Case: 1:08-cv-06105 Document #: 1 Filed: 10/24/08 Page 1 of 13 PageID #:1

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

)

GEORGE McREYNOLDS, MAROC

)

HOWARD, FRANKIE ROSS, MARVA YORK, )

LEROY BROWN, GLENN CAPEL, CARNELL )

MOORE, MARK JOHNSON and CATHY

)

BENDER-JACKSON, on behalf of themselves )

and all others similarly situated,

)

)

Plaintiffs,

)

)

v.

)

)

MERRILL LYNCH & CO., INC.,

)

MERRILL LYNCH, PIERCE, FENNER &

)

SMITH, BANK OF AMERICA

)

CORPORATION

)

)

Defendants.

)

)

FILED: OCTOBER 24, 2008 08CV6105 JUDGE KENNELLY MAGISTRATE JUDGE ASHMAN EDA
Jury Trial Demanded

COMPLAINT Plaintiffs George McReynolds, Maroc Howard, Frankie Ross, Marva York, Leroy Brown, Glenn Capel, Carnell Moore, Mark Johnson and Cathy Bender-Jackson, on behalf of themselves and all others similarly situated, by and through their attorneys, Stowell & Friedman, Ltd., hereby file this Complaint against Defendants, and state as follows:
JURISDICTION AND VENUE 1. Plaintiffs’ claims arise under 42 U.S.C. Section 1981 and Title VII.1 This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1343.

1 Plaintiffs have filed representative charges of race discrimination with the Equal Employment Opportunity Commission (“EEOC”). After they have exhausted their administrative remedies, Plaintiff will seek leave to amend the Complaint to formally include race and gender discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. (“Title VII”). Plaintiffs are aware of others similarly situated who are relying on his charge and on this lawsuit.
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2. Venue is proper in the Northern District of Illinois pursuant to 28 U.S.C. §1391(b). Defendants’ unlawful conduct took place nationwide, including in this District, and Defendants are licensed to do business and maintain a number of branch offices in this District.
PARTIES 3. Defendant Merrill Lynch & Co., Inc. is a financial services holding company, incorporated in Delaware and headquartered in New York, whose subsidiaries provide financial and investment services. Its subsidiary, Defendant Merrill Lynch, Pierce, Fenner & Smith Incorporated, is a full service securities firm engaged in the retail and institutional sale of securities, options contracts and various other financial products. Collectively, Merrill Lynch & Co., Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are herein referred to as “Merrill Lynch.” Merrill Lynch employs nearly 17,000 persons nationwide as Financial Advisors (“FAs” or “brokers”) who sell its products and services at its offices located throughout the country, including in Chicago, Illinois. Merrill Lynch is the country’s largest provider of brokerage and brokerage-related services. Merrill Lynch is a publicly traded, Fortune 100 corporation incorporated in Delaware with retail branches across the United States. 4. Defendant Bank of America Corporation (“Bank of America”) is a financial services company incorporated in Delaware and headquartered in North Carolina that provides a wide variety of banking and investment services.2 Collectively, Bank of America Corp. and its affiliates and subsidiaries are herein referred to as “Bank of America.” 5. On September 15, 2008, Bank of America and Merrill Lynch announced that
2 Bank of America will succeed Merrill Lynch as Plaintiffs’ employer and will assume liability for Merrill Lynch’s unlawful conduct, as well as its own actions.
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Bank of America would acquire Merrill Lynch for approximately $50 billion in an all-stock
transaction.
6. Plaintiffs are African-America Financial Advisors currently employed at Merrill
Lynch. Plaintiffs Marva York and Cathy Bender Jackson are female Financial Advisors
currently employed at Merrill Lynch.
ALLEGATIONS
7. As part of Bank of America’s acquisition of Merrill Lynch, Bank of America and
Merrill Lynch announced that they would pay retention bonuses to Merrill Lynch FAs. In a
broadcast to all of the Firm’s Financial Advisors, senior executive Robert McCann and
Daniel Sontag announced that retention bonuses will be based on a FA’s “production,” in
essence, commissions earned on client assets managed by the FA.
8. Merrill Lynch ranks and segregates its Financial Advisors by placing them in
quintiles. The FAs who have the highest 20% of production are in the “first quintile” of
production, and the FAs who have the lowest 20% in production are in the “fifth quintile” of
production. Merrill Lynch relies on these quintile rankings to distribute a variety of business opportunities, benefits and resources.3
9. Merrill Lynch has and is engaged in a nationwide pattern and practice of race and
3 Based on its quintile system and production, Merrill Lynch determines eligibility for titles, offices, sales assistance, distributions of accounts of departing brokers, leads, walk-ins, referrals, IPO opportunities, membership in partnerships or teams, recognition clubs, expense allowance, and managerial support. Merrill Lynch relies on this system even though it believes that its customers’ bias impacts the performance of African-American brokers on account of the brokers’ race. Favorable treatment garners commissions, which are then used to justify even more favorable treatment. For example, if a broker is given account distributions that generate commissions, the commissions earned from the donated accounts will entitle him to even more account distributions and other perks. Success breeds success at Merrill Lynch, and African-Americans are excluded from significant income earning opportunities giving rise to greater success due to Merrill Lynch’s discriminatory employment practices. Through these practices, Merrill Lynch intentionally perpetuates its own discrimination and any bias that may exist in society.
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gender discrimination and employs policies and practices that have a disparate impact on African-American and female Financial Advisors. As a result of its systemic discrimination, African Americans and women have less production and are in lower quintiles of production than white men. As a result, the recently announced retention bonus procedure disadvantages African Americans and women and disproportionately advantages white males as favored employees whose retention is more important to Bank of America and Merrill Lynch than the retention of African-Americans and women.
10. Merrill Lynch’s long history of systemic discrimination against African American and women is well known. As a result of a hostile corporate culture and policies and practices that steer business opportunities and resources to white men, African Americans and women are disproportionately situated in lower quintiles of production and so earn less than white men. Through Merrill Lynch’s own internal studies as well findings and expert reports in a number of well-publicized legal proceedings, Defendants are well aware of the negative employment outcomes of African Americans and women as FAs, including their lower levels of production and overrepresentation in lower quintiles of production.
11. According to public documents, in 1974, the Equal Employment Opportunity Commission sued Merrill Lynch based on its refusal to employ women, African Americans and Latinos as brokers. To resolve the lawsuit, Merrill Lynch agreed to the entry of a Consent Decree (the “O’Bannon Consent Decree”) that required Merrill Lynch to increase its representation of African-American brokers to 6.5%. On information and belief, Merrill Lynch has never met the goals to which it agreed in the O’Bannon Consent Decree. Indeed, more than 30 years later when this suit was filed, only 2% of the tenured brokers employed by Merrill Lynch are African-American. The representation of African-American brokers at
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Merrill Lynch is greater than 20 standard deviations below the goal in the 1978 EEOC Consent Decree and more than 10 standard deviations below the percentage representation in the industry, as reflected in EEOC census data. The probability of these disparities in representation occurring in a race-neutral or random selection is zero. Because of the high attrition resulting from Merrill Lynch’s systemic discrimination, the percentage of Merrill Lynch brokers with tenure in excess of ten years who are African-American is approximately 0.5%.
12. In 1996, a class of female FAs sued Merrill Lynch for systemic sex discrimination in Cremin v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 957 F.Supp. 1460 (N.D. Ill. 1997) (Castillo, J.). Pursuant to the court-approved Stipulation of Settlement (“Stipulation”), an alternative dispute resolution process was established for class members to pursue their individual and class discrimination claims of discrimination, the Claim Resolution Process (the “CRP”).
13. As part of the Cremin CRP, Merrill Lynch’s pattern and practice of gender discrimination was fully litigated and decided by well-qualified arbitration panels. Every Cremin arbitration panel who considered the class-wide statistical evidence held that Merrill Lynch had engaged in a pattern or practice of sex discrimination against female FAs. For example, in 2004, an arbitration panel ruled in favor of Cremin class member Hydie Sumner and awarded her $2,203,822 in damages, including punitive damages. See Ex. A, Sumner v. Merrill Lynch Decision and Award, at 6. In reaching this award, the Sumner Panel held Merrill Lynch liable for gender discrimination on both the class and individual claims. Specifically, the Sumner Panel ruled as follows:
[T]he record clearly and convincingly supports Sumner’s allegations of a pattern and practice of gender discrimination adversely affecting the pay of
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female FC’s. The class-wide statistical evidence demonstrates gross disparities in earnings between male and female FC’s. …
*** Having considered the class-wide statistical evidence and reports and testimony of experts, the [P]anel finds that these statistically significant disparities in earnings between male and female FC’s are not explained by non-discriminatory factors. Rather, the Panel finds that the disparate earnings of females and males were the result of Merrill’s discriminatory practices including, but not limited to an unequal distribution of accounts to female FC’s (see Dr. Madden’s report and testimony) and a male-dominated organizational structure at Merrill which created an environment in which managerial discretion was influenced by gender stereotypes adversely affecting female FC’s ([s]ee reports of Dr. Bielby and Dr. Fiske). …
*** [T]he Panel finds that the record clearly supports Sumner’s allegations of classwide discrimination against female FC’s with respect to promotions to management positions.
(Ex. A, at 6-7)(emphasis added).
14. As more recently alleged in the class action lawsuit McReynolds et al. v. Merrill
Lynch, (N.D. Ill.) (Gettleman, J.), Merrill Lynch is engaged in a nationwide pattern or

practice of race discrimination and maintains employment practices and policies that have a

disparate impact on African Americans.

15. As a result of racial discrimination, there are compensation disparities between

African American and white Financial Advisors as follows:

Annua1l6C. ompensation Percentage Differences 2001 African American brokers were paid 33.57% less

Standard Deviations
6.57

2002 African American brokers were paid 36.53% less

7.37

2003 African American brokers were paid 33.23% less

6.73

2004 African American brokers were paid 37.98% less

8.03

2005 African American brokers were paid 41.81% less

9.05

2006 African American brokers were paid 42.34% less

9.07

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17. The McReynolds plaintiffs allege that Merrill Lynch maintains stereotypical views about African-Americans that form the basis of personnel decisions and create an environment where occupational segregation, differential treatment and harassment are pervasive and condoned. As a result of Merrill Lynch biased culture, African-Americans are denied the same business opportunities and managerial, sales and administrative support as their male colleagues. Merrill Lynch also employs discriminatory policies and practices with regard to partnerships and the distribution of resources and business opportunities such as accounts, leads, referrals, walk-ins, call-ins, and initial public offerings (“IPOs”). For example, Merrill Lynch managers regularly steer accounts, productive assets and other income-generating opportunities to white brokers, and away from Africa-American brokers. Merrill Lynch’s discriminatory policies and practices result in lower production and diminished performance rankings for African-American brokers whose production would be equal or superior to that of similarly situated white brokers if Merrill Lynch distributed assets and opportunities equitably.
18. Consistent with Defendants’ systemic unlawful treatment of African-Americans, Merrill Lynch has failed to provide Plaintiffs with the same opportunities to succeed and advance as white brokers. Plaintiffs have not received the same level of resources, mentoring, managerial and sales support, or income-generating opportunities as white brokers. Moreover, like other African-Americans at Merrill Lynch, Plaintiffs have been excluded from favorable partnerships and subjected to a racially biased corporate culture and work environment in which African-Americans are treated as inferior. As a result, African American FAs are underrepresented, earn lower production, and populate disproportionately
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lower quintiles. 19. The following chart reflects that in 2003 there were no African-American brokers
with six to nine years tenure in the first quintile but 55% in the fifth quintile:
DISTRIBUTION OF LOS 6-9 FCs BY QUINTILE AND RACE

60
55.0
50

PERCENTAGE IN QUINTILE

40

30

20 10

20.5

20.2

20.0

20.0 19.8

19.5

15.0

10.0

0

0.0

0123456

LENGTH OF SERVICE IN 2002

RACE
African-American Caucasian

.

19. Likewise, in 2003, of the African-Americans who survived the Firm’s

discriminatory employment practices for more than 10 years, 50% were in the fifth quintile as

compared to 20% of Caucasian brokers:

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DISTRIBUTION OF LOS 10+ FCs BY QUINTILE AND RACE

PERCENTAGE IN QUINTILE

60

50

50.0

40

30

20 10

18.9

20.0

20.5

19.6 20.5

20.2

13.0 10.9
6.5

0 0123456 LENGTH OF SERVICE IN 2003

RACE
African-American Caucasian

20. Based on the above publicly available information, as well as its Merrill Lynch’s own studies and expert reports produced in the McReynolds lawsuit based on the Firm’s own data, Bank of America was well aware of Merrill Lynch’s discriminatory practices and their impact, and the small number of African-American FAs and their low production rankings. Nevertheless, Defendants intentionally chose to employ retention bonuses that intentionally discriminated against African Americans and women. Defendants identified and selected for higher compensation the FAs it would try hardest to retain via the retention bonuses and knew that they were offering more generous retention packages to white men than to African Americans and women. Simply put, Defendant intended to retain white men while not retaining African Americans and women. Further, the retention bonuses for African American Financial Advisors and women, even those in the higher quintiles, are lower than they would have been but for intentional racial discrimination.
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21. Plaintiffs will be harmed as a result of Merrill Lynch’s and Bank of America’s discriminatory award of retention packages.
22. Defendants have acted or failed to act as herein alleged with malice or reckless indifference to the protected civil rights of Plaintiffs. Plaintiff and the class are thus entitled to recover punitive damages in an amount to be determined by a jury.
CLASS ALLEGATIONS 23. Plaintiff bring this action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of a class of African-American FAs of Merrill Lynch/Bank of America in the United States who have been subjected to discrimination by Defendants due to their race and have been subjected to retaliation due to their opposition to discrimination. 24. Plaintiff is a member of the class he seeks to represent. The proposed class is so numerous that joinder of all members is impracticable. 25. There are questions of law and fact common to the class, and those questions predominate over individual questions. 26. The claims alleged by the plaintiff are typical of the claims of the class. 27. Plaintiff will fairly and adequately represent and protect the interests of the class. 28. The questions of law and fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
COUNT I RACE DISCRIMINATION IN VIOLATION OF 42 U.S.C. SECTION 1981 29. Plaintiff and all others similarly situated reallege the above paragraphs as thought stated herein and incorporate them by reference in Count I of this Complaint.
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30. Plaintiff and all others similarly situated were paid lower wages than non-African-

American Financial Advisors.

31. Plaintiffs and all others similarly situated reallege paragraphs 1 through 53 and

incorporate them by reference as though fully stated herein as part of Count II of this Complaint.

32. Section 1977 of the Revised Statutes, 42 U.S.C. Section 1981 as amended

guarantees all persons the same right to make and enforce contracts as non-African-Americans.

The term “make and enforce” contracts includes the making, performance, modification, and

termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of

contractual relationship.

33. By their conduct as alleged herein, Defendants discriminated against Plaintiffs

and all others similarly situated with respect to their wages in violation of 42 U.S.C. Section

1981.

PRAYER FOR RELIEF

41. WHEREFORE, Plaintiff respectfully requests that this Court find in favor of him

and the class and against Defendant as follows:

a. Certify this case as a class action;

b. Designate Plaintiffs as Class Representatives and designate Plaintiffs’ counsel of

record as Class Counsel;

c. Declare that Defendant’s acts, conduct, policies and practices are unlawful and

violate Section 1981;

d. Order appropriate equitable and injunctive relief to remedy the discrimination;

e. Award Plaintiff and all others similarly situated the value of all compensation and

benefits lost and that they will lose in the future as a result of Defendants’

unlawful conduct; 11

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f. Award Plaintiffs and all others similarly situated punitive damages, compensatory and other damages;
i. Award Plaintiffs and all others similarly situated prejudgment interest and attorneys fees, costs and disbursements, as provided by law;
j. Award Plaintiff and all others similarly situated such other make whole equitable, injunctive and legal relief as this Court deems just and proper to end the discrimination and fairly compensate Plaintiffs.
k. Award Plaintiff and all others similarly situated such other relief as this Court deems just and proper. DEMAND FOR A JURY TRIAL
Plaintiff hereby demands a jury trial as provided by Rule 38(a) of the Federal Rules of Civil Procedure.
Respectfully submitted on behalf of Plaintiffs and those similarly situated,
/s/ Linda D. Friedman STOWELL & FRIEDMAN LTD.
Mary Stowell Linda D. Friedman - Atty. No. 06190092 Suzanne E. Bish STOWELL & FRIEDMAN LTD 321 S. Plymouth Court Suite 1400 Chicago, Illinois 60604 (312) 431-0888
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 Case: 1:08-cv-06105 Document #: 82 Filed: 12/15/10 Page 1 of 18 PageID #:254

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION ______________________________________________________________________________

GEORGE MCREYNOLDS, et. al.,

)

Individually on behalf of themselves

)

and all others similarly situated,

)

)

Plaintiffs,

)

Case No. 08 Civ. 6105

)

vs.

)

Judge Robert W. Gettleman

)

MERRILL LYNCH & CO., INC., MERRILL )

LYNCH, PIERCE, FENNER & SMITH,

)

Magistrate Judge Gilbert

BANK OF AMERICA CORPORATION,

)

)

Defendants.

)

______________________________________________________________________________

DEFENDANTS’ MEMORANDUM IN SUPPORT OF ITS MOTION TO DISMISS
______________________________________________________________________________

Lori E. Lightfoot MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 (312) 782-0600 (Phone) (312) 701-7711 (Facsimile)
Jeffrey S. Klein Nicholas J. Pappas Allan Dinkoff WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000 (Phone) (212) 310-8007 (Facsimile)
Attorneys for Defendants Merrill Lynch & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., and Bank of America Corp.

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I.

PRELIMINARY STATEMENT

In an effort to retain high-performing Financial Advisors (“FAs”) following the

acquisition of ML & Co. by Bank of America, Merrill Lynch adopted a merit/production based

Transition Program under which FAs would be paid for remaining with the merged company.

(Am. Compl. ¶ 7.) The amount of compensation depended on each FA’s recent production

levels. In this lawsuit, Plaintiffs allege that the Transition Program unlawfully discriminated

against African American and female FAs by disproportionately advantaging white males. (Id.

at ¶ 9.) At the same time, however, Plaintiffs admit that payments under the Transition Program

were based on each FA’s production. (Id. at ¶ 20.) (“Merrill Lynch decided to design the

retention rewards based on annualized production credits through September 2008.”). In other

words, Plaintiffs acknowledge that the Transition Program measured all FAs, regardless of race

or gender, by the same production metrics to determine eligibility for, and amount of, bonuses.

This undisputed fact dooms Plaintiffs’ claims. Indeed, it was on this basis that Judge Scheindlin

recently dismissed a nearly identical claim brought by Plaintiffs’ counsel here regarding the very

same Transition Program. Goodman v. Merrill Lynch, 716 F. Supp. 2d 253 (S.D.N.Y. 2010)

(attached as Ex. A). The same result is compelled here by Supreme Court and Seventh Circuit

precedent.

