7th Circuit Allows Class Action Claim Against Merrill Lynch

In a significant employment class-action case following the Supreme Court’s Wal-Mart decision last year, the 7th Circuit has ruled that 700 black brokers at Merrill Lynch may proceed in a class against the bank. The opinion is available here.

The plaintiffs claim that two of Merrill Lynch’s policies disparately impacted black brokers. At issue are the “teaming” system, in which brokers may form teams with other brokers they select themselves, and the account distribution system, in which accounts are divided among remaining brokers after brokers leave the company. The plaintiffs allege those systems perpetuate racial discrimination at the company and have a disparate impact based on the brokers’ races. Significantly, while the policies are those of Merrill Lynch, the individual brokers in 600 different offices voluntarily select teams themselves.

The 7th Circuit opined that was enough to decide the common issues as a class action. Merrill Lynch must now show either that the policies did not have a disparate impact or that they were essential to the business.

The case is a good reminder not only of the perils of disparate impact law, but also of the significance of localized decisionmakers impacting the entire company.

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