III. , CONCLUSION

I realize that under most circumstances, certification of a class for monetary damages in
an employment discrimination suit is inappropriate, However, the uniqueness of Combined’s
structure and the nature of the relief sought by Ms. Palmer makes certification possible in this
case. Assuming, as I must for the purpose of this motion, that what Ms. Palmer has alleged is
true, class-wide injunctive relief would be the superior remedy for the class as a whole and alone
justifies allowing the class to move forward. It is possible that after litigation has gone further, it
may appear that punitive damages are not suitable. Nevertheless, at this point in the case, I am
quite satisfied that this is not the case.

It is possible for an employer, especially one of this size, to commit systemic
discrimination against a class of protected individuals. However varied such individual harms
may be, if they are all caused by the same pattem or practice, the wrongdoer should not be able to
avoid class liability simply because the class cannot be certified for compensatory damages. I
concede that cases suitable for class action on punitive damages would be quite rare but this case,
as pled (but not proved), is rare. To allow the case to proceed as a class action with respect to
both equitable and non-equitable relief best serves one of the primary purposes of Title VII,
which is “to bring an end to the proscribed discriminatory practices.” Bowe v. Colgate-
Palmolive Co., 416 F.2d 711, 720 (7" Cir. 1969). Ifa class is willing to sacrifice compensatory
relief in their class action to meet Rule 23 requirements, thus evincing a paramount desire to stop
systemic discrimination and prevent future harm, they should be allowed to proceed. The
difficulties often encountered in certifying a Title VII class for compensatory damages should not
preclude a class of plaintiffs from seeking alternative ways to serve the public interest by ending

widespread discrimination (assuming such discrimination can be proved, which has not yet been

19



nothing in the plain language of 42 U.S.C. §1981a conditions an award of punitive damages on
an underlying award of compensatory damages, and therefore, Ms. Palmer can pursue punitive
damages even in the absence of compensatory damages. See Hennessy v. Penril Datacomm
Networks, Inc., 69 F.3d 1344, 1352 (7° Cir. 1995).

Combined also argues that taking compensatory damages out of the case does not solve
the problems in Radmanovich and consequently, I should deny certification for the same reasons
as Judge Alesia in Radmanovich. However, I have wide discretion in fashioning a Title VII
remedy, Franks v. Bowman Transp. Co., 424 U.S. 747, 763 (1976), and this case presents a
question that is not directly addressed in Radmanovich, nor in any circuit. Therefore, 1 am not
required to follow Radmanovich, and there is no binding precedent for me to follow.

While I recognize that in most cases, an award of punitive damages requires a fact-
specific inquiry into an individual plaintiff's circumstances, see Lemon v. .U.O.E., 216 F.3d 577,
581 (7 Cir. 2000), when the focus is on the defendant’s conduct, as opposed to the class
members’ harms, and the relief is sought for the class as a whole, I find that such individualized
proof is not necessarily required. In Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5" Cir.
1998), upon which the Seventh Circuit heavily relies in Lemon, the court acknowledged the
possibility that punitive damages may be awarded on a class-wide basis without individualized
proof of injury, “where the entire class or subclass is subjected to the same discriminatory act or
series of acts.” Allison, 151 F.3d at 417. Although the court in Allison felt that “[p]unitive
damages cannot be assessed merely upon a finding that the defendant engaged in a pattern or
practice of discrimination,” id., the plaintiffs case in Allison was pled somewhat differently than
Ms. Palmer’s, as the proposed class was seeking compensatory as well as punitive damages.
Hence, the Allison court was not considering the same issue presented by Ms. Palmer. Also, the

