McReynolds v. Lynch

• Decision Date: 24 February 2012
• Docket Number: No. 11–3639.,11–3639.
• Parties: George McREYNOLDS, et al., on behalf of themselves and all others similarly situated, Plaintiffs–Appellants, v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

114 Fair Empl.Prac.Cas. (BNA) 710

672 F.3d 482

95 Empl. Prac. Dec. P 44,424

George McREYNOLDS, et al., on behalf of themselves and all others similarly situated, Plaintiffs–Appellants,

v.MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Defendant–Appellee.

No. 11–3639.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 13, 2012.Decided Feb. 24, 2012.

Linda Debra Friedman (argued), Senior Attorney, Stowell & Friedman, Chicago, IL, for Plaintiffs–Appellants.

Timothy S. Bishop (argued), Stephen M. Shapiro, Attorneys, Mayer Brown LLP, Chicago, IL, Jared R. Friedmann, Attorney, Weil, Gotshal & Manges LLP, New York, NY, for Defendant–Appellee.

Before POSNER, WOOD, and HAMILTON, Circuit Judges.

POSNER, Circuit Judge.

The plaintiffs have filed a class action suit that charges Merrill Lynch with racial discrimination in employment in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The plaintiffs ask that a class be certified for two purposes: deciding a common issue, Fed.R.Civ.P. 23(c)(4)—whether the defendant has engaged and is engaging in practices that have a disparate impact (that is, a discriminatory effect, though it need not be intentional) on the members of the class, in violation of federal antidiscrimination law—and providing injunctive relief. Fed.R.Civ.P. 23(b)(2). They also want damages. But while they asked the district court to certify the class for purposes of seeking compensatory and punitive damages, see Rule 23(b)(3), at argument the plaintiffs' lawyer said she wasn't asking—not yet anyway—for such certification, though her opening brief had suggested that if we found that the district court had erred in refusing to certify for class treatment the disparate impact issue and injunctive relief, we should order the court to “consider [on remand] the extent to which damages issues also could benefit from class treatment, consistent with Allen v. International Truck & Engine Corp., 358 F.3d 469 (7th Cir.2004).” We defer that question to the end of our opinion. But we note here that without proof of intentional discrimination, which is not an element of a disparate impact claim, the plaintiffs cannot obtain damages, whether compensatory or punitive, but only equitable relief (which might however include backpay, and thus have a monetary dimension). 42 U.S.C. § 1981a(a)(1); Kolstad v. American Dental Association, 527 U.S. 526, 534, 119 S.Ct. 2118, 144 L.Ed.2d 494 (1999). Section 1981a(a)(1) is explicit that damages cannot be awarded in respect of “an employment practice that is unlawful because of its disparate impact.”

The district court denied certification, and the plaintiffs asked this court for leave to appeal the denial. A motions panel granted leave, but the defendant argues that the panel erred—that the appeal is untimely. We begin with that question.

Rule 23(f) of the civil rules permits appeals from orders granting or denying class certification despite the general policy (though one with many exceptions) against allowing interlocutory appeals in the federal court system. A denial of class certification often dooms the suit—the class members' claims may be too slight to justify the expense of individual suits. Conversely, because of the astronomical damages potential of many class action suits, a grant of certification may place enormous pressure on the defendant to settle even if the suit has little merit. See, e.g., CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721, 723 (7th Cir.2011). And because class actions are cumbersome and protracted, an early appellate decision on whether a suit can be maintained as a class action can speed the way to termination of the litigation by abandonment, summary judgment, or settlement. E.g., Blair v. Equifax Check Services, Inc., 181 F.3d 832, 834–35 (7th Cir.1999); Newton v. Merrill Lynch, 259 F.3d 154, 162–65 (3d Cir.2001).

But Rule 23(f) requires that leave to appeal be sought from the court of appeals within 14 days of the entry of the order granting or denying certification. The district court denied the plaintiffs' initial motion for class certification in August 2010. In July 2011 the plaintiffs filed an amended motion for class certification, which the district judge denied in September, and within 14 days of that denial the plaintiffs sought our leave to appeal. The defendant asks us to treat the request for leave to appeal as an untimely request to appeal the August 2010 denial of certification. That would amount to treating the plaintiffs' second motion for certification as an untimely motion to reconsider the denial of the first motion.

