Certified: Thousands of Oracle Women Permitted to Proceed as a Class in a Significant Win for Gender and Pay Discrimination Actions

Last week, the San Mateo County Superior Court in Jewett v. Oracle granted the representative plaintiffs’ motion for class certification, permitting plaintiffs to proceed as representatives of a class of over 4,100 women. The case alleges systematic underpayment of women, in violation of California’s Equal Pay Act (EPA), Labor Code 1197.5 and California’s Unfair Competition Law, Business & Professions Code 17200.

While the ruling does not reach the merits of the allegations, it nevertheless is a crucial victory and an important breakthrough in pay and sex discrimination class action cases. In recent years, plaintiffs have sometimes met resistance in trying to bring class claims of systemic gender-based discrimination. For example, in Huang v. Twitter, the California courts declined to certify a class of approximately 135 software engineers in an action alleging that Twitter’s discretionary promotion policy had a disparate impact on women in violation of California’s Fair Employment and Housing Act. Similarly, in Moussoris v. Microsoft, the federal district and appellate courts declined to certify a class of approximately 8,600 women in technical and engineering roles in an action alleging that Microsoft’s policies and practices had a disparate impact on women with respect to compensation, promotions, and performance evaluations, in violation of Title VII of the Civil Rights Act and Washington state law. In both cases, the courts cited to Wal-Mart v. Dukes in concluding that commonality could not be established because the discrimination that the women faced was a result of an individualized exercise of discretion, so the inquiry was not suitable for a class case. In a sense, the employers were able to avoid liability on a classwide basis by granting decision-makers the type of discretionary authority that perpetuated the very structural, implicit biases that these cases sought to challenge.

In the instant case, plaintiffs’ claims differed in two notable ways. First, the claims were brought under California’s EPA, which is a strict liability statute – meaning there is no requirement to prove intent, discriminatory animus, or motive for the identified pay disparity. Second, plaintiffs contended that much of this pay disparity arose from Oracle’s use of prior salary at jobs before Oracle, an impermissible factor with respect to pay disparity under the statute (see Labor Code 1197.5(a)(1)(D)(4)).¹

In support of their claims, Plaintiffs submitted evidence that Oracle has a detailed, company-wide system of job codes that groups employees by job function, job specialty, job family, and responsibility level. Plaintiffs subsequently elicited Person Most Qualified (PMQ) testimony that individuals within job code share basic skills, knowledge, and abilities, and similar levels of responsibility and impact. Plaintiffs also introduced expert reports establishing that: (1) work within Oracle’s specific job codes were substantially equal with respect to skills, effort, and responsibilities; and (2) that women working in the same job codes as men receive less base pay, fewer bonuses, and lower stock compensation, to a statistically significant degree, such that the discrepancy could not be explained by job definition, tenure at Oracle, tenure in position, job performance, years of job experience, or location of work site.

The Superior Court found that Plaintiffs’ theory of recovery was suitable for class-wide proof because Oracle’s job codes would allow for comparison of salary data between individuals that performed work similar in skill, effort, and responsibility. The Court concluded that Plaintiffs’ evidence supported a finding that Oracle employed a top-down, centralized compensation system that was appropriate for classwide resolution.

Oracle argued that there was sufficient variance within each job code with respect to the specific duties of each employee that a comparison at the job code level was improper. However, the Court concluded that this was inconsistent with Oracle’s own PMQ testimony, and the EPA’s requirement that jobs only share similarities with respect to a composition of skill, effort, and responsibility performed under similar working conditions. Further, at the certification stage, Plaintiffs need only offer a theory that is susceptible to common proof, which they had done here.

Oracle also argued that it was entitled to present individualized evidence with respect to each and every class member to attempt to establish that there was a “bona fide” factor responsible for that woman’s lower pay compared to every man in her job code who is paid more. The Court rejected Oracle’s argument, finding that to be “bona fide” and applied “reasonably,” any job-related factor that Oracle could point to would have to have been applied consistently with respect to employees performing the same work. As the Court explained: “it is not reasonable or consistent with the purposes of the EPA to permit an employer to pick and choose factors inconsistently and idiosyncratically to justify disparate pay decisions for employees performing substantially similar work.” Although Jewett is not directly responsive to the decisions in the Twitter, Microsoft, and Wal-Mart cases, the Jewett order rebuffs the notion that an employer can insulate itself from classwide gender discrimination claims with respect to pay disparity by letting decision-makers operate with unchecked discretion.

Jewett thus marks an important step in bridging the gender pay gap as it provides employees with a simpler mechanism to bring their claims. Specifically, the Jewett order has solidified the California EPA as a pathway forward to challenging systemic gender discrimination in pay on a classwide basis.

If you believe you are being paid less because of your sex, contact Bryan Schwartz Law.