Section 703(h) of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e-2(h),

expressly protects employers from discrimination claims arising from the application of a merit-

or production-based pay system like the one at issue here. To overcome Section 703(h)’s

protection, a plaintiff must demonstrate that the employer adopted the program for the express

purpose of discriminating against a protected group. Plaintiffs’ theory here is that Defendants

had the requisite intent to discriminate against African American and female FAs because (1)

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Defendants were aware when they adopted the Transition Program that it would have a disparate impact on African American and female FAs; and (2) the inputs that determine production are tainted by past and ongoing intentional discrimination in other employment practices. Taken separately or together, these allegations do not suffice to maintain a claim.
As to knowledge of the disparate impact, the Supreme Court and the Seventh Circuit have held that adopting a program with awareness of its disparate impact is not tantamount to intentional discrimination within the meaning of Section 703(h). As to tainted inputs, allegations of discrimination in connection with other employment practices that may affect payments under the Transition Program do not undo the protections afforded to a Section 703(h) pay system; instead, the Supreme Court and the Seventh Circuit have made it clear that Plaintiffs’ remedy for any such discrimination is to challenge those separate practices, and if they are successful, to seek damages for receiving a lower Transition Program award than they otherwise would have been entitled to had they not been discriminated against.
The distinction between the program itself and the allegedly tainted inputs is important for defendants and courts, but irrelevant for plaintiffs. It is important for defendants and courts because if Plaintiffs are correct, then countless pay systems across the country that are based on gender neutral, rational factors, such as production, will need to be altered, and courts will find themselves in the business of redesigning compensation structures.
This distinction is irrelevant for plaintiffs, because they can recover for differences in pay by challenging the alleged underlying discrimination, as Plaintiffs do in McReynolds v. Merrill Lynch, No. 05 Civ. 6583 (N.D. Ill.) (Gettleman, J.) (the “McReynolds I Litigation”).1 Plaintiffs’ disparate treatment and disparate impact challenges to other discriminatory practices, such as 1 Plaintiffs in this case are all named plaintiffs in the McReynolds I Litigation. This Court has properly denied class certification in McReynolds I, but Plaintiffs’ counsel has indicated that the individual Plaintiffs intend to pursue their claims against Merrill Lynch.
2

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teaming, would provide them with adequate grounds for relief, and any losses allegedly suffered due to the application of the Transition Program would be an element of their damages.
The retention bonus system at issue here serves an obvious and important business purpose. When it was being acquired by Bank of America, Merrill Lynch targeted its most productive FAs to receive retention bonuses that would encourage them to remain at the firm. (See Am Compl. ¶¶ 7, 20.) The more successful the FA, the greater the bonus. (See id.) No other system would have made any sense in the business environment in which Merrill Lynch operates, and the Transition Program is consistent with what other firms in the industry reportedly had done in similar circumstances.2 In this context, it is simply not plausible that Defendants adopted this program with the intent to discriminate against African American and female FAs.
Defendants previously moved to dismiss Plaintiffs’ Complaint, arguing that Section 703(h) precluded Plaintiffs’ claims. Judge Kennelly denied Defendants’ motion in January 2009, prior to the case being transferred to this Court. Nevertheless, the Court should consider Defendants’ motion. Judge Kennelly’s decision came before the Supreme Court’s ruling in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), and thus he applied the wrong standard in evaluating Defendants’ motion. Judge Scheindlin’s dismissal in Goodman of a nearly identical claim regarding the Transition Program on Section 703(h) grounds—a decision rendered after Judge Kennelly’s ruling—confirms the need to revisit this issue.
2 See, e.g., http://registeredrep.com/news/ubs-mcdonald-retention/; http://www.researchmag.com/News/2009/2/Pages/Morgan-Stanley-Smith-Barney-ShareRetentionProgram-with-FAs.aspx; http://registeredrep.com/advisorland/Wachovia AGEdwards Retention Package/; http://www.onwallstreet.com/news/Morgan Stanley Smith Barney Retention Bonuses TARP26610791.html; http://www.investmentnews.com/apps/pbcs.dlllarticle?AID=/20070618/FREE/70618008/1/ INlssueAlert04&ht=; http://www2.insurancenewsnet.com/article.asp?a=ma&id=62104.
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The discovery burden on Defendants is likely to be significant, particularly in terms of depositions of senior executives, to defend claims that, on their face, are contrary to binding precedent. Accordingly, Defendants’ Rule 12(b)(6) motion to dismiss should be granted.
II. LEGAL STANDARD To avoid dismissal under Rule 12(b)(6), a plaintiff must provide “more than labels and conclusions,” and “a formulaic recitation of the elements of the cause of action will not do.” Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1964-65 (2007). A complaint must allege facts that show “plausibility of entitlement to relief,” and factual allegations “that are merely consistent with a defendant’s liability” fall short of that standard. Iqbal, 129 S. Ct. at 1949 (internal quotations omitted). “The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. It requires a plaintiff to “plea[d] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Pleading facts that “do not permit the court to infer more than the mere possibility of misconduct” fails to show “that the pleader is entitled to relief,” as required by Rule 8(a). Id. at 1950 (quoting Fed. R. Civ. P. 8(a)(2)). A claim requiring proof of intentional discrimination should be dismissed if the complaint “does not contain any factual allegation sufficient to plausibly suggest [defendant’s] discriminatory state of mind.” Id. at 1952. Applying Twombly and Iqbal, the Seventh Circuit requires that a complaint “suggest that the party has more than a ‘speculative’ right to relief.” EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007). “[I]t is not enough for a complaint to avoid foreclosing possible bases for relief; it must actually suggest that the plaintiff has a right to relief by providing allegations that raise a right to relief above the speculative level.” Id. at 777 (citations and quotation marks removed); see also Reger Development, LLC v. National City Bank, 592
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F.3d 759, 764 (7th Cir. 2010); Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009). Plaintiffs “must give enough details about the subject matter of the case to present a story that holds together.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010).3
The plausibility standard must be applied with particular rigor where, as here, “discovery is likely to be more than usually costly.” Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008) (citing Limestone Dev. Corp. v. Vill. of Lemont, Ill., 520 F.3d 797, 804 (7th Cir. 2008)).
III. ARGUMENT A. Law of the Case Doctrine Does Not Preclude Granting Defendants’ Motion
to Dismiss the Amended Complaint Prior rulings should be revisited where there is a change in the law or manifest error. See Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 572 (7th Cir. 2006); Starcon Int’l, Inc. v. N.L.R.B., 450 F.3d 276, 278 (7th Cir. 2006); Best v. Shell Oil Co., 107 F.3d 544, 546 (7th Cir. 1997). The law of the case doctrine does not limit a court’s power to reconsider earlier rulings in a case, rather, the doctrine is a “self-imposed prudential limitation” that should not be considered an “immutable rule.” Evans v. City of Chicago, 873 F.2d 1007, 1014 (7th Cir. 1989). On January 12, 2009, Judge Kennelly, prior to the case being transferred to this Court, entered an order denying Defendants’ Motion to Dismiss Plaintiffs’ Complaint. See Order, dated Jan. 12, 2009 (Docket No. 27). Similar to the instant motion, Defendants moved to dismiss the complaint based on Section 703(h). This Court should exercise its discretion to reexamine the
3 At issue in Swanson was a limited face-to-face interaction between the plaintiff and the particular persons who allegedly discriminated against her when she applied for a home equity loan. Swanson draws a sharp distinction between “straightforward cases,” like Swanson and Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002), and “more complex cases,” which will require more pleading detail. 614 F.3d at 404-05. The issues in this case are clearly more complex than the questions presented by either Swanson or Swierkiewicz, and are at least as complex, if not more complex, than the questions presented in Iqbal.
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issue presented in this motion, because new case law relevant to the issues has been decided subsequent to Judge Kennelly’s decision, namely Iqbal and Goodman.
To be sure, the Seventh Circuit has held that neither Iqbal nor Twombly changed the fundamentals of pleading. See Bissessur v. Ind. Univ. Bd. of Trustees, 581 F.3d 599 (7th Cir. 2009). But it also has recognized that the Supreme Court did intend Twombly and Iqbal to set a higher pleading bar. See Swanson, 614 F.3d at 403.
Judge Kennelly failed to test Plaintiffs’ complaint against that higher bar. Without the benefit of Iqbal, Judge Kennelly denied Defendants’ motion to dismiss without relying on or citing to the “plausibility standard,” which had not been articulated in Twombly. As a result, the court applied the wrong standard when it credited Plaintiffs’ bare statements that Defendants “‘intentionally chose to employ retention bonuses that intentionally discriminated against African Americans and women’ because they ‘intended to retain white men while not retaining African Americans and women.’” (Order, at p. 2). Judge Kennelly should not have credited these conclusory allegations under the plausibility standard, because Plaintiffs did not offer any facts sufficient to raise the allegations beyond mere speculation, nor do they offer such facts in the Amended Complaint. Indeed, Plaintiffs plead facts that are inconsistent with liability.
The allegations in Iqbal that the Supreme Court found insufficient show clearly that Plaintiffs’ allegations here also are inadequate to satisfy the plausibility standard. In Iqbal, the Court held that a plaintiff’s allegations that defendants “knew of, condoned, and willfully and maliciously agreed to subject [him]” to harsh conditions of confinement “as a matter of policy, solely on account of [his] religion, race, and/or national origin and for no legitimate penological interest” were “bare assertions” which amount to nothing more “than a formulaic recitation of the elements of a constitutional discrimination claim.” Iqbal, 129 S. Ct. at 1951. The Court
6

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rejected these allegations as “conclusory and not entitled to be assumed as true.” Id. Plaintiff also alleged that “the [FBI], under the direction of Defendant Mueller, arrested and detained thousands of Arab Muslim men...as part of its investigation of the events of September 11” and the FBI and Defendants Ashcroft and Mueller approved the policy that these detainees be held in highly restrictive areas until cleared. Id. Significantly, the Court held the complaint should be dismissed despite these allegations because the complaint “does not contain any factual allegations sufficient to plausibly suggest petitioners’ discriminatory state of mind.” Id. at 1952.
The allegations here relating to the Transition Program are even barer and more conclusory than those found inadequate in Iqbal. Under the Iqbal standard, Plaintiffs clearly failed to allege facts sufficient to plausibly suggest that the Transition Program was designed with the intent to discriminate against African American or female FAs.
Equally important, Judge Scheindlin’s decision in Goodman provides persuasive intervening authority that demonstrates the necessity of applying the Iqbal plausibility standard to the Amended Complaint. See 716 F. Supp. 2d 253. The Goodman decision addressed a sex discrimination claim against the Transition Program. Defendants moved for a partial ruling on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure as to all of the plaintiff’s claims relating to the Transition Program, which were virtually identical to the claims alleged in the instant action, albeit alleging discrimination solely on the basis of sex.4 Judge Scheindlin granted Defendants’ motion, holding that the Transition Program qualified as a “bona fide” production-based compensation system for purposes of Section 703(h), and that while other discrimination may have affected the plaintiff’s overall production credits, the Transition Program itself is protected under Section 703(h). Id. at 260-62. Judge Scheindlin had it exactly
4 Goodman was represented by the same attorneys as Plaintiffs here, and the allegations in her complaint are nearly identical to the allegations in the Amended Complaint here.
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right when she ruled that although “Goodman clearly alleges that defendants adopted the [Transition Program] in order to under-compensate and otherwise discriminate against their female FA’s, mere conclusory statements and recitations of the elements of a cause of action will not satisfy the plausibility standard.” Id. at 261.
Accordingly, because Judge Kennelly did not have the benefit of Iqbal in deciding Merrill Lynch’s motion to dismiss, and because the more recent decision by Judge Scheindlin in Goodman v. Merrill Lynch shows the critical importance of Judge Kennelly’s failure to apply the correct standard in assessing Plaintiffs’ Complaint, the law of the case doctrine should not bar a reexamination of the issues presented in this motion.
B. Section 703(h) Protects the Transition Program as a Merit- or ProductionBased Pay System
Section 703(h) provides in pertinent part: Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice . . . to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity of quality of production [when] such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin.
42 U.S.C. § 2000e-2(h) (emphasis added). The reasons for this statutory provision are clear from the legislative history. Congress
anticipated that legitimate “seniority, merit, or other incentive system[s]” might result in less pay to a substantial number of persons of a particular protected class (i.e., those of a particular race, sex, or national origin). See 110 Cong. Rec. 12723 (1964). Rather than prohibit such pay systems, Congress adopted Section 703(h) to protect these employment practices “unless it is shown that the employer was intending to discriminate for or against one of the [protected]
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groups.” 5 Id. As a result, seniority-, merit- or production-based systems cannot be held unlawful “absent a discriminatory purpose . . . even if the system has some discriminatory consequences.” Trans World Airlines, Inc. v. Hardison, 432 U.S. 63, 82 (1977) (emphasis added). Unlike its counterpart in the Equal Pay Act (“EPA”), 29 U.S.C. § 206(d), Section 703(h) does not operate as an affirmative defense. See Lorance v. AT&T Techs., Inc., 490 U.S. 900, 908-09 (1989). Instead, a plaintiff must establish that an employer’s practice falls outside the scope of Section 703(h), and “actual intent to discriminate must be proved.” Id. (emphasis in original) (quoting Am. Tobacco Co. v. Patterson, 456 U.S. 63, 65 (1982)).
C. Plaintiffs’ Own Allegations Establish that the Transition Program is a Production- Or Merit-Based System Protected by Section 703(h)
As alleged in the Amended Complaint, the Transition Program falls squarely within Section 703(h)’s statutory protection for production- or merit-based systems. The Amended Complaint states that the “retention bonuses would be based on a FA’s ‘production credits,’ in essence, commissions earned on client assets managed by the FA.” (Am. Compl. ¶ 7.) Thus, as described by Plaintiffs, the retention bonuses are calculated methodically and without discretion under a facially neutral, objective formula based on production, placing them within the protection of Section 703(h). 6 See EEOC v. Aetna Ins. Co., 616 F.2d 719, 725 (4th Cir. 1980); Goodman, 716 F. Supp. 2d at 261.7
5 The legislative history for the Equal Pay Act provision on which Section 703(h) was modeled confirms that Congress intended to protect such systems even though it was known that they might not yield equal pay for all employees. “[M]easuring either the quantity or quality of production or performance can result in far greater gross earnings by one person compared to another, even though both are technically doing the same type of work.” S. Rep. No. 88-176, at 4 (1963); Aetna, 616 at 725 (4th Cir. 1980). “[O]bviously, such systems which measure quantity or quality of production or performance will be valid exceptions to the equal-pay requirements.” S. Rep. No. 88-176, at 4. 6 Section 703(h) applies equally to claims under 42 U.S.C. § 1981. NAACP v. Detroit Police Officers Ass’n, 900 F.2d 903, 912-14 (6th Cir. 1990) (citing cases). An employment practice that passes scrutiny under the substantive requirements of Title VII and §703(h) “is not violative of 42 U.S.C. §1981.”
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D. Plaintiffs’ Theory of Discrimination Is Not Sufficient Under Section 703(h) The Transition Program loses its Section 703(h) protection only if Plaintiffs adequately allege that the program was adopted with the intent to discriminate. “To state a claim,” Plaintiffs “must plead sufficient factual matter to show that [defendant] adopted and implemented the … policies at issue not for a neutral … reason but for the purpose of discriminating on account of race.” Iqbal, 129 S. Ct. at 1948-49. Plaintiffs’ theory of intent focuses on two flawed propositions: (1) Defendants were aware of the disparate impact of the Transition Program, and (2) the bonuses awarded to African American and female FAs pursuant to the program were lower because of discrimination in other employment practices. The Supreme Court and the Seventh Circuit have held that neither one of these theories is sufficient to sustain a claim under Section 703(h).
1. Allegations of Knowledge of a Disparate Impact Are Insufficient to Overcome Section 703(h) Protection
Plaintiffs seek to infer intent from Defendants’ alleged awareness of the disparate impact the Transition Program would have on African American and female FAs. (Am. Compl. ¶ 22.) But the argument that awareness of disparate results is tantamount to intentional discrimination has been squarely rejected by the Supreme Court and the Seventh Circuit (pursuant to Rule 12 motions to dismiss and otherwise). See Iqbal, 129 S. Ct. at 1948 (“purposeful discrimination requires more than … ‘awareness of consequences.’”); Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 278-79 (1979) (rejecting plaintiffs’ argument that a veterans-preference program, which
Waters v. Wis. Steel Works of Int’l Harvester Co., 502 F.2d 1309, 1320 n.4 (7th Cir. 1974); accord Johnson v. Ryder Truck Lines, Inc., 575 F.2d 471, 475 (4th Cir. 1978). 7 See also, Scott v. Dallas County Hosp. Dist., No. 3:01-CV-2659-K, 2003 WL 21500426, at *2-3 (N.D. Tex. Apr. 21, 2003) (holding that a mathematical matrix for awarding compensation was a “merit system”); Gerbush v. Hunt Real Estate Corp., 79 F. Supp. 2d 260, 264 (W.D.N.Y. 1999) (holding that tying salaries to branch revenues and awarding bonuses for exceeding predicted revenue levels was a “merit system”).
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bestowed 97% of its benefits on men, was discriminatory because knowledge that a program
disfavors women is not akin to an intent to disfavor women, and stating that “intent” means
doing something because of, rather than in spite of or with indifference to, the prohibited
characteristic); Council 31, Am. Fed’n of State, County and Mun. Employees, AFL-CIO v.
Doherty, 169 F.3d 1068, 1073 (7th Cir. 1999) (affirming summary judgment on intentional
discrimination claim where defendant prepared an adverse impact analysis and knew that a
disproportionate number of African American employees would be affected by a reduction in
force); Cannon v. Univ. of Chi., 648 F.2d 1104, 1109-10 (7th Cir.), cert. denied, 454 U.S. 1128
(1981) (affirming dismissal of complaint where plaintiff’s allegation of disparate impact was not
sufficient to satisfy Title IX’s requirement of intentional discrimination because the “claim of
disparate impact, even when coupled with the allegations made in appellant’s brief to this court
that the defendants knew of this impact while enforcing their age policies, [was] insufficient to establish a violation of Title IX”).8
The Seventh Circuit has explained that “intent as awareness of consequences” cannot
suffice; discriminatory purpose requires more. Am. Nurses’ Ass’n v. Ill., 783 F.2d 716, 722 (7th
Cir. 1986) (internal quotes and citation omitted). Instead, the “particular course of action” must
have been “selected or reaffirmed. . .at least in part because of, not merely in spite of, its
adverse effects on an identifiable group.” Id. (emphasis added) (internal quotation marks
8 Accord Detroit Police Officers, 900 F.2d at 909 (holding that an employer who “knew that enforcement of the seniority plan would have a discriminatory impact on newly hired black officers” could not be liable under Title VII because application of the seniority plan was “congressionally immunized by §703(h) and by the decisions of the Supreme Court.”); African Am. Legal Defense Fund, Inc. v. N.Y. State Dep’t. of Educ., 8 F. Supp. 2d 330, 337 (S.D.N.Y. 1998) (even assuming the disparate impact of defendant’s funding scheme on minority students was both known and foreseeable, awareness of disparate consequences was insufficient and plaintiff’s complaint could not be read to include an allegation of discriminatory intent); Shelford v. N.Y. State Teachers Ret. Sys., 889 F. Supp. 81, 88 n.2 (E.D.N.Y. 1993) (“The only factual allegations offered by plaintiffs in their complaint deal with the system’s purported disparate impact on women which, of course, is not sufficient to foreclose recourse to the protection afforded to facially neutral seniority systems afforded under § 703(h).”).
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omitted); see Day v. Patapsco & Back Rivers R.R. Co., 504 F. Supp. 1301, 1310 (D. Md. 1981) (applying this standard to §703(h)). Goodman applied this standard to an identical claim, and held: “At best, however, Goodman alleges that defendants had knowledge of this past discrimination when they adopted the [Transition Program]. But knowledge of past and even present discrimination alone does not make it plausible that defendants actually adopted the [Transition Program] with discriminatory intent.” 716 F. Supp. 2d at 261.
Defendants have not found a single reported decision that adopted Plaintiffs’ theory and held that knowledge of a disparity was sufficient to establish intent under §703(h). Nor would such a ruling be consistent with the Congressional purpose underlying 703(h), which was to preserve merit- and production-based systems regardless of impact on protected groups so long as those systems were equally applied. Therefore, even assuming (as Plaintiffs allege) that Defendants knew that the use of production criteria for the Transition Program or other compensation/reward programs would “disproportionately exclude African American FAs” (Am. Compl. ¶ 20), the law is clear that this is not the same as discriminatory intent. Simply put, “[k]nowledge of a disparity is not the same thing as an intent to cause it or maintain it.” Am. Nurses’ Ass’n, 783 F.2d at 722.
2. Allegations of Other Alleged Discriminatory Practices that Affect a Merit- or Production-Based Pay System Are Insufficient
Plaintiffs focus their Amended Complaint on a host of allegations relating to other discriminatory conduct not at all relevant to Merrill Lynch’s actual intent in adopting the Transition Program. (See Am. Compl. ¶¶ 11-13.) Plaintiffs rely on allegations related to “inputs” that they allege impact an FA’s production credits, including teams and the distribution of resources and business opportunities such as accounts, leads, referrals, walk-ins, call-ins, and initial public offerings (“IPOs”). (Id. at ¶¶ 16-17.)
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However, allegations regarding past discrimination and discrimination with regard to inputs are immaterial to the questions before this Court regarding the Transition Program. The Supreme Court has said unequivocally that a system otherwise protected by Section 703(h) cannot be attacked merely because it allegedly perpetuates discrimination in other employment practices. Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 347-48 (1977). When other practices, such as “hiring, assignment, transfer and promotion policies,” are allegedly discriminatory, plaintiffs may obtain “all appropriate relief as a direct remedy for [that] discrimination.” Id.; see also Goodman, 716 F. Supp. 2d at 261 (“To the extent that other acts of discrimination in violation of Title VII affect the ‘inputs’ into a bona fide merit, seniority, or production-based system, a plaintiff’s remedy lies in challenging those violations directly.”).
To overcome Section 703(h), Plaintiffs must establish “that the [§703(h)] system itself was negotiated or maintained with an actual intent to discriminate.” Larkin v. Pullman-Standard Div., Pullman, Inc., 854 F.2d, 1549, 1576 (11th Cir. 1988), vacated on other grounds by Pullman-Standard, Inc. v. Swint, 493 U.S. 929 (1989). Any purported evidence regarding other practices does not relate “directly to [the employer’s] intent regarding the system,” but “tends to prove instead that [the employer] engaged in a number of other, separate discriminatory practices, and . . . the Supreme Court has required us to keep such distinctions in mind.” Id. at 1577 (emphasis in original). As such, Plaintiffs’ reliance on allegations of past discrimination and the “inputs” into the production-based bonus program is misplaced. Under well-established law, this alleged discriminatory conduct cannot serve as the basis for an attack against a Section 703(h) protected pay system.9
9 To the extent the Amended Complaint alleges discrimination with respect to the inputs and resources that Merrill Lynch provides its FAs, those claims simply repeat the claims in the McReynolds I Litigation. The named Plaintiffs in this lawsuit are all named Plaintiffs in the McReynolds I Litigation.
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E. Plaintiffs’ Conclusory Allegations of Intentional Discrimination Are Not Sufficient Under the “Plausibility” Standard
Plaintiffs include two conclusory statements in the Amended Complaint regarding the intent behind the Transition Program: (1) “Plaintiffs challenge [the Transition Program’s] . . . intentionally discrimination design” (Am. Compl. ¶ 20); and (2) “Defendants intended to retain and more generously compensate white men rather than African Americans and women” (id. at ¶ 22). These statements simply recite one element of the cause of action, and Plaintiffs provide no facts to support these allegations. Under Iqbal, the law is clear that threadbare recitals of the elements of a cause of action are insufficient to bring a claim above the speculative level and survive a Rule 12 Motion.
Similarly, in Goodman, the plaintiff included two conclusory sentences in her complaint regarding the intent of the Transition Program: (1) “Defendants intentionally designed and implemented retention bonuses based largely on production that had a disparate impact on and intentionally discriminated against women” and (2) “Defendants intended to retain and more generously compensate white men rather than female FAs.” Amended Complaint ¶ 19, Goodman v. Merrill Lynch, 2009 WL 2823710 (S.D.N.Y. Aug. 27, 2009) (No. 09 Civ. 05841) (attached as Ex. B). Goodman held that such allegations were insufficient to state a claim: “While [the plaintiff] clearly alleges that defendants adopted the [Transition Program] in order to under-compensate and otherwise discriminate against their female FA’s, mere conclusory statements and recitations of the elements of a cause of action will not satisfy the plausibility standard.” Goodman, 716 F. Supp. 2d at 261.
Plaintiffs have not stated a single fact to support the allegation that Defendants adopted the Transition Program with the intent to discriminate against African American and female FAs, other than facts with regard to knowledge of the disparate treatment and tainted inputs, both of
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which have been rejected by the Supreme Court and the Seventh Circuit. The Amended

