Ross v. Lockheed Martin Corp.

• Court: District Court, District of Columbia
• Decided: July 28, 2017
• Docket: Civil Action No. 2016-2508
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUM B IA

) VERNON ROSS and DEBRA JOSEY, ) o n b eh alf o f themselves and all others ) simila rly situated, ) ) P laintiffs, ) ) v. ) No. 16-cv-2508 (KBJ) ) LOCKHEED MARTIN CORP., ) ) Defendant. ) )

M EM ORANDUM OPINION

Named P laintiffs Vernon Ross and Debra Josey (“P laintiffs”) allege that

Defendant Lockheed Martin Corporation (“Lockheed”) has “engaged in a pattern or

practice of employment discrimination” that is “manifest[] in Lockheed Martin’s

performance appraisal system.” (Compl., ECF No. 1, ¶ 11.) According to Ross and

Josey, Lockheed’s annual employee performance review process is “flawed in both

design and implementation” (id.) because “African-American non-represented, salaried

employees below the level of Vice P resident have received lower overall ratings on

their annual performance reviews as compared to similarly situated white employees”

(id . ¶ 15), and the lower ratings have, in turn, resulted in “lower salaries, raises, [and]

bonuses, [lower] long term incentive awards, fewer promotions, and a lower retention

rate” for African Americans at Lockheed (id . ¶ 67). P laintiffs’ three-count complaint

claims that Lockheed’s performance review process has been systemically injurious in a

manner that amounts to both intentional race discrimination (see id. ¶¶ 65– 68 (Count I)) and disparate impact race discrimination (see id. ¶¶ 70–73 (Count II)). P laintiff Ross

further contends, solely on his own behalf, that Lockheed retaliated against him “for

filing a Charge of Discrimination . . . and/or complaining to senior executives at the

Company of racial discrimination faced by him and other African-American

employees.” (Id. ¶ 78 (Count III).)

Critically, Ross and Josey seek to prosecute the race discrimination claims on

behalf of the following class of plaintiffs:

[all] salaried non-represented African-American employees below the level of Vice P resident who received at least one performance evaluation between January 1, 2013 and February 29, 2016, with an overall rating below ‘significantly exceeded commitments’ while employed at Lockheed Martin.

(Id . ¶ 1.) The complaint contends that the discrimination claims are susceptible to

class-action treatment because, under Lockheed’s performance review process, there is

an “absence of measurable indicators” of achievement, which has allegedly “resulted in

inadequate safeguards against bias in the assessment of African American employees.”

(Id . ¶ 18; see also id. ¶ 21 (resting the complaint’s systemic discrimination allegations

on the fact that “[m]anagers’ comments on employee performance have not consistently

relied on specific, measurable, time-sensitive measures of employees’ performance” and

“[a]s a result, similar or even identical performance could garner different ratings under

different supervisors”).)

P laintiffs have filed their putative class action complaint along with a proposed

Settlement Agreement; therefore, this case has come to this Court fully formed. (See

Compl.; Settlement Agreement, ECF No. 4-1.) One key feature of the resolution that

P laintiffs have negotiated with Lockheed (in addition to a $22.8 million settlement fund

2 and certain changes to Lockheed’s performance appraisal process) is the class members’

agreement to release a broad swath of potential legal claims against the company,

including claims that have nothing whatsoever to do with Lockheed’s performance

review procedures. (S ee, e.g., Settlement Agreement at 22 (stating that the class

members agree to release “any and all racial employment discrimination claims of

whatever nature, known or unknown,” including but not limited to all “claims of alleged

racial discrimination in employment or in the provision of employee benefits claims

under Title VII, Section 1981, ERISA[,]” and “any other federal, state, or local” law).) 1

Also noteworthy is what is not featured in the proposed Settlement Agreement:

ho w mu ch money each class member can expect to receive in exchange for releasing any

and all race discrimination claims “that were or could have been” asserted against

Lockheed. (Id .) P laintiffs’ counsel insists that no class member’s expected recovery

can be determined, or even estimated, up front; rather, each class member must first

formally accept the terms of the Settlement Agreement and complete a detailed form

that discloses—for the first time—the potential race discrimination and/or benefits

claims that she has already agreed to release. (See Tr. of Oral Arg. at 69.) In

operation, then, a putative class member must decide whether to opt out of the

Settlement Agreement before knowing (1) the nature and value of the potential legal

claims that she might otherwise have brought against Lockheed based on her

employment history, or (2) the amount that she is likely to receive for participating in

the settlement and relinquishing all of her (previously undisclosed) claims.

1 Pag e-number citations t o documents t hat t he p arties have filed refer to t he p age n umbers t hat t he Co u rt ’s electronic filin g system automatically assigns.

3 Before this Court at present is P laintiffs’ motion for preliminary certification of

this case as a class action and preliminary approval of the Settlement Agreement. (S ee

P ls.’ Mot. for P reliminary Approval of Class Action Settlement Agreement (“Mot.”),

ECF No. 4.) In the motion, P laintiffs request that this Court make a preliminary

determination that the complaint satisfies the requirements of a viable class action

under Federal Rule of Civil P rocedure 23, and P laintiffs also seek preliminary approval

of the Settlement Agreement so that the class-wide notice and detailed claim forms can

be distributed. (S ee g enerally Mot.; Settlement Agreement.) P laintiffs have

consistently maintained that their putative class and proposed settlement satisfy all of

the necessary criteria for certification and approval under Rule 23 such that this case

should be permitted to cruise right into the notice and hearing stages of the class-wide

settlement process. However, for the reasons explained fully below, this Court has

reluctantly concluded that it has no choice but to pump the brakes.

In brief, P laintiffs have failed to demonstrate that the commonality prerequisite

for Rule 23 class certification can be adequately established, because they have not

explained how it is that Lockheed’s performance appraisal process systematically

discriminates against African-Americans such that it qualifies as either a “general

policy of discrimination” or a “testing procedure or other companywide evaluation

method” that gives rise to discrimination claims that are susceptible to common proof.

S ee Wa l-M art S to res, In c. v. Dukes, 564 U.S. 338, 353 (2011). This Court also sees

several fairness-related red flags when it considers the terms of the proposed Settlement

Agreement, including an egregious imbalance between the particular claims alleged in

the complaint and the scope of the class members’ release; a draconian set of

4 consequences that results from a putative class member’s mere failure to respond to the

class-wide notice; and a dearth of crucial information about the potential expected

recovery in relation to the claims being released, as is required for adequate assessment

of each putative class member’s individual settlement position.

Consequently, not only is this Court unable to find that P laintiffs have defined a

certifiable class for the purpose of Federal Rules of Civil P rocedure 23(a) and 23(b), the

Court must also conclude that the proposed Settlement Agreement cannot be

preliminarily approved as “fair, reasonable, and adequate” under Rule 23(e)(2).

Accordingly, the instant motion for preliminary approval of the Settlement Agreement

must be DENIED. A separate order consistent with this memorandum opinion will

follow.

I. B ACKGROUND

A. Dis parate Tre atment And Dis parate Impact Claims Under Title VII

Claims of employment discrimination under Title VII may proceed under both

“disparate treatment” and “disparate impact” theories. Ricci v. DeS tefano, 557 U.S.

557, 577 (2009); see a lso Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971). 2

“Disparate treatment occurs when ‘[t]he employer simply treats some people less

favorably than others because of their race, color, religion, sex, or national origin.’”

An d erson v. Zubieta, 180 F.3d 329, 338 (D.C. Cir. 1999) (alteration in original)

(quoting Int’l Bhd. of Teamsters v. Un ited States, 431 U.S. 324, 335 n.15 (1977)); see

2 Th e Griggs d ecision recognized that , even t hough t he Civ il Rig hts A ct o f 1964 as o riginally enacted “d id n ot include an exp ress p rohibition o n policies o r pract ices t hat p roduce a disparate imp act[,]” claims o f disparate imp act were n evertheless available under t hat st atute. Ri cci, 557 U.S. at 577. Co n g ress later amended Title VII t o codify t he h olding of Griggs and exp ressly provide for d isparate- imp act claims. S ee i d. at 578 (citing Civ il Rights Act of 1991, Pub. L. No . 102-166, 105 St at. 1071 (co d ified at 42 U.S.C. § 2000e-2(k)(1)(A))).

