Tag Archives: Comcast

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Bifurcation in the Wake of Comcast

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Recently the U.S. District Court for the Southern District of New York certified a liability class in a Title VII suit brought against the United States Census Bureau. In Houser v. Pritzker, Magistrate Judge Frank Maas found that five of eight named plaintiffs had standing to bring suit, and further held that the proposed class met the commonality and typicality requirements of Rule 23(a).

The judge declined, however, to certify a damages class. Analyzing the Supreme Court’s decision in Comcast Corp. v. Behrend, which significantly raised the bar for predominance under Rule 23(b), Magistrate Judge Maas found that certification of a damages class was inappropriate given the highly individualized nature of each class member’s damages. Rather than reject certification entirely, the Court chose to exercise its discretion under Rule 23(c)(4) to bifurcate the liability and damages phase, and proceed to adjudication of the liability questions.

As such, the decision of Houser is of significant importance to all employers in the workplace class action context.

Background

The United States Census Bureau conducts a nationwide census every 10 years, known as the Decennial Census. The 2010 Decennial Census created 1.3 million temporary employment positions between October 2008 and September 2010, and the Census Bureau received about 3.8 million applications for these positions.

In screening job applicants, the Census Bureau required all applicants with a criminal record to provide “official court documentation” of their prior arrests and convictions within 30 days of receipt of a demand letter. Once the documentation was received, staff members would review and determine whether to treat the applicant as available for hire, or request further information.

In 2010, eight individuals filed a purported class action suit challenging these procedures as non-job related and discriminatory because they negatively impacted the hiring of African-Americans and Latinos for obtaining employment.

The Court’s Decision

Magistrate Judge Maas focused primarily on two issues – subject matter jurisdiction and class certification under Rule 23 – in his ruling.

Subject Matter Jurisdiction  

The Census Bureau moved to dismiss the suit for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). The court examined whether the named plaintiffs had standing to bring suit and whether a favorable decision could redress their injuries.

First, the court concluded that five of the eight named plaintiffs individually possessed Article III standing to bring suit because they met the bare minimum qualifications for employment. Even though the Census Bureau established that the candidates would not have been hired due to a variety of factors ‒ geography, test scores and availability, among others ‒ the court rejected the notion that Title VII plaintiffs must show that they ultimately would have secured employment. Rather, “the question here is whether the Census Bureau’s allegedly discriminatory practices place any of the named plaintiffs on an unequal footing in terms of their ability to compete for employment.” In answer to this question, the court determined that the “five plaintiffs have established that they were eligible to be considered for employment but were denied the opportunity to compete with other applicants. That showing is sufficient to confer standing under Title VII.”

The court also held that the requested relief could redress the injuries of the same five plaintiffs. The court rejected the Census Bureau’s argument that each plaintiff was “precluded from selection for reasons entirely independent of the challenged policies and procedures” and therefore had no injuries that could be redressed by the relief sought. The court noted that these arguments were simply “repackaged” arguments relating to standing, and it denied the Census Bureau’s motion to dismiss.

Class Certification

Next, the court examined certification of the class. The court found without hesitation that the class met the standard for commonality under the Supreme Court’s decision in Wal-Mart Stores v. Dukes, 131 S. Ct., and commented that Dukes seemed to address the very situation at bar, where there was a “testing procedure to evaluate [all] applicants for employment” and “a class action on behalf of every applicant or employee who might have been prejudiced.” The court found that the parties had all but agreed that the “central questions in the case have a common, classwide answer; [and] the only point on which the parties disagree is the answers themselves.”

In examining typicality, the court noted that the only two Latino class representatives were not among the five plaintiffs with standing, and therefore the court declined to certify a class including Latino class members. This class definition seems unlikely to hold, however, as the court noted that Plaintiffs will have an opportunity to identify other Latino representatives, and the court may in its discretion amend the class definition at that time.

