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A federal judge has refused to certify a class action race discrimination suit brought by black workers at Hygrade Food Products Corp. after finding that Title VII cases are no longer appropriate for class treatment due to the provisions of the Civil Rights Act of 1991 that allow for compensatory and punitive damages. In his 14-page opinion in Miller v. Hygrade Food Products, Senior U.S. District Judge Lowell A. Reed Jr. found that prior to the passage of the 1991 Civil Rights Act, most Title VII pattern-and-practice class actions that alleged intentional discrimination were certified because the Civil Rights Act of 1964 allowed for very little relief beyond injunctive and declaratory relief. But now that the 1991 act has been enacted, Reed said, “Title VII class certification is much more debatable.” Reed followed the lead of the 5th U.S. Circuit Court of Appeals’ 1998 decision in Allison v. Citgo Petroleum Corp., which, he said, called into question “the general propriety of Title VII classes because of dramatic effects that 1991 Act has on Rule 23.” In a footnote, Reed said he found “no reported decision where a court within this circuit has certified a Title VII litigation class since the passage of the 1991 Act,” although one Eastern District of Pennsylvania judge has certified a settlement class under Title VII. In Allison, Reed said, the court “established a test for determining when, if both injunctive and declaratory relief as well as monetary relief are sought, the former would be deemed the primary relief sought.” Under the Allison test, Reed said, “monetary relief predominates in [Rule 23] (b)(2) class actions unless it is incidental to requested injunctive or declaratory relief.” Applying the test to the claims brought by the Hygrade workers, Reed found that the class of up to 200 workers cannot be certified. “Assuming arguendo that Hygrade operated in a discriminating manner, calculating compensatory and punitive damages, as opposed to simply back pay, of 200 persons would prove to be quite an individualized task,” Reed wrote. “Presumably, some members will have needed medical care, while others will not. In some cases, the family of the members will have been affected, while in other cases, such a probe will be unnecessary. These concerns represent only a sampling of the individualized nature of appraising damages.” As a result, Reed concluded that “in the present action, monetary relief predominates and precludes (b)(2) certification.” In the suit, nine black workers from Hygrade — a subsidiary of the Sara Lee Corp. that employs about 300 workers at its Philadelphia facility where it produces and packages hot dogs, bacon and ham — allege that Hygrade has engaged in a continuous pattern and practice of intentional race discrimination and racial harassment. Their lawyers, Robert T. Vance of Philadelphia and Cynthia L. Butler of Butler & Spears in Washington, D.C., specifically allege that Hygrade’s employment decisions regarding discipline, termination, compensation, training, work assignment, hiring of temporary employees and promotions are determined in a “highly subjective” manner at the hands of a “small, virtually entirely non-black, central group of people.” The suit also says Hygrade condones “a racially hostile work environment.” Vance and Butler sought to represent a broad-based class of all African Americans employed at — or who were not hired for permanent employment from a temporary position at — the Philadelphia facility from May 1, 1993, to June 1, 2000. But Hygrade’s lawyers — Patrick J. Doran and Howard A. Rosenthal of Pelino & Lentz in Philadelphia, along with William A. Blue, S. Craig Moore and Angela Marie Hubbell of Constangy Brooks & Smith in Nashville, Tenn. — strongly opposed class certification, arguing that the nine workers could never meet the test under Rule 23 to establish commonality and typicality of the claims. To respond, the plaintiffs’ team brought in a group of class action specialists from Berger & Montague including attorneys Stephen A. Whinston, Jerome M. Marcus, Jonathan Auerbach and Shanon J. Carson. In their brief, the Berger team urged Judge Reed not to follow Allison. “It is simply inconceivable that Congress gave Title VII plaintiffs damage remedies with one hand and at the same time took away with the other hand the only effective enforcement mechanism — the (b)(2) class action. Such an abrupt turnaround should only be inferred when it can be supported with specific legislative history,” they wrote. Instead, they argued, a “more logical” reading of the 1991 act is that Congress was aware of decades of class action litigation under Title VII and assumed that the new compensatory damage awards would be handled the same way as back-pay awards. “There is nothing inherently more difficult or complicated in individualized determinations of compensatory damages that would make such awards inappropriate under (b)(2) when individualized awards of back pay are already an accepted procedure,” they wrote. But Reed disagreed, finding that the class could never meet the provisions of Rule 23(b). In the 1991 act, Reed said, Congress amended the Civil Rights Act of 1964 in two critical ways — first by adding the remedies of compensatory and punitive damages for suits alleging intentional discrimination and second by allowing either side to demand a jury trial. Under the new law, Reed noted, compensatory damages include relief for “future pecuniary losses, emotional pain, suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses.” Punitive damages, he said, are allowed where the employer discriminates “with malice or with reckless indifference to the federally protected rights of an aggrieved individual.” The 1991 act caps damages at a maximum of $300,000 per plaintiff. Prior to these amendments, Reed said, Title VII cases only allowed for back pay and other equitable remedies. “These new remedies translate into a greater diversity and complexity of the issues to be adjudicated,” Reed wrote. Before the 1991 act was passed, Reed said, both the liability and the remedy phases were determined in bench trials. “This amendment creates potential management concerns as well as Seventh Amendment problems,” he wrote. Under Rule 23(b)(2), Reed said, classes “must be cohesive, particularly because unnamed members are bound by the decision with no opportunity to opt-out. In other words, disparate factual differences can bar class certification.” When a class suffers from a common injury and seeks class-wide relief, Reed found that “there is a presumption of cohesion.” By contrast, he said, “where a class seeks monetary relief, the class becomes less cohesive because assessing these damages often necessitates an examination into individual claims.” Reed found that the Allison test has been accepted by numerous appellate and district courts and holds that “monetary relief predominates in (b)(2) class actions unless it is incidental to requested injunctive or declaratory relief.” Although a few courts have criticized Allison, Reed said he found “no court crimination in the areas of discipline, termination, compensation, training, work assignment, hiring of temporary employees and promotions, as well as a hostile work environment. “The plaintiffs are not claiming that each worker was affected by the alleged discriminatory practices in the same manner. Rather, subjective standards will apply as the putative class includes individuals employed in different divisions, under different supervisors, for varying durations of time over a seven-year period.” Whinston also argued that if equitable relief includes back and front pay, then it can also include compensatory and punitive damages, especially in light of the statutory cap on damages. But Reed said, “Plaintiffs seem to be arguing that if pre-1991 Act Title VII classes could be certified under (b)(2) despite the fact that the class was seeking back and front pay, then the added remedies should not bar certification.” Attorney Lisa M. Rau of Kairys Rudovsky Epstein Messing & Rau, who is not involved with the Miller case, said she believes that Reed’s ruling is wrong. Rau said she has brought several class actions on behalf of workers in recent years, including one certified under Title VII by Senior U.S. District Judge Clarence C. Newcomer and two others under the Americans with Disabilities Act that were also certified and included claims for compensatory damages. The 3rd Circuit addressed the question in Baby Neal, Rau said, and held that courts can’t use individual damages issues as reason not to certify a class. Rau said the 1991 act hasn’t changed anything on the issue of class certification since the plaintiffs still share enough common questions that the court should use the vehicle of class action as a method of conserving judicial resources. “It’s important to remember that the primary purpose of a class action is judicial economy and management,” she said. And in reality, Rau said, the damages issues won’t be a concern because, if the court bifurcates the issues and holds a trial on liability first, the defendant will usually settle once liability has been established.

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