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African-American workers at the Adams Mark chain of hotels who say they were denied promotions and unfairly disciplined should not be allowed to pursue their discrimination claims as a nationwide class because they can’t point to a “centralized decision making process” that affected them all, a judge has found. In an 80-page report and recommendation in Vinson v. Seven Seventeen HB Philadelphia Corp., U.S. Magistrate Judge Charles B. Smith found that the plaintiffs cannot meet the “typicality” and “commonality” requirements of Rule 23. “Should this court certify the class, we would create a melting pot of all African-American hourly and salaried employees, in every department of each of defendants’ 24 nationwide hotels, challenging every type of employment action, by every supervisor and managerial employee,” Smith wrote. “Indeed, the sole commonality among these named plaintiffs and, presumably, among the putative class members is their race,” Smith wrote. Smith also recommended that eight of the 11 named plaintiffs have their cases sent back to their home districts in Missouri, North Carolina, Colorado and Alabama. Smith’s recommendations will become the law of the case if they are adopted by U.S. District Judge R. Barclay Surrick, who referred all pretrial matters to Smith. Lawyers on both sides now have 10 days to lodge objections to Smith’s report. The decision, if adopted, is a major victory for the defense team — attorneys Michael M. Baylson, Stephen A. Mallozzi and Teresa N. Cavenagh of Duane Morris & Heckscher. In the report, Smith tackled several complex issues relating to class action employment discrimination suits, including application of the “anti-stacking” rule and when to allow plaintiffs who have not complained to the EEOC to “piggy back” their Title VII claims onto claims by those who did. The decision is also very critical of the team of plaintiffs’ lawyers, finding that one reason the case should not be certified is that they are not adequate class counsel due to their history of mishandling other cases. “The court harbors some serious doubts about the ability of plaintiffs’ counsel to adequately represent a class in this case. They have, in other cases before the court, evidenced their willingness to violate discovery orders, miss filing deadlines, fail to conduct discovery and mislead defense counsel. Our well-founded concerns weigh heavily against class certification,” Smith wrote. The plaintiffs’ team — attorney Samuel A. Dion of Dion-Goldberger in Philadelphia; Alan Lescht in Washington, D.C.; Louis Ginsberg in New York; and Theodore C. Anderson and Dorothy Elizabeth Masterson of Kilgore & Kilgore in Dallas — previously filed a similar class action suit on behalf of black workers at Adams Mark hotels that was denied class certification by U.S. District Judge Jay C. Waldman. In the new suit, the plaintiffs’ lawyers argued that the first suit had effectively tolled the statute of limitations for the entire class. But Judge Smith found that adopting that argument would violate the anti-stacking rule. Tolling of the statute of limitations in class actions began in 1974, Smith found, with the U.S. Supreme Court’s decision in American Pipe and Const. Co. v. Utah. But Smith found that American Pipe and its progeny “have given rise to a new question that, to date, remains unanswered by the United States Supreme Court — whether the tolling rule applies to class claims brought by a new class representative after a denial of class certification.” The 3rd U.S. Circuit Court of Appeals has yet to rule on the issue, Smith found, but the “overwhelming majority” of courts that have reached the issue have declined to extend the rule to allow putative class plaintiffs, who have been denied certification in a prior action, to toll the statute of limitations on their claims indefinitely and relitigate certification questions by “stacking” one class action onto another. “Underlying these rulings rests the general premise that permitting plaintiffs to stack one class action on top of another and continue to toll the statute of limitations indefinitely would allow lawyers to file successive putative class actions with the hope of attracting more potential plaintiffs and perpetually tolling the statute of limitations as to all such potential litigants, regardless of how many times a court declines to certify the class,” Smith wrote. Such tactics, Smith said, “would frustrate the principal purpose of the class action procedure — promotion of efficiency and economy of litigation.” Plaintiffs’ lawyers argued that the anti-stacking rule should not apply because the first case was denied class certification on purely procedural grounds — that the plaintiffs had failed to timely file a second class certification motion after they were granted leave for additional discovery. Smith disagreed, saying Waldman had denied class certification “on the merits,” but gave the plaintiffs 20 days to renew their motion with additional supporting evidence. “Although plaintiffs received that discovery approximately three weeks later … they failed to file their renewed class certification motion within 20 days. … Due to their lack of diligence in pursuing the matter and their failure to meet court-imposed deadlines, this court denied certification with prejudice,” Smith wrote. Smith also rejected the argument that a procedural denial is any different from a denial on the merits for purposes