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Class Action Defense Cases-Hnot v. Willis Group: New York Federal Court Denies Defense Motion To Reconsider Order Certifying Class Action Because New Second Circuit Authority Governing Class Action Certification Had Been Satisfied

Second Circuit Opinion in In re IPO Class Action Enunciating new Standards for Certification of Class Actions Warranted Reconsideration of Order Certifying Class Action but not Decertification of Class Action because new Standards were met New York Federal Court Holds

Female employees filed a labor law class action against Willis Group and its affiliates alleging gender discrimination. Hnot v. Willis Group Holdings Ltd., 241 F.R.D. 204, 206 (S.D.N.Y. 2007). The district court granted plaintiffs’ motion to certify the litigation as a class action, see Hnot v. Willis Group Holdings Ltd., 228 F.R.D. 476 (S.D.N.Y. 2005); defense attorneys sought reconsideration of the class certification order and decertification of the class, arguing that under the Second Circuit opinion in In re Initial Pub. Offering Sec. Litig., 471 F.3d 24 (2d Cir.2006) (In re IPO) — a summary of which may be found here — which issued after the class action had been certified, plaintiffs failed to establish commonality under Rule 23(a), and that class action treatment was “inappropriate under Rule 23(b)(2),” 241 F.R.D. at 206. Specifically, the defense argued that a plaintiff is now required to do more than simply make “some showing” that the elements of Rule 23 have been met, id., at 207. The district court denied the defense motion, concluding that the requirements of Rule 23 had been met and that the lawsuit should properly proceed as a class action.

Plaintiffs filed their putative class action in 2001 “on behalf of a class of high-level female employees…alleging illegal employment discrimination on the basis of sex.” Hnot, at 206. In response to plaintiffs’ motion to certify a class action, defense attorneys argued that Rule 23(a)’s commonality requirement had not been satisfied. Id. Plaintiffs’ responded that “a common policy of vesting regional and local officers with unfettered discretion in making promotion and compensation decisions, result[ed] in discrimination against women in high level positions.” Id. (citation omitted). Each side submitted expert reports, which the district court considered as they pertained to the issue of commonality, id., and ultimately concluded that “plaintiffs’ evidence was ‘certainly adequate to establish that whether or not Willis’s promotion and compensation policies subject class members to discrimination is an issue common to all class members,’” id., at 207 (citing 228 F.R.D. at 483).

After finding that plaintiffs had met the remaining requirements of Rule 23(a), id. 485-86, the Court considered whether plaintiffs had also satisfied Rule 23(b)(2), which requires that “the defendant ‘has acted or refused to act on grounds generally applicable to the class,’ thus making final injunctive or declaratory relief appropriate for the class.” Id. at 486, citing Fed.R.Civ.P. 23(b)(2). The Court found that, because “declaratory, injunctive, and equitable relief predominate[d]” among plaintiffs’ claims, plaintiffs had satisfied Rule 23(b)(2). Id. Thus, with all of Rule 23’s requirements met, the Court granted plaintiffs’ motion for class certification. Id. at 486-87.

In re IPO held that district courts may not certify a class action merely on “some showing” that Rule 23’s requirements had been satisfied. In re IPO, at 41. Rather, it held that “the district judge must receive enough evidence, by affidavits, documents, or testimony, to be satisfied that each Rule 23 requirement has been met” and must “resolve[] factual disputes” related to those requirements even if such an analysis crosses over into consideration of the merits of the claim. Id. Defense attorneys argued that the district court should reconsider class certification in Hnot because plaintiffs merely had made “some showing” of commonality. 241 F.R.D. at 207.

The district court recognized its obligation to “reassess” its class certification ruling “as the case develops,” and that reconsideration of a class certification ruling is appropriate “if there is a showing of a ‘significant intervening event’ or ‘compelling reasons’ that could render the requirements of Rule 23 no longer satisfied.” Hnot, at 207-08 (citations omitted). The court agreed that the issuance of the opinion in In re IPO warranted such reconsideration, id., at 208. But while the court acknowledged that “In re IPO significantly altered the Rule 23 standards in this Circuit,” it concluded that its prior class certification order “already adheres to the [new] standards” and, accordingly, denied the motion for reconsideration and decertification. Id.

In reaching its conclusion, the federal court held that “In re IPO does not stand for the proposition that the Court should, or is even authorized to, determine which of the parties’ expert reports is more persuasive.” Hnot, at 210. Indeed, disagreement among experts on whether a defendants’ conduct resulted in discriminatory impact “is not a valid basis for denying class certification.” Id. (quoting In re IPO, 471 F.3d at 35). The district court explained at page 210:

In this case, plaintiffs and defendants disagree on whose statistical findings and observations are more credible, but this disagreement is relevant only to the merits of plaintiffs’ claim–whether plaintiffs actually suffered disparate treatment–and not to whether plaintiffs have asserted common questions of law or fact. By asking the Court to decide which expert report is more credible, defendants are requesting that the Court look beyond the Rule 23 requirements and decide the issue on the merits, a practice In re IPO specifically cautions against. Thus, the Court’s rejection of defendants’ objections to plaintiffs’ expert report was unaffected by In re IPO.

Because the district court previously concluded “that plaintiffs had satisfied the commonality requirement because there were common questions of fact or law that affected the entire class,” Hnot, at 211, and because it reaffirmed its prior determination that Rule 23(b)(2) had been satisfied, id., at 211-12, the court denied the defense motion to vacate the certification order.

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