Complaint should be dismissed because it “does not contain any factual allegation sufficient to

plausibly suggest [defendants’] discriminatory state of mind.” Iqbal, 129 S. Ct. at 1952. Nor

have Plaintiffs addressed the clear logic of the decision to structure the Transition Program in a

way that would retain the most successful, production FAs. “As between that ‘obvious

alternative explanation’ … and the purposeful, invidious discrimination” that Plaintiffs ask the

Court “to infer, discrimination is not a plausible conclusion.” Id. at 1951-52. A complaint does

not “plausibly establish [discriminatory] purpose” if there are “more likely explanations” for the

defendant’s actions. Id. at 1951.

Comparing the allegations here (and in Goodman) with the allegations found

insufficient in Iqbal highlights how woefully deficient the amended complaint here is.

IV. CONCLUSION Merrill Lynch respectfully requests that the Court dismiss Plaintiffs’ Amended Complaint

pursuant to Rule 12(b)(6).

Respectfully submitted,

By: /s/ Lori E. Lightfoot

.

Lori E. Lightfoot

MAYER BROWN LLP

71 South Wacker Drive

Chicago, Illinois 60606

(312) 782-0600 (Phone)

(312) 701-7711 (Facsimile)

Jeffrey S. Klein Nicholas J. Pappas Allan Dinkoff WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 (212) 310-8000 (Phone) (212) 310-8007 (Facsimile)

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December 15, 2010

Attorneys for Defendants Merrill Lynch & Co. Inc., Merrill Lynch, Pierce, Fenner & Smith Inc., and Bank of America, Corp.

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Case: 1:08-cv-06105 Document #: 82 Filed: 12/15/10 Page 18 of 18 PageID #:271

CERTIFICATE OF SERVICE

This is to certify that true and correct copies of Defendants’ Notice of Motion, Motion to Dismiss Plaintiffs’ Amended Complaint, and Memorandum In Support were served upon counsel for Plaintiffs addressed as follows:

Linda Friedman Mary Stowell Stowell & Friedman, Ltd. 321 S. Plymouth Court, Suite 1400 Chicago, Illinois 60604

via e-mail and First Class Mail on December 15, 2010.

By: /s/ James V. Hart

.

 
 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

GEORGE MCREYNOLDS, MAROC HOWARD, )

FRANKIE ROSS, MARVA YORK, LEROY

)

BROWN, GLENN CAPEL, CARNELL MOORE, )

MARK JOHNSON and CATHY BENDER-

)

JACKSON, on behalf of themselves and all others )

similarly situated,

)

)

Plaintiffs,

)

v.

)

)

MERRILL LYNCH & CO., INC., MERRILL

)

LYNCH, PIERCE, FENNER & SMITH, and

)

BANK OF AMERICA CORPORATION,

)

)

Defendants.

)

No. 08 C 6105 Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER

Plaintiffs George McReynolds, Maroc Howard, Frankie Ross, Marva York, Leroy

Brown, Glenn Capel, Carnell Moore, Mark Johnson and Cathy Bender-Jackson, on behalf of

themselves and all others similarly situated, have brought a two count first amended complaint

against defendants Merrill Lynch & Co., Inc., Merrill Lynch, Pierce, Fenner & Smith and Bank

of America alleging racial discrimination in violation of 42 U.S.C. § 1981 and Title VII of the

Civil Rights Act of 1964, 42 U.S.C. § 2000e et. seq. Defendants have moved to dismiss under

Fed. R. Civ. P. 12(b)(6), for failure to state a claim upon which relief can be granted. For the

reasons explained below, that motion is granted.

BACKGROUND

Defendant Merrill Lynch & Co. is a financial services holding company incorporated in

Delaware and headquartered in New York. Its subsidiaries provide financial and investment

services. Defendant Merrill Lynch, Pierce, Fenner & Smith, Inc. a full service securities firm

engaged in the retail and institutional sale of securities, option contracts and various other

financial products. As of the time of the filing of the instant complaint Merrill Lynch & Co. and

Merrill Lynch, Pierce, Fenner & Smith (jointly as “Merrill Lynch”) together employed more

than 15,000 Financial Advisors or brokers (“FAs”) who sold its products and services at branch

offices located throughout the country.

Defendant Bank of America Corporation (“BOA”) is a financial service company

incorporated in Delaware and headquartered in North Carolina. BOA provides a wide variety of

banking and investment services. On January 9, 2009, BOA acquired Merrill Lynch in a $50

billion all-stock merger transaction. Merrill Lynch now operates as a wholly owned subsidiary

of BOA.

As part of BOA’s acquisition of Merrill Lynch, BOA and Merrill Lynch

announced that they would pay retention awards under an Advisor Transition Program (“ATP”)

to Merrill Lynch’s FAs. In a company-wide broadcast to all FAs, Merrill Lynch executives

explained that the retention awards would be based on “projections of FAs’ future contributions

or ‘production,’ in essence, future commissions earned on client assets managed by the FA.”

Pursuant to a formula, Merrill Lynch based the retention awards on “annualized production”

through September 2008.

Plaintiffs are African-American FAs who either are currently employed at Merrill Lynch

or were employed at Merrill Lynch at the time of the merger. In addition to the instant case,

plaintiffs are also named plaintiffs in a companion case against Merrill Lynch in which they

allege class-wide racial discrimination throughout Merrill Lynch and all of its branch offices.

2

See McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, 2010 WL 3184179 (N.D. Ill. 2010) (“McReynolds I”).1
In the instant action (“McReynolds II”), plaintiffs challenge the ATP and Merrill Lynch’s decision to design the retention awards based on annualized production credits as being intentional racial discrimination. Plaintiffs allege that African-Americans were grossly underrepresented in the top quintiles and over-represented in the lowest quintiles of production credits. As a result, plaintiffs allege that African-American FAs were disproportionately excluded from receiving retention awards and that the retention awards that were given to African-American FAs were lower than they would have been absent unlawful discrimination. Plaintiffs challenge their annual compensation and retention awards following the merger “as the product of discriminatory input to the retention award formula, as well as its intentionally discriminatory design.”
DISCUSSION Defendants have moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. As an initial matter, plaintiffs argue that the motion should be denied on procedural grounds, without even reaching its merits. First, plaintiffs argue that Seventh Circuit precedent dictates that “courts should rule on class certification prior to ruling on the merits of the case.” That is true as a general matter, because Fed. R. Civ. P. 23(c) provides that the court must decide class certification early in the litigation, and Bertrand v. Maram, 495 F.3d 452 (7th Cir. 2007), suggests the decision should be before any final decision on the merits. But a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6) tests the sufficiency of the
1In the above-cited opinion, this court denied class certification. 3

complaint, not the merits of the case. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). Plaintiffs have presented, and this court is aware of no case that holds that the court must rule on class certification prior to determining whether the complaint is sufficient, particularly where, as in the instant case, no motion for class certification has been filed.
Next, plaintiffs argue that the court should strike the instant motion because Judge Kennelly, to whom the case was originally assigned, had denied a motion on similar grounds. Judge Kennelly’s order, however, as defendants point out, was issued prior to the Supreme Court’s decision in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), which clarified the new pleading standards first announced in Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007). The order also addressed the allegations in the original complaint. Plaintiffs have filed an amended complaint and defendants are entitled to and have challenged by motion the sufficiency of that complaint.
To survive such a motion, the complaint must meet the plausibility standard. Although detailed factual allegations are not required, the Rule does call for sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp., 550 U.S. at 555, 570. A claim is facially plausible when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. “Where a complaint pleads facts that are `merely consistent with’ a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 557).
In Iqbal, the Court indicated that two working principles underlie its decision in Twombly. First, the tenet that the court must accept as true all of the allegations in the complaint
4

is inapplicable to legal conclusions. “Threadbare recitals of the elements of the cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949. Second, only those complaints that state a plausible claim for relief survive a motion to dismiss, and the determination of whether a complaint states a plausible claim is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged – but it has not `show[n]’ – ‘that the pleader is entitled to relief.’” Id.
Applying these principles to the instant case reveals that the complaint merely alleges discriminatory conduct but has not “shown” that plaintiffs are entitled to relief. As defendants argue, §703(h) of Title VII, 42 U.S.C. § 2000e-2(h), protects an employer’s bona fide merit, seniority or production-based compensation system, even where the system has a discriminatory impact. The section provides in pertinent part:
Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production: provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex or national origin. Thus, under § 703(h), a disparate impact alone is insufficient to invalidate an otherwise bona fide merit, seniority or production-based compensation system. Actual intent to discriminate must be alleged and proved. American Tobacco Co. v. Patterson, 456 U.S. 63, 65 (1982). Such a system is bona fide if it applies equally to all employees the same way. So long as the system itself was adopted without a discriminatory intent it is bona fide and immunized
5

under § 703(h), even if it perpetuates the effects of other acts of discrimination that clearly violate Title VII. Id. at 705; see Teamsters v. United States , 431 U.S. 324, 348 (1977).
In the instant case, as described in plaintiffs’ complaint, the method used to compute the retention awards qualifies as a production-based compensation system under § 703(h). It used a gender- and race-neutral formula that was measured solely based on each individual FA’s annualized production credit through September 2008. As noted by Judge Scheindlin in Goodman v. Merrill Lynch & Co., Inc., 716 F. Supp.2d 253, 261 (S.D. N.Y. 2010), a case in which the same ATP system was upheld under § 703(h) from a challenge that it discriminated based on gender, “[a]lthough other discrimination by Merrill Lynch regarding account distributions and partnership formations may have affected the plaintiffs’ overall production credits, thereby skewing the input into the ATP, the ATP itself remains a protectable production based compensation system under section 703(h).”2
Therefore, plaintiffs’ complaint challenging the ATP retention computation system states a claim only if it contains sufficient factual allegations to make it plausible that the system was adopted with the intent to discriminate against African-American FAs in favor of white FAs. It does not. The complaint alleges (¶ 20) that “plaintiffs challenge their annual compensation and retention award following the Bank of America merger as the product of discriminatory input to the retention award formula, as well as its intentionally discriminatory design.” As Iqbal makes clear, these are mere conclusory statements that do not satisfy the plausibility standard. “Purposeful discrimination requires more than `intent as volition or intent as awareness of
2Goodman was brought by the same lawyers who represent plaintiffs in the instant action, and the complaint in Goodman with respect to the challenge to the ATP, contains virtually identical factual allegations as the instant complaint.
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consequences’; it involves a decisionmaker’s undertaking a course of action because of, not merely in spite of, the actions’ adverse effects upon an identifiable group.” Iqbal,129 S.Ct. At 1951 (quoting Personnel Administrator of Mass. v. Fenney, 442 U.S. 256, 279 (1979)).
In short, plaintiffs allege that the system was designed with discriminatory intent, but under Iqbal they must do more. They must plead sufficient factual matter to show that defendants adopted and implemented the retention system not for a neutral reason, but for the purpose of discriminating against African-American FAs. Id.; Day v. Patapsco & Back Rivers RR Co., 504 F. Supp. 1301, 1310 (D. Md. 1981). The instant complaint does contain detailed factual allegations of pervasive past and continuing intentional discrimination by Merrill Lynch. This court agrees with Goodman, however, that at best these allegations suggest that “defendants had knowledge of this past discrimination when they adopted the ATP. But knowledge of past and even present discrimination alone does not make it plausible that defendants actually adopted the ATP with discriminatory intent. Rather, the clear inference from the Complaint is that following the Bank of America’s acquisition of Merrill Lynch, defendant established the ATP in an effort to retain Merrill Lynch’s FAs.” Goodman, 716 F. Supp.2d at 261-62. The court further agrees with Judge Scheindlin that “[t]o the extent that other acts of discrimination in violation of Title VII affect the `inputs’ into a bona fide merit, seniority, or production-based compensation system, a plaintiff’s remedy lies in challenging those other violations directly.” Id. at 261. This is precisely what the instant plaintiffs have done in McReynolds I.
In their brief, plaintiffs chastise defendants for failing to inform this court that plaintiffs filed an amended complaint in Goodman which was not challenged. But it is plaintiffs who have misrepresented the course of the Goodman pleadings. The amended complaint to which they
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refer acknowledges Goodman’s inability to plead sufficiently that defendants designed the ATP with discriminatory intent. Plaintiffs’ counsel in Goodman (including the same attorneys representing plaintiffs in the instant case), informed Judge Scheindlin: “Mindful of the Court’s `great skepticism’ of plaintiffs ability to sufficiently allege that the ATP was adopted to intentionally discriminate against female FAs, and mention of Rule 11 sanctions (Order at 1718), plaintiff does not believe that she can plead additional facts, without discovery, that would persuade the court that her challenge to defendants’ intentionally discriminatory design of the ATP is actionable.” The surviving amended complaint in Goodman to which the instant plaintiffs refer challenges only the “inputs” into the ATP. To the extent that plaintiffs suggest that the instant complaint survives because it contains similar challenges, it is duplicative of McReynolds I.
Moreover, even if plaintiffs’ factual allegations with respect to the inputs (which are the subject of McReynolds I) were sufficient to allow the court to infer more than the mere possibility that Merrill Lynch designed the ATP with discriminatory intent (and they clearly are not), those same allegations in no way suggest that BOA acted with any discriminatory intent. There are simply no facts in the complaint to suggest even the possibility that BOA ever discriminated against African-Americans. Indeed, any such inference would be illogical given that BOA would have no incentive to subject itself to yet another lawsuit by these plaintiffs.
CONCLUSION For the reasons set forth above, defendants’ motion to dismiss is granted. ENTER: March 29, 2011
__________________________________________ Robert W. Gettleman
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United States District Judge 9

 
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In the
United States Court of Appeals
For the Seventh Circuit

No. 11-1957 GEORGE MCREYNOLDS, et al.,
v.

Plaintiffs-Appellants,

MERRILL LYNCH & CO., INC., et al., Defendants-Appellees.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.
No. 08 C 6105—Robert W. Gettleman, Judge.

