One of the challenges recently facing groups of employees hurt by discriminatory employment practices has been to persuade courts to allow the entire controversy to be decided in a single class action. Today, the Seventh Circuit issued a decision that helps break down some of the barriers to effective class certification, in a case involving a city school board’s policy of placing schools on suspension – primarily affecting minority neighborhoods – and firing teaching staff.
Chicago Teachers Union, Local No. 1 v. Board of Education of the City of Chicago, No. 14-2843 (7th Cir. Aug. 7, 2015): Chicago Public schools (CBS), through the Chicago Board of Education (Board), operates a policy of were sting leadership – administrative, teaching and parental – away from schools thought to be “failing,” and supplanting the old operation with an outside agency. These are known as “turnarounds,” as the Seventh Circuit summarizes:
“One process involves reconstituting schools that the Board deems to be deficient. Such a reconstitution or ‘turnaround,’ as it is known colloquially, involves removing and replacing all administrators, faculty, and staff from a selected school and relieving the local school council of certain duties. Then, the Board neither contracts with a third party to operate the school, assigns the school to the Board’s Office of school Improvement, or turns it over to one of the nineteen geographic networks that make up the next layer of leadership in the Chicago school Board system.”
In the 2012 process, 226 schools in the system were deemed eligible for turnaround under state law based on falling into the lowest academic level, level three (plus some addition al schools that fell into level two were eligible because they were currently on probation). This group was winnowed down to 74 “by removing schools that met the objective criteria of a composite Illinois Standard Achievement Test (ISAT) score above the network average for elementary schools or a five-year graduation rate above network average for high schools.”
Finally, out of the 74 schools, ten were selected by the Board CEO for turnaround treatment. This process was determined not “on the basis of a written policy or on one particular set of factors,” but a variety of factors including “academic performance, performance trends, leadership, whether the school was over or under utilized, proximity to and effect on There schools, school culture, facilities, safety, parent and community input, and input from CPS staff.” The list of ten resulted from a series of meetings between the CEO and high-level Board members “in which they discussed the types of information that the group would consider concerning schools eligible for reconstitution, and then analyzed that information.” The Board then voted to approve the final list.
According to a lawsuit filed by the teachers’ union, this process had a devastating impact on black teachers, who allegedly bore the brunt of the terminations. “The ten schools were located exclusively on the south and west sides of Chicago where African Americans make up 40.9% of tenured teachers. No schools were selected for turnaround on the north side, where only 6.5% of tenured teachers are African American.”
The union in its lawsuit alleged that the “turnaround” policy violates Title VII, Section 1981, and Equal Protection. The union sought to certify a Rule 23 class action to obtain a declaration that the policy was unlawful, an injunction against the practice, and individual damages for the teachers fired under the policy.
The district court judge assigned to the case denied class certification, holding that because of the supposedly unique factors that went into deciding the final ten schools, There was no common question around which to organize a single class action on behalf of the union and teachers.
The Seventh Circuit reverses. Applying the current law, including the Supreme Court’s recent Title VII class-action decision, Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), the panel noted decisive errors of law and analysis in the district court judge’s order denying class certification.
1. The district court erred in focusing singularly on the end of the process that involved the most subjective judgment. Because objective criteria largely drove the first two stages, those alone presented a single, common class issue (per Rule 23(a)(2)) that affected the entire class:
“The introduction of subjective, case-by-case criteria would not alleviate the disparate impact of the initial objective criteria. Surely we would say that the plaintiffs could allege that There was sufficient commonality to establish a class. Every one of those teachers could answer the question, ‘why was I disfavored?’ by pointing to the initial objective criteria that impacted only African-American teachers.”
2. Even the subjective factors applied at the end of the process conceivably presented common issues suited to class resolution:
“In short, subjective, discretionary decisions can be the source of a common claim if they are, for example, the outcome of employment practices or policies controlled by higher-level directors, if all decision-makers exercise discretion in a common way because of a company policy or practice, or if all decision-makers act together as one unit.”
The panel notes that despite the panoply of issues considered by the Board, There were true commonalities among those factors:
“We can boil these criteria down to the following ten categories: (1) academic performance, (2) performance trends, (3) leadership, (4) whether the school was over or under utilized, (5) proximity to and effect on There schools, (6) school culture, (7) facilities, (8) safety, (9) parent and community input, and (10) input from CPS staff.”
Thus, this was not the case, as in Wal-Mart, “where a court could have no way of knowing why each of the thousands of individual managers made distinct decisions regarding promotions and pay in millions of employment decisions …. Here we have one decision-making body, led by a CEO with ultimate authority to recommend schools to the Board, using one set of factors to analyze the need for turnaround in each school.”
Thus, the district court erred in holding that “it would have to examine the rationale behind the decision to turn around each of the ten schools and compare those reasons to the decisions not to pursue the remaining sixty-three.” The panel holds that “[t]his not so. The court need only resolve whether the ‘same conduct or practice by the same defendant gives rise to the same kind of claims from all of the class members.'”
3. The district court erred in denying certification of a Rule 23(b)(2) class to enter declaratory and injunctive relief. The panel holds that the lower court judge misunderstood the relief sought. For the Rule 23(b)(2) class, the union did not seek any form of individualized relief, such as reinstatement or back pay for fired teachers, that might require individualized analysis. It sought a single injunction to end the practice and to monitor future rounds of school shutdowns.
As the panel notes, “[t]he Board replicated the district court’s error in its briefing before this court, spending several paragraphs describing the complexities required for providing individualized relief … But this all frolic and detour. An order enjoining the board from reconstituting schools would provide the exact relief that the 23(b)(2) class requests … Likewise, a declaratory order that the turnaround process did or did not violate federal law would resolve the issue for all class members.”
4. Finally, the district court erred in not certifying a Rule 23(b)(3) class action to award individualized relief. The panel holds that the union established conclusively that the common issues for such relief predominated the individual issues.
“The lower court reasoned that ‘There were specific facts and issues as to why each of the ten schools was selected for turnaround in 2012.’ Order, p.18. This true, but as we discussed at length above, however, each school was evaluated for its performance under the same set of criteria, analyzed by the same committee, and ultimately subject to the decision-making authority of one person. As the plaintiffs point out, they all suffered the same injury at the same time as the result of the same selection process by the same central decision-maker.”
As the panel concludes:
“One single question would trigger a liability finding for both the 23(b)(2) and 23(b)(3) class: did the policies and process behind the 2012 reconstitution unlawfully discriminate against African-American teachers and staff? And the answer to this question would eliminate the need for repeat adjudication of this question for determinations of damages or individual injunctive relief.”
In sum, the opinion is a complete win – a clean sweep – for the union, the teachers and (by extension) all beleaguered employees in search of collective justice.