By Frank Cruz-Alvarez, a Partner with Shook, Hardy & Bacon L.L.P. in the firm’s Miami, FL office, and Britta Stamps, an Associate in the firm’s Kansas City, Mo office. 

Under the U.S. Court of Appeals for the Eighth Circuit’s recent ruling in Harris v. Union Pacific Railroad Company, the extent to which an employer conducts an individualized assessment of an employee when applying a uniform policy is key to determining whether a class can be certified under Federal Rules of Civil Procedure 23(b)(2) or 23(b)(3).  In its reversal of the district court’s decision to certify a class, the Eighth Circuit reinforced how detrimental individualized inquiries are to class certification.  Harris represents the latest in a trend of Eighth Circuit opinions clamping down on class certification. 

The road to class certification by the district court began with a company-wide policy implemented by Union Pacific Railroad Company.  Union Pacific applies a fitness-for-duty policy to all employees and requires employees in some positions to report “reportable health events” to its Health and Medical Services department for further evaluation of the employee’s fitness for duty.  Union Pacific reviews the employee’s appropriate medical records and considers guidelines from at least one federal agency and scientific literature to determine whether the employee presents an unacceptably high risk of sudden incapacitation. Based on the outcome of that review, Union Pacific may require functional work restrictions, then relies on the employee’s supervisors to determine whether the employee can perform the job with or without reasonable accommodation despite the restrictions. 

Current and former employees of Union Pacific Railroad Company alleged that Union Pacific’s fitness-for-duty policy violated the Americans with Disabilities Act (“ADA”), see 42 U.S.C. § 12101 et seq., because the policy led to the systematic removal of workers with disabilities.  The district court, working under the framework set forth in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), certified a hybrid class action of employees under Federal Rules of Civil Procedure 23(b)(2) and (b)(3).  The district court adopted a two-stage trial plan, under which the jury would determine during the first stage of litigation whether Union Pacific “engaged in a pattern or practice of disability discrimination” and the district court would decide whether to grant injunctive relief under Rule 23(b)(2).  In the second stage, the district court would hold “Individual Hearings on reinstatement, back pay and compensatory damages, ADA ‘qualification,’ and individual defenses” under Rule 23(b)(3).  Such a hybrid certification—separating the Rule 23(b)(2) class from the money-damages portion of the case—continues to gain popularity across many jurisdictions. 

While Plaintiffs argued that it is the “policy itself” that is unlawful rather than the way the policy was applied, the Eighth Circuit rejected that argument.  Applying the plain language of the ADA, the Eighth Circuit held that “the district court cannot determine whether the ‘policy itself’ constituted a pattern or practice of unlawful discrimination without considering whether the policy is job-related for each of over 650 positions in question and whether the policy is consistent with business necessity in each situation.”  Pointing to the named plaintiffs, the Court noted that individual employees to whom the policy was applied have varying “reportable health events” ranging from cardiomyopathy, a pacemaker, and PTSD to substance abuse problems and syncope.  Further individualized issues arise when the added layer of different jobs are factored in: “the analysis for an accountant with cardiomyopathy is not the same as the analysis for an engineer with cardiomyopathy, nor is the analysis for an engineer with cardiomyopathy the same as the analysis for an engineer with PTSD.”¹ 

Despite Plaintiffs’ argument that Union Pacific’s use of a “single set of medical standards” would allow Union Pacific to present “classwide defenses” during stage one of the trial, the Eighth Circuit pointed to the elaborate evaluation process Union Pacific performs under that single set of medical standards for each affected employee.  The functional work restrictions, evaluations from the employee’s supervisors, and application of medical guidelines lead to different and individualized outcomes, as demonstrated by the fact that employees with the same disability do not automatically receive the same outcome under the policy. 

Given all those factors, the Eighth Circuit concluded that to determine whether the policy is unlawfully discriminatory, the district court would have to consider the unique circumstances of each position at issue.  The inherently individualized questions of whether the policy is consistent with business necessity and job related for each of the 650 jobs at Union Pacific defeats predominance.  The district court’s failure to conduct the “rigorous analysis” of the predominance prong required by Rule 23(b)(3) ultimately led to reversal.  And while the court did not base its holding on the superiority requirement of Rule 23(b)(3)², it advised that superiority would be difficult to demonstrate where plaintiffs have conceded that class members could bring separate individual actions if the class claim fails. 

Turning to Rule 23(b)(2), the Eighth Circuit relied on its previous decisions in Ebert v. General Mills, Inc., 823 F.3d 472 (8th Cir. 2016), and Avritt v. Reliastar Life Insurance Co., 615 F.3d 1023 (8th Cir. 2010), in its reversal of the district court’s certification of a Rule 23(b)(2) class.  For the same reasons that the class could not satisfy the predominance requirement, the Eighth Circuit concluded that Union Pacific’s conduct could not be evaluated on a uniform, class wide basis.  Considering precedent holding that the cohesiveness requirement³ is even more stringent than the predominance requirement, cohesiveness could not be established for this class.  

In a slight plot twist, both the majority and concurring opinions hint at a path for certification of a class under Union Pacific’s fitness-for-duty policy.  The majority opinion suggests that if Union Pacific applied their policy in the same way to each employee regardless of position or medical circumstance, individualized issues may not have overwhelmed the inquiry.  The majority also suggests that class certification may have been appropriate if the proposed class consisted of employees from the same or similar positions with the same or similar disabilities.  Judge Kelly’s concurring opinion takes that reasoning a step further, implying that the relevant class-certification question should be: “Was this policy job-related for the position in question?”  That question deems the similarity of the disability irrelevant and would allow a class of employees from the same or similar jobs to be certified.  The truly fatal flaw, then, may have only been the lack of limiting criteria for the class.  

While the class definition used by plaintiffs may be out of the control of companies facing similar class actions, companies can revisit their policies to assess whether the policies are applied on a case-by-case basis with adequate individual attention given to each employee, client, or customer.  The ramifications of this opinion span beyond ADA and employment issues.  The Eighth Circuit sent a clear message that any company-wide policies that are applied evenly, with no questions asked about particular circumstances, risk the certification of a class action given the absence of any individualized inquiries for a district court to make during a class trial.

NOTES  

1. Harris v. Union Pacific Railroad Co., 953 F.3d 1030, 1036 (8th Cir. 2020).
2. Rule 23(b)(3) applies to individualized claims for damages and requires the plaintiff to establish two main points: (1) “questions of law or fact common to class members predominate over any questions affecting only individual members”; and (2) “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”  Fed. R. Civ. P. 23(b)(3).  As relevant here, courts may find predominance lacking if the defendant can assert individualized defenses to class members’ claims and may conclude a class action is not the superior method of resolution if many individualized inquiries exist.
3. Because Rule 23(b)(2) only authorizes class wide declaratory or injunctive relief, the court cannot award individualized relief for this type of class.  The class must be sufficiently cohesive because all members of the class will be bound by the remedy.  As explained in Ebert, “cohesiveness is the touchstone of a [Rule 23](b)(2) class” because a Rule 23(b)(2) class is mandatory and the relief sought must apply the entire class together.  823 F.3d at 480.