ARGUED OCTOBER 24, 2011—DECIDED SEPTEMBER 11, 2012

Before SYKES and TINDER, Circuit Judges, and DEGUILIO, District Judge.
SYKES, Circuit Judge. In 2005 a group of brokers at Merrill Lynch sued the firm under 42 U.S.C. § 1981 and Title VII raising various claims of racial discrimination and seeking to litigate the claims as a class. Among
 The Honorable Jon E. DeGuilio, United States District Court for the Northern District of Indiana, sitting by designation.

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other things, they alleged that the firm’s “teaming” and account-distribution policies had the effect of steering black brokers away from the most lucrative assignments and thus prevented them from earning compensation comparable to white brokers. That litigation is ongoing. See McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012) (reversing the denial of class certification).
Three years after that suit was filed, Bank of America acquired Merrill Lynch, and the companies introduced a retention-incentive program that would pay bonuses to Merrill Lynch brokers corresponding to their previous levels of production. In response a similar group of brokers filed a second class-action suit, this time against both Merrill Lynch and Bank of America. The new suit again invoked § 1981 and Title VII, but focused specifically on the retention program. The plaintiffs alleged that the bonuses incorporated previous production levels that were the product of Merrill Lynch’s underlying discriminatory policies. The defendants moved to dismiss for failure to state a claim, arguing that the retention program was a race-neutral compensation system keyed to quality of production and was therefore exempt from challenge under § 703(h) of Title VII (codified at 42 U.S.C. § 2000e-2(h)).
The district court granted the motion. The court first held that the retention program qualified as a productionbased compensation system within the meaning of the § 703(h) exemption. As such, the program was protected from challenge unless it was adopted with “the

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intention to discriminate because of race.” 42 U.S.C. § 2000e-2(h). The court then held that the complaint’s allegations of discriminatory intent were conclusory, akin to those rejected by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662 (2009). Finally, to the extent that the allegations pertained to the underlying employment practices at Merrill Lynch—the “inputs” that produced the bonuses—the court held that they duplicated the claims in the earlier, ongoing suit. These holdings resolved the § 1981 claim as well, so the court dismissed the entire case with prejudice.
We affirm. As described in the complaint, the retention program awarded bonuses based on a race-neutral assessment of a broker’s prior level of production, which suffices to protect the program under § 703(h) unless it was adopted with intent to discriminate. It is not enough to allege, as the complaint does, that the bonuses incorporated the past discriminatory effects of Merrill Lynch’s underlying employment practices. See Am. Tobacco Co. v. Patterson, 456 U.S. 63 (1982); Int’l Bhd. of Teamsters v. United States, 431 U.S. 324 (1977). The disparate impact of those employment practices is the subject of the first lawsuit, and if proven, will be remedied there. With respect to the retention program itself, the complaint alleges discriminatory intent in a wholly conclusory fashion, so dismissal was proper under the pleading standards announced in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007), and amplified in Iqbal.

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I. Background
Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith, Inc. (jointly, “Merrill Lynch”), are financialservices firms engaged in the retail and institutional sale of various financial products. At the time the present case was filed, Merrill Lynch was the largest retail brokerage firm in the country, employing over 15,000 financial advisors nationwide.1 These brokers sell the company’s financial products and services, and they are paid according to a firm-wide grid formula that applies different commission rates based on the broker’s level of production. While the formula is intricate, the basic principle is that a broker’s compensation is based on “production credits”—in essence, commissions earned on client assets managed by the broker. The compensation formula is neutral with respect to race.
In 2005 George McReynolds, a black broker, filed a classaction discrimination lawsuit against Merrill Lynch in federal court in the Northern District of Illinois. McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 05-cv-6583 (N.D. Ill. filed Nov. 18, 2005) (“McReynolds I”). The suit was originally brought by McReynolds as the lone named plaintiff and alleged claims of racial discrimination under 42 U.S.C. § 1981, but it was amended in November 2006 to add 16 additional named plaintiffs and a discrimination claim under Title VII,

1 The parties refer to Merrill Lynch’s financial advisors as “FAs,” but we find that acronym awkward, so we’ll call them “brokers” instead.

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42 U.S.C. § 2000e-2. The plaintiffs challenged a wide array of Merrill Lynch’s employment policies and practices, alleging racial discrimination in hiring, compensation, account distribution, and “teaming” (the grouping of brokers that handle particular accounts).
A major theme of the McReynolds I litigation is the allegation that black brokers were systematically steered away from the most lucrative assignments and thus prevented from earning compensation comparable to their white counterparts. The case was assigned to Judge Robert Gettleman, and in 2010 he denied class certification. A panel of this court recently reversed that determination, see McReynolds, 672 F.3d at 492, and the litigation is ongoing.
Meanwhile, on September 15, 2008, Bank of America announced that it would acquire Merrill Lynch in a $50 billion all-stock merger. The transaction closed on January 1, 2009, and Merrill Lynch now operates as a wholly owned subsidiary of Bank of America. As part of the acquisition, the companies decided to pay retention-incentive bonuses to Merrill Lynch brokers based on each broker’s production credits. Thus, brokers who had already been earning higher compensation for producing more business would be offered larger bonuses to remain with the firm through the acquisition.
In response to the retention plan, McReynolds and a group of black brokers filed the present suit, making this case “McReynolds II.” The named plaintiffs in the two cases are substantially similar, though not identical; all the plaintiffs in this case are also plaintiffs in

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McReynolds I, and the same law firm represents them. Merrill Lynch is a defendant in both cases, and Bank of America is also a defendant in this case.2
The McReynolds II complaint once again alleges two claims of racial discrimination—one under 42 U.S.C. § 1981 and one under Title VII—but the substantive focus is far more limited in that this suit challenges only the retention program.3 In essence the plaintiffs allege that the pervasive past discrimination at Merrill Lynch resulted in production credits that reflected the effects of past discriminatory policies and practices. In turn, the use of production credits to determine retention bonuses amounted to an act of employment discrimination because it had the purpose and effect of depressing the size of bonuses earned by black brokers, or eliminating them altogether. The plaintiffs once again sought class certification.
The new suit was initially assigned to Judge Matthew Kennelly, and while class discovery was still underway, Merrill Lynch moved to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Judge Kennelly denied the motion, holding that the plaintiffs had adequately alleged that the retention plan was adopted with intent to discriminate. Merrill Lynch then filed an unopposed motion to transfer the case to Judge Gettleman,

2 We will refer to the defendants collectively as “Merrill Lynch,” unless the context requires otherwise.
3 The version of the complaint at issue here is the plaintiffs’ “First Amended Complaint,” but we refer to it as simply “the complaint.”

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the presiding judge in McReynolds I. After the case was transferred, the Supreme Court decided Iqbal, which made it clear that the new pleading standards the Court had announced two years earlier in Twombly applied outside the antitrust context of Twombly itself. Based on Iqbal, Merrill Lynch renewed its motion to dismiss.
Judge Gettleman granted the motion. As a threshold matter, the judge opted to resolve the motion to dismiss before ruling on class certification, noting that a Rule 12(b)(6) motion “tests the sufficiency of the complaint, not the merits of the case.” The judge then held that the retention program was a race-neutral productionbased compensation system protected by § 703(h) and could be challenged only if it was adopted with intent to discriminate, not mere awareness that the program would disfavor black brokers based on the residual effects of past discrimination. The judge held that the complaint’s allegations of intent to discriminate were nothing more than a “[t]hreadbare recital[] of the elements of the cause of action, supported by mere conclusory statements”—the kind of pleading the Supreme Court rejected in Iqbal. 556 U.S. at 678. To the extent that the production-credit “inputs” were themselves the product of discriminatory policies, the judge held that the new suit simply duplicated the litigation already underway in McReynolds I.
Finally, Judge Gettleman took note of a case in the Southern District of New York raising a nearly identical challenge to this same retention program, except that it alleged a claim of sex discrimination. See Goodman v.

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Merrill Lynch & Co., 716 F. Supp. 2d 253 (S.D.N.Y. 2010). The judge in Goodman had dismissed the plaintiffs’ complaint, holding that Merrill Lynch’s retention program was a production-based compensation system protected under § 703(h) and that the complaint failed to adequately allege intentional discrimination. Id. at 261-62.

II. Discussion
We review a Rule 12(b)(6) dismissal de novo, construing the complaint in the light most favorable to the plaintiffs, accepting as true all well-pleaded facts, and drawing reasonable inferences in the plaintiffs’ favor. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). The plaintiffs’ primary argument is that the district court erred in concluding at the pleading stage that the retentionbonus program was a valid production-based compensation system shielded from challenge by § 703(h). They also maintain that dismissal was inconsistent with the Lilly Ledbetter Fair Pay Act of 2009, Pub. L. No. 111-2, § 3, 123 Stat. 5 (codified at 42 U.S.C. § 2000e-5(e)(3)). Finally, they argue that the district court erroneously concluded that to the extent the allegations in the present complaint focus on Merrill Lynch’s underlying discriminatory practices, they merely duplicate the claims in the McReynolds I litigation.4
4 At the end of their opening brief, the plaintiffs also lodge a procedural objection to the district court’s decision to address the dismissal motion ahead of class certification. Rule 23(c) of
(continued...)

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4 (...continued) the Federal Rules of Civil Procedure provides that the district court must address class certification “early” in the litigation and generally before addressing a motion directed at the merits. See Bertrand v. Maram, 495 F.3d 452, 455 (7th Cir. 2007). But there is no fixed requirement that the court must always defer a decision on a Rule 12(b)(6) motion until after the court addresses class certification. As the district court noted, a motion to dismiss for failure to state a claim tests the sufficiency of the complaint, and although a Rule 12(b)(6) dismissal operates as a final decision on the merits if leave to replead is not granted, it is sometimes appropriate to decide a Rule 12(b)(6) motion ahead of class certification. See, e.g., Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 550 (2007) (affirming dismissal of antitrust claims prior to ruling on class certification); Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 394-96 (7th Cir. 2011) (same); Shlahtichman v. 1-800 Contacts, Inc., 615 F.3d 794, 797 (7th Cir. 2010) (same).
It was especially appropriate to do so here. As we will explain, this suit essentially piggybacks on McReynolds I, in which the same plaintiffs are challenging the various employment practices at Merrill Lynch that contribute to the determination of a broker’s production credits. Those production credits, in turn, form the basis for the retention bonuses at issue here. Whether the retention-bonus program is insulated from challenge under § 703(h) is a threshold question that can be resolved on the pleadings. To the extent that the plaintiffs are really challenging the disparate impact of the underlying policies that provide the “inputs” for the bonuses, their claim here is subsumed within McReynolds I, and if successful, will be remedied there.

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A. Section 703(h)
The plaintiffs assert claims of racial discrimination under § 1981 and Title VII based on what the complaint describes as a long history of discriminatory employment policies and practices at Merrill Lynch that have the effect of denying black brokers the same business opportunities as white brokers. The complaint alleges that Merrill Lynch uses “production credits” to determine compensation, that these production credits reflect the effects of the underlying discrimination, and thus that the retention program, which paid bonuses based on production credits, was adopted with intent to discriminate against black brokers.
Section 703(h) of Title VII provides that certain compensation systems are exempt from challenge as an unlawful employment practice absent intent to discriminate:
Notwithstanding any other provision of this subchapter, it shall not be an unlawful employment practice for an employer to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production . . . , provided that such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin . . . .
42 U.S.C. § 2000e-2(h). The import of § 703(h) is that disparate racial impact is insufficient under Title VII to invalidate a “bona fide seniority or merit system,” or a “system which measures earnings by quantity or quality

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of production.” Plaintiffs challenging an employment practice or compensation system of this type must establish intent to discriminate. Patterson, 456 U.S. at 65.
Section 703(h) thus creates an exception to the general rule that “a prima facie Title VII violation may be established by policies or practices that are neutral on their face and in intent but that nonetheless discriminate in effect against a particular group.” Teamsters, 431 U.S. at 349. An employment practice that passes muster under Title VII does not violate § 1981, Waters v. Wis. Steel Works of Int’l Harvester Co., 502 F.2d 1309, 1320 n.4 (7th Cir. 1974), so if the Merrill Lynch retention program is protected under § 703(h), then dismissal of both claims was proper.

1. Production-Based Compensation System
Our first question is whether the retention program qualifies as “a system which measures earnings by quantity or quality of production” within the meaning of § 703(h). The Supreme Court has more often interpreted and applied § 703(h) as it pertains to challenges to seniority and merit systems, but what the Court has said in those contexts guides the analysis here. The most relevant cases for our purposes are Teamsters and Patterson.
In Teamsters the Supreme Court held that a seniority system cannot be challenged under Title VII merely because it incorporates the effects of past acts of intentional discrimination. 431 U.S. at 353-54. The Court explained that employees who are the victims of intentional

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discrimination after Title VII was enacted are entitled to retroactive seniority as a remedy for the violation, id. at 347-48 (citing Franks v. Bowman Transp. Co., 424 U.S. 747, 778-79 (1976)), but § 703(h) insulates the seniority system itself from challenge notwithstanding that the system locks in the effects of past discrimination, id.
The Court acknowledged that § 703(h) immunized only “bona fide” seniority systems in which differences in treatment were not “the result of an intention to discriminate because of race,” but it declined to hold that any system that perpetuates the effects of past discrimination was not “bona fide” as a result. Id. at 353. Rather, the Court explained that the seniority system in Teamsters applied neutrally to all races and “did not have its genesis in racial discrimination,” and was therefore a bona fide seniority system insulated from challenge under § 703(h). Id. at 355-56. Patterson reaffirmed the holding of Teamsters and clarified that § 703(h) applies equally to seniority systems adopted both before and after the passage of Title VII. 456 U.S. at 77.
Merrill Lynch argues, and we agree, that Teamsters and Patterson control the outcome here. The complaint alleges that retention bonuses are determined by production credits—“in essence, commissions earned on client assets managed by the [broker]”—and that the credits are “generated for the [brokers’] assets under management on the purchase or sale of certain investment products.” The complaint further alleges that “[a]ssets under management reflect the total amount of clients’ assets that a broker is responsible for managing

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on the clients’ behalf.” As described in the complaint, the production-credit system is about as direct a measure of production as one could imagine in the financialservices industry, and the plaintiffs do not suggest otherwise.
The complaint likewise alleges that “compensation is largely determined by a ‘grid’ formula that applies different commission rates based on a[] [broker’s] level of production” and that this formula is “neutral on [its] face.” Nowhere does the complaint allege that the formula is actually applied in a discriminatory manner—only that the “inputs” determining a broker’s production levels were themselves the products of past discrimination.
Taking these allegations as true, we have little trouble concluding that the retention-bonus program compensates brokers on the basis of production and that it does so in a race-neutral manner. To the extent that the program incorporated the effects of past discrimination, the same was true of the seniority system in Teamsters. Just as the Teamsters plaintiffs could obtain retroactive seniority as a remedy in a claim addressing the underlying discrimination, so too may the plaintiffs here obtain a remedy for any underlying discriminatory policies if they succeed in their challenge in McReynolds I. Stated differently, to whatever extent the plaintiffs can prove they would have received larger bonuses but for the past discrimination affecting their production levels, that loss may be incorporated into the remedy in McReynolds I. But the retention program itself is

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shielded from challenge as a production-based compensation system under § 703(h).
The plaintiffs have several arguments as to why Teamsters should not control, but none are ultimately persuasive. First, they rely on a line of cases holding that a compensation scheme is not protected under § 703(h) if it does not actually measure what it purports to measure. See, e.g., Griggs v. Duke Power Co., 401 U.S. 424, 434-36 (1971) (holding that § 703(h) does not protect use of testing requirements with a disparate impact on racial minorities where the tests were not shown to be related to job performance); Ass’n Against Discrimination in Emp’t v. City of Bridgeport, 647 F.2d 256, 272-74 (2d Cir. 1981) (racially discriminatory test that did not actually measure fitness for the job could not be characterized as a “bona fide merit system” under § 703(h)). The plaintiffs contend that just as the tests in Griggs and Association Against Discrimination were not really measuring merit, neither is the retention-bonus program really measuring the quality of production.
This comparison does not hold up under scrutiny. The material point in Griggs and Association Against Discrimination was that the testing devices at issue in those cases were not validly measuring employees’ merit to begin with and were only serving to create racial disparities. See Griggs, 401 U.S. at 431 (“[N]either the high school completion requirement nor the general intelligence test is shown to bear a demonstrable relationship to successful performance of the jobs for which it was used.”); Ass’n Against Discrimination, 647 F.2d at

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273 (“[I]t would defy reason to characterize as a ‘bona fide merit system’ a test that does not measure the fitness of those who take it for the positions to be filled according to its results.”). This case is quite different. The complaint itself acknowledges that a broker’s production credits do, in fact, reflect “commissions earned on client assets managed by the [broker],” and there is no suggestion that this metric of production is improper. It is also undisputed that brokers who more successfully invest their assets under management earn more production credits and that this calculation is made on an objective and racially neutral basis. In short, a broker’s production credits—on which the retention bonuses were based—do in fact measure the “quality of production” as required for the § 703(h) exemption.
This might be a different case if a broker’s compensation depended on a subjective analysis of how effectively the broker was representing the firm. If, for example, black brokers were receiving systematically poorer reviews than their white counterparts who performed substantially similar work, and the reviews determined compensation, then Merrill Lynch could not shield the system simply by calling it a merit- or production-based system—or at least, the § 703(h) issue could not be resolved at the pleading stage. In that situation, the challenger might have an arguable factual basis for a claim under Griggs that the evaluations were not actually measuring production. But here, the complaint alleges that the retention-bonus program applies equally to all brokers and uses an objective, mechanical measure of productivity, avoiding any subjective evaluations.

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The plaintiffs also argue that § 703(h) should apply only to “piecework” production systems, like the manufacture of physical products on an assembly line, and not the sort of financial-asset production-credit system at issue here. This reading of the statute has no basis in the text and is not compelled by relevant precedent. Section 703(h) states that “it shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to . . . a system which measures earnings by quantity or quality of production.” This language is not limited to piecework systems; indeed, the specific use of the phrase “quantity or quality” plainly expands the reach of § 703(h) beyond quantity-based piecework compensation systems. The plaintiffs point out that where production-based systems are discussed in the legislative history of § 703(h), only piecework systems are mentioned as an example. Consulting legislative history may be an acceptable means of decoding an ambiguous statute, see DIRECTV, Inc. v. Barczewski, 604 F.3d 1004, 1008 (7th Cir. 2010), but the text of § 703(h) is not ambiguous in any relevant respect. It broadly exempts compensation systems based on quantity or quality of production.
Next, the plaintiffs contend that even if the retention program qualifies as a production-based system, it is not “bona fide” as that term is used in § 703(h). See 42 U.S.C. § 2000e-2(h) (“[I]t shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production . . . .” (emphasis added)).

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The statute itself does not explain what is meant by “bona fide,” but in Teamsters the Supreme Court elaborated on the term in the context of a seniority system:
The seniority system in this litigation is entirely bona fide. It applies equally to all races and ethnic groups. To the extent that it “locks” employees into non-line-driver jobs, it does so for all. The [injured employees] . . . are not all Negroes or Spanish-surnamed Americans; to the contrary, the overwhelming majority are white. The placing of line drivers in a separate bargaining unit from other employees is rational in accord with the industry practice . . . . It is conceded that the seniority system did not have its genesis in racial discrimination, and that it was negotiated and has been maintained free from any illegal purpose.
431 U.S. at 355-56. The plaintiffs maintain that although the retention program is racially neutral on its face, it cannot be considered “bona fide” because the production-credit system on which it is based had its genesis in Merrill Lynch’s discriminatory policies and practices and was neither negotiated nor maintained free from illegal purpose.
We do not need to grapple with the question whether the term “bona fide” has some specialized meaning in this context.5 On the most straightforward reading of the statute, the “bona fide” modifier applies to seniority

5 A standard definition of “bona fide” is: “1. Made in good faith; without fraud or deceit. 2. Sincere; genuine.” BLACK’S LAW DICTIONARY 199 (9th ed. 2004).