13


_ lt is Ms. Palmer’s contention that (1) even if women somehow make it to the regional
manager level, those women have to work harder and encounter resistance from their male co-
workers and subordinates every step of the way; and (2) these women are always passed up for
promotion to divisional manager, even though they often outperform their male counterparts.
For example, Casey McConnell, who was a regional manager during her employment with
Combined, submitted a declaration stating that she had been turned down for promotions many
times while less-qualified male co-workers got the promotions she requested. Ms. McConnell
alleges that when she was finally promoted, she was continually harassed about her personal life
and when she was denied requests for an additional sub-regional manager, one was assigned to
another, much smaller state in her division that was run by a male regional manager whose
region had not outperformed hers and as a result, she had to work much harder to reach a certain
premium dollar base and was constantly threatened with demotion if she failed to reach it. Ms.
McConnell also states that her regional office was 200 miles from her home, but her divisional
manager refused to provide her with an office closer to her home even though she submitted
numerous requests, and consequently, she had to convert her home into an office and was never
reimbursed for those costs. Finally, Ms. McConnell asserts that she was passed up for promotion
to the divisional manager level on at least three occasions while males with numbers inferior to
hers were promoted to those positions and that despite her numerous complaints of sex
discrimination to her divisional manager, nothing was ever done, and she was told to just “get
over it.”

When asked about the few number of women who make it to the regional manager level,

Ronald Agypt, Vice President and Managing Director of Seventh Essential who reports directly


determined in this case). Taking the size of this defendant and the nature of Ms. Palmer’s
allegations into account, a class action appears to be the better way to effectively eradicate the
alleged discrimination taking place on an institutional scale. See Sprogis v. United Air Lines,
Inc., 444 F.2d 1194, 1201 (7 Cir. 1971) (citing Jenkins v. United Gas Corp., 400 F.2d 28, 33-34
(5" Cir, 1968).

For the reasons above, Ms. Palmer’s motion for class certification is GRANTED.

m= g 5 eh

James B. Zagel
United States District Judge

DATE: Cane ust Aq aoon

20


It remains an open question whether Rule 23(b)(2) can be used to certify a no-notice, no-
opt-out class when compensatory or punitive damages are at issue. However, Ingersoll provides
a way to certify a class under Rule 23(b)(2) when non-equitable relief is at issue while ensuring
constitutionality and adequate due process, namely by treating the Rule 23(b)(2) class as if it
were certified under 23(b)(3) and give notice and opportunity to opt out under Rule 23(d)(2)’s
authority. Ingersoll, 195 F.3d at 898 (citing Williams v. Burlington Northern, Inc., 832 F.2d 100,
103 (7* Cir, 1987)), In addition to preserving constitutionality and due process, I have decided to
provide notice for two other reasons: (1) notification of class members will improve the litigation
process by making class members aware of the case, thus allowing them to offer evidence or
arguments which they believe might be helpful to either Ms. Palmer or Combined-in short, it
will give them a chance to contribute to the case if they choose to do so; and (2) notice for
Radmanovich must be sent out anyway, so no significant additional expenses will be incurred.

In addition to providing an opportunity to opt out, this notice will inform those individuals who
have filed suit on their own behalf secking punitive damages that they are automatically excluded
from the class and will inform all potential class members that because this suit does not seek
compensatory damages, they do not have to opt out of this action to pursue those damages.

2. Rule 23(b)(3)

Although I have certified this class under Rule 23(b)(2), were I to have considered the
applicability of Rule 23(b)(3), I would have concluded that the class would be certifiable under
that subsection as well. Rule 23(b)(3) allows certification if “the court finds that the questions of
law or fact common to the members of the class predominate over any questions affecting only
individual members, and that a class action is superior to other available methods for the fair and
efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). Because this case is directed

17


and 23(0)(3). She asks this court to certify either a Rule 23(b)(2) class or a hybrid Rule 23(b)(2)
and 23(b)(3) class.

C. Rule 23(a)

Before I can consider whether Ms. Palmer can meet Rule 23(b){2) or 23(b)(3)
requirements, I must address whether Ms. Palmer can pass the first hurdle, the requirements
under Rule 23(a), which are: numerosity, commonality, typicality, and adequacy of
representation. Combined argues that the proposed class is too diverse and heterogenous to meet
the latter three requirements. However, Judge Alesia, considering the same arguments in
Radmanovich, concluded that all of these requirements were met, and after reviewing Judge
Alesia’s opinion and the facts of this case, I concur with Judge Alesia’s ruling with respect to the
Rule 23(a) requirements.

