Microsoft, Advocates Expect Class Action Test in Sex Bias Case

Nov. 4, 2019, 11:16 AM

More than 8,000 women who say Microsoft Corp. engages in systemic pay and promotion discrimination will try to convince the Ninth Circuit that they should proceed as a group, in a case that provides a vehicle to explore the viability of class actions.

The battle with the Redmond, Wash.-based tech giant comes before the appeals court at a time when there is a groundswell of attention on gender and sex bias in the workplace. The #MeToo movement that emerged two years ago drew attention to sexual harassment. Several ongoing lawsuits against major companies, including law firms, tech companies, and accounting giants allege unequal treatment and pay.

A panel of the U.S. Court of Appeals for the Ninth Circuit will hear oral arguments Nov. 4 in Portland, Ore., over whether to overturn a Seattle federal district court’s decision to nix a sex discrimination class action against Microsoft. Major business groups, including the U.S. Chamber of Commerce, as well as worker advocacy groups have argued to the appeals court that the outcome of this case will have broad repercussions.

Workers say the lower court’s ruling, left unchecked, would be a major setback for workers attempting to address systemic disparities. Business groups argue that allowing the 8,000-strong Microsoft class to move forward would lead to untenable results and an unwieldy case that doesn’t target a specific company policy.

Attorneys will argue whether practices at Microsoft are enough to unite the group of more than 8,630 women in technical and engineering roles from 2012 to the present. The workers’ attorneys say the company’s pay and promotion structure leads to imbalances between men and women. The company will argue that that is not a strong enough to tie the entire class together and that doing so would be untenable.

Dukes Casts Shadow

The U.S. Supreme Court’s eight-year old decision in Walmart Stores, Inc. v. Dukes casts a long shadow over the current dispute.

The high court in 2011 found that 1.6 million female former employees of the retail giant didn’t have enough in common to proceed as a class. Proof of inequity among the class members wasn’t enough, the justices said.

The Dukes decision is commonly cited by companies fighting class actions alleging bias, and has been a roadblock to class actions ever since.

Under “the Supreme Court’s controlling decision in Walmart, this is an easy case,” the U.S. Chamber of Commerce told the Ninth Circuit in its friend-of-the-court brief, referencing the Dukes decision. “[A] ‘classwide’ proceeding would devolve into thousands of mini-trials that would bog down the district court and Microsoft for years—while delivering none of the asserted benefits of representative litigation,” the Chamber, along with the Retail Litigation Center, said.

District Judge James Robart in the Seattle federal court also pointed to the 2011 decision in ruling that the women didn’t point to a common practice in the lawsuit against Microsoft. That was a “fatal flaw” in the workers’ argument, he said.

“There is no bias in Microsoft’s pay and promotion practices,” a company spokesperson said in an email statement. “The District Court Judge carefully considered the plaintiffs’ arguments on class certification and rejected them. We remain committed to increasing diversity and making sure that Microsoft is a workplace where everyone has an equal opportunity to succeed.”

Pay equity litigation often has acutely focused on the tech sector. In California, a state judge in March 2018 refused to derail pay discrimination class claims from a group of Google female employees. That same month, Uber agreed to pay $10 million to settle a class discrimination suit that included claims of gender and racial compensation disparities. Recent rulings, however, have found that the original plaintiffs in the Dukes lawsuit against Walmart dispute should proceed individually.

In the current bid for group status by the Microsoft women, their lawyers cited recent decisions involving Goldman Sachs Group Inc. and the Merrill Lynch unit of Bank of America Corp., which have allowed narrower, more focused classes to be certified.

If the Seattle court’s decision is reversed, it would reverberate through the federal courts because the case is linked so closely with Dukes, said Stephanie Adler-Paindiris, a principal in Orlando with Jackson Lewis. Adler-Paindiris is the co-leader the firm’s Class Actions and Complex Litigation Group.

She said the workers’ arguments oversimplify a complex problem and deprive the company of due process to be able to dig into each individualized circumstance.

“When you talk about the #MeToo movement, and talk about the all the issues coming to light about equal pay, all of that is really good,” Adler-Paindiris said. “The issue here is whether or not the class actions procedure is the right way to remedy that wrong.”

Advocates Push For Class

Yet, advocates pressed the court to allow the women to proceed as a class, arguing that scuttling this avenue would hurt workers attempting to fight imbalances in the workplace. The stakes are even higher for low-income workers and people of color who fear retaliation if they came out publicly and pursued a case as an individual plaintiff, said Aarti Kohli, executive director of Advancing Justice-Asian Law Caucus.

“The fear of retaliation is real for someone who is trying to build a career. To expect them to come out and to expect everyone to come out publicly creates a lot of risk for people who have to support their families,” Kohli said.

Among other issues, the district court took an extreme view on the type of evidence that can support a class action, said Noreen Farrell, executive director of Equal Rights Advocates. It suggested that company records of gender bias complaints and internal audits of pay issues can be ignored and that instead class members have to personally appear as case witnesses to show that common problems exist, she said.

That legal standard for showing intentional discrimination has no basis in the law, she said. It would make it virtually impossible for these kinds of claims to be certified for class treatment.

“The Ninth Circuit has an important opportunity to reject an artificial standard of evidence promoted by the lower court that will frustrate the vindication of anti-discrimination laws if left to stand,” Farrell said. “If the #MeToo movement has taught us anything, it has revealed the power for change when women come forward to tell their story. The courts are an important place for that to happen.”

The women are represented by teams from Lieff Cabraser Heimann & Bernstein and Outten & Golden. Orrick, Herrington and Sutcliffe represents Microsoft.

The Ninth Circuit panel includes Judges Richard Paez and Johnnie Rawlinson with Leslie Emi Kobayashi, a district court judge from Hawaii.

The case is Moussouris v. Microsoft Corp. No., 9th Cir. App., No. 18-35791, oral argument 11/4/19.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Terence Hyland at thyland@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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