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Gutierrez v. Johnson & Johnson

December 19, 2006

NILDA GUTIERREZ, LINDA MORGAN, WAYNE BROWN, & KRISTA MARSHALL PLAINTIFFS,
v.
JOHNSON & JOHNSON, DEFENDANT.



The opinion of the court was delivered by: Walls, Senior District Judge

FOR PUBLICATION

OPINION

Plaintiffs move for class certification. They are four, African American and Hispanic former employees of Johnson & Johnson who allege that they were discriminated against on account of their race by Johnson & Johnson's excessively subjective compensation and promotion practices. The Plaintiffs ask this Court to certify a class of approximately 8,600 class members of African and/or Hispanic descent employed by Johnson & Johnson in its thirty-five operating companies in any permanent salaried exempt or non-exempt position in the United States from November 15, 1997 to the present.

The motion has been extensively briefed and orally argued. Both parties have submitted voluminous exhibits to the Court in support of their positions. After careful consideration, the Court concludes that Plaintiffs fail to meet their burden to demonstrate commonality, typicality, and adequacy. Accordingly, their motion for class certification is denied.

FACTUAL BACKGROUND

Defendant Johnson & Johnson is a multi-national conglomerate of consumer and healthcare companies, thirty-five of which are U.S. companies. Although popularly known for its consumer products such as baby powder and band-aids, Johnson & Johnson includes medical device companies that market joint implants and surgical instruments, diagnostic companies which provide laboratory testing equipment and software, and pharmaceutical companies that develop and sell prescription drugs. Johnson & Johnson has employees in positions such as clerical staff, sales representatives, biochemists, engineers, research scientists, physicians, lawyers, and computer specialists.

Johnson & Johnson Corporate is headquartered in New Brunswick, New Jersey. The Defendant has a decentralized management framework. Corporate headquarters sets general guidelines; each of the thirty-five operating companies is responsible for running its own business operations on a day-to-day basis and for managing its personnel. At the corporate level, Johnson & Johnson has a board of directors and a ten member Executive Committee. Johnson & Johnson maintains a Corporate Credo which expresses the Company's philosophy as to how it wishes to conduct business. The Credo states that "Compensation must be fair and adequate. . . .There must be equal opportunity for employment development [a]nd advancement for the qualified." The Credo is displayed on a large stone plaque at corporate headquarters, in Johnson & Johnson's annual reports, on the corporate webpage, and in offices throughout the organization.

Corporate headquarters maintains a Compensation and Benefits Committee, a Management Compensation Committee, and Worldwide Compensation Resources. It offers the operating companies resources such as training, software, and planning tools. Corporate headquarters issues employment guidelines to the companies regarding compensation, promotion, and performance evaluation systems. However, these guidelines are implemented differently by the human resources departments of each of the operating companies, resulting in significant differences in employment practices.

At the subsidiary level, each operating company has its own headquarters and operational facilities, as well as its own senior management. The senior management is responsible for all aspects of the business entity, including compliance with laws and regulations. Each operating company has an independent human resources organization which operationalizes guidelines from Johnson & Johnson Corporate and develops employment policies and practices for the company. As example, if Johnson & Johnson Corporate sets the range of bonuses, it is up to each operating company to determine the criteria for awarding bonuses. Each operating company also has an EEOC officer and is responsible for satisfying its own affirmative action plans and goals. It is only with respect to top level positions at the operating companies that Johnson & Johnson Corporate personnel are involved in decision-making processes related to hiring, promotion, evaluation, compensation, and succession planning.

Plaintiffs, Nilda Gutierrez, Linda Morgan, Wayne Brown, and Krista Marshall ("Plaintiffs"), are former Johnson & Johnson employees of African American and Hispanic descent. Plaintiffs allege they were underpaid relative to comparable Caucasian employees and denied promotions on account of race and ethnicity. Plaintiffs' Complaint alleges that common employment policies, adopted by Johnson & Johnson senior management, permit unmonitored managerial discretion as a regular component of pay and promotion decisions. According to Plaintiffs, excessively subjective employment practices have led to gross disparities in pay and promotion. Plaintiffs allege that these violations are systemic and constitute a pattern and practice that permeates Johnson & Johnson's domestic operations.

PROCEDURAL HISTORY

On November 15, 2001, Plaintiffs filed an employment discrimination suit on behalf of themselves and other similarly situated employees against Johnson & Johnson pursuant to Section 1981 of the Civil Rights Act of 1871, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 1981, Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000e et seq., and the New Jersey Law Against Discrimination, N.J. Stat. § 10:5-1 et seq. Plaintiffs allege both disparate treatment (pattern or practice) and disparate impact. Plaintiffs have subsequently filed an amended complaint and a second amended complaint.

After conducting extensive discovery, Plaintiffs filed a motion for class certification on September 27, 2004 and asked this Court to certify the following class of approximately 8,600 class members:

All persons of African and/or Hispanic descent employed by defendant Johnson & Johnson in any permanent salaried exempt or non-exempt position in the United States from November 15, 1997 to the present.

Both parties then moved to strike the expert statistical report of their adversary. On November 6, 2006, this Court denied Plaintiffs' motion to strike the expert report of Dr. David Wise ("Wise Report") and Defendant's motion to strike the expert report of Drs. Madden & Vekker ("Madden Report"). Gutierrez v. Johnson & Johnson, 01-cv-5302, 2006 WL 3246605 (D.N.J. Nov. 6, 2006). The Court heard oral argument on the motion for class certification on December 5, 2006.

STANDARDS Class Certification -- Fed R. Civ. P. 23(a) & 23(b)

To obtain class action certification, Plaintiffs must establish that all four prerequisites of Fed. R. Civ. P. 23(a) are met as well as at least one part of Fed. R. Civ. P. 23(b). Baby Neal v. Kanter, 43 F.3d 48, 55 (3d Cir. 1994). Rule 23(a) requires a showing of (1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. See Fed. R. Civ. P. 23(a).*fn1 If these requirements are satisfied, the court must also find the that the class action is maintainable under one of the subsections of Rule 23(b), the second and third of which are pertinent to this case. Rule 23(b) provides that an action may be maintained as a class action where:

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of the members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or ...


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