1. onali icali

Because this case, like Radmanovich, is a “pattern or practice” action, there are common
issues of law and fact that meet the commonality and typicality requirements, To meet the
commonality requirement, there must be questions of fact or law that are common to the class,
and this requirement can generally be met with a common nucleus of operative fact. Keele v.
Wexler, 149 F.3d 589, 594 (7 Cir. 1998) (citing Rosario v, Livaditis, 963 F.2d 1013, 1018 (7"
Cir. 1992)). A common nucleus of operative facts exists when a defendant has “engaged in
standardized conduct towards members of the proposed class,” id., and commonality may be met
when the defendant operates under a general policy of discrimination manifested through entirely

subjective decision making practices. Falcon, 457 U.S. at 159 n.15, Additionally, in such cases,


occur and remain unaddressed, and because women have no real recourse to address these
wrongs, they are forced to endure ongoing harassment and a higher potential of violence against
them.

E. Training

This alleged environment of sexual harassment, according to Ms. Palmer, also results in
inferior training and thus a diminished chance at success within the company. Ms. Palmer
alleges that while male sales agents were mentored and groomed during training sessions, women
were degraded, humiliated, and harassed, and male managers refused to take female sales agents
seriously. Such inferior training, Ms. Palmer alleges, ensures that women are held back and have
a significantly smaller chance of generating premiums and consequently, a diminished
opportunity for promotion.

F. Company-Wide Policies

Finally, Ms. Palmer alleges that the very structure and nature of Combined is what allows
all forms of sexual discrimination to flourish and continue. Due to the centrally-organized.
structure of the company, Ms. Palmer alleges, the men in charge can and do foster an
environment that denies women equal opportunities to earn compensation and promotion and
creates fertile ground in which sexual harassment flourishes. Because advancement in Combined
has always been directly tied to success in the insurance sales system, the allegedly inadequate
training and sales opportunities are effective in holding women back, and because the highest
levels of management are occupied by men who allegedly ignore and often encourage the
humiliation and degradation of women, there is no recourse for the women who suffer in such an

environment.


to Combined’ 8 president, stated that he believed women did not pursue the promotions because
of familial responsibilities and admitted that he had never taken any measures, such as hiring an
outside firm, to determine why so few women were being promoted. Ms. Palmer contends that
Mr. Agypt’s testimony is illustrative of Combined’s intentional disregard for its alleged gender
inequality.

D. Harassment

In addition to the alleged gender disparities with respect to compensation and promotion,
Ms. Palmer asserts that at every level of Combined, women are forced to endure harassment by
male co-workers and managers, which usually takes the form of objectification, offensive sexual
comments, and unwanted sexual advances. Such behavior, Ms. Palmer asserts, is rampant
throughout Combined, often occurring on a daily basis. This harassment, according to Ms.
Palmer, creates an environment of constant humiliation and degradation to women, sometimes
rising to the level of physical violence, and complaints are ignored and sometimes result in
intimidation. Some of the more troubling allegations set forth by Ms. Palmer involve sexual
assaults and intimidation of the alleged victims to prevent legal action. While not all allegations
of harassment rise to such a serious level, Ms. Palmer contends that it is the apathy towards and
encouragement.of the less violent forms of harassment that allows and increases the possibility
that the more serious acts will occur. Ms. Palmer alleges that this misogynist environment
inheres in the very foundations on which Combined rests, and as a result, all sexual forms of
harassment, whether it be offensive comments or sexual assault, are tolerated by Combined at
even the highest level of its management. Ms. Palmer asserts that it is Combined’s deliberate

indifference to the harassment of women that allows the widespread and continual harassment to


at the practices and procedures at Combined, and punitive damages can be awarded to the class
as a whole without determining liability with respect to individual class members, those
questions concerning Combined’s alleged systemic discrimination predominate over individual
questions. The very nature of a pattern or practice action requires evidence of widespread harm,
which is usually shown through evidence concerning more than a single individual, and
considering the large size of this class and the similarities among their allegations regarding
Combined’s policies and practices, a class action is the most efficient and effective way to
litigate these claims.

