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Seventh Circuit Says Merrill Lynch Class Action Can Proceed

Eight months after the Supreme Court made it harder for plaintiffs to band together to bring a class action lawsuit, the Seventh Circuit Court of Appeals has decided to let a major Merrill Lynch class action lawsuit go forward. That means that more than 700 current and former Merrill Lynch employees can bring their employment discrimination claims against the financial management company, reports Reuters.

The litigants are accusing Merrill Lynch of employment discrimination, including steering African-Americans into clerical positions, giving the most lucrative accounts to white brokers, and creating a hostile work environment.

Class certification was not guaranteed thanks to last year's Supreme Court decision in Walmart v. Dukes. In that case, the Supreme Court denied class certification for 1.5 million female Walmart employees, finding that the group lacked the commonality needed for a class action lawsuit. Justice Scalia, writing for the majority, noted, "Because respondents wish to sue about literally millions of employment decisions at once, they need some glue holding the alleged reasons for all those decisions together."

The Seventh Circuit Court of Appeals, however, found enough "glue" among the Merrill Lynch class action plaintiffs to make the class action stick.

The Seventh Circuit's decision only reinstates the lawsuit as a class action claim; it has no bearing on the merits of the case. Judge Richard Posner, writing for the three-judge panel, clarified, "We are not suggesting that there is in fact racial discrimination at any level within Merrill Lynch, or that management's teaming and account distribution policies have a racial effect. The fact that black brokers have on average lower earnings than white brokers may have different causes altogether. The only issue at this stage is whether the plaintiffs' claim of disparate impact is most efficiently determined on a class-wide basis rather than in 700 individual lawsuits."

Barring additional appeals, the Merrill Lynch class action will return to the district court for discovery and trial.

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