the class action context. Denial of class certification is often the death of such litigation, as plaintiffs’ class counsel thereafter might lose their enthusiasm to litigate individual plaintiff cases. On December 1, 1998, new Rule 23(f) of the Federal Rules of Civil Procedure came into effect. This new rule permits immediate appeals of district court rulings which grant or deny certification of a case as a class action. Under previous law, appellate review of class certification decisions could be secured only in rare situations. The amended rule allows defendants to avoid the crushing financial incentive to seek early settlements based upon the specter of a plaintiffs’ class successfully securing class action certification. Conversely, immediate appeals allow unsuccessful plaintiffs to seek review of district court determinations and to keep alive the possibility of class certification. Two of the most important legal developments relative to class actions over the last several years are the decisions of the 5th U.S. Circuit Court of Appeals in Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998), and the 7th Circuit in Jefferson v. Ingersoll International, Inc., 195 F.3d 894 (7th Cir. 1999). The 5th Circuit’s decision in Allison and the 7th Circuit’s decision in Jefferson illustrate the various ways in which federal appellate courts have interpreted the impact of the Civil Rights Act of 1991 upon class certification in employment discrimination cases. The 5th Circuit’s analysis in Allison held that claims by a plaintiff class for monetary damages and injunctive relief under the Civil Rights Act of 1991 precluded certification of a class in a Title VII suit based on disparate impact and disparate treatment theories of discrimination. In so holding, the 5th Circuit called into serious question the ability of plaintiffs to maintain a class action whenever disparate treatment discrimination is alleged and the plaintiff class seeks both monetary damages and injunctive relief. In this respect, Allison provides employers with support for the contention that the Civil Rights Act of 1991 changes the entire landscape of litigating and certifying Title VII class actions. In Jefferson, the 7th Circuit ruled that when a plaintiff class demands compensatory and punitive damages, certification is permissible only when monetary relief is incidental to injunctive relief. In remanding the case to the district court, the 7th Circuit left the district court to determine whether the monetary damages sought by the plaintiff class were incidental to the equitable relief sought, and if so, whether certification under Rule 23(b)(2) is ever appropriate when money damages are sought. If the money damages sought by plaintiffs were more than incidental, the district court would then have to decide whether to certify the class under Rule 23(b)(3) or bifurcate the proceedings by certifying a Rule 23(b)(2) class for equitable relief and a Rule 23(b)(3) class for damages. The 7th Circuit’s analysis in Jefferson parts company with the 5th Circuit in Allison. The net effect will be a far greater chance for plaintiffs to prosecute class claims for employment discrimination. It remains to be seen whether other federal appellate courts follow the lead of the 5th Circuit in Allison or the hybrid procedures at issue in the 7th Circuit’s ruling in Jefferson. One thing is clear — the threat of class action employment discrimination will continue to haunt corporations and their executives due to the sheer cost and expense of defending such lawsuits and the public relations fallout from being accused of systemic or class-wide discrimination. This article is excerpted with permission from CCH’s Journal of Employment Discrimination Law, Spring 2000 Edition. Gerald L. Maatman Jr. is a partner of Baker & McKenzie and based in the firm’s Chicago office. Mr. Maatman is a graduate of Washington & Lee University (B.A., 1978, Magna Cum Laude) and Northwestern University School of Law (J.D., 1981). He is also an adjunct professor of law at Northwestern University. Mr. Maatman is chairperson of Baker & McKenzie’s Global Labor, Employment & Employee Benefits Practice Group, which consists of over 300 attorneys in the firm’s 61 offices throughout the world. � 2000, CCH INCORPORATED. All Rights Reserved.

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