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In an opinion that employment lawyers say all but shuts the door on class actions in which damages are sought for alleged civil rights violations, the 5th U.S. Circuit Court of Appeals has declined to certify a class of 200 African-American employees who alleged workplace discrimination. The Aug. 22 decision in Matthews Smith, et al. v. Texaco Inc., et al. decertified a class of plaintiffs, relying heavily on previous 5th Circuit opinions that question whether civil rights damages sought by a class of allegedly aggrieved employees can be calculated by objective standards. The plaintiffs, all employees of Star Enterprise — a refinery company that has since been reorganized under a different name — alleged discrimination in the company’s evaluations, job postings, pay systems and promotion practices, suing under Title VII of the Civil Rights Act of 1964. Star Enterprise attorneys denied the allegations in court pleadings. The class recognized and sought damages under the Civil Rights Act of 1991, which allows recovery for employment discrimination but caps damages at $300,000 per plaintiff. Other common types of class action cases only seek injunctive relief. But in a 2-1 decision, the court found that even though the plaintiffs may have a common cause of action, their damage claims likely would be different. “This argument [that a class has a common cause of action] fails to appreciate the overwhelming number of individual-specific issues, as to both the theories of recovery and the damages sought,” wrote Judge Jerry E. Smith in an opinion joined by Judge Harold R. DeMoss Jr. In a dissent, Senior Judge Thomas M. Reavley seemed perplexed by the majority’s conclusion. “The fault is said to be the lack of predominance of the class-wide discriminatory pattern claim over the individual damage claims. … ,” Reavley wrote. “And then the court then explained why the class action would be far superior to individual trials in fair and efficient adjudication, the latter path [individual trials] tying up the court for at least 200 weeks. “The Fifth Circuit rule of law, if this opinion stands, is that there can be no class action where the class members seek individual personal damages beyond those incidental to a claim for equitable relief,” Reavley wrote. James Payne, a partner in Beaumont, Texas’ Provost & Umphrey who represents the plaintiff class, says he will file a motion for en banc review before the court. Scott Kneese, a partner in Houston’s Bracewell & Patterson who represents Star Enterprise, says he can’t comment on the case because of a confidentiality agreement his client has with the plaintiff class. The result of the opinion, says Dallas employment lawyer Kenneth Molberg, is that plaintiff classes will be dead on arrival if they pursue civil rights damages in federal court. “The 5th Circuit has gone to great lengths to put a nail in the coffin,” says Molberg, who notes he has prevailed in previous class action civil rights cases on behalf of plaintiffs. Determining damages in such a case is not as arduous as the 5th Circuit suggests, Molberg says. “At the damage stage, we just addressed them individually,” he says. “We simply figure out a damage formula. “If you want to write Rule 23 [of the Federal Rules of Civil Procedure, which allows class certification in civil rights cases] off the books, then write it off the books,” Molberg says of the opinion. “But don’t engage in this language.” James Jones, a civil rights employment lawyer with Dallas’ Jones & Associates, believes Smith will lead plaintiff classes to take their civil rights cases to state court. “I think you’ll also have a practical effect of driving a lot more of these cases into state court where the questions in … Smith are still open questions,” Jones says. But plaintiffs recently have been backing off of federal class actions anyway, says Michael Maslanka, a partner in Dallas’ Andrews & Kurth, who represents employers. “What we’re seeing a lot more of is multiplaintiff cases. They’re still going to seek relief,” Maslanka says. “If they can’t get a class action, these folks are going to get lawyers and seek individual claims.”

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