Combined points out that approximately 20 women have filed individual claims against
it, which it argues shows the inefficiency of allowing this class to move forward. However,
while 20 would be a significant number if the class being proposed were in the hundreds, it is not
so when the proposed class is in the thousands. Such a small percentage of the potential class
choosing to pursue individual actions against Combined does not call the superiority of a class
action in adjudicating these claims into serious question. With regard to the other considerations
under Rule 23(b)(3), (1) the interests of the class members are better served through a class
action, given the similarities among each class member’s allegations; (2) there appears to be no
undesirability of concentrating the litigation of these claims in this forum; and (3) because there
are ways to distribute punitive damages without assessing each class member’s injury, this class
action is manageable. For all of these reasons, I would find that certification of this class is

appropriate under Rule 23(b)(3).!

"Since I am certifying this class under Rule 23(b)(2), I have not reached the question of what sort of notice
must go out if this class were certified under Rule 23(b)(3).

18


Enhanced Sales Force and were sales agents or managers at some point during their employment
with Combined.”

A. Standard for Deciding a Motion for Class Certification

While I may not conduct a preliminary inquiry into the merits of the underlying claims in
deciding a motion for class certification, Eisen v. Carlisle & Jaquelin, 417 U.S. 156, 177-78
(1974), I can look beyond the pleadings to determine whether the requirements of Rule 23 are
met. Szabo v. Bridgeport Mach., Inc., 249 F.3d 672, 677 (7" Cir. 2001); Gen. Tel. Co. of S.W. v.
Falcon, 457 U.S. 147 (1982). Ms. Palmer has the burden of demonstrating that all requirements
for class certification are met. Ret. Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7"
Cir. 1993).

B. Radmanovich v. Combined

As the parties are well aware, there is another putative class action suit involving
Combined in this district, Radmanovich v. Combined Insurance Co. of America, N.D. Ill. Case
No. 01-9502. The case was before Judge Alesia, who denied Ms, Radmanovich’s motion for
class certification, before it was reassigned to me. Neither party disputes that the underlying
facts of Radmanovich and the present case are the same. The parties, however, strongly dispute
the implications of Judge Alesia’s opinion.

Judge Alesia denied class certification in Radmanovich because he found that Ms.
Radmanovich failed to satisfy the predominance and superiority requirements of Rule 23(b)(3).
The primary difference between Radmanovich and Ms. Palmer’s case is that Ms. Palmer is not
seeking compensatory relief. Ms. Palmer argues that she can meet the Rule 23(b)(2)

requirements for injunctive relief and punitive damages can be certified under both Rule 23(b)(2)


‘Minute Order Porm (06/97)

\

United States District Court, Northern District of Mlinois

Name of Assignad Judj Sitting Judge if Othe
. or Magistrate Iudee James B. Zagel than Assigned Judge
CASE NUMBER 02 C 1764 DATE 8/29/2003
CASE Brenda Palmer vs. Combined Insurance Company of America
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
qm a Filed motion of [ use listing in “Motion” box above.]
(2) Qa Brief in support of motion due
(3) Q Answer brief to motion due. . Reply to answer brief due. .
(4) Q Ruling/Hearing on setfor at
(5) QO Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Q Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) Qo Trial{set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) CGeneralRule21 CIFRCP41(a)(1) (FRCP41(a)(2).
ao [Other docket entry] Enter Memorandum Opinion and Order: Plaintiff's motion for class
certification (27-1) is granted.
(al) & [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required.
ao | Notices mailed by judge’s staff.
‘Notified counsel by telephone.
Docketing to mail notices.
Mail AO 450 form, 1yunoa LouLsia‘s‘a
Copy to judge/magistrate judge. wya1g
19;
courtroom “ett Wd 62 Sny £0
eepay's [Bie lviav. tame
intials epee ETS
: Clerk's Office ling deputy ile



