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Goldman Sachs may have to reinstate plaintiffs even if they resigned or had division eliminated

April 16th, 2017  |  Lorene Park

By Lorene D. Park, J.D.

Finding that two former Goldman Sachs employees who sought reinstatement had standing to pursue injunctive and declaratory relief and that reinstatement was feasible even though one voluntarily resigned and the other left the company when her division was divested, a federal district court in New York denied Goldman Sachs’ motion to dismiss these plaintiffs’ claims for injunctive and declaratory relief. In so holding, the court revisited and departed from another judge’s interpretation of Wal-Mart Stores, Inc. v. Dukes on the issue of former employees’ standing to seek injunctive or declaratory relief.

The five plaintiffs in this long-running case accused Goldman Sachs of engaging in a pattern and practice of gender discrimination against its female associates, vice presidents, and managing directors with respect to compensation and promotion opportunities. They also claimed that gender bias “pervades Goldman Sachs’ corporate culture,” and that the company maintained a “boys’ club” atmosphere focused on things like drinking and sports. They claimed women were sexualized and those who complained were retaliated against. At issue here was the defendants’ motion to dismiss two of the plaintiffs’ claims for injunctive and declaratory relief.

Seeking reinstatement to “rightful position.” One of two plaintiffs was promoted to vice president in 2003, and became eligible to be promoted to managing director starting in 2005, but was never promoted again. She claimed she was evaluated more harshly than male colleagues, was paid less, and was given fewer opportunities. For example, she alleged that in 2007, her manager said she would be nominated to be managing director but should consider “adopting” rather than getting pregnant. When she took maternity leave, she was passed over for the promotion in favor of a male trader even though her revenue from her stock portfolio rose from $1.2M to over $6M that year and to $9.5M next year. Goldman Sachs subsequently “divested itself” of her department. Among other remedies, she sought reinstatement to “rightful position.”

The second plaintiff targeted by Goldman Sachs’ motion was a senior analyst who first worked in Miami and then Dallas, but traveled regularly to work from the New York office as well. She was promoted to associate in 2012 and made VP in 2014, but was allegedly evaluated unfairly based on gender and paid less than male colleagues. In March 2016, she asked to transfer back to Miami due to the relocation of her significant other. She was allegedly assured that “relocation to Miami in 2016 would be possible,” but she was later informed she could work in Dallas or New York or could apply for an “inferior position” in Miami. She alleged that she was denied the transfer in retaliation for participating in this lawsuit. She resigned but also seeks reinstatement.

Standing to seek injunctive or declaratory relief. In its motion, Goldman Sachs relied on a July 12, 2012 decision in this case issued by another judge. With “significant reservations,” that judge held that under Dukes, a former employee lacks standing to bring claims against her former employer for injunctive or declaratory relief. In the view of the court here, though, finding a “blanket denial” was too broad because Dukes involved a class, the application of Rule 23(b)(2) and (b)(3) to claims for back pay, and a need for individual review of monetary relief. The High Court’s decision did not address the impact of a request for reinstatement on standing. Noting that other courts have also disagreed with the 2012 ruling in this case, the court exercised its discretion to revisit the issue. Ultimately, it held that a former employee seeking reinstatement has standing to seek injunctive and declaratory relief. It also concluded that each plaintiff’s standing should be measured from the date of her motion to intervene in this case.

You don’t have to be fired to be reinstated. The defendants argued that allegations of unlawful discharge are required for a plaintiff to be eligible for reinstatement but the court disagreed. While the remedy might be most commonly used in such instances, reinstatement has been granted in a variety of other circumstances as well. That said, reinstatement may not always be feasible, and courts generally consider the circumstances to determine if it is appropriate.

Plaintiff who resigned proceeds with claim. Here, the plaintiff who resigned after being denied a transfer was a current employee when she intervened so she had standing to seek injunctive and declaratory relief. While the defendants argued that her claim became moot when she resigned, the court found that they failed to satisfy the “heavy” burden of showing it was “impossible” to grant her reinstatement. The court pointed out that she claimed she was consistently denied fair performance evaluations and resigned due to the systemic discrimination. She also claimed she was “assured” relocation was possible and that coordination of her team and “was already being done remotely.” With this in mind, and noting that she sought an order reinstating her to her “rightful position,” the court found reinstatement possible and denied the defendants’ motion.

At this point in the opinion, the court also granted this plaintiff’s motion to file a supplemental complaint adding retaliation claims under Title VII and New York City law (that the transfer denial was due to her participation in this suit). The claims arose after the most recent complaint was filed, and the plaintiff did not engage in undue delay or bad faith.

Plaintiff whose division was divested also proceeds. With respect to the plaintiff whose department was divested, although she was no longer employed at the time she intervened, the court found that she had standing to seek injunctive or declaratory relief under the principles discussed. Although Goldman Sachs argued that reinstatement was not feasible because her division no longer existed, the court disagreed. The plaintiffs claimed the company denied women opportunities for lateral moves into other areas of the firm and so it was possible that reinstatement in a lateral position might be the “rightful position” she sought.

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