5 a lso 42 U.S.C. § 2000e-2(a)(1) (making it unlawful for an employer “to fail or refuse to

hire or to discharge any individual, or otherwise to discriminate against any individual

with respect to his compensation, terms, conditions, or privileges of employment,

because of such individual’s race, color, religion, sex, or national origin”). To make

out a p rima f acie case of disparate treatment discrimination, a plaintiff must prove that

“(i) [he or she] suffered an adverse employment action (ii) because of [his or her] race,

color, religion, sex, or national origin.” Bra d y v. Of fice o f S ergeant a t Arms, 520 F.3d

490, 493 (D.C. Cir. 2008); see also id. at 493 & n.1 (citing M cDonnell Douglas Corp. v.

Green, 411 U.S. 792, 802 (1973)). “P roof of discriminatory motive is critical for

[disparate treatment] claims.” Anderson, 180 F.3d at 338 (internal quotation marks and

citation omitted).

By contrast, a disparate impact claim arises when “policies or practices that are

neutral on their face and in intent . . . nonetheless discriminate in ef f ect against a

particular group.” Id. at 339 (emphasis added; internal quotation marks and citation

omitted); see a lso 42 U.S.C. § 2000e-2(k)(1)(A)(i) (providing that a plaintiff may

establish a prima f acie disparate impact violation by “demonstrat[ing] that a respondent

uses a particular employment practice that causes a disparate impact on the basis of

race, color, religion, sex, or national origin”). 3 “When presenting a disparate impact

claim, a plaintiff must generally ‘demonstrate with statistical evidence that the practice

or policy has an adverse effect on the protected group.’” Greater New Orleans Fair

3 A n employer may d efend against a d isparate imp act claim by “demo nstrat[ing] that the challenged p ractice is job relat ed for t he position in q uestion and consistent wit h business necessity[.]” 42 U.S.C. § 2000e-2(k)(1)(A)(i); see a lso Ricci, 557 U.S. at 578. “Ev en if t he employer meets t hat b urden, h o wever, a p laintiff may still s ucceed b y showing t hat t he employer refuses to adopt an available alt ernative employment p ractice t hat h as less disparate imp act and s erves t he employer’s legitimate n eeds.” Ricci, 557 U.S. at 578 (cit ing 42 U.S.C. § 2000e-2(k)(1)(A)(ii), (C)).

6 Ho u sing Action Ctr. v. U.S. Dep’t of Housing and Urban Dev., 639 F.3d 1078, 1085– 86

(D.C. Cir. 2011) (quoting Garcia v. Johanns, 444 F.3d 625, 633 (D.C. Cir. 2006)).

Furthermore, and notably, a plaintiff must demonstrate that she was personally injured

as a result of an employment policy with a disparate impact in order to be able to

challenge the policy under Title VII. See 42 U.S.C. § 2000e-5(f) (conferring a cause of

action under Title VII on a “person claiming to be aggrieved” by an unlawful

employment practice); see a lso M elendez v. Ill. Bell Tel. Co ., 79 F.3d 661, 668 (7th Cir.

1996); Yo ung v. Covington & Burling LLP, 736 F. Supp. 2d 151, 158– 59 (D.D.C. 2010).

Both disparate treatment and disparate impact theories are available to an injured

plaintiff who seeks to challenge discrimination that results from an employer’s policy

of delegating employment decisions to individual supervisors based on subjective or

discretionary criteria. See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 991

(1988). A plaintiff challenging such a policy under a disparate impact theory is

relieved from having to prove that discriminatory intent motivated either the policy of

delegation or the particular adverse employment decision that affected her, see id. at

986– 87; however, crucially, “the plaintiff’s burden in establishing a prima facie case

goes beyond the need to show that there are statistical disparities in the employer’s

work force.” Id. at 994 (plurality opinion). 4 This is because “[i]t is completely

unrealistic to assume that [employers’] unlawful discrimination is the sole cause of

. . . statistical imbalances in the composition of their work forces.” Id. at 992 (plurality

opinion). Rather, to support a claim for disparate impact, “the plaintiff must offer

4 A majo rit y of t he Supreme Co urt expressly adopted t he reasoning of Justice O’Connor’s p lurality o p in ion in Wa tson d uring t he fo llowing Term. S ee Wa rds Cove Packing Co. v. Atonio, 490 U.S. 642, 656– 58 (1989), su perseded b y statute o n other g rounds, 42 U.S.C. § 2000e-2(k).

7 statistical evidence of a kind and degree sufficient to show that the practice in question

has caused the exclusion of applicants for jobs or promotions because of their

membership in a protected group.” Id. at 994 (plurality opinion). P ut another way,

“[a]s a general matter, a plaintiff must demonstrate that it is the application of a

specific or particular employment practice that has created the disparate impact under

attack.” Wards Cove Packing Co., 490 U.S. at 657; see also 42 U.S.C. § 2000e-

2(k)(1)(B)(i) (providing that, unless a disparate-impact plaintiff can establish that

making such a showing is impossible, she must “demonstrate that each particular

challenged employment practice causes a disparate impact”).

B. Plaintiffs ’ Alle gations In This Case

On December 23, 2016, P laintiffs filed the complaint in the instant case, which

alleges that Lockheed, “one of the largest aerospace, defense, and technology

companies in the world” (Compl. ¶ 8), engaged in race discrimination against its

African-American employees through the operation of the performance appraisal system

that the company uses to evaluate all of its employees (see id. ¶ 11). According to the

complaint, over the course of a three-year period between January of 2013 and February

of 2016 (see id . ¶ 1), Lockheed’s performance appraisal system “produced a disparate

impact in performance ratings, and consequently in the promotions, compensation, and

retention of salaried African-American employees below the level of Vice P resident”

(id . ¶ 11). The two named plaintiffs, Vernon Ross and Debra Josey, allege that they

were injured by the performance appraisal system and seek to certify a class of nearly

all current and former African-American Lockheed employees below the rank of Vice

8 P resident who were evaluated pursuant to the performance appraisal system during the

relevant three-year period. (See id. ¶¶ 11, 57.)

1. The P erformance Appraisal System

According to the complaint, between 2013 and 2016, Lockheed “evaluated all

non-represented [i.e., non-union], salaried employees under essentially the same

performance appraisal system, although with some changes over time.” (Id. ¶ 12.)

Lockheed used this performance appraisal system “in all of its business areas—

Aeronautics, Rotary and Missions Systems, Missiles and Fire Control, Space Systems,

and Enterprise Operations” (id. ¶ 13)—and the system consisted of the following basic

components. First of all, every year (at the beginning of the performance appraisal

cycle) each salaried employee was required to identify “commitments” that reflected the

employee’s individual goals for her work at Lockheed during the upcoming year, with

manager approval. (See id. ¶¶ 17– 18.) Then, at the end of the calendar year, the

employee would receive a performance review in which a manager evaluated that

employee’s work, using both written comments and numerical ratings. (See id. ¶ 20.)

The written comments addressed the degree to which the employee had lived up to each

commitment, and the numerical ratings reflected the employee’s performance (on a 5.0

scale) with respect to meeting both her individual commitments and a series of desired

“behaviors” that Lockheed had prescribed across the entire company. (Id. ¶¶ 17, 20,

36.) An employee’s performance review also aggregated each of these numerical

rankings to calculate a single “composite score.” (Id. ¶ 20.)

Once all managers completed their performance reviews of the individual

employees in their purview, groups of managers then gathered for “calibration” sessions

9 that were held in order to determine an “ultimate tier placement” for the employees

under their supervision. (Id. ¶¶ 22– 23.) A tier placement reflected an overall

assessment of an employee’s performance vis-à-vis the identified commitments; for

example, the highest tier was called “significantly exceeds commitments[.]” (Id. ¶ 57.)

Notably, these calibration sessions operated on a curve: there were four possible tiers

(see id . ¶ 35), and the manager groups placed “predetermined percentages of [the]

employees” that were under consideration in a given session into each of the four tiers

(id . ¶ 22). In doing so, the managers purportedly took account of each employee’s

performance review as well as commentary from other participants in the calibration

session, including participants who had not reviewed that employee’s individual

performance appraisal results. (S ee id. ¶ 23.) Ultimately, an employee had the

opportunity to appeal her performance review and overall tier placement under the

appraisal system, but “[v]ery few appeals [were] brought or [were] successful in

altering overall ratings.” (Id. ¶ 24.)