Finally, the court examined the predominance requirement of Rule 23(b) and found no bar to certification with respect to injunctive relief. The court’s analysis of damages sub-classes, however, was quite different. The court explained that “[t]he Supreme Court recently emphasized the stringency of the predominance requirement in Comcast Corp. v. Behrend” which requires that plaintiffs offer a damages model capable of calculating damages across the class. Given the “highly individualized nature” of analyzing damages as to any individual class member in this case, the court found that individual questions would predominate and the stringent requirements of Comcast were not met.

Nevertheless, the court found that Comcast did not mandate denial of class certification in its entirety. Rule 23(c)(4) allows a court in its discretion to maintain a class action only with respect to particular issues, and Magistrate Judge Mass opined that “nothing in the [Comcast] ruling appears to have taken that option off the table in future lawsuits.” The court noted that although Comcast did not bifurcate the issues under Rule 23(c)(4), the plaintiffs in that suit did not request that relief.

Implications for Employers

Courts have disagreed as to the effect of Comcast on class certification. Some have held that the decision requires a class-wide model for calculating damages in order to certify a class for any purpose, while other courts have bifurcated liability and damages phases and granted certification only with respect to the former. Indeed, district courts in the Second Circuit have reached different conclusions, and the Court of Appeals for the Second Circuit seems poised todecide the issue. Employers should be watching carefully.

This blog was previously published on the Seyfarth Shaw website.

Jeff Zucker Leaving NBC Post-Comcast Merger

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NBC chief exec Jeff Zucker today told his employees that he will be leaving the network — not of his own volition — as soon as the company’s pending merger with Comcast is complete, something that is expected to occur right around the end of the year.

Even as he said he accepted the logic of a new owner seeking to install its own chief executive, Mr. Zucker also described his departure as both “incredibly emotional” and “gut-wrenching in the sense that you have spent your whole life here at NBC.”

In the face of persistent rumors that Comcast would seek to remove Mr. Zucker the first chance it got, Mr. Zucker had said in previous interviews that he had in no way foreclosed the possibility of staying on. G.E., which retained 49 percent of the company, had done its part by locking Mr. Zucker into the position, awarding him a new three-year contract seven months ago that was designed to take him into and past the takeover by Comcast.

Aaahhh … Mergers: Always messy, always difficult, always tumultuous.

Especially during the transition period, the uncertainty among employees can have a significant effect of morale, stress and, ultimately, productivity. Even Zucker himself has been unsure of the company’s direction for some time.

“Look, I knew from the day this was announced that this was a possibility,” Mr. Zucker said. “I wasn’t going to shut the door on anything. But in the last nine months it became increasingly clear that they did want to put their own team in place — and I didn’t want to end up being a guest in my own house.”

While he often faced withering criticism in Hollywood circles for his leadership of the entertainment division of the NBC network — in his note to the staff he mentioned the “ups and downs” the company had experienced — Mr. Zucker said he did not detect “any particular reason” beyond the broad desire for new leadership for Comcast’s inclination to make a change.

Change inevitably happens.

And obviously when two companies come together, there is going to be a lot of deliberation and lag time in major announcements. The process of merging is just that — a process. But companies need to know that this uncertainty can lead to a working environment that is less than optimal.

That effects all mergers. But specifically when it comes to media companies, there are a bevy of other risks involved.

In fact, we broke down the NBC/Comcast merger in our May cover story, detailing the liability, intellectual property, data security, privacy and insurance integration issues associated with a media merger.

We also took a look at the epic failure of the AOL/Time Warner merger and Google’s acquisition of YouTube.

conan obrien

Jeff Zucker’s decision to reinstall Jay Leno into The Tonight Show over Conan O’Brien will go down as one of the last stamps he put on the only company he has ever worked for.

The Comcast/NBC Merger Faces a Diversity Hurdle

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In May, we covered the the risk management complications of the proposed merger between NBC and Comcast. The crux of the piece was to look at the unique difficulties of any media sector merger and we also looked back at the failed AOL/Time Warner marriage as well as the legal liabilities that Google inherited when it bought YouTube for $1.6 billion in 2007.