. “2, Adequacy of Representation

With respect to adequacy of representation, Rule 23(a) requires that “the representative
parties will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).
Adequacy of representation involves two inquiries: the adequacy of (1) the plaintiff's named
counsel and (2) the named plaintiff's representation in protecting the distinct interests of the class
members. Ret. Chicago Police Ass'n, 7 F.3d at 598. The class representative must “possess the
same interest and suffer the same injury as the class members.” Uhl v. Thoroughbred Tech &
Tel., Inc., 309 F.3d 978, 985 (7 Cir. 2002) (quoting £. Tex. Motor Freight Sys., Inc. v.
Rodriguez, 431 U.S. 395, 403 (1977).

The qualifications of Ms. Palmer’s attorneys are not in dispute, and I find that Palmer’s
allegations on her own behalf assert the same injuries as the members of the class she seeks to
represent, namely economic and emotional harm due to sex discrimination. I also find that she
has the same interest in pursuing this case as the rest of the class members, which is to stop
Combined’s alleged systemic sex discrimination and punish Combined for its alleged
wrondgoing. Combined argues that, because within the proposed class there are supervisory and
non-supervisory employees, there can be no adequacy of representation. While this may be true
in other cases, I find that what is alleged in this case is a pattern or practice that harms female
employees at all levels, and for this reason adequacy of representation has been met.

D. Rule 23(b)(2) and Injunctive Relief

Because Palmer meets the Rule 23(a) requirements, my next consideration is whether the
requirements for injunctive relief undey Rule 23(b)(2) are satisfied. Rule 23(b)(2) provides that if
Rule 23(a) requirements are met, a class action may be maintained if “the party opposing the
class has acted or refused to act on grounds generally applicable to the class, thereby making

1


factual variation among the class members’ grievances does not destroy commonality. Rosario,
963 F.2d at 1018.

To meet the typicality requirement of Rule 23(a), the claims and defenses of the
representative parties must be typical of the claims and defenses of the class. This inquiry is
closely related to commonality. Keele, 149 F.3d at 595 (citing Rosario, 963 F.2d at 1018).
Typicality is satisfied when the plaintiff's claim “arises from the same event or practice or course
of conduct that gives rise to the claims of other class members” and the plaintiff's claim is
“based on the same legal theory.” Jd. (quoting De La Fuente v. Stokely Van-Camp, Inc., 713
F.2d 225, 232 (7" Cir. 1983). The existence of factual differences will not preclude certification,
Ret. Chicago Police Ass'n, 7 F.3d at 596-97 (citation omitted), and the [s]imilarity of legal theory
is more important than factual similarity, so the presence of factual differences between the
claims of the members of the proposed class is not fatal to a finding of typicality.” De La
Fuente, 713 F.2d at 232.

Both parties spend a great deal of time discussing Ms. Palmer’s pattern or practice
evidence in their briefs. However, I cannot consider the merits of Ms. Palmer’s claim and
consider the evidence presented by both parties only to the extent needed to “understand the
claims, defenses, relevant facts and applicable substantive law.” Dhamer v. Bristol-Myers
Squibb Co., 183 F.R.D. 520, 530 (N.D. Ill. 1998) (citation omitted). Ms. Palmer has properly
pled a pattern or practice case, and although it is possible that she may be wrong or simply unable
to prove her case, the pleadings and evidence presented meet the commonality and typicality
requirements. Combined premises its argument that Ms. Palmer cannot satisfy these
requirements primarily on the factual variations of the class members’ grievances, but as the case
law indicates, that alone is not enough to defeat findings of commonality and typicality.