According to the complaint, the overall tier placement that an employee received

after her individual performance review and the group calibration session played a

prominent role in Lockheed’s subsequent decisions regarding base compensation, bonus

payments, and promotions. (S ee id. ¶¶ 27– 32.) Specifically, P laintiffs maintain that the

“standard percentage increase in salary” that Lockheed awards to employees each year

was “based on their tier and their place in the salary range for their position.” (Id.

¶ 28.) Lockheed also “bestow[ed] discretionary merit increases” in compensation, as

well as “a variety of monetary awards and bonus programs[,]” based in part on an

employee’s overall tier placement. (Id. ¶¶ 29– 30.) Finally, “[f]or certain positions at

10 Lockheed Martin, employees may advance through what are called growth

promotions[,]” which “represent movement to a higher level within the employees’

existing positions” and which were “based in part on employees’ . . . performance

evaluations.” (Id . ¶ 31.)

P laintiffs’ complaint alleges that, due to flaws in the design and implementation

of the performance evaluation system, Lockheed’s performance review process “has

produced a disparate impact based on race in evaluation ratings and, consequently, in

the compensation, promotion, and retention of African-American employees.” (Id.

¶ 14.) For example, with respect to the individual employee performance reviews, the

complaint asserts that Lockheed failed to prescribe “measurable indicators” for

managers to use when deciding how to rate an employee for a particular objective or

behavior, and therefore Lockheed “ha[s] not provided adequate safeguards against bias

in the assessment of African American employees.” (Id. ¶ 19; see also id. ¶ 18.) In

addition, according to the complaint, managers’ written comments “have not

consistently relied on specific, measurable, time-sensitive measures of employees’

performance[,]” which means that “similar or even identical performance could garner

different ratings under different supervisors.” (Id. ¶ 21.)

The complaint also identifies flaws with respect to the group calibration

sessions. P laintiffs allege that the “discussion of any one employee was cursory at

best”; that “employees holding different positions but at the same level were compared

against one another”; that “at times, employees were represented by managers who

knew little about their performance if the employees’ manager was unavailable to attend

a given meeting”; and that, “[a]s a result, employees may have been assigned to the

11 forced distribution tiers by persons with little if any direct knowledge of employees’

performance[.]” (Id. ¶ 23.) Furthermore, with respect to the appeals process, the

complaint alleges that the right to appeal “does not rectify the biased assessments

resulting from the Company’s performance appraisal system” because employees do not

have “an adequate right to appeal to a manager who was not involved in preparing the

review from which [the employee is] appealing.” (Id. ¶ 24.)

The complaint maintains that, as a consequence of these alleged flaws in the

performance appraisal process, Lockheed’s evaluation system “allow[s] for racially

biased assessments of employees.” (Id. ¶ 12.) The result, P laintiffs contend, is that

“African-American non-represented, salaried employees below the level of Vice

P resident have received lower overall ratings on their annual performance reviews as

compared to similarly situated white employees[,]” and P laintiffs also allege, “[u]pon

information and belief,” that this disparity “is statistically significant.” (Id. ¶ 15.) In

addition, P laintiffs assert that the disparity in overall performance ratings has had

corresponding effects “in the compensation, promotion, and retention of African-

American employees.” (Id. ¶ 14; see also id. ¶ 28 (stating that, “[u]pon information and

belief,” “discrimination in the performance appraisal process” caused disparities in

merit salary increases); id. ¶ 32 (performance appraisal system led to disparities in

growth promotions); id. ¶¶ 33– 34 (performance appraisal system led to disparities in

retention rates).) Thus, P laintiffs attribute the alleged disparities in compensation,

promotion, and retention to “flaws in the design and implementation of the Lockheed

12 Martin performance appraisal system, including the nature of the calibration and

validation process.” (Id. ¶ 16.) 5

2. Allegations Regarding The Named P laintiffs

P laintiffs Debra Josey and Vernon Ross allege that they have been personally

injured as a result of Lockheed’s performance appraisal system. (See id. ¶¶ 35– 56.)

P laintiff Josey is a current Lockheed employee and has worked at the company and its

predecessors since 1983. (S ee id . ¶ 7.) She is currently a Software Engineer Manager

in Lockheed’s Rotary and Mission Systems division in Florida, and she previously

worked as an Engineering Leadership Development P rogram Manager in Lockheed’s

Information Systems and Solutions division in Maryland. (See id.) Josey alleges that

she “received lower ratings than similarly situated white employees during her

employment at Lockheed Martin despite her stellar performance throughout the [2013–

2016] period.” (Id. ¶ 35.) Josey contends that the effects of the performance appraisal

system on her are manifest when one compares the relatively low overall tier

placements she received during the relevant period—second tier (out of four) for her

work in 2012, third tier for 2013, and third tier for 2014—with the high numerical

ratings and positive written comments that she received in her individual performance

reviews during that same timeframe. (See id. ¶¶ 35– 37.) Josey alleges that the third-

tier ratings she received for 2013 and 2014 “put her below average[,]” notwithstanding

5 Th e complaint also asserts t hat, “[i]n addition t o t he flaws in t he p erformance appraisal system, [cert ain] changes imp lemented b y former Senior Vice President o f Human Resources John Lu cas in creased t he discriminat ion against African A merican employees” and “diminished Lo ckheed Martin’s effo rts t o encourage racial diversity at t he Comp any.” (Co mpl. ¶¶ 25–26.) These Lu cas-related alleg ations appear in two stray p aragraphs t hat stand alone in t he complaint (see i d.), and John Lu cas is n o t mentioned further. No specifics are p rovided regarding h is conduct, t he “changes” that were made u n d er his supervision, or t he alleged “discrimination” t hat A frican-American employees suffered d ue to h is actions.

13 the fact she received composite numerical ratings of 4.1 and 3.9 (out of 5.0) on her

individual performance reviews in those two years—ratings that, she alleges, “show that

she substantially exceeded Lockheed Martin’s expectations.” (Id. ¶ 36.) Moreover, in

contrast to the third-tier rating that she received in 2014, Josey’s performance review

for that same year “did not have any negative comments concerning her commitments

or her behavioral objectives.” (Id. ¶ 37.) Josey maintains that the divergence between

her individual performance review and her overall tier rating is attributable to the fact

that, during group “calibration sessions[,]” she was compared to employees with

“markedly different roles” from hers. (Id. ¶ 38.) Josey appealed her tier placement for

2013, but her appeal was unsuccessful. (See id. at 39.)

In the complaint, Josey alleges that, “[a]s a result of her lower-tier performance

ratings, [she] has been paid less than her white counterparts with the same or less

experience” (id. ¶ 40); that she did not receive any bonuses or awards in 2013 or 2014

(see id . ¶ 41) ; and that her performance review ratings have “negatively impacted her

ability to be promoted within the company” (id . ¶ 42). With respect to promotions,

Josey alleges that she unsuccessfully applied for 55 positions between 2012 and 2015,

of which at least 37 would have constituted promotions, and that in the four cases in

which she knows the identity of the candidate who was selected for the position, three

of the successful candidates were white employees who Josey believes were less

qualified than she. (See id. ¶ 43.) In 2015, Josey was notified of her impending layoff

as part of a reduction in force (a development that she believes would not have taken

place “if she had received higher ratings”); however, she avoided being laid off by

14 accepting a different position at the same level that required her to relocate from

Maryland to Florida. (Id. ¶ 44.)

P laintiff Vernon Ross is a former Lockheed employee who worked for the

company from 1991 to 2015, most recently as the Director of STEM, Generations, and

Higher Education in Human Resources in Lockheed’s Enterprise Operations division.

(S ee id . ¶ 6.) Like Josey, Ross alleges that he “received ratings lower than those of

similarly situated white employees during his time at Lockheed Martin despite

commendable work performance.” (Id. ¶ 46.) Ross also contends that “[t]he contrast

between [his] written reviews and his [tier ratings] shows that ratings have a weak

relationship to performance.” (Id. ¶ 48.) Ross was placed in the second tier out of four

for 2012, the third tier for 2013, and the third tier for 2014 (see id. ¶ 47), and alleges

that these tier placements stand in contrast with the uniformly positive written

comments that he received on his performance review for 2014 (see id. ¶ 48). Ross

“does not know against whom he was compared at calibration sessions,” but “his direct

manager told him that he was calibrated with all Human Resources Directors, regardless

of the wide variation in duties.” (Id. ¶ 50.) Ross alleges that because of his “unique

positions at Lockheed Martin throughout the period from 2011 through 2015 posing

unusual challenges[,]” there were “no proper comparators for his position.” (Id.) Ross

appealed the results of his 2013 performance appraisal, and although Lockheed changed

two of the individual numerical ratings on his performance reviews during the appeals

process, Ross’s overall tier placement remained unchanged. (See id. ¶ 53.)