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and merit systems, not to production-based compensation systems. To repeat, the statute provides that “it shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production.” If the “bona fide” modifier were meant to apply to production-based systems as well as seniority and merit systems, the more natural phrasing would authorize employers to use different standards of compensation “pursuant to a bona fide seniority system, merit system, or system which measures earnings by quantity or quality of production.”6
The interpretive question is largely irrelevant, however, because even if the “bona fide” modifier applies, the concept is inherently built into what it means for a system to measure quantity or quality of production.

6 We have not been able to find any case that has squarely addressed this interpretive question. The plaintiffs cite Beasley v. Kroehler Manufacturing Co., 406 F. Supp. 926, 928-29 (N.D. Tex. 1976), for the proposition that “a production system must be shown to measure the actual quantity or quality of the employee’s production—without employer manipulation—before it qualifies as bona fide.” But Beasley says nothing of the sort—indeed, the court went so far as to quote § 703(h) as excluding the bona fide language as applied to production-based compensation systems. See id. (“Title VII specifically provides that ‘it shall not be an unlawful employment practice for an employer to apply different standards of compensation . . . pursuant to a . . . quantity or quality of production[.]’ 42 U.S.C. § 2000e-2(h).” (alterations in original)).

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Indeed, the “bona fide” question is essentially identical to the question whether the retention-bonus program is, in fact, a production-based system. If there were truly a dispute as to whether the retention program measured production—as would be the case in the “subjective analysis” hypothetical discussed above—then perhaps it could be said that the retention program was not “bona fide.” But as we have explained, the retention program qualifies as a production-based system, so any extra “bona fide” analysis is beside the point.
Finally, when the Supreme Court explained why the seniority system in Teamsters was “entirely bona fide,” 431 U.S. at 355, it did so in language that distinguished a bona fide seniority system from one adopted as a “result of an intention to discriminate.” The Court observed that the seniority system qualified as “bona fide” in part because it “did not have its genesis in racial discrimination” and was “negotiated and . . . maintained free from any illegal purpose.” Id. at 356. This anticipates the next step in the § 703(h) analysis, which concerns the issue of discriminatory intent.

2. Intent to Discriminate
Because it qualifies as a production-based compensation system, the retention program is exempt from challenge under § 703(h) provided it was “not the result of an intention to discriminate because of race.” As an initial matter, the plaintiffs argue that even if the retention program itself was not adopted with a discriminatory purpose, it was based on production levels that re-

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flected the effects of past intentional discrimination, so the actual differences in bonus pay resulted from an intention to discriminate, if only indirectly. This argument relies on a misreading of the statutory language. Appropriately excerpted, § 703(h) provides that “it shall not be an unlawful employment practice . . . to apply different standards of compensation . . . provided that such differences are not the result of an intention to discriminate.” The phrase “such differences” in the proviso refers back to “standards of compensation,” not the actual amount of compensation.
Teamsters confirms this understanding of the statute. There, it was conceded that the differences in seniority (and thus the differences in employment privileges) were the product of intentional discrimination, but the seniority system itself was nevertheless immune from challenge under § 703(h). The plaintiffs suggest that production-based systems should be treated differently from seniority systems, but nothing in the text of the statute or the Court’s analysis in Teamsters supports limiting that case to its facts. The proviso applies across the board. By its terms, § 703(h) authorizes employers to apply different standards of compensation pursuant to a seniority, merit, or production-based system provided that the system was not adopted with a discriminatory purpose. Although Teamsters addressed a seniority system, the Court’s interpretation of § 703(h) applies with

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equal force here.7 A production-based compensation system, like a seniority or merit system, forfeits the protection of § 703(h) only if the system itself was adopted with the intent to discriminate.
The complaint alleges this intent, but it does so only generally, raising the question whether the allegations pass muster under the heightened pleading standards set forth in Twombly and Iqbal. To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of entitlement

7 The EEOC, as an amicus for the plaintiffs, suggests an odd distinction between Teamsters and the present case. The agency argues that Teamsters involved “discrete acts of discrimination that had immediate and tangible adverse effects on the plaintiffs but were not challenged at the time,” but in this case, “the disparity in compensation under the [retention program] was the first tangible consequence of the discriminatory allocation of accounts and other benefits.” Setting aside whether this distinction is valid in theory, the argument cannot be squared with the complaint, which asserts that Merrill Lynch’s underlying discriminatory policies had a disparate impact on brokers’ wages well before the acquisition by Bank of America, and that those policies are the subject of litigation in McReynolds I.

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to relief.’ ” Id. (quoting Twombly, 550 U.S. at 557) (internal quotation marks omitted).
Iqbal clarified two working principles underlying the Twombly decision. First, although the complaint’s factual allegations are accepted as true at the pleading stage, allegations in the form of legal conclusions are insufficient to survive a Rule 12(b)(6) motion. Id. Accordingly, “[t]hreadbare recitals of the elements of the cause of action, supported by mere conclusory statements, do not suffice.” Id. Second, the plausibility standard calls for a “context-specific” inquiry that requires the court “to draw on its judicial experience and common sense.” Id. at 679. This is “not akin to a ‘probability requirement,’ ” but the plaintiff must allege “more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678.
Applying these principles here, the allegations that Merrill Lynch knew that the production-credit system had a disparate impact on black brokers are legally insufficient. Instead, the complaint must allege enough factual content to support an inference that the retention program itself was adopted because of its adverse effects on black brokers. See Iqbal, 556 U.S. at 676-77; Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 279 (1979).
The plaintiffs suggest that reliance on Iqbal and Feeney is misplaced because those cases concerned constitutional claims, not statutory claims. The distinction makes no difference. It is well-established that an intentional-discrimination claim under Title VII is evalu-

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ated the same way as an intentional-discrimination claim arising under the Equal Protection Clause:
Neither [Washington v.] Davis nor [Personnel Administrator v.] Feeney were Title VII cases, a point emphasized in Davis. But when intentional discrimination is charged under Title VII[,] the inquiry is the same as in an equal protection case. The difference between the statutory and constitutional prohibitions becomes important only when a practice is challenged . . . based on a theory of “disparate impact,” as distinct from “disparate treatment” . . . .
Am. Nurses’ Ass’n v. Illinois, 783 F.2d 716, 722 (7th Cir. 1986) (citation omitted); see also EEOC v. Joe’s Stone Crab, Inc., 220 F.3d 1263, 1273 (11th Cir. 2000) (“[T]o show discriminatory intent [under Title VII], a plaintiff must demonstrate ‘that the decisionmaker . . . selected or reaffirmed a particular course of action at least in part because of, not merely in spite of, its adverse effects on an identifiable group.’ ” (alteration in original) (quoting Feeney, 442 U.S. at 279) (internal quotation marks omitted)). By operation of § 703(h), both the Title VII and § 1981 claims require a showing of intentional discrimination, so Iqbal and Feeney provide the proper decisional framework.
The complaint alleges in some detail that black brokers at Merrill Lynch have been the victims of discriminatory employment policies and practices and that they receive fewer production credits as a result. But much less is said about the retention program itself. The complaint alleges that the retention awards

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were “based on annualized production credits through September 2008,” that the awards for black brokers “were lower than they would have been absent unlawful discrimination,” and that both Merrill Lynch and Bank of America were aware of this differential and the underlying discriminatory practices that allegedly caused it. As to whether the retention program itself was adopted with discriminatory purpose, however, the complaint asserts only the following:
Defendants intentionally designed and implemented retention bonuses based largely on production credits that had a disparate impact on and intentionally discriminated against African Americans and women. Defendants identified and selected for higher compensation the FAs they would try hardest to retain via the retention bonuses, and they knew that they were offering more generous retention packages to white men than to African Americans and women. Simply put, Defendants intended to retain and more generously compensate white men rather than African Americans and women. Defendants did not want to retain African American FAs, and have engaged in policies and practices designed to further their higher rates of attrition.
We agree with the district court that these allegations of intent are the sort of conclusory allegations that are insufficient under Iqbal. All four sentences say basically the same thing and at roughly the same level of generality—that Merrill Lynch intentionally designed the retention program based on production levels that incorpo-

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rated the effects of past discrimination, and that the firm did so with the intent to discriminate against black brokers. Stated as such, the assertion is merely a conclusion, unsupported by the necessary factual allegations to support a reasonable inference of discriminatory intent. Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). Indeed, it is helpful to compare this language to the rejected complaint in Iqbal itself, which alleged that the defendants “knew of, condoned, and willfully and maliciously agreed to subject [the plaintiff] to harsh conditions of confinement as a matter of policy, solely on account of [his] religion, race, and/or national origin and for no legitimate penological interest.” Id. at 680 (internal quotation marks omitted).
The plaintiffs argue that the complaint adequately alleges intentional discrimination but the district court erroneously rejected the allegations as “implausible” by drawing two improper inferences: first, that the true motive of the retention program was to retain the most productive brokers; and second, that Bank of America would have wanted to avoid discrimination to prevent a lawsuit. Had the complaint adequately alleged intentional discrimination in the first place, this might be a valid point. The “plausibility” standard under Iqbal “does not imply that the district court should decide whose version to believe, or which version is more likely than not.” Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir. 2010). But the complaint did not adequately allege intentional discrimination in the

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first place. The district court recognized as much, holding that the plaintiffs offered nothing more than conclusory allegations of discriminatory intent.
In any event, our standard of review is de novo, and based on our own review of the complaint, we conclude that it contains insufficient factual content to support an inference that the retention program itself was intentionally discriminatory. The plaintiffs have alleged that Merrill Lynch’s past employment practices had discriminatory effects on black brokers and the firm knew it when it designed the retention program. But however ample the complaint’s allegations might be to support a disparate-impact claim vis-à-vis the underlying employment practices, they are insufficient to support a claim of intentional discrimination with respect to the retention program. Under Teamsters the past discriminatory “inputs” are legally irrelevant to the lawfulness of the retention program. The complaint needs to allege some facts tending to support a plausible inference that the retention program itself was adopted for a discriminatory purpose.
The complaint contains no factual allegations of this nature. It alleges only that Merrill Lynch was aware of the disparate impact of its policies on black brokers and then asserts in wholly conclusory terms that this impact was the purpose of the retention program. Under a combined reading of Teamsters and Iqbal, these allegations are legally insufficient to state a claim. This is a complex discrimination claim, and we have observed that under Iqbal and Twombly, “[t]he required level of factual specific-

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ity rises with the complexity of the claim.” McCauley v. City of Chicago, 671 F.3d 611, 616-17 (7th Cir. 2011) (citing Swanson, 614 F.3d at 405). Because the complaint contains only conclusory allegations that the retention program was adopted with intent to discriminate, it fails to state a claim upon which relief may be granted.

B. Lilly Ledbetter Fair Pay Act
The plaintiffs also argue that dismissal was improper under the Lilly Ledbetter Fair Pay Act of 2009, which they claim creates a new cause of action for discriminatory practices whenever compensation is paid pursuant to past discriminatory employment decisions. They argue, in essence, that a new cause of action was created when Merrill Lynch paid the retention bonuses, taking this case outside the ambit of § 703(h). This argument completely misunderstands the Fair Pay Act.
The Act was passed following the Supreme Court’s decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc., 550 U.S. 618 (2009), which held that Title VII’s 180-day statute of limitations begins to run when a discriminatory pay decision is made, not each time compensation is paid, id. at 632. Lilly Ledbetter filed suit within 180 days of receiving a paycheck reflecting an allegedly discriminatory wage, but the employment decisions that caused the claimed disparity in pay occurred much earlier. The Court held that the limitations period began to run at the time the discriminatory employment decisions were made, not each time a paycheck was issued. Id. at 627-28.

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In response to this decision, Congress passed the Fair Pay Act, which provides as follows:
For purposes of this section, an unlawful employment practice occurs, with respect to discrimination in compensation in violation of this title, when a discriminatory compensation decision or other practice is adopted, when an individual becomes subject to a discriminatory compensation decision or other practice, or when an individual is affected by application of a discriminatory compensation decision or other practice, including each time wages, benefits, or other compensation is paid, resulting in whole or in part from such a decision or other practice.
42 U.S.C. § 2000e-5(e)(3)(A). The statute thus reverses the decision in Ledbetter and clarifies that an unlawful employment practice occurs for purposes of the statute of limitations “each time . . . compensation is paid, resulting in whole or in part from [an unlawful employment] decision or other practice.”
The Act therefore concerns the question of timing—it affects when discriminatory practices may be challenged by extending the statute of limitations every time a paycheck is issued. It is an accrual rule; it does not affect the substance of the claim. Indeed, in AT & T Corp. v. Hulteen, 556 U.S. 701, 715-16 (2009), the Supreme Court specifically held that § 703(h), as interpreted in Teamsters, survived the Fair Pay Act. Hulteen held that a bona fide seniority system was protected by § 703(h) even though it did not retroactively equalize pregnancy leaves taken before the passage of the Pregnancy Discrimination Act (“PDA”). Id. at 704-06. The Court thus applied Team-

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sters in the context of pregnancy discrimination. In holding that the Fair Pay Act did not affect its decision, the Court noted that “AT & T’s pre-PDA decision not to award Hulteen service credit for pregnancy leave was not discriminatory, with the consequence that Hulteen has not been ‘affected by application of a discriminatory compensation decision or other practice.’ ” Id. at 716 (quoting 42 U.S.C. § 2000e-5(e)(3)(A)). In other words, by virtue of § 703(h), the employer had not, in fact, committed an unlawful employment practice, so there was no way that future payments could have “continued” this nonexistent discrimination.
The same is true here. The plaintiffs have challenged only the retention program, but the program is immune from challenge as a race-neutral production-based compensation system under § 703(h). As such, there is no Title VII violation in the first place, so it makes no sense to say that the payment of bonus awards extended the statute of limitations. What the Fair Pay Act would do, if applicable here, is allow the plaintiffs another chance to challenge Merrill Lynch’s underlying discriminatory practices if the statute of limitations had run on those claims. But the plaintiffs are already challenging those practices in McReynolds I, so the Fair Pay Act simply has no role to play in this litigation.

C. Construing the Complaint as a Challenge to Underlying Discriminatory Practices
Finally, the plaintiffs argue that even if the retention program itself is protected, the complaint should be

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construed as a challenge to the underlying discriminatory practices at Merrill Lynch—about which there are many detailed allegations in the complaint—and the district court therefore should not have dismissed the suit as duplicative of the claims made in McReynolds I.8 This argument would be difficult to win under any circumstances, and it is especially weak here. The district court has broad discretion to dismiss a complaint “ ‘for reasons of wise judicial administration . . . whenever it is duplicative of a parallel action already pending in another federal court.’ ” Serlin v. Arthur Andersen & Co., 3 F.3d 221, 223 (7th Cir. 1993) (quoting Ridge Gold Standard Liquors, Inc. v. Joseph E. Seagram & Sons, Inc., 572 F. Supp. 1210, 1213 (N.D. Ill. 1983)). A suit is duplicative if the “claims, parties, and available relief do not significantly differ between the two actions.” Ridge Gold, 572 F. Supp. at 1213. The district court has significant latitude on this question, and we will reverse only for abuse of discretion. Serlin, 3 F.3d at 223.
Application of that standard here is quite straightforward. All of the named plaintiffs in this case are also plaintiffs in McReynolds I, and the McReynolds I litigation challenges the underlying employment practices that are alleged to have caused differences in brokers’ production credits, and by extension in the retention awards.

8 Merrill Lynch maintains that the plaintiffs waived this argument by failing to make it in the district court. To the contrary, the plaintiffs specifically raised this argument in their brief in response to the motion to dismiss.

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The plaintiffs will be able to obtain complete relief in McReynolds I because any loss relating to reduced retention awards based on lower production credits can simply be treated as part of the damages in that case should the plaintiffs prevail on the merits.
The plaintiffs insist that because the class and the claims are broader in McReynolds I, and Bank of America is named as a defendant here but not in the earlier case, the two actions are sufficiently different to proceed as independent actions. We disagree. The larger class size and broader scope of the claims in McReynolds I actually support the district court’s holding that any challenge to Merrill Lynch’s underlying employment practices here is subsumed in the earlier case. And to the extent that Bank of America may be liable as a corporate parent, the plaintiffs can try to amend their complaint in McReynolds I to add Bank of America as a defendant. See EEOC v. Vucitech, 842 F.2d 936, 944 (7th Cir. 1988); see also Worth v. Tyer, 276 F.3d 249, 259-60 (7th Cir. 2001) (“ ‘When the successor company knows about its predecessor’s liability, knows the precise extent of that liability, and knows that the predecessor itself would not be able to pay a judgment obtained against it, the presumption should be in favor of successor liability . . . .’ ” (quoting Vucitech, 842 F.2d at 945)). But allowing a separate suit seeking the same remedy would be redundant.
Finally, the plaintiffs make the curious assertion that dismissal would “eliminate[] the role of the [EEOC] in investigating employment discrimination claims against employers that repeatedly commit ‘similar or related’

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discriminatory acts.” The argument seems to be that the district court’s refusal to entertain this duplicative lawsuit will somehow discourage potential plaintiffs from filing charges with the EEOC and thus prevent the agency from adequately investigating long-standing discriminatory practices. We see no such disincentive. Plaintiffs may always file new claims with the EEOC. Dismissal here simply reflects the district court’s conclusion that if the complaint in this case is construed as a challenge to Merrill Lynch’s underlying discriminatory practices, there are not, in fact, any new claims being made—only the potential for greater damages in the earlier suit. This conclusion was not an abuse of discretion.9
AFFIRMED.

