When David Sanford earned a record $250 million jury verdict for a sex discrimination and gender pay class-action in 2010, he made more than history. He outlined a business plan for a practice many lawyers say can be a difficult business: Taking on the gender pay gap.
The huge result on behalf of women pharmaceutical sales representatives working for Novartis, which ended with a $175 million settlement and $38.5 million in attorney fees, has helped Sanford’s firm, Sanford Heisler, develop perhaps the largest practice in the country trying to remedy that stubborn statistic that shows women’s median income in 2014 was 79 percent of men’s in the U.S. workforce.
Despite the potential for large payouts, the pervasiveness of the gender pay gap and the rising level of attention being paid to it, there is disagreement among lawyers in this space that there is a business case for plaintiffs lawyers to bring a tide of Equal Pay Act cases.
Attorneys in the area, including Sanford, say the economics of these cases can still be difficult to justify in the face of recent case law that makes it more difficult to certify a class of women. And practical hurdles limit the number of cases as well. Speaking up about pay disparities still often leads to retaliation. And the costs can be great. A large class-action against Goldman Sachs, for example, failed earlier this year.
“The Supreme Court of the United States has made it very difficult for law firms to view this as a profitable practice,” Sanford said. “The risks are very great.”
Yet others are optimistic that the raising social awareness will lead to more cases. Lori Andrus, whose California firm this year reached a $4 million settlement on behalf of women lawyers at Farmers Insurance, has been making the case up and down the Golden State that more attorneys should be bringing cases under the Equal Pay Act or Title VII of the Civil Rights Act.
“I’m not discouraged,” Andrus said of recent cases in employers’ favor, such as the U.S. Supreme Court ruling in Dukes v. Wal-Mart that said the women Wal-Mart employees in the case were not similar enough to form a class. “It’s 2016. I’m fed up.”
Lieff Cabraser Heimann & Bernstein is another firm that has found success in this area, often partnering with Outten & Golden as co-lead counsel on national class-actions against large companies. The firms settled a case against Morgan Stanley for $39 million and are currently paired up on a lawsuit against Microsoft Corp., alleging gender discrimination against female technical employees at the company.
But a case the firms brought against Goldman Sachs highlights the risks in the practice for plaintiffs firms.
The suit claimed female vice presidents earned 21 percent less than male colleagues while female associates earned 8 percent less. The suit also alleged that about 23 percent fewer female vice presidents were promoted to a managing director position than males.
But in March, a U.S. magistrate judge in the U.S. District Court for the Southern District of New York recommended the class not be certified. In a report calling it a “close case,” Magistrate Judge James Francis IV said the cause of the gender pay disparity was unlikely to be proved by common promotion and compensation policies at the bank.
Questions around the women’s skills, the nature of their work and the profitability of the business units they worked in would all play into the firm’s promotion decisions, Francis wrote, “effectively swamp(ing) the common question of whether the evaluative policies have, on average, a discriminatory impact.”
The case was filed in 2010 and the U.S. district judge affirmed the magistrate’s recommendation in June of this year. While it’s unclear how much that case cost the firms up to that point, similar litigation suggests these cases require a large investment by the plaintiff.
In the Novartis case, which was litigated over a similar five-plus-year timeframe, 68 Sanford Heisler timekeepers spent nearly 37,000 hours on the case, court records show. That time was valued at $16 million.
If there is reason to believe more Equal Pay Act claims will be brought in the near future, a recent settlement reached by Sanford Heisler with tech giant Qualcomm may be Exhibit A.
Qualcomm settled the would-be class action for $19.5 million (and $5.85 million in attorney fees) before the plaintiffs filed their complaint, potentially signaling an increased willingness on corporations’ behalf to be seen as proactive in closing the gender pay gap. Sanford Heisler called the settlement reached before a class was certified “literally unparalleled.”
Companies have also begun announcing pay changes for women without the impetus of a lawsuit. Web domain provider GoDaddy lists its gender pay statistics publicly. Salesforce.com Inc. similarly provides that data for its employees and says it spent $3 million last year equalizing its women employees’ salaries to their male counterparts’.
One common characteristic among those companies that may help spur their action is their California headquarters. The state last year passed an updated version of the Equal Pay Act that makes it easier for women to prevail in lawsuits. For instance, the new law shifts the burden to explain the pay gap from the employee to the employer.
That law may prove helpful in a case brought in California by Chicago-based Sedgwick partner Traci Ribeiro against her firm, alleging sex discrimination.
Sharon Vinick, Ribeiro’s California-based lawyer who also sued the Oakland Raiders on behalf of their cheerleading squad, said the new law in California may make these cases more favorable for employees. But she was unsure that it would lead to an influx of law firms seeing the gender pay gap as a lucrative practice. Apart from a few national plaintiffs firms, the majority of cases are handled by local labor and employment attorneys in small firms, she said. But a reputation in the field is always just one big case away.
“In general there are people bringing these cases like me, swinging away and trying to do the best work for our clients, and our name comes to the top when the work is sexy like the Raiders case or high-profile like Traci’s case,” Vinick said.
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