Now, however, the future of a combined Comcast/NBC look murkier than expected.

On Monday, a House Judiciary Committee hearing into whether or not the deal would be approved took an abrupt turn. The Los Angeles Times show business blog Company Town explains:

C-SPAN didn’t cover Monday’s nearly four-hour House Judiciary Committee “field hearing” on Comcast’s proposed deal to take control of NBC Universal. But if it had, viewers accustomed to the network’s trademark colorless coverage would have been treated to a Hollywood-worthy drama.
After all, who would expect a gathering of staid Washington lawmakers to feature a congresswoman implying that she had been offered a bribe, another member oblivious to media consolidation, one witness likening a corporate giant to a “plantation,” and three attendees arguing about race?
But this hearing had all that, plus plenty of grandstanding from lawmakers and the witnesses, who both faced cheers and groans from the audience.

C-SPAN didn’t cover Monday’s nearly four-hour House Judiciary Committee “field hearing” on Comcast’s proposed deal to take control of NBC Universal. But if it had, viewers accustomed to the network’s trademark colorless coverage would have been treated to a Hollywood-worthy drama.

After all, who would expect a gathering of staid Washington lawmakers to feature a congresswoman implying that she had been offered a bribe, another member oblivious to media consolidation, one witness likening a corporate giant to a “plantation,” and three attendees arguing about race?

But this hearing had all that, plus plenty of grandstanding from lawmakers and the witnesses, who both faced cheers and groans from the audience.

Reps. Maxine Waters (D-CA), John Conyers (D-MI) and Louie Grohmert (R-TX) all questioned company executives on the diversity — or lack thereof — of their staff and airwaves. None of Comcast’s stations are wholly owned by African Americans and, given the increasing consolidation of media in today’s world, this was viewed by some lawmakers as not just less than adequate in 2010.

The New York Times‘ Media Decoder blog highlighted the issue by quoting one of the hearings witnesses.

“Black executives have never had greenlight power at a major studio or network,” said Suzanne DePasse, the chief executive of DePasse-Jones entertainment, and an established film and television producer who broke into the business with Motown.

“We need greenlight power,” she said.

Those from the corporate side of things disagreed. Comcast carries TV One, for instance, they claim, which while not 100% owned by African Americans is a network aimed at black families. Hip Hop on Demand is another black-targeted channel on the Comcast roster, noted Company Town.

Such analysis provoked a rebuke by TV One Chairman Alfred Liggins, who said the relevant factor is that his network is managed by, and programmed for, African Americans.

Will Griffin, head of Hip Hop on Demand, a video channel, found Washington’s logic even more perplexing. In testimony, he said Washington’s view of “racial purity in public policy almost cost us a chance at American history. Our president is black enough … and so is TV One, and so is Hip Hop on Demand.”

Furthermore, Griffin added that Comcast is “blacker” than much of the other media companies out there.

Will Griffin, the chief executive of the Hip Hop OnDemand, a service that has been closely associated with Comcast, described that large minority base as reason to approve the merger, rather than oppose it. “This is far more direct and immediate market leverage than minorities have over other media companies,” Mr. Griffin said in prepared remarks that were distributed before the session began. During the hearing, Mr. Griffin spoke forcefully in favor of Comcast, as did a handful of others.

In her testimony, NBC’s VP of diversity Paula Madison outlined a post-merger plan to add “two new independent cable two new independent cable services annually for the first next three years, with substantial minority ownership in at least half of them.”

That’s a good start, say some. But it’s now beginning to look like this issue, which has led some minority advocates to call for a boycott against the companies, will present a much larger hurdle to the media marriage than most expected.

“It’s not going to happen without conditions,” said Alex Nogales, the president of the National Hispanic Media Coalition

Stay tuned — quite literally.