10


. To make matters worse, according to Ms. Palmer, Combined has never taken any
measures to study these gender disparities, and even though Combined’s parent company, Aon
Corporation, has enacted Equal Employment Opportunity (“EEO”) policies for all its
subsidiaries, such policies are ignored and unenforced. Ms. Palmer alleges that the Employee
Handbook that is distributed to incoming sales agents at Combined contains a “problem solving
procedure” that directs employees to report discrimination or harassment to their immediate
supervisor or corporate headquarters. The problem, Ms. Palmer asserts, is that (1) immediate
supervisors either ignore such complaints or are themselves committing the discrimination and
harassment; (2) Combined invests minimal resources into EEO training, and even when such
training is given, the trainer himself, who has no background in EEO matters or specific training,
sometimes harasses women during those very sessions; and (3) when complaints are reported to
corporate headquarters, they are not maintained in any uniform or comprehensive manner, and
when they are investigated, the investigations fall far below industry standards, often consisting
of a report simply stating that the allegations could not be corroborated and that the EEO policy
was reiterated, but no disciplinary action taken. With respect to such investigative reports, Ms.
Palmer contends that although such reports are supposed to be placed in the employee’s

personnel file, there is no system in place to make sure that this actually occurs.

II, DISCUSSION
Ms. Palmer seeks certification of the following class: “{a]ll women who, at any time on

or after March 8, 2002, worked in Combined insurance Company of America’s Seventh Essential


cards given to the agent on a weekly basis by the district manager. This constitutes the “premium
worked.” Agents are required to call on the clients identified on these cards to service the
accounts, which includes renewing current policies and selling new products, thus retaining
existing business and generating new business. Agents are also expected to use the client
contacts to find and develop new leads and referrals. Ms. Palmer alleges that women received
significantly less “premium worked” than men even though evidence shows that women were
more successful than men in renewing the premiums that they were given. According to Ms.
Palmer, by doing this, Combined ensures that women must work harder than men to earn the
same amount of commission, achieve performance goals, and qualify for promotion.

C. Promotion

This case involves Combined’s “Seventh Essential Enhanced Sales Force” (“Seventh
Essential”), which comprises 80% of Combined’s work force. At Combined, the country is
divided into geographical divisions, each headed by a district manager who reports to the
national sales manager and Vice-President/Managing Director of Seventh Essential (both of
whom are men). Beneath divisional managers are regional managers, then sub-regional
managers, district managers, and finally, sales managers. Ms. Palmer asserts that there has never
been a female divisional manager in Combined’s 83-year history and there are only a handful of
female regional managers, two of whom submitted declarations stating their belief that women,
including themselves, were discriminated against at Combined. According to Ms. Palmer,
significant promotion disparities exist at two points in the job level hierarchy: 40% of women are
cut out at the district manager level and another 65% of women are blocked out at the regional

manager level.


proposed class being considered in Allison is different than Ms. Palmer’s class in that the
potential plaintiffs here are not spread across separate facilities, represented by different unions,
working in many different skill groups, nor are they challenging policies that may have changed
over the years or have been inconsistently implemented, The lack of actual facilities or other
organizational structures is, according to Ms. Palmer, precisely one of the key reasons why the
alleged discriminatory practices and policies are able to flourish and remain consistent. It is the
tather unusual structure of Combined that distinguishes this case from other Title VII class
actions involving the mote typical workplace. Combined does make a valid point that
nevertheless, each class member has suffered differing degrees of harm and thus, it appears that
distribution of punitive damages will inevitably require individualized assessments. However,
given the unique nature of this suit, and the possibility of distributing a punitive damages award
without looking at the specifics of each class member, I find that this could be one of the rare
exceptions to existing case law.

It is conceivable that an award of punitive damages could be awarded pro rata. In EEOC
v. O&G Spring and Wire Forms Speciality Co., 38 F.3d 872, 879-80 (7" Cir. 1992), the Seventh
Circuit held that the district court did not abuse its discretion in distributing a lump sum class
back pay award to eligible class members pro rata, Although it is unusual to award a lump sum
class punitive damages award pro rata, the nature of this case allows for this possibility. In
addition, punitive damages may be allocated by some other formula, to be determined at a later
time, which would alleviate the need for individualized analysis. It is also possible that punitive
damages could be awarded cy pres to an appropriate organization, in which case the individual
differences between class members would be irrelevant. Exactly how an award of punitive
damages might be distributed need not be decided at this stage~as long as there are viable options

14


and do not “tequire additional hearings to resolve the disparate merits of each individual’s case.”
Allison, 151 F.3d at 415.