9 In their reply brief, the plaintiffs also argue that the case should have been stayed rather than dismissed. See Gleash v. Yuswak, 308 F.3d 758, 760 (7th Cir. 2002) (“Even when prudence calls for putting a redundant suit on hold, it must be stayed rather than dismissed unless there is no possibility of prejudice to the plaintiff.”). Arguments raised for the first time in a reply brief are waived. See Mendez v. Perla Dental, 646 F.3d 420, 423-24 (7th Cir. 2011). Moreover, we doubt that the decision to dismiss rather than stay this case could have possibly prejudiced the plaintiffs. As we have noted, to the extent that they prevail on their claims in McReynolds I, the plaintiffs will have a complete remedy.
9-11-12

 
 Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 1 of 13
GILBERT,PROTO,TERMED
United States District Court Northern District of Illinois − CM/ECF LIVE, Ver 5.1.1 (Chicago)
CIVIL DOCKET FOR CASE #: 1:08−cv−06105

McReynolds et al v. Merrill Lynch &Co., Inc. et al Assigned to: Honorable Robert W. Gettleman related Case: 1:05−cv−06583
Case in other court: 11−01957 Cause: 42:1981 Civil Rights
Plaintiff

Date Filed: 10/24/2008 Date Terminated: 03/29/2011 Jury Demand: Both Nature of Suit: 440 Civil Rights: Other Jurisdiction: Federal Question

George McReynolds

represented by Linda Debra Friedman Stowell &Friedman, Ltd. 303 W. Madison Street Suite 2600 Chicago, IL 60606 312−431−0888 Fax: 312−431−0228 Email: lfriedman@sfltd.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot Stowell &Friedman, Ltd. 303 W. Madison Street Suite 2600 Chicago, IL 60606 312−431−0888 Email: grobot@sfltd.com ATTORNEY TO BE NOTICED

Suzanne E. Bish Stowell &Friedman, Ltd. 321 South Plymouth Court Suite 1400 Chicago, IL 60604 312−431−0888 Email: sbish@sfltd.com ATTORNEY TO BE NOTICED

Plaintiff Maroc Howard

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Frankie Ross

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 2 of 13

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Marva York

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff LeRoy Brown

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Glenn Capel

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Carnell Moore

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 3 of 13

ATTORNEY TO BE NOTICED

Plaintiff Mark Johnson

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

Plaintiff
Cathy Bender−Jackson on behalf of themselves and all others similarly situated,

represented by Linda Debra Friedman (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

George S. Robot (See above for address) ATTORNEY TO BE NOTICED

Suzanne E. Bish (See above for address) ATTORNEY TO BE NOTICED

V. Defendant Merrill Lynch &Co., Inc.

represented by Allan David Dinkoff Weil, Gotshal &Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310−6771 Email: allan.dinkoff@weil.com PRO HAC VICE ATTORNEY TO BE NOTICED
Gina M Diomedi Adler Murphy &McQuillen LLP One N. La Salle St. Suite 2300 Chicago, IL 60602 (312) 477−7680 Email: gdiomedi@amm−law.com TERMINATED: 04/27/2010
Jeffrey S. Klein Weil, Gotshal &Manges 767 Fifth Avenue New York, NY 10153 (212)310−8000 Email: jeffrey.klein@weil.com ATTORNEY TO BE NOTICED
Lori E. Lightfoot Mayer Brown LLP 71 South Wacker Drive

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 4 of 13

Chicago, IL 60606 (312) 782−0600 Email: llightfoot@mayerbrown.com ATTORNEY TO BE NOTICED

Nicholas J. Pappas Weil, Gotshal &Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310−8669 Email: nicholas.pappas@weil.com ATTORNEY TO BE NOTICED

Patricia Wencelblat Weil, Gotshal &Manges 767 Fifth Ave. New York, NY 10153 (212) 310−8654 Email: patricia.wencelblat@weil.com PRO HAC VICE ATTORNEY TO BE NOTICED

Salvatore A. Romanello Weil, Gotshal &Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310−8000 PRO HAC VICE ATTORNEY TO BE NOTICED

Defendant Merrill Lynch, Pierce, Fenner &Smith

represented by Jeffrey S. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Gina M Diomedi (See above for address) TERMINATED: 04/27/2010

Lori E. Lightfoot (See above for address) ATTORNEY TO BE NOTICED

Nicholas J. Pappas (See above for address) ATTORNEY TO BE NOTICED

Patricia Wencelblat (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Defendant Bank of America Corporation

represented by Jeffrey S. Klein (See above for address) LEAD ATTORNEY ATTORNEY TO BE NOTICED

Lawrence Charles DiNardo Jones Day 77 West Wacker Drive Suite 3500 Chicago, IL 60601−1692

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 5 of 13
(312)782−3939 Email: lcdinardo@jonesday.com TERMINATED: 01/27/2010 LEAD ATTORNEY
Allan David Dinkoff (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Anna Kathryn Hartog Jones Day (CH) 77 West Wacker Drive Chicago, IL 60601 Email: ahartog@jonesday.com TERMINATED: 01/27/2010
Efrat R Schulman Jones Day 77 West Wacker Drive Suite 3500 Chicago, IL 60601−1692 (312)782−3939 Fax: (312)782−8585 Email: eschulman@jonesday.com TERMINATED: 01/27/2010
Lori E. Lightfoot (See above for address) ATTORNEY TO BE NOTICED
Nicholas J. Pappas (See above for address) ATTORNEY TO BE NOTICED
Patricia Wencelblat (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED
Salvatore A. Romanello (See above for address) PRO HAC VICE ATTORNEY TO BE NOTICED

Date Filed 10/24/2008
10/24/2008 10/24/2008
11/10/2008 12/03/2008

# Docket Text
1 COMPLAINT filed by Plaintiffs Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown; Jury Demand. Filing fee $ 350.(smm) (Entered: 10/27/2008)
2 CIVIL Cover Sheet. (smm) (Entered: 10/27/2008)
3 ATTORNEY Appearance for Plaintiffs Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown by Linda Debra Friedman. (smm) (Entered: 10/27/2008)
5 SUMMONS Issued as to Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Bank of America Corporation. (smm) (Entered: 11/12/2008)
6 MINUTE entry before the Honorable Matthew F. Kennelly:Status hearing set to 9:00 a.m. on Monday, 1/5/2009 before Judge Kennelly, in Chambers, Room 2188.

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 6 of 13

12/09/2008
12/09/2008
12/09/2008
12/09/2008 12/09/2008 12/09/2008 12/17/2008 12/19/2008 12/31/2008 12/31/2008 12/31/2008 12/31/2008 01/02/2009 01/02/2009 01/07/2009 01/07/2009

Parties are to review and comply with Judge Kennelly's standing initial order, which may be found on his web page, located http://www.ilnd.uscourt.gov at http://www.ilnd.uscourts.gov/JUDGE/KENNELLY/mfkpage.htm. Counsel for plaintiff(s) are ordered to cause a copy of this order to be delivered forthwith to each defendant in the same manner that summons has been or is being served on each defendant.Mailed notice (smm) (Entered: 12/04/2008)
7 SUMMONS Returned Executed by Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown as to Merrill Lynch, Pierce, Fenner &Smith on 12/8/2008, answer due 12/29/2008. (Bish, Suzanne) (Entered: 12/09/2008)
8 SUMMONS Returned Executed by Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown as to Merrill Lynch &Co., Inc. on 12/8/2008, answer due 12/29/2008. (Bish, Suzanne) (Entered: 12/09/2008)
9 SUMMONS Returned Executed by Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown as to Bank of America Corporation on 12/8/2008, answer due 12/29/2008. (Bish, Suzanne) (Entered: 12/09/2008)
10 ATTORNEY Appearance for Defendant Bank of America Corporation by Lawrence Charles DiNardo (DiNardo, Lawrence) (Entered: 12/09/2008)
11 ATTORNEY Appearance for Defendant Bank of America Corporation by Efrat R Schulman (Schulman, Efrat) (Entered: 12/09/2008)
12 ATTORNEY Appearance for Defendant Bank of America Corporation by Anna Kathryn Hartog (Hartog, Anna) (Entered: 12/09/2008)
13 MINUTE entry before the Honorable Matthew F. Kennelly:By request of the parties, initial status hearing set for 1/5/2009 is vacated and reset to 1/7/2009 at 09:00 AM., in chambers, 2188. (or, ) (Entered: 12/17/2008)
14 MINUTE entry before the Honorable Matthew F. Kennelly: By request of the parties, the time to answer the complaint is extended to 1/7/09. (lcw, ) (Entered: 12/19/2008)
15 MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 07520000000003391757. (hearing on January 7, 2009) (Pappas, Nicholas) (Entered: 12/31/2008)
16 ATTORNEY Appearance for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith by Lori E. Lightfoot (Lightfoot, Lori) (Entered: 12/31/2008)
17 ATTORNEY Appearance for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith by Gina M Diomedi (Diomedi, Gina) (Entered: 12/31/2008)
18 NOTICE of Motion by Gina M Diomedi for presentment of motion to appear pro hac vice 15 before Honorable Matthew F. Kennelly on 1/7/2009 at 09:00 AM. (Diomedi, Gina) (Entered: 12/31/2008)
19 MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 07520000000003394272. (appearance on 1/7/09) (Klein, Jeffrey) (Entered: 01/02/2009)
20 NOTICE of Motion by Gina M Diomedi for presentment of motion to appear pro hac vice 19 before Honorable Matthew F. Kennelly on 1/7/2009 at 09:00 AM. (Diomedi, Gina) (Entered: 01/02/2009)
21 MOTION by Defendant Bank of America Corporation to dismiss Plaintiffs' Complaint (DiNardo, Lawrence) (Entered: 01/07/2009)
22 NOTIFICATION of Affiliates pursuant to Local Rule 3.2 by Bank of America Corporation (DiNardo, Lawrence) (Entered: 01/07/2009)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 7 of 13

01/07/2009 01/07/2009 01/07/2009 01/07/2009
01/12/2009
02/09/2009 02/09/2009 02/25/2009 03/06/2009 03/09/2009 04/06/2009 08/06/2009 08/06/2009 10/01/2009 10/01/2009

23 MOTION by Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith to dismiss or In The Alternative to Strike Those Portions of Plaintiffs' Complaint Alleging Gender Discrimination. (Lightfoot, Lori) (Entered: 01/07/2009)
24 MEMORANDUM by Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith in support of motion to dismiss 23 or In The Alternative to Strike Those Portions of Plaintiffs' Complaint Alleging Gender Discrimination. (Lightfoot, Lori) (Entered: 01/07/2009)
25 Rule 7.1 Disclosure STATEMENT by Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith (Lightfoot, Lori) (Entered: 01/07/2009)
26 MINUTE entry before the Honorable Matthew F. Kennelly:Status hearing pursuant to Rule 16(b) held. The motions for leave to appear pro hac vice of Jeffrey Klein and Nicholas Pappas are both 15 19 granted. Response to motion to dismiss 21 23 is to be filed by 2/4/09; reply is to be filed by 2/18/09. Ruling will be made by mail. Status hearing continued to 2/25/2009 at 9:00 A.M., with attorneys by telephone. Call is to be initiated by parties.Mailed notice (smm) (Entered: 01/09/2009)
27 MINUTE entry before the Honorable Matthew F. Kennelly: For the reasons stated below, the Court denies defendants' motions to dismiss or strike [docket nos. 21, 23] and vacates the remainder of the briefing schedule on those motions. The Court directs defendants to answer the complaint on or before 2/9/09. Rule 26(a)(1) disclosures are to be made by 2/20/09. Counsel are directed to confer regarding a schedule for discovery and for presentation of any motion for class certification so that those topics may be addressed at the telephone status hearing set for 2/25/09. [For further details see minute order.] Mailed notice (td, ) (Entered: 01/13/2009)
28 ANSWER to Complaint by Bank of America Corporation(DiNardo, Lawrence) (Entered: 02/09/2009)
29 ANSWER to Complaint by Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith(Lightfoot, Lori) (Entered: 02/09/2009)
30 MINUTE entry before the Honorable Matthew F. Kennelly:Status hearing held. Defendants intend to file a LR 40.4 motion before Judge Gettleman by 3/2/2009. Status hearing continued to 3/11/2009 at 09:00 AM., with attorneys by telephone for the purpose of setting a pretrial schedule. (or, ) (Entered: 02/25/2009)
32 EXECUTIVE COMMITTEE ORDER: Case reassigned to the Honorable Robert W. Gettleman for all further proceedings. Pursuant to Local Rule 40.4 finds case to be related to 05 C 6583. Signed by Executive Committee on 3/6/09.(smm) (Entered: 03/10/2009)
31 MINUTE entry before the Honorable Matthew F. Kennelly:Case having been reassigned to Judge Gettleman, status hearing set for 3/11/2009 before Judge Kennelly, is vacated. (or, ) (Entered: 03/09/2009)
33 MINUTE entry before the Honorable Robert W. Gettleman: Status hearing is set for 8/11/2009 at 9:00 a.m. Mailed notice (gds, ) (Entered: 04/06/2009)
34 MOTION by Defendant Bank of America Corporation for leave to file Additional Attorney Appearances. (Attachments: # 1 Exhibit A, # 2 Exhibit B)(Lightfoot, Lori) (Entered: 08/06/2009)
35 NOTICE of Motion by Lori E. Lightfoot for presentment of motion for leave to file 34 before Honorable Robert W. Gettleman on 8/11/2009 at 09:00 AM. (Lightfoot, Lori) (Entered: 08/06/2009)
36 MOTION by Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Bank of America Corporation for protective order (Joint Motion for Entry of Proposed Agreed Protective Order) (Attachments: # 1 Exhibit A, # 2 Certificate of Service)(Lightfoot, Lori) (Entered: 10/01/2009)
37 Joint NOTICE of Motion by Lori E. Lightfoot for presentment of motion for protective order, 36 before Honorable Robert W. Gettleman on 10/8/2009 at 09:15 AM. (Lightfoot, Lori) (Entered: 10/01/2009)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 8 of 13

10/01/2009 10/01/2009 10/01/2009 10/08/2009 10/08/2009 10/13/2009 10/26/2009
11/03/2009 11/03/2009 11/03/2009 11/03/2009 11/03/2009 01/15/2010
01/15/2010 01/20/2010

38 ATTORNEY Appearance for Plaintiffs Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown by Suzanne E. Bish (Bish, Suzanne) (Entered: 10/01/2009)
39 ATTORNEY Appearance for Plaintiffs Glenn Capel, Carnell Moore, Mark Johnson, Cathy Bender−Jackson, George McReynolds, Maroc Howard, Frankie Ross, Marva York, LeRoy Brown by George S. Robot (Robot, George) (Entered: 10/01/2009)
40 (This is Related to Document #37) Amended Joint NOTICE of Motion by Lori E. Lightfoot for presentment of motion for protective order, 36 before Honorable Robert W. Gettleman on 10/6/2009 at 09:15 AM. (Attachments: # 1 Certificate of Service)(Lightfoot, Lori) (Entered: 10/01/2009)
41 MINUTE entry before the Honorable Robert W. Gettleman:Joint motion for entry of protective order 36 is granted. (For further detail see separate order(s).)Mailed notice (smm) (Entered: 10/09/2009)
42 AGREED PROTECTIVE Order Signed by the Honorable Robert W. Gettleman on 10/8/2009.(smm) (Entered: 10/09/2009)
43 MINUTE entry before the Honorable Robert W. Gettleman:Uncontested motion 34 by defendant Bank of America Corp. for leave to file additional attorney appearances of Jeffrey Klein, Nicholas Pappas, Salvatore Romanello and Allan Dinkoff is granted.Mailed notice (smm) (Entered: 10/14/2009)
44 MINUTE entry before the Honorable Robert W. Gettleman:The portion of defendant Bank of America's motion for leave to file additional appearances 34 to allow Lori Lightfoot leave to file her appearance as additional counsel for defendant Bank of Anmerica is granted. Attorney Lori E. Lightfoot for Bank of America Corporation added. Mailed notice (smm) (Entered: 10/28/2009)
45 ATTORNEY Appearance for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Bank of America Corporation by Lori E. Lightfoot (Lightfoot, Lori) (Entered: 11/03/2009)
46 ATTORNEY Appearance for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Bank of America Corporation by Nicholas J. Pappas (Pappas, Nicholas) (Entered: 11/03/2009)
47 ATTORNEY Appearance for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Bank of America Corporation by Jeffrey S. Klein (Klein, Jeffrey) (Entered: 11/03/2009)
48 MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 07520000000004245862. for Allan Dinkoff o/b/o Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith and Bank of America Corporation (Dinkoff, Allan) (Entered: 11/03/2009)
49 MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 07520000000004246032. for Salvatore A. Romanello o/b/o Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith and Bank of America Corporation (Romanello, Salvatore) (Entered: 11/03/2009)
50 MOTION by Defendants Bank of America Corporation, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Plaintiffs Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross, Marva York for discovery Agreed Motion to Refer Discovery Matters to Magistrate Judge Denlow (Bish, Suzanne) (Entered: 01/15/2010)
51 Notice of Agreed Motion NOTICE of Motion by Suzanne E. Bish for presentment of motion for discovery, 50 before Honorable Robert W. Gettleman on 1/21/2010 at 09:15 AM. (Bish, Suzanne) (Entered: 01/15/2010)
52 MOTION by counsel for Defendant Bank of America Corporation to withdraw as attorney (Hartog, Anna) (Entered: 01/20/2010)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 9 of 13

01/20/2010 01/25/2010 01/25/2010 01/26/2010 01/27/2010 01/27/2010
02/04/2010
02/09/2010 03/10/2010
03/13/2010 03/16/2010 03/23/2010 04/01/2010 04/19/2010 04/19/2010

53 NOTICE of Motion by Anna Kathryn Hartog for presentment of motion to withdraw as attorney 52 before Honorable Robert W. Gettleman on 1/26/2010 at 09:15 AM. (Hartog, Anna) (Entered: 01/20/2010)
54 MINUTE entry before Honorable Robert W. Gettleman: Parties agreed motion to refer discovery 50 matters to Magistrate Judge is granted. Mailed notice (gds, ) (Entered: 01/25/2010)
55 Pursuant to Local Rule 72.1, this case is hereby referred to the calendar of Honorable Morton Denlow for the purpose of holding proceedings related to: discovery supervision. (gds,) Mailed notice. (Entered: 01/25/2010)
Judge Honorable Morton Denlow no longer referred to the case. (smm) (Entered: 01/26/2010)
56 Pursuant to Local Rule 72.1, this case is hereby referred to the calendar of Honorable Morton Denlow for the purpose of holding proceedings related to: discovery supervision. (gds, ) Maiiled notice. (Entered: 01/27/2010)
57 MINUTE entry before Honorable Robert W. Gettleman:Motion 48 of Allan Dinkoff for leave to appear pro hac vice is granted. Motion 49 of Salvadtore A. Romanello for leave to appear pro hac vice is granted. Motion 52 of defendant Bank of America for leave to withdraw appearances of Lawrence Dinardo, Anna Hartog and Efrat Schulman is granted. Attorney Efrat R Schulman; Lawrence Charles DiNardo and Anna Kathryn Hartog terminated.Mailed notice (smm) (Entered: 01/27/2010)
58 MINUTE entry before Honorable Morton Denlow: Status hearing set for 2/16/2010 at 10:00 AM. in Courtroom 1350. Parties shall deliver a copy of an initial status report to chambers, Room 1356, five business days before the initial status hearing. If the parties have recently prepared and filed an initial status report, the submission of the previously filed initial status report is sufficient. The parties are directed to review and to comply with Judge Denlow's standing order setting initial status report. Copies are available in chambers or through Judge Denlow's web page at www.ilnd.uscourts.govMailed notice (dmk, ) (Entered: 02/04/2010)
59 MINUTE entry before Honorable Morton Denlow: Status hearing reset to 3/16/2010 at 10:00 AM. on request of the parties. Status hearing set for 2/16/2010 is stricken.Mailed notice (dmk, ) (Entered: 02/09/2010)
60 STATUS Report Initial Status Report by Bank of America Corporation, Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Carnell Moore, Frankie Ross, Marva York (Bish, Suzanne) (Entered: 03/10/2010)
61 MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 0752−4614285. (Wencelblat, Patricia) (Entered: 03/13/2010)
62 MINUTE entry before Honorable Morton Denlow:Magistrate Judge Status hearing held on 3/16/2010. Status hearing set for 6/17/2010 at 10:00 AM.Mailed notice (dmk, ) (Entered: 03/16/2010)
63 MOTION by Defendants Bank of America Corporation, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith to amend/correct MOTION for Leave to Appear Pro Hac Vice Filing fee $ 50, receipt number 0752−4614285. 61 (Wencelblat, Patricia) (Entered: 03/23/2010)
64 NOTICE of Correction regarding 63 . (ep, ) (Entered: 04/01/2010)
65 MOTION by counsel for Defendants Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith to withdraw as attorney Gina Diomedi (Lightfoot, Lori) (Entered: 04/19/2010)
66 Agreeded NOTICE of Motion by Lori E. Lightfoot for presentment of motion to withdraw as attorney 65 before Honorable Robert W. Gettleman on 4/27/2010 at 09:15 AM. (Lightfoot, Lori) (Entered: 04/19/2010)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 10 of 13