---

1 The 9^th Circuit recently reiterated that reliance on prior pay history does not insulate an employer from liability under the federal EPA, which this firm has blogged about here.^↩

Revisiting Evidentiary Standards in Gender Discrimination Class Actions

On Monday April 2, 2018, the U.S. District Court, Southern District of New York, excluded arbitrary expert testimony and accepted generalized proof of statistical evidence to grant, in part, Plaintiffs’ class certification motion in Chen-Oster, et al. v. Goldman Sachs, 2018 WL 1609267, at *1 (S.D.N.Y. Mar. 30, 2018).

The Class, consisting of approximately 2,300 female current and former Associates and Vice Presidents in the Investment Banking, Investment Management, and Securities Divisions of Goldman Sachs, are challenging the company’s practices of paying women less, giving them worse reviews, and passing them over for promotion. Specifically, Plaintiffs allege that Goldman’s “360 review” performance evaluation process, “forced ranking,” and “cross ruffing” (i.e., cross-checking procedure that involves teams of Goldman partners interviewing each other about potential candidates) are policies and practices that inherently discriminate against women, particularly when those policies and practices are exercised within a “boy’s club” culture, where for example, managers/decision-makers exclude women from events such as barbeques, drinks, and golf outings, hire scantily dressed female escorts to attend holiday parties, etc.

The Court first addressed Goldman Sachs’ attempt to use “experts” in the financial industry to explain custom and practice for evaluation and promotion; however, the Court rejected Goldman’s expert. In United States v. Dukagjini, 326 F.3d 45, 54 (2d Cir. 2003), the Second Circuit, interpreting the Daubert expert-certification approach and applying Rule 702, held that expert testimony should be excluded if the witness is not actually applying expert methodology. The Honorable Judge Analisa Torres, writing in Chen-Oster for the District Court, stated “[u]nder Daubert, the Court must exercise its gatekeeping function accordingly, and ‘exclude unreliable expert testimony and junk science from the courtroom.’” Chen-Oster, 2018 WL 1609267, at *8 (citing, inter alia, Almeciga v. Ctr. for Investigative Reporting, Inc., 185 F. Supp. 3d 401, 415 (S.D.N.Y. 2016)). Judge Torres went on to state, “[g]eneral knowledge about the financial services industry (or, indeed, uninformed speculation about Goldman Sachs) could hardly be relevant or reliable on the question of whether a statistician’s methodology is sound or supported.” Chen-Oster, 2018 WL 1609267, at *8. Judge Torres specifically cited SEC v. Tourre, 950 F. Supp. 2d 666, 677–78 (S.D.N.Y. 2013), in which the Court had excluded testimony because the expert’s knowledge and expertise was in “so broad a category as to become meaningless when particularized” to the issues of the case. Judge Torres, was emphatic: “Defendants cannot circumvent the requirements of Rule 702 and Daubert by labeling a statistical expert’s statistical exercises a ‘real world check.’ A wolf in sheep’s clothing is still a wolf.” Chen-Oster, 2018 WL 1609267, at *8.

The Court also, recognizing the realities of large class actions, allowed Plaintiffs to use “generalized proof” of statistical evidence to show causation prima facie that Goldman Sachs’ policies and practices have a disparate impact on women. Relying on Dukes v. Walmart, Goldman Sachs attempted to argue that individual managers applied Goldman’s practices in “highly individualized ways,” such that Plaintiffs could not show that Defendants used a “common mode of exercising discretion.” Id. at *12. But the Court “decline[d] to indulge in Defendants’ semantic somersaults.” Id. Hitting at the root, the District Court made clear that in Dukes the plaintiffs lost because they had not identified a “common job evaluation procedure.” Here, Plaintiffs did. Id.

Defendants also, relying on a disaggregated business unit argument, contended that gender disparities were the result of “anomalies specific to individual Business Units.” Id. at *14. However, the Court rejected this argument, reasoning that “business units” at Goldman Sachs were not fixed. Id. For years, Goldman had transferred business units to different divisions, and moreover, the personnel in those units regularly transferred to other units and/or divisions. Id. Ultimately, the Court found the Class expert’s cross-unit modelling of the correlation between the performance/promotion process and gender to be persuasive, as it controlled for, among other things, division, year, office, education, and experience. Id. at *15. The expert’s report thereby provided significant proof of commonality for the purposes of showing the disparate impact of Goldman Sachs’ practices on women.

The Court also certified the disparate treatment claim, but not based on the Goldman Sachs “boy’s club” culture. Interestingly, the Court applied a “statistics and anecdotal evidence” approach in which it considered internal complaints, external complaints, survey answers, emails, articles, business records, and declarations from class members to ground its disparate treatment analysis. While Courts may not be recognizing the “boy’s club” phenomenon as evidence in and of itself, they are putting the pieces together to show that misogynist attitudes and practices continue to pervade certain workforces and injure women’s careers.

Although Dukes still presents challenges, the Chen-Oster analysis is a boon to class certification in discrimination cases.

If you have experienced discrimination based upon your gender, and need help, contact Bryan Schwartz Law.