In my February 24, 2003, opinion denying Combined’s motion to strike Ms. Palmer’s
class allegations, I stated that the request for punitive damages was not incidental to the
injunctive and declaratory relief because punitive damages would depend on some degree on
each class member’s circumstances. However, in considering this motion, I have explored
alternatives to distributing punitive damages that would not require such individualized inquiry,
and after examining both parties’ arguments and existing case law carefully, I have reconsidered
my previous ruling. J now find that, given the unique circumstances of this case, the punitive
damages are incidental to the injunctive relief and thus certify the proposed class under Rule
23(b)(2). The essential purpose of Ms. Palmer’s request for punitive damages is in no way meant
to compensate or make the class members whole. The very nature of punitive damages is to
punish “evil motive or intent, or . . . reckless indifference to the federally protected rights of
others.” Merriweather v, Family Dollar Stores of Indiana, 103 F.3d 576, 581 (7" Cir. 1996)
(citation omitted), Because the focus of punitive damages is on the defendant’s conduct, not the
class members, it is possible to fashion a punitive damages award that would punish Combined
for past wrongdoing, if such wrongdoing was proved, and not require individualized inquiry.
The other purpose of this punitive damages award would be to deter future wrongdoing, which
may also have the effect of encouraging compliance with any awarded injunctive relief by
ensuring that Combined understands the adverse monetary consequences of disobeying the
injunction. This purpose could also be served without having to assess each class member’s

circumstances.

16


contacting clients at their homes or in restaurants and other public places. They
work solely on a commission basis and receive no salary from Combined.

In Combined, there are twelve separate sales divisions, each managed by a
divisional manager. Each sales territory is divided into regions, which are
supervised by regional managers. Each region is divided into sub-regions, sub-
regions into districts and districts into territories, and these units are managed by
sub-regional managers, district managers and territorial managers, respectively.
Divisional and regional managers and the sales agents whom they oversee
regularly attend large, multi-day sales meetings known as “Ardmores.”

Combined operates on a strict pyramid system in which nearly every manager
must advance from within, and almost every top manager (including the chief
executive) started as a sales agent (the lowest level) and worked his way up
through the pyramid system. Its founder, W. Clement Stone, established the
principle that a strictly-commission sales force must be motivated emotionally as
well as financially, and that principle remains ingrained in Combined’s
philosophy today.

Ms. Palmer’s allegations can be summed up as the following: (1) Combined’s managers give

female employees inferior sales opportunities and diminished prospects for success; (2)

Combined gives fewer promotions to women than men; (3) female employees at Combined are

sexually harassed on a regular basis; (4) Combined provides female employees with inferior

training; and (5) even though Combined knows that all of these things are occurring, no effective

steps to stop the behavior are taken.

B.

Compensation

Ms. Palmer claims that during the relevant time period, between 1998 and 2001,

Combined paid women significantly less than their male counterparts by giving women far fewer

dollars in premium to work in the field than men. For sales agents and managers at Combined,

earnings tie directly to the number of insurance products sold. Every week, an agent is assigned

to work in a specific territory, and one source of business in that territory is the lead and referral


Fidei jh

‘ UNITED STATES DISTRICT COURT aed
NORTHERN DISTRICT OF ILLINOIS SEP ra 2003
EASTERN DIVISION

BRENDA PALMER, on behalf of herself
and others similarly situated,

Plaintiff,
No. 02 C 1764
v. Judge James B. Zagel

COMBINED INSURANCE COMPANY
OF AMERICA,

Defendant.