The complaint alleges that Ross’s relatively low tier ratings “prevented him from

advancing within the Company[,]” and that “he was repeatedly bypassed in promotions

15 to a Vice P resident position in favor of white employees who often had lesser

credentials than him.” (Id. ¶ 52.) Ross adds that he “received only one long term

incentive award” during his 24 years as a Lockheed Martin employee. (Id. ¶ 51.) In

2015, Lockheed notified Ross that it planned to terminate his position as part of a

reduction in force (see id . ¶¶ 55– 56), and Ross then “applied to over 40 jobs within

Lockheed Martin,” some at his then-current level and some at lower levels, but he did

not receive any offers (id. ¶ 56). Ross alleges that he “was unable to find a new job due

in significant part to the discriminatorily low appraisal ratings he had received.” (Id .)

Ross’s employment was terminated at the end of 2015 (see id.), and according to the

complaint, he received the initial notice of termination “[s]hortly after” he filed a

charge of discrimination with the EEOC against Lockheed (id . ¶ 55). Ross also alleges

that the EEOC charge was not his first formal complaint: in July of 2014, he allegedly

“complained internally of the discrimination that he and other African American

employees faced at Lockheed Martin.” (Id. ¶ 54.)

3. The Class Definition, Allegations, And Claims

As mentioned above, Josey and Ross seek to bring this lawsuit as a class action

on behalf of a class that the complaint defines as follows:

[A]ll African-American salaried employees below the level of Vice P resident employed by Defendant in the United States for at least one day between January 1, 2013 and February 29, 2016, and who received at least one performance evaluation during that period with an overall rating below “significantly exceeds commitments[.]”

(Id . ¶ 57.) Several groups of African-American employees who might otherwise be

included within this definition are expressly excluded from the putative class:

(1) employees who signed release agreements, (2) union-represented employees, (3) individuals who have asserted claims of race discrimination against Lockheed Martin, which remain pending before

16 any local, state or federal agency or in any state or federal court as of the date of preliminary approval, (4) individuals employed by Sandia Corporation, and (5) individuals who became (or become) employees of Lockheed Martin or one of its subsidiaries as a consequence of stock or asset acquisitions consummated on or after January 1, 2012 including, but not limited to, the following transactions: Industrial Defender, Materion Assets, Deposition Sciences, Astrotech AssetsZeta Associates, Sun Catalytix, Systems Made Simple, and Sikorsky.

(Id .) Moreover, and notably, as it relates to the allegedly discriminatory performance

review process, the proposed class definition does not contain any objective criteria that

permit identification of the particular African-American employees who allegedly

suffered concrete injury as a result of Lockheed Martin’s performance appraisal

system—i.e., those African-American employees who demonstrably should have

received either higher numerical rankings or a higher tier rating than Lockheed assigned

to them during the relevant period. (See id.)

The complaint alleges that, as defined, the putative class contains “over 5,500

members who worked in over 40 states across the United States” (id . ¶ 59), and that

Ross and Josey “are members of the Class they seek to represent” (id . ¶ 58). The

complaint also contains several allegations regarding the putative class that expressly

aim to demonstrate that the prerequisites to class certification set forth in Federal Rule

of Civil P rocedure 23 are satisfied, and that are discussed at greater length below. (S ee

id . ¶¶ 59– 64; see a lso infra P art III.A.)

With respect to the legal claims that P laintiffs seek to maintain on behalf of the

class, the complaint alleges, in two separate counts, that Lockheed’s performance

appraisal system subjected members of the proposed class to intentional and disparate

impact race discrimination, and a third count alleges that P laintiff Ross was retaliated

against as a result of his discrimination complaints. (See Compl. ¶¶ 65– 79.) To be

17 specific, as mentioned above, Count I of the complaint alleges that “Lockheed Martin

intentionally discriminated against P laintiffs Ross and Josey and members of the

proposed Class on the basis of their race by assigning African-American employees

lower ratings than other employees in the performance appraisal system,” in violation

of 42 U.S.C. § 1981. (Id. ¶ 67.) In Count II, the complaint alleges that “Lockheed

Martin has maintained a pattern or practice of employment discrimination against

African-American employees in performance appraisal ratings” (id . ¶ 72), and that

Lockheed Martin’s policies and practices “have had a disparate impact against African-

American employees in performance appraisal ratings” (id . ¶ 73), both in violation of

Title VII of the Civil Rights Act of 1964. Finally, Count III of the complaint alleges

that Ross “has suffered [an] adverse employment action because Defendant retaliated

against him for filing a Charge of Discrimination with the EEOC and/or complaining to

senior executives at the Company of racial discrimination faced by him and other

African-American employees.” (Id. ¶ 78.) P laintiffs’ complaint seeks declaratory,

monetary, and injunctive relief. (See id., P rayer for Relief, ¶¶ a–d.)

C. The Proposed Se ttlement Ag reement

On December 23, 2016, P laintiffs filed the putative class action complaint along

with a proposed Settlement Agreement, and asked this Court for both preliminary

certification of the proposed class for settlement purposes under Federal Rule of Civil

P rocedure 23(a) and (b), and preliminary approval of the Settlement Agreement under

Federal Rule of Civil P rocedure 23(e). (See P ls.’ Mot. for P relim. Approval of Class

Action Settlement Agreement (“Mot.”), ECF No. 4; see also Settlement Agreement, Ex.

18 A to Mot., ECF No. 4-1.) 6 The proposed Settlement Agreement provides programmatic

and monetary relief to members of the class. The programmatic relief primarily

consists of the establishment of a “council” that will recommend that certain changes be

made to Lockheed’s performance evaluation process (including ending the calibration

session procedure), ensure that diverse slates of candidates are considered for open

positions, and review salaries to ensure equity. (See Settlement Agreement at 28–33.)

Lockheed also agrees to implement inclusion training, to improve its collection of data

regarding performance evaluations and employee advancement, and to fulfill certain

obligations to report this data to its board of directors and to Class Counsel. (See id . at

34– 40.)

As for monetary relief, according to the Settlement Agreement, Lockheed has

agreed to pay $22.8 million into a fund that is to be distributed among the members of

the class who affirmatively opt to participate in the settlement based on criteria that a

Claims Administrator will determine after gathering information from the class

members, as described below. (S ee id. at 41– 47.) Regardless, P laintiffs’ counsel will

be paid 28% of this settlement fund as attorneys’ fees, plus $225,000 per year for four

years as compensation for their role in supervising the Settlement Agreement’s

programmatic relief. (See id . at 53.) Counsel would also be reimbursed for their

litigation expenses to date, which are approximately $125,000. (S ee id.; Mot. at 39.)

6 A ft er t he Co urt’s mo tion hearing, Plaintiffs also filed a supplement al memorandum in support of t heir ap p roval mo tion (see Pls.’ Su ppl. M em. in Supp. o f Pls.’ M ot. for Prelim. A pproval (“Suppl. M em.”), ECF No . 13), as well as a No tice o f Supplemental Authority alerting the Co urt to a recent D.C. Circuit d ecision affirming a class certification order (see Pls.’ Notice o f Suppl. Authority, ECF No . 14 (d is cussing DL v. District of C olumbia, 860 F.3d 713 (D.C. Cir. 2017))).