The question of timeliness may seem to be about jurisdiction, since most deadlines for appeals from a district court have been held to be jurisdictional. But as we noted recently in In re IFC Credit Corp., 663 F.3d 315, 319–20 (7th Cir.2011), the Supreme Court has been moving toward a definition of the subject-matter jurisdiction of the federal courts that includes all cases that these courts are “competent,” in the sense of legally empowered, to decide. This implies that deadlines for appealing are not jurisdictional, since they regulate the movement upward through the judicial hierarchy of litigation that by definition is within federal jurisdiction. Yet appeal deadlines either found in statutes or adopted by courts by direction of a statute continue to be treated as jurisdictional—though not all of them; the Supreme Court recently rejected such a “bright line” rule in favor of requiring a “clear indication” that the deadline was intended by Congress to be jurisdictional. Henderson v. Shinseki, ––– U.S. ––––, 131 S.Ct. 1197, 1203, 179 L.Ed.2d 159 (2011). (The power of Congress to impose such limits on the jurisdiction of the federal courts is not questioned.) But because no “clear indication” is to be found in the pertinent statutory texts, see, e.g., 28 U.S.C. §§ 2101(c), 2107(a), (c), the Court has found itself saying such things as that Congress is not required to “use magic words in order to speak clearly on this point” and that “context, including [the Supreme Court's] interpretation of similar provisions in many years past, is relevant.” Henderson v. Shinseki, supra, 131 S.Ct. at 1203, quoting Reed Elsevier, Inc. v. Muchnick, ––– U.S. ––––, 130 S.Ct. 1237, 176 L.Ed.2d 18 (2010).

What we take away from this formula is that if the Court has traditionally treated a particular statutory deadline as jurisdictional it will go on doing so, id. at 1203–06; John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 134, 128 S.Ct. 750, 169 L.Ed.2d 591 (2008); Bowles v. Russell, 551 U.S. 205, 209–10 and n. 2, 127 S.Ct. 2360, 168 L.Ed.2d 96 (2007); In re Caterbone, 640 F.3d 108, 111–13 (3d Cir.2011), even though doing so doesn't comport with the new “competence” standard. Deadlines for appealing are just a type of statute of limitations, as acknowledged in John R. Sand & Gravel v. United States, supra, 552 U.S. at 133, 128 S.Ct. 750, and statutes of limitations ordinarily are affirmative defenses rather than jurisdictional bars. A deadline for bringing or appealing a federal case presupposes that the case is within the competence of federal courts to decide.

We declined in Asher v. Baxter Int'l Inc., 505 F.3d 736, 741 (7th Cir.2007), to rule on whether the deadline in Rule 23(f), though it is promulgated by the Supreme Court under the authority of the Rules Enabling Act, 28 U.S.C. § 2072, rather than found in or directed to be adopted by a statute, is jurisdictional. But by now it is clear that it is not jurisdictional—that the exception to the “competence” standard is limited to statutory deadlines, United States v. Neff, 598 F.3d 320, 322–23 (7th Cir.2010), for how can a court contract or expand its jurisdiction except by force of a constitutional or statutory provision? If the deadline was made by Congress, then whether it is jurisdictional depends on congressional intent, and, the Supreme Court appears to be saying, in the absence of any clues to that intent on whether the courts traditionally have treated the deadline as jurisdictional. The time limit in Rule 23(f), having been created by the Court rather than by Congress (no time limits are specified in the Rules Enabling Act—the Act is an enabler, not a specifier), is governed by the “competence” standard and therefore is not jurisdictional, for obviously the suit from which the appeal is sought to be taken is within the jurisdiction of the federal courts.

But suppose our understanding of the evolving Supreme Court doctrine is wrong, and the deadline in Rule 23(f) is jurisdictional. The only difference between a deadline that is jurisdictional and one that is not is that a litigant cannot lose the benefit of the former type (until judgment becomes final after exhaustion of appellate remedies) by failing to assert it, or because the other party's failure to comply would in nonjurisdictional settings be excused by such doctrines as equitable estoppel or equitable tolling. The defendant has from the outset vigorously contested the timeliness of the appeal, and the plaintiffs are not arguing that they should be excused for having missed the deadline. Even if not jurisdictional, a deadline is mandatory in the sense that if invoked by a party in timely fashion the court is bound by it. Eberhart v. United States, 546 U.S. 12, 19, 126 S.Ct. 403, 163 L.Ed.2d 14 (2005) (per curiam); Asher v. Baxter Int'l Inc., supra, 505 F.3d at 741; Maxwell v. Dodd, 662 F.3d 418, 421 (6th Cir.2011); Wilburn v. Robinson, 480 F.3d 1140, 1146–47 (D.C.Cir.2007).

Rather, the plaintiffs' argument is that their 14 days to seek leave to appeal ran anew from the denial of their amended motion for class certification. The defendant points out that a deadline for appealing cannot be extended by a motion for reconsideration of a previous appealable order, Asher v. Baxter Int'l Inc., supra, 505 F.3d at 739–40; Gary v. Sheahan, 188...