MEMORANDUM OPINION AND ORDER

This is a sex discrimination action brought under Title VII of the Civil Rights Act of
1964, 42 U.S.C. § 2000¢ et seq. by Brenda Palmer, both individually and on behalf of others
similarly situated. Ms. Palmer moves for class certification pursuant to Fed. R. Civ. P. 23 (“Rule

23"),

L BACKGROUND
A. General
The factual background of this case has been detailed in my prior opinion denying
defendant Combined Insurance Company of America’s (“Combined”) motion to strike Palmer’s
class allegations dated February 24, 2003, part of which I will reiterate here:
Combined is an insurance company specializing in health, accident and life
insurance products sold throughout the United States. These insurance products
are sold by sales agents spanning the country who are overseen by managers, who
are themselves supervised by a higher level of management. Combined is one of
the last (if not the very last) vestiges of the “door-to-door” salesmen variety of

insurance selling. These salesmen do not work in an office; rather, they work on
their own and control their working conditions and schedules, meeting with and

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appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a
whole.” Fed. R. Civ. P. 23(b)(2). I concur with Judge Alesia that even if a pattern or practice
can be proven, determination of compensatory relief would require individual determinations that
render a case of this magnitude unmanageable. However, I find that the nature of Ms. Palmer’s
allegations with respect to injunctive relief do not have the same fault. Such individualized
assessments are not necessary when it comes to injunctive relief. See, e.g., Cooper v. Fed.
Reserve Bank of Richmond, 467 U.S. 867, 876 (1984) (stating that “a finding of a pattern or
practice of discrimination itself justifies an award of prospective relief to the class”). Ms, Palmer
has alleged that Combined engages in a systemic practice of discrimination against female
employees and refuses to take any steps to stop it, and at this point in the case, there remains a
factual issue as to whether such a pattern or practice exists. If a pattern or practice is found to
exist, an award of injunctive relief, which would likely consist of company-wide changes to
Combined’s practices and policies, would not require examination of each individual class
member’s grievances. Thus, I find that Ms. Palmer has satisfied the Rule 23(b)(2) requirements
for injunctive relief.

E. Punitive Damages

The more difficult inquiry is whether I can certify a class for punitive relief under Rule
23(b)(2) or 23(b)(3). Ms. Palmer presents a rather unique case in which injunctive and punitive,
but not compensatory, relief is sought, and the relief is sought for the class as a whole, not the
individual members of the class. My review cf federal case law has not produced another Title
VII class action case that proceeds in this manner. Combined argues that an award of punitive
damages must bear a reasonable relationship to a compensatory damages award, so taking
compensatory damages out of the equation precludes recovery of punitive damages. However,

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that can adequately address manageability concerns, that is enough for class certification.
Difficulty in correctly awarding damages to a class alone cannot defeat a motion for class
certification. See De La Fuente, 713 F.2d at 233.

Therefore, having addressed general manageability issues, I will now determine whether a
class can be certified with respect to punitive damages under either Rule 23(b)(2) or Rule
23(b)(3).

1. Je 23(b\(2

Rule 23(b)(2)’s suitability to practice or pattern suits is well-established in the case law.
See Jefferson v. Ingersoll Intern, Inc., 195 F.3d 894, 897 (7 Cir. 1999). However, when non-
equitable relief is sought, Rule 23(b)(2) is problematic because it provides for binding litigation
without guarantees of personal notice and an opportunity to opt out of the suit. As noted in
Lemon, “Rule 23(b)(2) operates under the presumption that the interests of the class members are
cohesive and homogenous such that the case will not depend on adjudication of facts particular
to any subset of the class nor require a remedy that differentiates materially among class
members.” Lemon, 216 F.3d at 580. There are two ways of certifying a class under Rule
23(b)(2) when monetary relief is sought: (1) certification without notice or an opportunity to opt
out only if the monetary damages are incidental to the injunctive or declaratory relief, Allison,
216 F.3d at 415, or (2) certification with notice and an opportunity to opt out using an exercise of
plenary authority under Rules 23(d)(2) and 23(d)(5), as though the class was certified under Rule
23(b)(3). Ingersoll, 195 F.3d at 898. For monetary damages to be incidental to the injunctive or
declaratory relief, the monetary damages must “flow directly from liability to the class as a whole
on the claims forming the basis of the injunctive or declaratory relief,” cannot depend “in any
significant way on the intangible, subjective differences of each class member’s circumstances,”

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