McReynolds v. Merrill, Lynch, Pierce, Fenner & Smith, Inc.

Dist. Ct. erred in denying request by plaintiffs (700 African-American brokers) for class certification in action seeking injunctive relief against defendant-employer alleging that defendant’s policy of permitting individual brokers to create teams that shared clients created disparate impact based on race where Dist. Ct. concluded that defendant’s delegation of decisions that influenced plaintiffs’ compensation to 135 regional directors precluded finding of existence of common issue that could be resolved in proposed class action. Record showed that plaintiffs satisfied prerequisites for establishment of class action treatment under Rules 23(b)(2) and (c)(4) where: (1) lawsuit involved two company-wide policies that permitted brokers to form their own teams and based account distributions on past success of said brokers; and (2) issues with respect to whether defendant’s policies created disparate impact and whether said policies were nonetheless justified by business necessity were common to entire class. Ct. further observed that should plaintiffs prevail in class action, any damages calculations would have to occur in individual lawsuits to determine degree to which any class members were adversely affected by defendant’s policies.