Overview
On November 15, 2022, American Arbitration Arbitrator John Gleeson granted final approval of a $175 million settlement between Claimants and Sterling Jewelers in this rare, closely-watched certified class arbitration, filed under Title VII of the Civil Rights Act of 1964 (Title VII) and the Equal Pay Act (EPA).
Claimants, approximately 70,000 former and current female employees of Sterling Jewelers, one of the nation’s largest jewelry chains, filed this lawsuit before the American Arbitration Association (AAA) in March 2008, claiming they were subjected to a pattern of gender-based pay and promotions discrimination.
The lawsuit, which was litigated before the AAA, the United States District Court for the Southern District of New York, and the United States Court of Appeals for the Second Circuit, involved novel legal issues and rulings related to class certification, class arbitration, and the threshold role of an arbitrator. On October 5, 2020, the Supreme Court declined to hear the petition for certiorari, allowing the case to move forward to trial as a certified class arbitration before the AAA.
Case Background
On March 24, 2008, on behalf of themselves and other current and former female sales employees of Sterling, Claimants Laryssa Jock, Christy Meierdiercks, Maria House, Denise Maddox, Lisa McConnell, Gloria Huff (Pagan), Judy Reed, Linda Rhodes, Nina Shahmirzadi, Leighla Murphy (Smith), Dawn Souto-Coons, and Marie Wolf, who are current and former female employees of Sterling, filed a lawsuit in arbitration alleging they were paid less than similarly-situated male employees and were denied promotional opportunities because of their gender. The case was filed in arbitration before the American Arbitration Association, a private agency that manages arbitrations, rather than in court, because Sterling’s internal RESOLVE Program requires that employees bring these claims in arbitration, and not in court.
Claimants, on behalf of themselves and other current and former female sales employees of Sterling, sued Sterling in arbitration under federal civil rights laws alleging that Sterling paid them less than male employees performing the same work and denied them opportunities for promotion because of their gender. Specifically, Claimants brought this arbitration under Title VII and the EPA.
Sterling denies that it has discriminated against Claimants or any other current or former female sales employees and alleges that all the pay and promotion decisions that it has made regarding its female employees have been for non-discriminatory reasons.
Female Employees of Sterling Jewelers Win Class Certification of Title VII Claims and Conditional Certification for Equal Pay Act Claims
EQUAL PAY ACT CLAIMS
On February 29, 2016, the Arbitrator in the action Jock et al. v. Sterling Jewelers Inc. issued two important rulings. First, the Arbitrator ruled that current and former female sales employees of Sterling together may pursue their claims under the Equal Pay Act, in which they claim that Sterling paid them less than males performing the same work in the same establishment. Second, the Arbitrator granted Claimants’ request for equitable tolling (meaning that a statute of limitations on bringing a claim is extended) that allows these female employees to reach back thirteen years to bring their claims if they worked as sales associates, department managers, assistant managers, or store managers for Sterling anytime between October 16, 2003 and the present day. Read the ruling conditionally certifying the Equal Pay Act claims. The Equal Pay Act requires potential members of the collective action to indicate that they wish to join the collective action by submitting a Consent to Join form.
Class counsel mailed out Consent-to-Join forms, as stipulated in the February 29, 2016 Order, to Claimants who qualified for the Equal Pay Act claims. The deadline to return these consent forms passed in September 2016.
TITLE VII CLAIMS
The above rulings are in addition to the Arbitrator’s ruling on February 2, 2015 that allowed current and former female sales employees of Sterling to pursue together in a class action their claims under Title VII. Specifically, on February 2, 2015, after a lengthy hearing and extensive briefing, Arbitrator Kathleen Roberts issued a ruling certifying a class, which includes approximately 70,000 current and former women employees at Sterling Jewelers Inc.’s retail stores nationwide dating back to 2004 and going forward to the present and up to the first day of trial. Three aspects of the ruling are important for Claimants to know. First, the ruling permits the class to try, on a class-wide basis, claims alleging that Sterling’s pay and promotion practices have had an adverse effect on women sales employees. If the class succeeds in proving that the challenged pay and promotion practices were discriminatory, then, the Arbitrator also ruled, the class may seek class-wide changes to the challenged pay and promotion practices. Second, the ruling also provides that if the class proves the challenged practices were discriminatory, the Arbitrator will establish procedures to allow class members to recover damages for the wages and promotional opportunities lost because of the discrimination. Third, the Arbitrator also ruled that the claim alleging intentional discrimination did not satisfy the new high standard for class certification that the Supreme Court recently announced. However, the Named Claimants and current and former employees may still pursue individual claims of intentional discrimination. Read the ruling (Class Determination Award).