04/27/2010 05/07/2010
05/10/2010 05/17/2010
06/07/2010 06/11/2010
08/16/2010 08/19/2010 08/24/2010 10/18/2010 11/01/2010 11/15/2010 11/16/2010

67 MINUTE entry before Honorable Robert W. Gettleman:Motion 61 of Patricia Wencelblat to appear pro hac vice is granted. Defendants' motion 63 to amend motion for leave to appear pro hac vice is granted. Defendants' motion 65 for leave to withdraw the appearance of Gina Diomedi as counsel is granted.Mailed notice (smm) (Entered: 04/27/2010)
69 EXECUTIVE COMMITTEE ORDER: It appearing that Jeffrey T. Gilbert has been appointed as a United States Magistrate Judge for the Northern District of Illinois, and It further appearing that Internal Operating Procedure 17(a) provides for the creation of an initial calendar for a newly−appointed magistrate judge; therefore IT is hereby ordered that the attached list of civil consent cases and civil referrals be and they are hereby reassigned to form the initial calendar of the Honorable Jeffrey T. Gilbert. Case referred to the Honorable Jeffrey T. Gilbert for the purpose of holding proceedings related to: discovery supervision. Signed by Executive Committee on 5/7/10. Mailed notice. (td, ) (Entered: 05/10/2010)
68 MINUTE entry before Honorable Morton Denlow: This case having been reassigned to Magistrate Judge Jeffrey Gilbert, all pending status or hearing dates before Magistrate Judge Denlow are vacated. All other dates to stand pending further orderMailed notice (dmk, ) (Entered: 05/10/2010)
70 MINUTE entry before Honorable Jeffrey T. Gilbert: This case has been reassigned to Magistrate Judge Gilbert. Status hearing set for 6/14/2010 at 2:00 p.m. in Courtroom 1386. Parties shall deliver a copy of the initial status report to chambers, Room 1366, five business days before the initial status hearing. The parties are directed to review and to comply with Judge Gilbert's standing order for initial status report. Copies are available in chambers or through Judge Gilbert's web page at www.ilnd.uscourts.gov.Mailed notice (ep, ) (Entered: 05/17/2010)
71 STATUS Report (Initial) by Merrill Lynch, Pierce, Fenner &Smith (Hart, James) (Entered: 06/07/2010)
72 MINUTE entry before Honorable Jeffrey T. Gilbert: The Court has reviewed the parties initial status report. The status hearing scheduled for 6/14/2010 at 2:00 p.m. is stricken. Status hearing set before Magistrate Judge Gilbert for 8/17/2010 at 9:45 a.m. The parties shall advise Magistrate Judge Gilbert's courtroom deputy the week before the next status hearing if they do not believe a status hearing is necessary. Mailed notice (ep, ) (Entered: 06/11/2010)
73 MINUTE entry before Honorable Jeffrey T. Gilbert: The status hearing set for 8/17/10 at 9:45 a.m. is stricken and re−set to 8/26/10 at 9:45 a.m. Mailed notice (ep, ) (Entered: 08/16/2010)
74 MINUTE entry before Honorable Jeffrey T. Gilbert: The status hearing set for 8/26/10 at 9:45 is stricken and reset to 8/24/10 at 9:45 a.m. Mailed notice (ep, ) (Entered: 08/19/2010)
75 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing held. Status hearing set for 10/18/10 at 2 p.m. following Judge Gettleman's status hearing. Mailed notice (ep, ) (Entered: 08/24/2010)
76 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing held. Plaintiffs shall file an amended complaint by 11/1/10. Status hearing set for 11/18/10 at 10:00 a.m. The parties shall meet and confer and file a proposed discovery plan in this case by 11/16/10. Mailed notice (ep, ) (Entered: 10/18/2010)
77 FIRST AMENDED complaint by Glenn Capel, Maroc Howard, Marva York, LeRoy Brown, Cathy Bender−Jackson, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross against All Defendants (Friedman, Linda) (Entered: 11/01/2010)
78 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing set for 11/18/10 at 10:00 a.m. is stricken. The parties shall meet and confer and file a proposed discovery plan in this case by 12/15/10. The Court will set a date for another status hearing in a future minute order. Mailed notice (ep, ) (Entered: 11/15/2010)
79 MINUTE entry before Honorable Robert W. Gettleman: Defendants are given an extension of time to 12/15/2010 within which to answer or otherwise plead to the

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 11 of 13

12/15/2010 12/15/2010 12/15/2010 12/15/2010 12/23/2010 01/11/2011 01/13/2011 01/18/2011
01/18/2011 01/31/2011 02/03/2011 02/07/2011 02/16/2011

amended complaint. Mailed notice (gds, ) (Entered: 11/16/2010)
80 MOTION by Defendants Bank of America Corporation, Merrill Lynch, Pierce, Fenner &Smith, Merrill Lynch &Co., Inc. to dismiss Plaintiffs' Amended Complaint (Lightfoot, Lori) (Entered: 12/15/2010)
81 NOTICE of Motion by Lori E. Lightfoot for presentment of motion to dismiss 80 before Honorable Robert W. Gettleman on 1/13/2011 at 09:15 AM. (Lightfoot, Lori) (Entered: 12/15/2010)
82 MEMORANDUM by Bank of America Corporation, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith in support of motion to dismiss 80 (Attachments: # 1 Exhibit A−B)(Lightfoot, Lori) (Entered: 12/15/2010)
83 Discovery Plan by Bank of America Corporation, Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith, Carnell Moore, Frankie Ross, Marva York Joint Proposed Discovery Plan (Bish, Suzanne) (Entered: 12/15/2010)
84 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing set for 1/13/11 at 10:15 a.m. for the purpose of discussing the parties' joint discovery plan and setting discovery dates. Mailed notice (ep, ) (Entered: 12/23/2010)
85 MINUTE entry before Honorable Jeffrey T. Gilbert: At the parties' request, the status hearing set for 1/13/11 at 10:15 a.m. is reset to 1/18/11 at 10:30 a.m. Mailed notice (ep, ) (Entered: 01/11/2011)
86 MINUTE entry before Honorable Robert W. Gettleman: Presentation date for defendants' motion to dismiss is re−set to 1/18/2011 at 9:15 a.m. Telephone notice (gds, ) (Entered: 01/13/2011)
87 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing held. The parties shall complete non−expert class discovery by 10/31/11. The Court indicated to the parties that this case would be placed into the Seventh Circuit Electronic Discovery Pilot Program. The Court therefore will apply the standing order relating to the discovery of electronically stored information ("ESI") (available at www.ilnd.uscourts.gov). The parties shall familiarize themselves with the standing order and with the principles relating to the discovery of electronically stored information that underlies the standing order, and shall use the standing order and those principles in addressing any discovery disputes that may arise in this case concerning ESI. Mailed notice (ep, ) (Entered: 01/18/2011)
88 MINUTE entry before Honorable Robert W. Gettleman: Motion hearing held on 1/18/2011 regarding defendants' motion to dismiss 80 plaintiffs' amended complaint. Plaintiffs' response is due by 2/1/2011. Defendants' reply is due by 2/8/2011. Status hearing set for 3/29/2011 at 9:00 a.m. Mailed notice (gds, ) (Entered: 01/25/2011)
89 MINUTE entry before Honorable Robert W. Gettleman: Plaintiff is given an extension of time to 2/4/2011 to file response to motion 80 to dismiss plaintiffs' amended complaint. Defendants' reply is due by 2/14/2011. Telephone notice (gds, ) (Entered: 01/31/2011)
90 MINUTE entry before Honorable Robert W. Gettleman: Plaintiff is given an extension of time to 2/7/2011 to file response to motion 80 to dismiss the amended complaint. Reply is due by 2/16/2011. Telephone notice (gds, ) (Entered: 02/03/2011)
91 MEMORANDUM by Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross, Marva York in Opposition to motion to dismiss 80 (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D)(Friedman, Linda) (Entered: 02/07/2011)
92 REPLY by Defendants Bank of America Corporation, Merrill Lynch &Co., Inc., Merrill Lynch, Pierce, Fenner &Smith to motion to dismiss 80 (Defendants' Reply Memorandum in Further Support of Its Motion to Dismiss) (Attachments: # 1 Exhibit A)(Lightfoot, Lori) (Entered: 02/16/2011)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 12 of 13

02/25/2011 02/25/2011 03/04/2011 03/29/2011 03/29/2011 03/30/2011
04/25/2011
04/25/2011
04/26/2011 04/26/2011 04/26/2011 05/05/2011
05/10/2011 05/11/2011 03/13/2012 03/13/2012 03/13/2012

93 MINUTE entry before Honorable Robert W. Gettleman: Status hearing is set for 3/30/2011 at 9:30 a.m. Mailed notice ( gds, ) (Entered: 02/25/2011)
94 MINUTE entry before Honorable Robert W. Gettleman: Status hearing date of 3/29/2011 is stricken. Mailed notice (gds, ) (Entered: 02/25/2011)
95 MINUTE entry before Honorable Jeffrey T. Gilbert: Status hearing set for 3/30/11 at 9:45 a.m. or at such immediately after the status hearing scheduled before Judge Gettleman. Mailed notice (ep, ) (Entered: 03/04/2011)
96 MINUTE entry before Honorable Robert W. Gettleman: Defendants' motion to dismiss 80 the amended complaint is granted. Civil case terminated. Mailed notice (gds, ) (Entered: 03/29/2011)
97 Memorandum Opinion and Order signed by the Honorable Robert W. Gettleman on 3/29/2011: Mailed notice (gds, ) (Entered: 03/29/2011)
98 MINUTE entry before Honorable Jeffrey T. Gilbert: Pursuant to Judge Gettleman's order issued on 3/29/11 96 , all matters relating to the referral of this action having been resolved, the case is returned to the assigned judge. Referral terminated. Mailed notice (ep, ) (Entered: 03/30/2011)
99 NOTICE of appeal by Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross, Marva York regarding orders 97 , 96 , 98 Filing fee $ 455, receipt number 0752−5933849. (Friedman, Linda) (Entered: 04/25/2011)
100 DOCKETING Statement by Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross, Marva York regarding notice of appeal, 99 (Friedman, Linda) (Entered: 04/25/2011)
101 NOTICE of Appeal Due letter sent to counsel of record (dj, ) (Entered: 04/26/2011)
102 TRANSMITTED to the 7th Circuit the short record on notice of appeal, 99 . Notified counsel (dj, ) (Entered: 04/26/2011)
103 ACKNOWLEDGEMENT of receipt of short record on appeal regarding notice of appeal, 99 ; USCA Case No. 11−1957. (smm) (Entered: 04/27/2011)
104 TRANSCRIPT OF PROCEEDINGS held on 01/18/11 before the Honorable Robert W. Gettleman. Court Reporter Contact Information: Jennifer Costales, CRR, RMR jennifer_costales@ilnd.uscourts.gov (312)427−5351. <P>IMPORTANT: The transcript may be viewed at the court's public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through the Court Reporter/Transcriber or PACER. For further information on the redaction process, see the Court's web site at www.ilnd.uscourts.gov under Quick Links select Policy Regarding the Availability of Transcripts of Court Proceedings.</P> Redaction Request due 5/26/2011. Redacted Transcript Deadline set for 6/6/2011. Release of Transcript Restriction set for 8/3/2011. (Costales, Jennifer) (Entered: 05/05/2011)
105 SEVENTH CIRCUIT transcript information sheet by Cathy Bender−Jackson, LeRoy Brown, Glenn Capel, Maroc Howard, Mark Johnson, George McReynolds, Carnell Moore, Frankie Ross, Marva York (Robot, George) (Entered: 05/10/2011)
106 TRANSMITTED to the USCA for the 7th Circuit the long record on appeal 99 (USCA no. 11−1957). (dj, ) (Entered: 05/11/2011)
107 NOTICE by Suzanne E. Bish of Change of Address (Bish, Suzanne) (Entered: 03/13/2012)
108 NOTICE by Linda Debra Friedman of Change of Address (Friedman, Linda) (Entered: 03/13/2012)
109 NOTICE by George S. Robot of Change of Address (Robot, George) (Entered: 03/13/2012)

Case: 1:08-cv-6105 As of: 11/07/2013 08:27 PM CST 13 of 13

10/03/2012 10/03/2012
10/03/2012 10/03/2012

110 LETTER from the Seventh Circuit regarding the record on appeal in USCA no. 11−1957: No record to be returned.(ym, ) (Entered: 10/04/2012)
111 MANDATE dated 9/11/2012 from the Seventh Circuit regarding notice of appeal, 99 ; Appellate case no.: 11−1957.The judgment of the District Court is AFFIRMED, with costs, in accordance with the decision of this court entered on this date. (ym, ) (Entered: 10/04/2012)
112 BILL of Costs from the USCA: Appeal No. 11−1957. (ym, ) (Entered: 10/04/2012)
113 OPINION from the USCA for the 7th Circuit; Argued 10/24/2011; Decided 9/11/2012 in USCA case no. 11−1957. (ym, ) (Entered: 10/04/2012)

 
 In the
United States Court of Appeals
For the Seventh Circuit
No. 11-3639 GEORGE MCREYNOLDS, et al., on behalf
of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Defendant-Appellee.
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.
No. 05 C 6583—Robert W. Gettleman, Judge.
ARGUED JANUARY 13, 2012—DECIDED FEBRUARY 24, 2012
Before POSNER, WOOD, and HAMILTON, Circuit Judges. POSNER, Circuit Judge. The plaintiffs have filed a class action suit that charges Merrill Lynch with racial discrimination in employment in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The plaintiffs ask that a class be certified for two purposes: deciding a common issue, Fed. R. Civ. P. 23(c)(4)—whether

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the defendant has engaged and is engaging in practices that have a disparate impact (that is, a discriminatory effect, though it need not be intentional) on the members of the class, in violation of federal antidiscrimination law; and providing injunctive relief. Fed. R. Civ. P. 23(b)(2). They also want damages. But while they asked the district court to certify the class for purposes of seeking compensatory and punitive damages, see Rule 23(b)(3), at argument the plaintiffs’ lawyer said she wasn’t asking—not yet anyway—for such certification, though her opening brief had suggested that if we found that the district court had erred in refusing to certify for class treatment the disparate impact issue and injunctive relief, we should order the court to “consider [on remand] the extent to which damages issues also could benefit from class treatment, consistent with Allen v. International Truck & Engine Corp., 358 F.3d 469 (7th Cir. 2004).” We defer that question to the end of our opinion. But we note here that without proof of intentional discrimination, which is not an element of a disparate impact claim, the plaintiffs cannot obtain damages, whether compensatory or punitive, but only equitable relief (which might however include backpay, and thus have a monetary dimension). 42 U.S.C. § 1981a(a)(1); Kolstad v. American Dental Association, 527 U.S. 526, 534 (1999). Section 1981a(a)(1) is explicit that damages cannot be awarded in respect of “an employment practice that is unlawful because of its disparate impact.”
The district court denied certification, and the plaintiffs asked this court for leave to appeal the denial. A motions panel granted leave, but the defendant argues

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that the panel erred—that the appeal is untimely. We begin with that question.
Rule 23(f) of the civil rules permits appeals from orders granting or denying class certification despite the general policy (though one with many exceptions) against allowing interlocutory appeals in the federal court system. A denial of class certification often dooms the suit—the class members’ claims may be too slight to justify the expense of individual suits. Conversely, because of the astronomical damages potential of many class action suits, a grant of certification may place enormous pressure on the defendant to settle even if the suit has little merit. See, e.g., CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721, 723 (7th Cir. 2011). And because class actions are cumbersome and protracted, an early appellate decision on whether a suit can be maintained as a class action can speed the way to termination of the litigation by abandonment, summary judgment, or settlement. E.g., Blair v. Equifax Check Services, Inc., 181 F.3d 832, 834-35 (7th Cir. 1999); Newton v. Merrill Lynch, 259 F.3d 154, 162-65 (3d Cir. 2001).
But Rule 23(f) requires that leave to appeal be sought from the court of appeals within 14 days of the entry of the order granting or denying certification. The district court denied the plaintiffs’ initial motion for class certification in August 2010. In July 2011 the plaintiffs filed an amended motion for class certification, which the district judge denied in September, and within 14 days of that denial the plaintiffs sought our leave to appeal. The defendant asks us to treat the request for

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leave to appeal as an untimely request to appeal the August 2010 denial of certification. That would amount to treating the plaintiffs’ second motion for certification as an untimely motion to reconsider the denial of the first motion.
The question of timeliness may seem to be about jurisdiction, since most deadlines for appeals from a district court have been held to be jurisdictional. But as we noted recently in In re IFC Credit Corp., 663 F.3d 315, 31920 (7th Cir. 2011), the Supreme Court has been moving toward a definition of the subject-matter jurisdiction of the federal courts that includes all cases that these courts are “competent,” in the sense of legally empowered, to decide. This implies that deadlines for appealing are not jurisdictional, since they regulate the movement upward through the judicial hierarchy of litigation that by definition is within federal jurisdiction. Yet appeal deadlines either found in statutes or adopted by courts by direction of a statute continue to be treated as jurisdictional—though not all of them; the Supreme Court recently rejected such a “bright line” rule in favor of requiring a “clear indication” that the deadline was intended by Congress to be jurisdictional. Henderson v. Shinseki, 131 S. Ct. 1197, 1203 (2011). (The power of Congress to impose such limits on the jurisdiction of the federal courts is not questioned.) But because no “clear indication” is to be found in the pertinent statutory texts, see, e.g., 28 U.S.C. §§ 2101(c), 2107(a), (c), the Court has found itself saying such things as that Congress is not required to “use magic words in order to speak clearly on this point” and that “context, including [the Supreme

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5

Court’s] interpretation of similar provisions in many years past, is relevant.” Henderson v. Shinseki, supra, 131 S. Ct. at 1203, quoting Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1248 (2010).
What we take away from this formula is that if the Court has traditionally treated a particular statutory deadline as jurisdictional it will go on doing so, id. at 1203-06; John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 134 (2008); Bowles v. Russell, 551 U.S. 205, 209-10 and n. 2 (2007); In re Caterbone, 640 F.3d 108, 111-13 (3d Cir. 2011), even though doing so doesn’t comport with the new “competence” standard. Deadlines for appealing are just a type of statute of limitations, as acknowledged in John R. Sand & Gravel v. United States, supra, 552 U.S. at 133, and statutes of limitations ordinarily are affirmative defenses rather than jurisdictional bars. A deadline for bringing or appealing a federal case presupposes that the case is within the competence of federal courts to decide.
We declined in Asher v. Baxter Int’l Inc., 505 F.3d 736, 741 (7th Cir. 2007), to rule on whether the deadline in Rule 23(f), though it is promulgated by the Supreme Court under the authority of the Rules Enabling Act, 29 U.S.C. § 2072, rather than found in or directed to be adopted by a statute, is jurisdictional. But by now it is clear that it is not jurisdictional—that the exception to the “competence” standard is limited to statutory deadlines, United States v. Neff, 598 F.3d 320, 322-23 (7th Cir. 2010), for how can a court contract or expand its jurisdiction except by force of a constitutional

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or statutory provision? If the deadline was made by Congress, then whether it is jurisdictional depends on congressional intent, and, the Supreme Court appears to be saying, in the absence of any clues to that intent on whether the courts traditionally have treated the deadline as jurisdictional. The time limit in Rule 23(f), having been created by the Court rather than by Congress (no time limits are specified in the Rules Enabling Act—the Act is an enabler, not a specifier), is governed by the “competence” standard and therefore is not jurisdictional, for obviously the suit from which the appeal is sought to be taken is within the jurisdiction of the federal courts.
But suppose our understanding of the evolving Supreme Court doctrine is wrong, and the deadline in Rule 23(f) is jurisdictional. The only difference between a deadline that is jurisdictional and one that is not is that a litigant cannot lose the benefit of the former type (until judgment becomes final after exhaustion of appellate remedies) by failing to assert it, or because the other party’s failure to comply would in nonjurisdictional settings be excused by such doctrines as equitable estoppel or equitable tolling. The defendant has from the outset vigorously contested the timeliness of the appeal, and the plaintiffs are not arguing that they should be excused for having missed the deadline. Even if not jurisdictional, a deadline is mandatory in the sense that if invoked by a party in timely fashion the court is bound by it. Eberhart v. United States, 546 U.S. 12, 19 (2005) (per curiam); Asher v. Baxter Int’l Inc., supra, 505 F.3d at 741; Maxwell v. Dodd, 662 F.3d 418, 421 (6th Cir. 2011); Wilburn v. Robinson, 480 F.3d 1140, 1146-47 (D.C. Cir. 2007).