19 For the class members’ part, the Settlement Agreement contains a broad release

of legal claims that extends well beyond any claims that arise from the allegedly

discriminatory operation of Lockheed’s performance appraisal system, and also requires

that class members act affirmatively to obtain any monetary benefit in exchange for

releasing their claims. That is, per the agreement, all class members who do not

affirmatively opt out will automatically release “any and all racial employment

d iscrimination claims of whatever nature, known or unknown,” including “any and a ll

cla ims o f racial discrimination in emp loyment o r in th e p rovisio n o f emp loyee b enefits”

that have arisen in the context of their employment relationship with Lockheed at any

time up until the moment the class member signs his or her claim form. (Settlement

Agreement at 22; see a lso Tr. of Oral Arg. at 27 (counsel for P laintiffs acknowledging

that the release effectively includes “[a]ny and all race discrimination claims[,]”

including a claim that “has nothing to do with the evaluations that [an employee]

receive[s] from [her] employer”); Suppl. Mem. at 12 (stating that “[u]nder the terms of

the settlement” in this case, class members “will release Lockheed Martin from a ll

types of racial discrimination claims” (emphasis added)).) 7 Yet, a class member who

wishes to receive any portion of the settlement fund as compensation for this broad

release of claims must go further, by undertaking to complete an extensive claim form

and timely submit it to the designated Claims Administrator. (See Settlement

Agreement at 44; see a lso Claim Form, Ex. 2 to Settlement Agreement, ECF No. 4-1.)

Thus, class members who do not respond to the notice of settlement in any fashion not

7 Th e n amed Plaintiffs also s pecifically agree t o release all claims t hey may h ave against Lo ckheed M art in, whether o r n ot related t o race discrimination. (See Settlement A greement at 24.)

20 only have all of their discrimination and benefits claims extinguished, they also forfeit

entirely any opportunity to receive any monetary compensation for those extinguished

claims. 8

To facilitate award determinations, the claim form that class members are asked

to complete asks a wide-ranging series of questions that seek information not only

about the class members’ experiences in regard to Lockheed’s performance review

system (i.e., the subject matter of the complaint), but also about any instance of race-

based discrimination that class members believe they may have suffered during their

employment at Lockheed. (S ee, e.g., Claim Form at 84 (asking about any form of race

discrimination); id. at 86 (asking about discriminatory non-promotions); id . at 87

(asking about discriminatory terminations).) The Settlement Agreement then leaves it

to the Claims Administrator to evaluate a class member’s individual legal claims and to

allocate the settlement fund accordingly. (See Settlement Agreement at 45– 47; Kovach

Decl. ¶¶ 11– 23; see a lso Kovach Decl. ¶ 15 (explaining that the Claims Administrator

“will also assign points based off of Claim Form responses”).)

8 Un d er t he p roposed Settlement Agreement, even those class members who d o comp lete t he claim fo rm an d submit it t o t he Claims Admin istrator apparently are not automat ically entitled t o receive any co mp ensation in exchange for releasing t heir claims. Du ring the hearing t hat t his Co urt held on April 24, 2017, Plain t iffs’ counsel o rally represented t hat “everyone will g et at least s omething[,]” b ut co u nsel b ased t hat representation o n the fact that one o f the factors that the Claims A dministrator will p u rportedly consider in d eciding how mu ch a p art icular class member will receive is “the number o f weeks wo rked fo r Lockheed Martin d uring t he class p eriod[,]” and “there won’t b e anybody in the class wh o h asn’t wo rked t here at least fo r some p eriod.” (Tr. o f Oral A rg. at 74 (d iscussing Settlement A g reement at 45); see a lso Decl. of Lo ree Kovach (“Kovach Decl.”), Ex. 7 t o Su ppl. M em., ECF No. 13– 7, ¶ 11 (exp laining t hat t he length-of-emp loyment factor “will likely result in each Claimant receiving at least some award”).) Ho wever, t he Sett lement A greement it self does not s pecify a min imu m amo u nt o f compensation for each class member, and it n either inst ructs t he Claims A d min ist rator regarding how to weigh each o f t he s ix lis ted factors n or n otifies class members of h ow t h e Claims Admin istrator will g o about doing so. (See Settlement Agreement at 45.)

21 Significantly, the Settlement Agreement provides no guidance regarding how the

Claims Administrator will distribute the settlement fund, what the minimum recovery

amount will be for any class member who submits a claim form, or what the average

recovery will be (either for class members in general or for class members who indicate

on their claim form that they have experienced other types of discrimination). Nor does

the class notice provide any such information to the class members. (See generally

Notice of Class Action (“Class Notice”), Ex. 4 to Settlement Agreement, ECF No. 4-1.)

And because each person who is awarded money from the settlement fund “will be

required to keep the amount of their award confidential” (Settlement Agreement at 47),

it also appears that class members will never be able to discern this information. At the

motion hearing, P laintiffs’ counsel made clear that only after all class members have

decided whether or not to opt out and have returned their detailed claim forms will

P laintiffs’ counsel—with aid from the Claims Administrator—submit a final allocation

of the settlement fund to the Court for approval, and as a practical matter, this final

accounting might not take place until after the Court holds its final approval hearing.

(S ee Tr. of Oral Arg. at 86 (stating that “[t]he actual allocation I believe will still be in

process at th[e] time [of the final approval hearing]”).)

In anticipation of the process described above, the Settlement Agreement

contemplates that the Claims Administrator will send written notice of this lawsuit and

of the proposed settlement to all class members shortly after the Court issues a

preliminary approval order. (S ee Settlement Agreement at 43–44; see also Class

Notice.) The proposed notice offers each class member four options: (1) fill out and

return the attached claim form and participate in the settlement; (2) opt out of the

22 settlement; (3) submit an objection to the Court regarding the fairness of the settlement;

or (4) do nothing. (S ee Class Notice at 102.) Any opt-out request must include certain

identifying information, as well as a verbatim copy of the specific opt-out language that

appears in the class notice. (S ee id. at 110– 11.) 9 Individuals who do nothing—that is,

who neither follow the opt-out procedure nor submit a claim form—both forfeit any and

all race discrimination claims they may have against Lockheed and also lose the

opportunity to recover a portion of the settlement fund. (See Settlement Agreement at

24.) During the motion hearing, P laintiffs’ counsel estimated based on his experience

that approximately 30– 50% of class members will not respond to the notice in any

fashion. (S ee Tr. of Oral Arg. at 33– 34).

II. LEGAL STANDARDS

The district court’s role in reviewing a proposed settlement agreement in a class-

action lawsuit follows a “three-stage process, involving two separate hearings[.]” 4

William B. Rubenstein, Newberg o n Cla ss Actions § 13:10 (5th ed. 2014); see also Fed.

Judicial Ctr., M anual f or Complex Litig ation § 21.632 (4th ed. 2004). “First, the parties

present a proposed settlement agreement to the court for so-called ‘preliminary

approval.’” 4 Newberg on Class Actions § 13:10 (emphasis omitted). “If the case is

presented for both class certification and settlement approval, the certification hearing

and preliminary fairness evaluation can usually be combined.” M anual f or Complex

Litig a tion § 21.632. “Second, if the court does preliminarily approve the settlement

9 If a cert ain n umber o f class members opt o ut of t he Settlement Agreement, Lo ckheed M artin will h ave t h e o ption to either v oid the agreement o r retrieve fro m t he settlement fund $4,000 p er class member wh o o pts o ut. (S ee Settlement Agreement at 19.) The Court g ranted the p arties’ joint mo t ion fo r leave t o file t h e requisite n umber o f o pt-outs t hat t rigger t his provision u nder seal. (See Sealed M ot., ECF No . 5; M in. Order o f Apr. 25, 2017.)

23 (and conditionally certify the class), notice is sent to the class describing the terms of

the proposed settlement” and explaining class members’ options with respect to the

settlement agreement, including the right to object to the proposed settlement. 4

Newb erg on Class Actions § 13:10 (emphasis omitted); see also Fed. R. Civ. P .

23(e)(1), (e)(5). Finally, the court holds a hearing after which “the court decides

whether or not to give ‘final approval’ to the settlement[,]” which “can also encompass

a decision certifying the class” if the court has not made that decision already. 4

Newb erg on Class Actions § 13:10.

The instant lawsuit is presently at the preliminary approval stage, and P laintiffs

seek an order that both preliminarily certifies the class and preliminarily approves the

Settlement Agreement. (S ee g enerally Mot.)

A. Clas s Certification

P arties frequently seek to certify a class for settlement purposes, sometimes (as

in this case) because they have “settle[d] before . . . even a class action complaint has

been filed.” M anual f or Complex Litig ation § 21.132; see also Amchem Prods., Inc. v.

Win d so r, 521 U.S. 591, 618 (1997) (noting that “the ‘settlement only’ class has become

a stock device”). “When presented with a settlement-only class, a court must determine

whether the proposed class satisfies the requirements of Federal Rule of Civil P rocedure

23, with one exception: the court does not need to consider whether ‘the case, if tried,

would present intractable management problems[.]’” Alvarez v. Keystone Plu s Co nstr.