of applying the anti-stacking rule. “A plaintiffs’ lawyer, having had the class certification issue ruled upon and denied, should not be able to keep filing class actions, thereby tolling the statute of limitations indefinitely, and seek continuous relitigation of the certification issue. To accept plaintiffs’ theory would undermine basic notions of fairness and allow class counsel to simply disregard scheduling orders and other procedural obligations, as counsel did in this case,” Smith wrote. If Smith’s decision on the anti-stacking rule is adopted by Surrick, it will be a major blow to the plaintiffs because the Title VII claim is now limited to employees who suffered discrimination within the 180 days before named plaintiff Timothy Walters filed his charge of discrimination with the EEOC. It would also redefine the Section 1981 class to include only those individuals who suffered discrimination within two years prior to the filing of the complaint. Even more devastating to the case is Smith’s decision that the workers cannot proceed as a class for any of their claims due to internal conflicts within the class, the inadequacy of both the plaintiffs and their counsel, and the lack of commonality among the class members. ‘ACROSS-THE-BOARD’ THEORY Smith found that under earlier class action jurisprudence, courts applied an “across-the-board” theory and routinely found the commonality and typicality requirements met where an individual plaintiff alleged companywide or pervasive employment discrimination. But in 1982, Smith said, the U.S. Supreme Court “pulled in the reins” on the across-the-board theory with its decision in General Telephone of Southwest v. Falcon that insisted on “actual, not presumed, compliance with the typicality and commonality provisions of Rule 23.” Although the Supreme Court didn’t eliminate across-the-board class actions, Smith found that it made the pursuit of such claims “significantly more onerous.” Plaintiff must now establish that the discriminatory practice was “pervasive or was reflected in other employment activities,” Smith said, and “conclusory allegations of discrimination on a class-basis are no longer sufficient.” In post- Falcon decisions, Smith said, the courts have emphasized that in cases alleging classwide discrimination, in particular employment actions, the plaintiffs must show a “company-wide policy or practice, beyond individualized claims of discrimination.” Courts have also required detailed allegations, affidavits and other evidence to determine if the individual claims share questions of law or fact with the class claims, and if the individual claims are typical of those brought for the class, Smith found. To prove that the discrimination suffered by the named plaintiffs was not “isolated,” Smith said, the class representatives must have evidence that “a central administration knew of the discriminatory practices, and permitted them to continue,” or “statistical evidence of a consistent, system-wide pattern” or “similar charges were made by other employees.” But when employment decisions are “subject to nearly complete local or departmental autonomy,” Smith said, the commonality and typicality requirements of Rule 23 “are noticeably absent.” Smith found that the Adams Marks workers “face fatal certification obstacles on both the commonality and the typicality fronts.” The case was filed on behalf of all current and former African-American employees of defendants, Smith noted, and challenges “almost every employment practice,” including promotional decisions; salary, raise and benefits decisions; hostile work environment; hiring, training, promotion; retaliation; and termination. The plaintiffs claim that they have been victimized by a “general policy of racial discrimination” at Adams Mark Hotels, carried out through an entirely subjective decision-making process put into place by the company’s owner Fred Kummer. But Smith found that much of the evidence the plaintiffs presented was designed to show that Kummer is a “racist” and that he has taken steps to eliminate promotions that will attract black customers. The plaintiffs’ brief then lays out the evidence relating to the alleged discrimination that each named plaintiff suffered. Smith found the logic flawed, saying the plaintiffs “make the broad leap that the adverse employment actions suffered by the putative class representatives resulted directly from Mr. Kummer’s racist tendencies, which have permeated the ranks of the hotel management.” Although they made “somewhat convincing” case that Adams Mark hotels engage in public accommodations discrimination, Smith found that “noticeably absent from their evidence or brief is any showing of a broad discriminatory policy in the employment decisions of the company.” Smith found the plaintiffs were unable to “make a link between the racial policies directed towards African-American customers of the hotel and the employment discrimination claims of the defendants’ African-American employees.” The class certification motion failed, Smith said, because the plaintiffs “have put forth no evidence establishing a centralized decision making process for each of the challenged employment decisions for each of the plaintiffs’ positions.” Kummer was involved only in hiring the top-level executives at each hotel, but “no evidence exists that Fred Kummer was involved in these day-to-day employment decisions at each of these hotels.”

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