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Rather, the plaintiffs’ argument is that their 14 days to seek leave to appeal ran anew from the denial of their amended motion for class certification. The defendant points out that a deadline for appealing cannot be extended by a motion for reconsideration of a previous appealable order, Asher v. Baxter Int’l Inc., supra, 505 F.3d at 739-40; Gary v. Sheahan, 188 F.3d 891 (7th Cir. 1999); Jenkins v. BellSouth Corp., 491 F.3d 1288, 1290-92 (11th Cir. 2007); McNamara v. Felderhof, 410 F.3d 277, 280-81 and n. 8 (5th Cir. 2005), unless the motion is made within the time allowed for taking the appeal, Blair v. Equifax Check Services, Inc., supra, 181 F.3d at 837, and this rule applies to appeals under Rule 23(f). Id. Otherwise the deadline for taking the appeal would be eviscerated. And this is so even if the motion for reconsideration doesn’t just say “and for the reasons stated in our original motion we ask the court to reverse its ruling” but adds “and by the way we have thought of some clever new arguments for why our motion should have been granted.” Carpenter v. Boeing Co., 456 F.3d 1183, 119091 (10th Cir. 2006). For it is easy to think up new arguments.
But it doesn’t follow that the failure to take a timely appeal from one interlocutory order operates as a forfeiture, jurisdictional or otherwise, of the right to appeal a subsequent order. For the later motion may not be, either in form or, more important, in substance, a motion to reconsider the previous denial. A rule limiting parties to one interlocutory appeal from a grant or denial of class certification would disserve Rule 23(f). It is important that the question whether the case is to

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proceed as a class action be resolved sooner rather than later. So if it becomes clear in the course of the lawsuit, as a result of new law or newly learned facts, that the denial of certification was erroneous, and if years of litigation lie ahead before a final judgment can be expected, and if therefore an appeal from the denial of certification may either end the litigation or at least place it on a path to swift resolution, the court of appeals should have discretion to allow the appeal.
The fact that the appellate court has a discretionary jurisdiction over Rule 23(f) appeals is important. Appellate jurisdiction in the federal system ordinarily is mandatory. With few exceptions, we have to decide all appeals that we have jurisdiction to hear; we do not have a discretionary appellate jurisdiction like the Supreme Court. But because our jurisdiction to hear interlocutory appeals under Rule 23(f) is discretionary, there is little danger that the filing in the district court of a second motion for certification based on altered circumstances, followed if it is denied by a motion in this court for leave to appeal, will either delay the district court proceedings (Rule 23(f) provides that “an appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders”) or burden us or the opposing party. If the movant is playing a delay game, prompt denial by the motions panel of leave to appeal probably will end it; if he persists he will be courting sanctions in both the district court and this court for filing frivolous pleadings. And by the way, we do not permit a party to circumvent the 14-day deadline in Rule 23(f) by appealing a denial of

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class certification under 28 U.S.C. § 1292(b) (authorizing interlocutory appeals that present a controlling issue of law on which there is substantial room for disagreement and prompt resolution would expedite the litigation), Richardson Electronics, Ltd. v. Panache Broadcasting, 202 F.3d 957, 959 (7th Cir. 2000), which has no deadline.
Dicta in the Tenth Circuit’s opinion in Carpenter v. Boeing Co., supra, go beyond the unexceptionable proposition that merely presenting “new arguments” does not change a motion for reconsideration of a grant or denial of class certification into a motion that if denied is appealable under Rule 23(f). The opinion states (456 F.3d at 1191) that
given the multifactor analysis that courts must apply in deciding the propriety of class certification, [even appellate review limited to whatever changed circumstances had given rise to the fresh motion for certification] would often require contorted thinking that exceeds the capacities of even appellate courts. How can an appellate court say that one particular new factor would require a different result regardless of how the district court weighed the factors presented originally? In stating that the new factor required a different result, the appellate court must engage in weighing the factors weighed by the district court in its original ruling but cannot know precisely how much weight the district court granted to each. In particular, what if the district court clearly erred in giving dispositive weight to one factor? How is the appellate court to

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ignore such error (in keeping with the presumption that the original decision was correct) even when it addresses a motion for reconsideration that raises only a rather inconsequential new factor?. . . We are not inclined to adopt a construction of Rule 23(f) that would regularly require mental gymnastics just for the purpose of giving litigants a second bite at the interlocutory-appellate-review apple. We note that the very absence of a prompt appeal by the party aggrieved by the decision on certification suggests that the concerns justifying Rule 23(f) are, at the least, less significant in the particular case. If the decision whether or not to certify the class was truly outcome determinative, one would not expect the losing party to continue the litigation for months before launching a new challenge to the ruling. Any value in permitting a belated interlocutory appeal is overridden by the desirability of the district court’s proceeding expeditiously.
A court of appeals is never obliged to engage in “contorted thinking” about a Rule 23(f) appeal, for it can always deny leave to appeal, and should do so if it would have to do mental contortions in order to make up its collective mind whether appeal should be allowed. And if the new motion for certification “raises only a rather inconsequential new factor,” then the failure of the plaintiffs to have sought interlocutory review of the denial of the original motion for certification becomes a reason to deny leave to appeal out of hand, without any “mental gymnastics.” As

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11

for “not expect[ing] the losing party to continue the litigation for months before launching a new challenge to the ruling,” the new challenge is timely if filed as soon as the development warranting a new motion for certification occurs, but untimely if the plaintiff dawdles. And if the appeal is not “belated,” but based on developments that may warrant certification, allowing the appeal may very well speed up rather than slow down the litigation. In effect the court held in Carpenter that the new motion for certification was in substance an untimely motion for reconsideration. The holding is unexceptionable, but the dicta are not persuasive.
The basis of the plaintiffs’ renewed motion for class certification in the present case was the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), handed down a month earlier. That was an important development in the law governing class certification in employment discrimination cases—possibly a milestone. It may seem a perverse basis for a renewed motion for class certification, since the Supreme Court reversed a grant of certification in what the defendant in our case insists is a case just like this one. But the district judge, though he again denied certification, didn’t think the plaintiffs were perverse in basing their new motion on Wal-Mart. On the contrary, he said that “Wal-Mart does add a lot to the landscape under Rule 23 . . . . I think this really cries out for a 23(f) appeal, and I would support it. And I’m going to put that in my order [denying the renewed motion for certification—and he did] . . . . [T]his is one [case] that really cries out for [a Rule 23(f) appeal] with the change in the land-

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scape by the Wal-Mart opinion. Of course, you know, most defendants think that the change is in their interest, not in the plaintiffs’. But you’ve [the judge was addressing the plaintiffs’ lawyer] made a good argument, and I think it deserves to be put to rest one way or the other.” The judge was right.
Wal-Mart holds that if employment discrimination is practiced by the employing company’s local managers, exercising discretion granted them by top management (granted them as a matter of necessity, in Wal-Mart’s case, because the company has 1.4 million U.S. employees), rather than implementing a uniform policy established by top management to govern the local managers, a class action by more than a million current and former employees is unmanageable; the incidents of discrimination complained of do not present a common issue that could be resolved efficiently in a single proceeding. Fed. R. Civ. P. 23(a)(2). Not that the employer would be immune from liability even in such a case; if the local managers are acting within the scope of their employment in discriminating against their underlings on a forbidden ground (sex, alleged in Wal-Mart, race in our case), the employer is liable for their unlawful conduct under the doctrine of respondeat superior. But because there was no company-wide policy to challenge in Wal-Mart—the only relevant corporate policies were a policy forbidding sex discrimination and a policy of delegating employment decisions to local managers—there was no common issue to justify class treatment.
The district judge thought this case like Wal-Mart because Merrill Lynch, accused of discriminating against

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700 black brokers currently or formerly employed by it, delegates discretion over decisions that influence the compensation of all the company’s 15,000 brokers (“Financial Advisors” is their official title) to 135 “Complex Directors.” Each of the Complex Directors supervises several of the company’s 600 branch offices, and within each branch office the brokers exercise a good deal of autonomy, though only within a framework established by the company.
Two elements of that framework are challenged: the company’s “teaming” policy and its “account distribution” policy. The teaming policy permits brokers in the same office to form teams. They are not required to form or join teams, and many prefer to work by themselves. But many others prefer to work as part of a team. Team members share clients, and the aim in forming or joining a team is to gain access to additional clients, or if one is already rich in clients to share some of them with brokers who have complementary skills that will secure the clients’ loyalty and maybe persuade them to invest more with Merrill Lynch. As we said, there are lone wolves, but there is no doubt that for many brokers team membership is a plus; certainly the plaintiffs think so.
The teams are formed by brokers, and once formed a team decides whom to admit as a new member. Complex Directors and branch-office managers do not select the team’s members.
Account distributions are transfers of customers’ accounts when a broker leaves Merrill Lynch and his cli-

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ents’ accounts must therefore be transferred to other brokers. Accounts are transferred within a branch office, and the brokers in that office compete for the accounts. The company establishes criteria for deciding who will win the competition. The criteria include the competing brokers’ records of revenue generated for the company and of the number and investments of clients retained.
The Complex Directors, as well as the branch-office managers, have a measure of discretion with regard to teaming and account distribution; they can veto teams and can supplement the company criteria for distributions. And to the extent that these regional and local managers exercise discretion regarding the compensation of the brokers whom they supervise, the case is indeed like Wal-Mart. But the exercise of that discretion is influenced by the two company-wide policies at issue: authorization to brokers, rather than managers, to form and staff teams; and basing account distributions on the past success of the brokers who are competing for the transfers. Furthermore, team participation and account distribution can affect a broker’s performance evaluation, which under company policy influences the broker’s pay and promotion. The plaintiffs argue that these company-wide policies exacerbate racial discrimination by brokers.
The teams, they say, are little fraternities (our term but their meaning), and as in fraternities the brokers choose as team members people who are like themselves. If they are white, they, or some of them anyway, are more

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comfortable teaming with other white brokers. Obviously they have their eyes on the bottom line; they will join a team only if they think it will result in their getting paid more, and they would doubtless ask a superstar broker to join their team regardless of his or her race. But there is bound to be uncertainty about who will be effective in bringing and keeping shared clients; and when there is uncertainty people tend to base decisions on emotions and preconceptions, for want of objective criteria.
Suppose a police department authorizes each police officer to select an officer junior to him to be his partner. And suppose it turns out that male police officers never select female officers as their partners and white officers never select black officers as their partners. There would be no intentional discrimination at the departmental level, but the practice of allowing police officers to choose their partners could be challenged as enabling sexual and racial discrimination—as having in the jargon of discrimination law a “disparate impact” on a protected group—and if a discriminatory effect was proved, then to avoid an adverse judgment the department would have to prove that the policy was essential to the department’s mission. 42 U.S.C. § 2000e-2(k)(1)(A)(i); Ricci v. DeStefano, 129 S. Ct. 2658, 2672-73 (2009); Bryant v. City of Chicago, 200 F.3d 1092, 1098-99 (7th Cir. 2000). That case would not be controlled by Wal-Mart (although there is an undoubted resemblance), in which employment decisions were delegated to local managers; it would be an employment decision by top management.

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Merrill Lynch’s broker teams are formed by brokers, not managers, just as in our hypothetical example police officers’ partners are chosen by police officers, not supervisors. If the teaming policy causes racial discrimination and is not justified by business necessity, then it violates Title VII as “disparate impact” employment discrimination—and whether it causes racial discrimination and whether it nonetheless is justified by business necessity are issues common to the entire class and therefore appropriate for class-wide determination.
And likewise with regard to account distributions: if as a result of racial preference at the team level black brokers employed by Merrill Lynch find it hard to join teams, or at least good teams, and as a result don’t generate as much revenue or attract and retain as many clients as white brokers do, then they will not do well in the competition for account distributions either; and a kind of vicious cycle will set in. A portion of a team’s pre-existing revenues are transferred within a team to a new recruit, who thus starts out with that much “new” revenue credited to him or her—an advantage, over anyone who is not on a team and thus must generate all of his own “new” revenue, that translates into a larger share of account distributions, which in turn helps the broker do well in the next round of such distributions. This spiral effect attributable to companywide policy and arguably disadvantageous to black brokers presents another question common to the class, along with the question whether, if the team-inflected account distribution system does have this disparate impact, it nevertheless is justified by business necessity.

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There is no indication that the corporate level of Merrill Lynch (or its parent, Bank of America) wants to discriminate against black brokers. Probably it just wants to maximize profits. But in a disparate impact case the presence or absence of discriminatory intent is irrelevant; and permitting brokers to form their own teams and prescribing criteria for account distributions that favor the already successful—those who may owe their success to having been invited to join a successful or promising team—are practices of Merrill Lynch, rather than practices that local managers can choose or not at their whim. Therefore challenging those policies in a class action is not forbidden by the Wal-Mart decision; rather that decision helps (as the district judge sensed) to show on which side of the line that separates a company-wide practice from an exercise of discretion by local managers this case falls.
Echoing the district judge, the defendant’s brief states that “any discrimination here would result from local, highly-individualized implementation of policies rather than the policies themselves.” That is too stark a dichotomy. Assume that with no company-wide policy on teaming or account distribution, but instead delegation to local management of the decision whether to allow teaming and the criteria for account distribution, there would be racial discrimination by brokers or local managers, like the discrimination alleged in Wal-Mart. But assume further that company-wide policies authorizing broker-initiated teaming, and basing account distributions on past success, increase the amount of discrimination. The incremental causal effect (overlooked by the district

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judge) of those company-wide policies—which is the alleged disparate impact—could be most efficiently determined on a class-wide basis.
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.
The district judge exaggerated the impact on the feasibility and desirability of class action treatment of the fact that the exercise of discretion at the local level is undoubtedly a factor in the differential success of brokers, even if not a factor that overwhelms the effect of the corporate policies on teaming and on account distributions. Obviously a single proceeding, while it might result in an injunction, could not resolve class members’ claims. Each class member would have to prove that his compensation had been adversely affected by the corporate policies, and by how much. So should the claim of disparate impact prevail in the class-wide proceeding, hundreds of separate trials may be necessary to determine which class members were actually adversely affected by one or both of the practices and if so what loss he sustained—and remember that the class has 700 members. But at least it wouldn’t be necessary in each of those trials to determine whether the chal-

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lenged practices were unlawful. Rule 23(c)(4) provides that “when appropriate, an action may be brought or maintained as a class action with respect to particular issues.” The practices challenged in this case present a pair of issues that can most efficiently be determined on a class-wide basis, consistent with the rule just quoted.
As said in Mejdrech v. Met-Coil Systems Corp., 319 F.3d 910, 911 (7th Cir. 2003),
class action treatment is appropriate and is permitted by Rule 23 when the judicial economy from consolidation of separate claims outweighs any concern with possible inaccuracies from their being lumped together in a single proceeding for decision by a single judge or jury. Often, and as it seems to us here, these competing considerations can be reconciled in a “mass tort” case by carving at the joints of the parties’ dispute. If there are genuinely common issues, issues identical across all the claimants, issues moreover the accuracy of the resolution of which is unlikely to be enhanced by repeated proceedings, then it makes good sense, especially when the class is large, to resolve those issues in one fell swoop while leaving the remaining, claimant-specific issues to individual follow-on proceedings.
The kicker is whether “the accuracy of the resolution” would be “unlikely to be enhanced by repeated proceedings.” If resisting a class action requires betting one’s company on a single jury verdict, a defendant may be forced to settle; and this is an argument against definitively resolving an issue in a single case if enormous

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consequences ride on that resolution. In re Bridgestone/ Firestone, Inc., 288 F.3d 1012, 1020 (7th Cir. 2002); In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1299-1300 (7th Cir. 1995); contra, Klay v. Humana, Inc., 382 F.3d 1241, 1274 (11th Cir. 2004). But Merrill Lynch is in no danger of being destroyed by a binding class-wide determination that it has committed disparate impact discrimination against 700 brokers, although an erroneous injunction against its teaming and account distribution policies could disadvantage it in competition with brokerage firms that employ similar policies—though we have no information on whether others do.
The Mejdrech decision, and Bridgestone/Firestone and Rhone-Poulenc more fully, discuss the danger that resolving an issue common to hundreds of different claimants in a single proceeding may make too much turn on the decision of a single, fallible judge or jury. The alternative is multiple proceedings before different triers of fact, from which a consensus might emerge; a larger sample provides a more robust basis for an inference. But that is an argument for separate trials on pecuniary relief, and the only issue of relief at present is whether to allow the plaintiffs to seek class-wide injunctive relief. There isn’t any feasible method—certainly none has been proposed in this case—for withholding injunctive relief until a series of separate injunctive actions has yielded a consensus for or against the plaintiffs.
As far as pecuniary relief is concerned, there may be no common issues (though then again there may be,

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see Allen v. International Truck & Engine Corp., supra, 358 F.3d at 472), and in that event the next stage of the litigation, should the class-wide issue be resolved in favor of the plaintiffs, will be hundreds of separate suits for backpay (or conceivably for compensatory damages and even punitive damages as well, if the plaintiffs augment their disparate-impact claim with proof of intentional discrimination). The stakes in each of the plaintiffs’ claims are great enough to make individual suits feasible. Most of Merrill Lynch’s brokers earn at least $100,000 a year, and many earn much more, and the individual claims involve multiple years. But the lawsuits will be more complex if, until issue or claim preclusion sets in, the question whether Merrill Lynch has violated the antidiscrimination statutes must be determined anew in each case.
We have trouble seeing the downside of the limited class action treatment that we think would be appropriate in this case, and we conclude that the district judge erred in deciding to the contrary (with evident misgivings, however). The denial of class certification under Rules 23(b)(2) and (c)(4) is therefore
REVERSED.

2-24-12