Sterling subsequently challenged the Arbitrator’s decision to bind a larger group to the class action arbitration. Sterling contends that the Arbitrator has exceeded her authority by allowing a larger group to bind to this class action arbitration, as they never submitted to her authority or presented to her the question of whether the RESOLVE agreement permits class action arbitration. On January 16, 2018, the district court of the Southern District of New York (Rakoff, J.) granted Sterling’s motion in part, vacating class certification of the Title VII claims to the extent that members of the class did not affirmatively consent to join this action. Claimants appealed the district court’s decision and argument on that appeal took place in early May of 2019. The trial on liability of the EPA and Title VII class and collective action claims, originally scheduled for March 26, 2018, has been stayed pending the Second Circuit’s decision.
The November 2019 decision of the Second Circuit, which reversed the decision of the Southern District of New York, held that Sterling employees, by entering into the RESOLVE agreement, consented to “the [A]rbitrator’s authority to decide the threshold question of whether the agreement permits class arbitration.”
The Arbitrator has tolled the statute of the limitations of the claims of the women who were members of the Title VII class.
Important Rulings
In 2015 and 2016, the Arbitrator issued rulings certifying a class under Title VII of the Civil Rights Act of 1964 (Title VII) and conditionally certifying a class under the Equal Pay Act (“EPA”). Although the case was set for a trial in early 2018, it has since been stayed while Sterling appealed the Arbitrator’s certification of the Title VII class.
In January 2018, the district court reversed the Arbitrator’s certification of the Title VII class for class members who had not affirmatively joined the arbitration; however, in November 2019, the Court of Appeals granted the Claimants’ appeal of this decision and reinstated the Arbitrator’s ruling certifying the full class of claims. The Court explained that “[a]lthough the absent class members have not affirmatively opted in to this arbitration proceeding, by signing the RESOLVE [Arbitration] Agreement, they consented to the arbitrator’s authority to decide the threshold question of whether the agreement permits class arbitration.” Therefore, the Appeals Court concluded, the Arbitrator had the authority to certify a class that included all women within the class definition who signed RESOLVE agreements.
Sterling petitioned the U.S. Supreme Court for certiorari in an effort to overturn the Court of Appeals’ decision holding that a class of approximately 70,000 women could collectively pursue claims in arbitration. On October 5, 2020, the Supreme Court declined to hear the petition for certiorari, leaving the Second Circuit’s ruling intact.
A trial was subsequently scheduled for September 6, 2022. John Gleeson, a former United States District Judge for the Eastern District of New York, was appointed as the new arbitrator to preside over the trial.
On November 30, 2021, the Arbitrator heard arguments from both sides on 11 motions that had been pending since 2018. The rulings were delayed while the courts ruled on Sterling’s appeal of the prior Arbitrator’s decision to certify as a class the Claimants’ pay and promotion claims brought under Title VII of the Civil Rights Act of 1964. The Arbitrator denied Sterling’s motions for summary judgment of Claimants’ promotion claims and their pay claims brought under the Equal Pay Act and denied Sterling’s motions to decertify Claimants’ promotion claims and their Equal Pay Act claims.
The Arbitrator also ruled that eight claimants who joined the Equal Pay Act case, but who had not submitted discovery responses in 2017, were compelled to do so by February 28, 2022. The Arbitrator also dismissed the EPA claims of 64 opt-ins for whom no evidence was presented of an individual male comparator under the EPA. These individuals may still be allowed to pursue Title VII claims and will be contacted personally by Class Counsel.
Claimants’ class claims challenging Sterling’s pay and promotion practices will now move forward to trial.
Other Important Decisions
On February 3, 2015, following the issuance of the Class Determination Award, Sterling sent an email to all its employees, including members of the certified class arbitration, describing the Arbitrator’s Award in a way that the Arbitrator characterized as “improper” and erroneous. Class Counsel challenged Sterling’s memo to its employees on grounds that it was misleading.
On March 16, 2015, the Arbitrator ruled that Sterling’s February 3, 2015 email communication to its employees “presents a seriously incomplete and misleading description of the [Class Determination] Award that diminishes the significance of the Award and could potentially discourage interest and participation in the class arbitrations.” She found Sterling’s email “fail[ed] to convey the central determination of the Award: the certification of a class of tens of thousands of current and former female employees with respect to claims of discrimination based upon disparate impact.”
In this decision, the Arbitrator reiterated that that class members to the Arbitration are represented by Class Counsel (contact information provided below) and that Sterling’s attorneys are prohibited from contacting class members with respect to the subject matter of the Arbitration unless approved by Class Counsel or by order of the Arbitrator. Read the Arbitrator’s Order.
Case name: Jock et al. v. Sterling Jewelers Inc., No. 11 160 0065508 (AAA; S.D.N.Y.)