Co rp ., 303 F.R.D. 152, 159 (D.D.C. 2014) (quoting Amch em, 521 U.S. at 620). That

lone exception aside, the remaining class-certification requirements “demand undiluted,

even heightened, attention in the settlement context.” Amchem, 521 U.S. at 620.

24 A court may certify a class under Rule 23 only if it satisfies all of the

prerequisites set forth in Rule 23(a) and at least one of the three requirements of Rule

23(b). S ee Co mcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). Under Rule 23(a),

the party seeking class certification must demonstrate that: “(1) the class is so numerous

that joinder of all members is impracticable; (2) there are questions of law or fact

common to the class; (3) the claims or defenses of the representative parties are typical

of the claims or defenses of the class; and (4) the representative parties will fairly and

adequately protect the interests of the class.” Fed. R. Civ. P . 23(a). Courts generally

refer to these prerequisites as “numerosity, commonality, typicality, and adequacy of

representation[.]” Amgen v. Conn. Retirement Plans & Trust Funds, 568 U.S. 455, 460

(2013). As relevant here, in order to satisfy the commonality requirement, “[class

members’] claims must depend upon a common contention[,]” and “[t]hat common

contention . . . must be of such a nature that it is capable of classwide resolution—

which means that determination of its truth or falsity will resolve an issue that is central

to the validity of each one of the claims in one stroke.” Wal-M art, 564 U.S. at 350.

Rule 23(b) lays out different requirements for three different “types of class

actions.” Fed. R. Civ. P . 23(b). P laintiffs here seek certification under Rules 23(b)(2)

and 23(b)(3), relying on Rule 23(b)(2) for purposes of their requested injunctive relief

and Rule 23(b)(3) for purposes of their requested monetary relief. (See Mot. at 27– 30.)

S ee a lso Eubanks v. Billington, 110 F.3d 87, 96 (D.C. Cir. 1997) (explaining that a

court “may adopt a ‘hybrid’ approach” under Rule 23(b), “certifying a (b)(2) class as to

the claims for declaratory or injunctive relief, and a (b)(3) class as to the claims for

monetary relief”); a ccord 2 Newberg o n Cla ss Actions § 4:1. Under Rule 23(b)(2), a

25 class action may be maintained if “the party opposing the class has acted or refused to

act on grounds that apply generally to the class, so that final injunctive relief or

corresponding declaratory relief is appropriate respecting the class as a whole[.]” Fed.

R. Civ. P . 23(b)(2). Under Rule 23(b)(3), a class action may be maintained if “the court

finds that the questions of law or fact common to class members predominate over any

questions affecting only individual members, and that a class action is superior to other

available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ.

P . 23(b)(3).

When certifying a class, the court “must define the class and the class claims,

issues, or defenses[.]” Fed. R. Civ. P . 23(c)(1)(B). “Defining the class is of critical

importance” because, among other things, “it identifies the persons . . . entitled to relief

[and] bound by a final judgment,” and as a result, “[t]he definition must be precise,

objective, and presently ascertainable.” M anu al f o r Co mp lex Litig ation § 21.222. “The

class definition should describe the operative claims, issues, or defenses, such as injury

resulting from securities fraud or denial of employment on account of race.” Id.; see

a lso Ko h en v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 677 (7th Cir. 2009) (“[I]f the

definition is so broad that it sweeps within it persons who could not have been injured

by the defendant’s conduct, it is too broad.”); Th o rp e v. District o f Co lumb ia, 303

F.R.D. 120, 141– 42 (D.D.C. 2014) (assessing whether class definition was “fatally

overbroad” by virtue of including individuals who had not plausibly suffered an injury).

Notably, courts have taken divergent approaches to applying Rule 23 when a

party moves for a “preliminary” or “conditional” certification order and requests

preliminary approval of a class settlement agreement as a prelude to distributing notice

26 to the class. S ee 4 Newberg on Class Actions § 13:18 (describing the split in authority).

“Most courts” have held that “a less stringent standard applies at the preliminary

approval phase with regard to the requirements for class certification.” Id. (citing, e.g.,

S cho enbaum v. E.I. Du Pont de Nemours & Co., No. 4:05CV01108, 2009 WL 4782082,

at *5 (E.D. Mo. Dec. 8, 2009)). Under this approach, at the preliminary approval stage,

the court “make[s] a preliminary determination that the proposed class satisfies the

criteria set out in Rule 23(a) and at least one of the subsections of Rule 23(b).” M anual

f o r Co mp lex Litigation § 21.632. This approach “contemplates that formal class

certification will be combined with the [final] fairness hearing,” and thus, at the

preliminary approval stage, the judge merely scans for “obvious impediments to class

certification” so as to save the plaintiff the trouble of noticing the hearing on final

settlement approval in cases where the court foresees that the formal certification

motion will be a non-starter. Sch oenbaum, 2009 WL 4782082, at *5.

Other courts, however, “undertake a full certification analysis under Rule 23(a)

and (b) before addressing whether a proposed settlement should be p relimin arily

approved.” 4 Newberg o n Class Actions § 13:18 (emphasis in original) (citing, e.g.,

Ep h edra Prods. Liab. Litig., 231 F.R.D. 167, 170 (S.D.N.Y. 2005)). In explaining this

approach, the court in Eph edra Products observed that the 2003 amendments to Rule 23

deleted preexisting language that had provided for “conditional” class certification, and

the Ep h edra Products court inferred from that change that “Rule 23 must be rigorously

applied even at th[e] ‘preliminary’ stage.” 231 F.R.D. at 170. In addition, it appears

that the more rigorous approach finds support in the text and structure of Rule 23’s

provisions, because the settlement rule (Rule 23(e)) specifically confers upon “class

27 members” the right to receive notice and object to the settlement proposal—objections

that the court will consider at the final hearing, see Fed. R. Civ. P . 23(e)(1), (e)(5)—and

thus strongly suggests that the class must be formed and the class members identified

p rio r to the court’s issuance of the notice and convening of the settlement hearing.

In any event, at the very least, district courts appear to have discretion under the

Federal Rules to decide whether to subject a putative class to the full force of Rule 23

at the preliminary approval stage or merely screen for obvious impediments to class

certification and leave the formal certification decision for the final approval hearing.

Cf . La rio noff v. United S tates, 533 F.2d 1167, 1183 (D.C. Cir. 1976) (holding that

district courts have discretion regarding the timing of the certification decision); Fed.

R. Civ. P . 23(c)(1)(A) (providing that courts should decide whether or not to certify a

class “[a]t an early practicable time”); id . 2003 advisory committee note (enumerating

various “considerations [that] may affect the timing of the certification decision”);

LCvR 23.1(b) (providing that, “in the exercise of its discretion[,]” a court may extend

the deadline for a certification motion prescribed by the Local Rules). 10 In this Court’s

10 Vario u s contextual factors mig ht in fluence a court’s choice bet ween t hese t wo d ifferent approaches in a p art icular case. S ee 7AA Ch arles Alan Wright, et al., Federal Practice and Procedure § 1785.3 (3d ed . 2005) (“The t ime at wh ich the court fin ds it appropriate to make its class-action d etermination may v ary with t he circumstances of t he p articular case.”). In some cases, fo r examp le, a court mig ht choose t o d elay t he certification d ecision b ecause it is likely t hat in formation p ertinent t o Rule 23(a)’s req u irements will come to lig ht d uring t he n otice and o bjection p rocesses t hat t ake p lace after t he p relimin ary approval stage. In o ther cases, judicial economy mig ht b e best served b y deciding the cert ification issue early (i.e., at t he p reliminary approval stage), so t hat t he notices required by Ru les 23(c)(2) (regarding certification) and 23(e)(1) (regarding s ettlement) can be combined. S ee Manual fo r C o mplex Litigation § 21.633. In yet o ther cases, concerns wit h the class definition mig ht lead a court t o resolve t he certification issue, and thereby “define t he class and t he class claims, issues o r defenses,” Fed . R. Civ . P. 23(c)(1)(B), b efore the notice is issued and t he p utative class members are fo rced t o ch o ose h ow to respond. S ee 7A Federal Practice and Procedure § 1760 (noting t hat “hav[ing] the class d es cribed in some d etail . . . may p rove essential in actions under Ru le 23(b)(3) in o rder t o g ive class memb ers t he n otice required by Ru le 23(c)(2), t hereby enabling them t o decide whether t o opt out o f t h e action[,]” and early certification “is o f considerable value . . . in co nnection with t he n otice and rev iew of a d ismissal o r compromise o f the action under Rule 23(e)”).

