Jones Day Women Can Pursue Bias Claims Over ‘Black-Box’ Pay

Posted May 20th, 2020.

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BY PATRICK DORRIAN AND MEGHAN TRIBE

Six female former Jones Day associates may continue pursuing claims challenging the firm’s alleged “black-box” pay system, a federal judge said, keeping alive a lawsuit that may eventually require the firm to disclose sensitive information about how it sets attorneys’ compensation rates.

The firm’s former lawyers say the pay system and related policies, including one requiring lawyers to not discuss their pay with co-workers, had a disparate impact on women. The U.S. District Court for the District of Columbia rejected Jones Day’s motion to dismiss some of those claims.

But the six lead plaintiffs failed to adequately describe how those same policies, while neutral on their face, had unintended discriminatory consequences for attorneys who became pregnant or took maternity leave, the court said Tuesday. It dismissed those claims without prejudice.

The court also agreed with the firm that many other aspects of the 23 separate causes of action asserted in the proposed class action, including some of the six plaintiffs’ equal pay claims, were insufficiently pleaded. These also include some individual claims for relief under federal, New York, D.C., and California anti-discrimination and family rights laws.

The six lawyers sued Jones Day in April 2019, accusing it of systemic discrimination against female associates that resulted in lower pay and narrowed career opportunities. They say much of the bias was caused by managing partner Stephen J. Brogan’s “totalitarian grip” over the firm’s pay and other decision-making.

The women will “face a far steeper hill” when the case reaches the summary judgment stage, but they adequately identified the neutral employment policy or practice needed to survive judgment on the pleadings on their disparate impact sex bias claims, Judge Randolph D. Moss said.

Pay Data Often Private
The decision means that Jones Day may eventually have to turn over information about a secretive “black box” pay system that the women say is controlled exclusively by Brogan and based on subjective factors.

“We look forward to litigating our claim that Jones Day’s black box compensation system directed by Managing Partner Steve Brogan discriminates against women,” said Kate Mueting, partner and co-chair of the Title VII practice at Sanford Heisler Sharp, which represents the Jones Day attorneys.

Jones Day didn’t immediately respond to a request for comment about the ruling. The firm is likely to resist divulging that information, first by asking the judge to revisit the claims on summary judgment and then by asking that documents sealed.

Courts have been willing to shield pay data information in recent cases involving similar discrimination claims against Microsoft and Oracle.

Last year a federal appeals court granted Microsoft’s request to seal certain documents and evidence in a lawsuit by former employees who said the tech giant’s “stacked ranking” performance evaluation “undervalued” women.

A California court has allowed a wide array of documents and evidence to be filed under seal in a class action against Oracle which alleges that the tech company pays women less than men for the same work.

“There are a number of reasons why companies don’t want that information out there that are not unique to law firms,” said Jonathan Segal, an employment lawyer with Duane Morris in Philadelphia. “With firms, the pay information may provide a road map for competitors for who to target for recruiting.”

Segal said he’s not aware of the pay practices at Jones Day and wasn’t speaking about the particulars of the case.

Competitive advantage is one reason Jones Day would likely move to keep its pay information private, another could be privacy of individuals at the firm, said Jahan Sagafi, an employment lawyer at Outten & Golden.

But there are ways to present compensation data “at a level of generality that’s sufficiently anonymized, but also sufficiently granular that it actually says something,” Sagafi, whose firm is representing the employees in the Microsoft case, said.

Jones Day is also facing another pay discrimination lawsuit brought by husband and wife lawyers Mark Savignac and Julia Sheketoff.

The pair, former Jones Day attorneys, sued the firm last July alleging, among other things, that Jones Day’s parental leave policy discriminates based on sex and that the firm discriminated against Sheketoff in pay. The firm has denied these allegations and sought to dismiss the suit in September.

Several other law firms have been hit with allegations of gender discrimination in recent years.

Former associates at Morrison & Foerster filed a lawsuit against the firm alleging the firm discriminated against them after they became pregnant, placing them on a “mommy track.” Five out of the seven plaintiffs settled their claims against the firm in December.

Labor and employment firm Ogletree Deakins Nash Smoak & Stewart was sued in February 2018 in a $300 million gender discrimination case brought by a former female nonequity shareholder. The case was ultimately dismissed as part of an apparent settlement in February.

‘Close Question’
Moss rejected Jones Day’s argument that the claim is based on a group of separate policies, not the single employment practice the U.S. Supreme Court requires for a class disparate impact claim.

In addition to the autonomous “black box” pay system and a requirement that lawyers not discuss their pay, the lawsuit also alleges that the firm uses a subjective evaluation system. Its hyper-centralized system placing final pay, promotion, and related decision-making in the hands of Brogan and Brogan’s “no whining” policy also contributed to the discriminatory mix, the women say.

Jones Day’s contention—”that each of these elements is necessarily capable of separation for analysis” and therefore not a single policy or practice—can’t be accepted before discovery is exchanged in the case, Moss said.

According to the lawsuit, “it is the very alleged secrecy policy and quashing of complaints that purportedly allowed the disparate impact caused by the centralized, subjective, consensus evaluation system to continue from year to year,” the judge said. “It is also plausible that the ‘No Whining’ or the ‘Pay Secrecy’ policy caused continued disparities by closing natural feedback channels,” he said.

It was a “close question,” but the lawsuit’s allegations also fairly describe how the challenged group of policies had unintended discriminatory consequences for female associates based on sex, Moss said.

The disparate impact claims based on pregnancy and maternity, on the other hand, were insufficient, in part because they were only based on the experiences of two of the six lead plaintiffs, the court said.

Only three of the six plaintiffs adequately explained how they were paid less than male associates for equal work, Moss said, dismissing those claims in part.

He also dismissed plaintiff Meredith Williams’ hostile work environment claims under California and D.C. laws, her California law constructive discharge claim, plaintiff Katrina Henderson’s sex-based wrongful discharge claim under New York City law, plaintiffs Nilab Rahyar Tolton’s and Saira Draper’s retaliation claims, and plaintiffs Andrea Mazingo’s and Jaclyn Stahl’s constructive discharge claim under D.C. law.

The court declined to dismiss Williams’ disparate treatment sex bias claim based on her 2016 employee evaluation and resulting pay, Henderson’s pay bias claims under New York City law and her race bias claim under federal law, or the suit’s request for injunctive relief in the form of reinstatement of the six plaintiffs.

Sanford Heisler Sharp LLP represents the women. Jones Day represents itself.

The case is Tolton v. Jones Day, 2020 BL 187042, D.D.C., No. 1:19-cv-00945, 5/19/20.

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