Chen-Oster v. Goldman, Sachs & Co. LLC.

Background

Plaintiffs brought a class action alleging intentional discrimination, discrimination resulting from employment practices, retaliation, and pregnancy discrimination under Title VII of the Civil Rights Act of 1964 and the New York City Human Rights Law. The court had previously certified a class of female Associates and Vice Presidents employed in the United States by Goldman Sachs and its predecessors in the Investment Banking, Investment Management, and Securities divisions. The class involved employees subject to Goldman Sachs’s 360 review, quartiling, or cross-ruffing processes.

Goldman Sachs later moved to decertify the class, arguing in part that class members lacked standing and that the class did not satisfy the requirements of Federal Rule of Civil Procedure 23(b)(3). In a March 17, 2022 order, the court denied that motion. It found that the class had standing and that the commonality requirement was satisfied because class members held one of two jobs and were evaluated under the same processes.

Motion for Reconsideration

Goldman Sachs asked the court to reconsider the standing ruling, arguing that the court had made a clear legal error by relying on an equal-footing principle drawn from equal-protection cases. Goldman Sachs contended that the Supreme Court’s decision in Texas v. Lesage limited that principle to claims for injunctive relief.

The court granted in part and denied in part the motion for reconsideration. Rather than decertifying the class, the court concluded that it could address standing concerns by redefining the class. The court declined to create a “fail-safe” class—one whose membership would depend on proving the members’ claims—and said the class could not be defined by whether members ultimately could recover damages.

For the 360 review and quartiling processes, the court agreed that the following people could not have standing to seek damages based on those processes: employees who were not employed long enough for the process to be used to determine their compensation; self-sustaining private wealth advisors whose compensation was not tied to those processes; employees who were employed only after January 1, 2016; and employees who were in the highest quartile in every relevant year for the quartiling process. The court also limited the 360 review class to claims involving the process from January 1, 2005, through January 1, 2016, because it had previously granted Goldman Sachs summary judgment on claims based on the process in 2002 through 2004.

The court did not exclude women who received top-quartile ratings in every relevant year from the 360 review class because a factual dispute remained about whether 360 review directly affected compensation or did so only through quartiling. The court stated that Goldman Sachs could later request a further limitation if the facts showed that 360 review affected compensation only through quartiling.

For the cross-ruffing process, the court rejected Goldman Sachs’s argument that promoted women lacked standing. The court reasoned that they might have been promoted earlier but for cross-ruffing and might therefore have suffered an injury that could be remedied through back pay. The court also declined to exclude Vice Presidents with less than two years in that position because the parties disputed whether a fixed two-year period was required before eligibility for promotion to Managing Director.

The resulting damages class included: (1) female Associates and Vice Presidents, excluding self-sustaining private wealth advisors, who were subject to 360 review and employed long enough for it to be used to determine compensation, in the three divisions from January 1, 2005, through January 1, 2016; (2) female Associates and Vice Presidents, with the same exclusion, who were subject to quartiling and employed long enough for it to be used to determine compensation, during the previously stated geographic and time periods through January 1, 2016; and (3) female Vice Presidents in the three divisions who were subject to cross-ruffing during the previously stated geographic periods through resolution of the action.

The court found that the alleged injuries were traceable to Goldman Sachs’s processes and could be remedied through back pay. It also found that the revised damages class continued to satisfy Rule 23(b)(3) for the reasons given in the earlier class-certification and March 17, 2022 orders.

Request for Interlocutory Appeal

Goldman Sachs also sought permission for an immediate appeal concerning standing and commonality under 28 U.S.C. § 1292(b). The court denied that request as moot as to standing because it had granted reconsideration on that issue. It denied the request on the merits as to commonality.

The court explained that the commonality determination was fact-based and would require fact-intensive review, including examination of the discretion allowed to reviewers and the work performed by Associates and Vice Presidents. Because the requested appeal did not present a controlling legal question, the court found that certification under § 1292(b) was inappropriate.

Disposition

The court’s conclusion states that Goldman Sachs’s motion for reconsideration was granted in part and denied in part, and that the motion for certification of an interlocutory appeal was denied. The court also denied Goldman Sachs’s request for oral argument. It stated that trial would commence on June 5, 2023 and directed the clerk to terminate the motion at ECF No. 1346.