28 view, the expansive class definition proposed in P laintiff’s complaint warrants squarely

addressing class certification at the present juncture.

B. Court Approval Of Clas s Settlement Ag reements

Once the court has certified a class—whether in the context of adversarial

litigation or for settlement purposes—the court must play an active role in any

agreement among the present parties that settles the case. See Fed. R. Civ. P . 23(e)

(“The claims, issues, or defenses of a certified class may be settled, voluntarily

dismissed, or compromised only with the court’s approval.”); see a lso M anual f or

Co mp lex Litigation § 21.61 (explaining that court approval under Rule 23(e) is required

regardless of “[w]hether a class action is certified for settlement or certified for trial

and later settled”). In this supervisory role, the court must scrutinize any proposed

settlement agreement so as to “protect[] unnamed class members ‘from unjust or unfair

settlements affecting their rights[.]’” Amchem, 521 U.S. at 623 (quoting 7B Fed eral

Pra ctice a nd Procedure § 1797). With this concern in mind, the court’s review of a

proposed settlement agreement “must be exacting and thorough[,]” M anual f or Complex

Litig a tion § 21.61; indeed, some courts “have gone so far as to characterize the court’s

role as akin to the high duty of care that the law requires of fiduciaries.” Wong v.

Accretive Health, Inc., 773 F.3d 859, 862 (7th Cir. 2014) (internal quotation marks and

citation omitted); see a lso 4 Newb erg on Class Actions § 13:40 (“[T]he court is said to

have a ‘fiduciary duty’ toward absent class members during the settlement of a class

suit.”). And the legal standard set forth in Rule 23(e) itself dictates that, if a proposed

settlement “would bind class members, the court may approve it only after a hearing

and on finding that it is fair, reasonable, and adequate.” Fed. R. Civ. P . 23(e)(2).

29 The text of Rule 23(e) does not expound upon what constitutes a “fair,

reasonable, and adequate” settlement agreement, but an advisory committee note to the

2003 amendments to that rule provides that “[f]urther guidance can be found in the

Manual for Complex Litigation.” Fed. R. Civ. P . 23(e) 2003 advisory committee’s note.

That resource provides as follows:

Fairness calls for a comparative analysis of the treatment of class members vis-à-vis each other and vis-à-vis similar individuals with similar claims who are not in the class. Reasonableness depends on an analysis of the class allegations and claims and the responsiveness of the settlement to those claims. Adequacy of the settlement involves a comparison of the relief granted relative to what class members might have obtained without using the class action process.

M a n ua l f o r Complex Litigation § 21.62. The Manual goes on to provide a long and

non-exhaustive list of factors that courts may consider in the context of the Rule 23(e)

inquiry, including “the advantages of the proposed settlement versus the probable

outcome of a trial on the merits of liability and damages”; “the fairness and

reasonableness of the procedure for processing individual claims under the settlement”;

and “the apparent intrinsic fairness of the settlement terms.” Id. The D.C. Circuit has

not announced any particular set of factors that guide the Rule 23(e) fairness inquiry,

but

courts in this circuit generally consider five factors: (1) whether the settlement is the result of arm’s-length negotiations; (2) the terms of the settlement in relation to the strength of plaintiffs’ case; (3) the status of the litigation proceedings at the time of settlement; (4) the reaction of the class; and (5) the opinion of experienced counsel.

Alva rez, 303 F.R.D. at 163. The context of each particular case determines “which

factors apply and what weight to give them.” M a n ual f or Co mp lex Litig ation § 21.62.

30 In the context of a motion for preliminary approval of a proposed settlement

agreement, a court “must make a preliminary determination on the fairness,

reasonableness, and adequacy of the settlement terms[.]” Id. § 21.632. “Rule 23 itself

does not outline” the preliminary settlement approval process, “nor, therefore, does it

provide district courts a standard by which to adjudicate the motion for preliminary

approval.” 4 Newberg o n Class Actio ns § 13:10. In this district, judges presented with

motions for preliminary approval of a class settlement agreement typically “consider

(1) whether the proposed settlement appears to be the product of serious, informed,

non-collusive negotiations, (2) whether it falls within the range of possible judicial

approval, and (3) whether it has any obvious deficiencies, such as granting unduly

preferential treatment.” Richardson v. L’Oreal USA, Inc., 951 F. Supp. 2d 104, 106– 07

(D.D.C. 2013) (internal quotation marks and citation omitted); see also 4 Newberg o n

Cla ss Actions § 13:10 (reporting that “courts in most circuits use some variation” of

this test). Although “the standard that governs the preliminary approval inquiry is less

demanding than the standard that applies at the final approval phase[,]” a court must

“not simply rubber-stamp a motion for preliminary approval [of a class settlement

agreement], and review is more than perfunctory.” 4 Newb erg o n Cla ss Actions § 13:13

(internal quotation marks and citations omitted). Ultimately, “[p]reliminary approval of

a proposed settlement to a class action lies within the sound discretion of the court.”

Rich a rdson, 951 F. Supp. 2d at 106 (internal quotation marks and citation omitted).

III. ANALYSIS

P laintiffs have asked this Court to certify preliminarily that their discrimination

lawsuit against Lockheed Martin can proceed as a class action, and they also request

31 that this Court provide preliminary approval of the parties’ proposed Settlement

Agreement. As explained fully below, the Court is not persuaded that Rule 23(a)(2)’s

commonality requirement is satisfied, nor is it convinced that the significant fairness

issues that are apparent with respect to the terms of the Settlement Agreement can be

overcome. Therefore, this Court cannot assent to either of P laintiffs’ requests.

A. Plaintiffs Have Failed To Demonstrate That The Proposed Class Action Satis fies The Co mmonality Prerequisite Fo r Ce rtification Unde r Rule 23

P laintiffs propose to represent a class of individuals that encompasses all current

and former African-American employees at Lockheed (subject to limited exclusions not

relevant here) who received a less-than-perfect performance evaluation on at least one

occasion during a three-year period. (See Compl. ¶ 57.) P laintiffs maintain that there

are more than 5,500 such individuals (see id. ¶ 59), and they argue that their proposed

class satisfies the commonality requirement set forth in Rule 23(a)(2) “because . . . each

member of the Class was subject to the same performance evaluation system at

Lockheed Martin.” (Mot. at 23; see also id. (“The discrimination in pay, promotions,

and retention experienced by each member of the proposed Class is bound together by

the common, unifying system that produced the unlawful disparities complained of.”).)

Unfortunately for P laintiffs, the Supreme Court’s landmark decision in Wal-M art

S to res, In c. v. Dukes, 564 U.S. 338 (2011), spoke directly to what is required in order to

satisfy the commonality criterion in the context of an employment discrimination class

action, and its reasoning makes abundantly clear that the commonality criterion is not

satisfied under the circumstances presented in this case.

32 1. The Supreme Court Has Held That, To Maintain An Employment Discrimination Case As A Class Action, Rule 23(a) Commonality Requires That The Employer Have Discriminated Against All Class Members In The Same Way

The Supreme Court’s Wal-M art decision “changed the landscape” that a district

court must navigate when considering whether a putative class action satisfies Rule

23(a)’s commonality requirement. DL v. District o f Co lumb ia, 713 F.3d 120, 126 (D.C.

Cir. 2013). In Wal-Mart, three current and former female employees sued Wal-Mart

Stores, Inc.— “the Nation’s largest private employer[,]” 546 U.S. at 342—and alleged

that the company’s pay and promotion practices violated Title VII’s prohibition on sex

discrimination under both disparate-treatment and disparate-impact theories. See id . at

343– 45. Notably, “[p]ay and promotion decisions at Wal-Mart [were] generally

committed to local managers’ broad discretion, which [was] exercised ‘in a largely

subjective manner.’” Id. at 343 (quoting Duk es v. Wal-Mart Stores, Inc., 222 F.R.D.

137, 145 (N.D. Cal. 2004)). Certain promotions were available only to employees who

had “above-average performance rating[s]” and satisfied other objective criteria, but

even for those decisions, senior managers had discretion to choose among all employees

who satisfied those criteria. Id. The plaintiffs’ theory of the case was that “a strong

and uniform ‘corporate culture’ permit[ted] bias against women to infect, perhaps

subconsciously, the discretionary decisionmaking of each one of Wal-Mart’s thousands

of managers—thereby making every woman at the company the victim of one common

discriminatory practice.” Id. at 345. Accordingly, the three named plaintiffs sought to

litigate their case as a class action on behalf of all current and former female Wal-Mart

employees, a group that was approximately 1.5 million strong. See id . at 342.

33 When it analyzed whether the case could be certified as a class action under Rule

23, the Supreme Court first observed that “[t]he class action is an exception to the usual

rule that litigation is conducted by and on behalf of the individual named parties

only[,]” id . at 348 (emphasis added) (internal quotation marks and citation omitted),

and that Rule 23 only permits class-action treatment where the class claims are “fairly

encompassed by the named plaintiff’s claims[,]” id. at 348– 49 (internal quotation marks

and citations omitted). With respect to Rule 23’s commonality requirement—which the

Justices called “[t]he crux of th[e] case”—the Supreme Court cautioned that the Rule’s

“language is easy to misread” because, at first blush, virtually every class complaint

raises “questions of law or fact common to the class.” Id. at 349; see also id. at 349– 50

(explaining that overarching questions such as “Do our managers have discretion over

pay?” and “Is that an unlawful employment practice?” are certainly common to all class

members, but are insufficient to establish commonality because they “give[] no cause to

believe that all [class members’] claims can productively be litigated at once”). Beyond

the mere identification of basic facts or general principles that are common to the

members of the class, the Court explained, the commonality requirement demands that

all class members’ claims “must depend on a common co n tention . . . [that] is capable

of classwide resolution[,]” such that “determination of [that contention’s] truth or

falsity will resolve an issue that is central to the validity of each one of the claims in

one stroke.” Id. at 350 (emphasis added). Thus, “for example, the assertion of

discriminatory bias on the part of the same supervisor” might satisfy the commonality

requirement because, under that circumstance, a common contention that is capable of

34 common proof—i.e., that supervisor exercised discretion in a discriminatory fashion—

would lie at the center of each class member’s claim. Id. (emphasis added).

The Court also expounded on the commonality requirement as it applies in the

specific context of Title VII employment-discrimination class actions, explaining that

because the core of any individual plaintiff’s Title VII claim is “the reason for a

particular employment decision,” litigating many such claims (arising out of many

different employment decisions) at once is only productive if “some glue hold[s] the

alleged reasons for all those decisions together,” id . at 352 (emphasis in original)

(internal quotation marks and citation omitted). 11 P ut another way, the commonality

requirement is met in an employment discrimination case only where the plaintiff

demonstrates “that examination of all the class members’ claims for relief will produce

a common answer to the crucial question why was I disf avored.” Id. (emphasis in

original).

In other words, the “common contention” or “glue” that binds an employment

discrimination class together must bridge a “conceptual gap” between “an individual’s

claim that he has been denied a promotion [or higher pay] on discriminatory grounds,

and . . . the existence of a class of persons who have suffered the same injury as that

individual[.]” Id. at 352– 53 (quoting Gen. Tel. Co. of the Sw. v. Fa lcon, 457 U.S. 147,

157– 58 (1982)). And, notably, the Wal-M art decision recognized two possible methods

by which a plaintiff might establish the requisite common contention: a plaintiff must

either (1) identify a “testing procedure or other companywide evaluation method that

11 In t h e in stant case, t he Plaintiffs h ave pled one o f their t wo class claims u nder 42 U.S.C. § 1981 rat h er t han Title VII, b ut t he s tandards articulated in Wa l-Mart are “equally apposite t o claims u nder t h [at] statute[.]” Burton v. District of C olumbia, 277 F.R.D. 224, 229 n .6 (D.D.C. 2011).

35 can be charged with bias[,]” or (2) provide “[s]ignificant proof that an employer

operated under a general policy of discrimination[.]” Id. at 353 (quoting Fa lco n, 457

U.S. at 159 n.15). Requiring that one of these avenues be pursued ensures that, when

evaluating the certification motion, the court does not lose sight of the need to

“‘identify[] the specific employment practice that is challenged’” as producing a

racially disparate outcome, id.at 357 (quoting Wards Cove Packing Co., 490 U.S. at

656), which is a key task that even individual plaintiffs must accomplish in a Title VII

case. Cf . Falcon, 457 U.S. at 159 n.15 (“[I]t is noteworthy that Title VII prohibits

discriminatory p ra ctices, not an abstract policy of discrimination.” (emphasis in

original)). (S ee a lso P art I.A, supra.)

Turning to the particular claims at issue in Wal-M art, the Supreme Court

observed that the named plaintiffs had not sought to identify a biased companywide

evaluation method, and had also failed in their attempt to provide “significant proof that

Wal-Mart operated under a general policy of discrimination.” Wal-M art, 564 U.S. at

353 (internal quotation marks omitted). The Court noted that the only policy the

plaintiffs had identified was the “‘policy’ of a llo win g d iscretion by local supervisors

over employment matters[,]” id. at 355 (emphasis in original), and it explained that,

because the simple fact of delegating decisions “should itself raise no inference of

discriminatory conduct,” id. (quoting Watson, 487 U.S. at 990), to establish sufficient

commonality, the plaintiffs needed to “identif[y] a common mode of exercising

discretion that pervades the entire company[,]” id . at 356. The plaintiffs failed to do so,

the Court held, because they had produced only regional and national disparity data

rather than the sort of granular, store-by-store data that could demonstrate truly

36 pervasive discrimination. S ee id . at 356– 57. And the Court made clear that even more

granular disparity data would not necessarily have cured the commonality defect,

because such data alone could not establish the necessary “specific employment

practice” (i.e., a “common mode of exercising discretion”) that produced a disparate

impact in a manner that was common to the class. Id. at 356– 57.

In the end, after analyzing facts and claims that are strikingly similar to those

that are presented in the instant case, the Supreme Court offered a summation for its

discussion of commonality in a Title VII employment class action that echoes

resoundingly in the case before this Court: “Merely showing that [an employer]’s policy

of discretion has produced an overall sex-based disparity does not suffice.” Id. at 357.

2. P laintiffs Have Not Established That Lockheed’s P erformance Review System Causes Racially Disparate Outcomes In A Manner That Can Be Established Through Common P roof

As explained, the plaintiffs in Wal-M art sought to litigate employment

discrimination claims on behalf of all female current and former Wal-Mart employees.

If Wa l-M a rt teaches anything, it is that plaintiffs can maintain such an employment

discrimination lawsuit as a class action only if they can identify a company-wide

“common contention” regarding the reasons that each member of the class has suffered

an injury. S ee 564 U.S. at 350. As discussed above, Wal-M art recognized two methods

by which a plaintiff can thread together many individuals’ employment discrimination

claims so as to demonstrate that they can productively be litigated at once: by pointing

to a “testing procedure or other companywide evaluation method that can be charged

with bias[,]” or by providing “[s]ignificant proof that an employer operated under a

general policy of discrimination[.]” Id. at 353 (quoting Fa lco n, 457 U.S. at 159 n.15).

37 In this Court’s view, P laintiffs in the instant case have done neither, and thus have

fallen far short of establishing a commonality of issues as Rule 23(a)(2) requires.

First of all, try as they might, P laintiffs have failed to identify a “testing

procedure or other companywide evaluation procedure that can be charged with bias.”

Id . (emphasis added). This is so notwithstanding P laintiffs’ vigorous efforts to

characterize Lockheed’s performance appraisal system as a “companywide evaluation

method” (Suppl. Mem. at 2 (internal quotation marks and citation omitted)), and to

assert that several common elements of that system are “flawed” (Compl. ¶ 11).

P laintiffs allege, for example, that the group “calibration sessions” at which multiple

managers were required to discuss many employees and assign them into one of four

performance “tiers” suffered from inadequate information about each employee under

consideration and often required apples-to-oranges comparisons between employees

with different positions. (S ee Compl. ¶ 23.) But the contention that the companywide

evaluation procedures often resulted in ratings that were poorly correlated with job

performance (see id . ¶¶ 17– 24), however plausible, does not supply an account of how

those procedures themselves resulted in the racially disparate outcomes that P laintiffs

have observed in Lockheed’s overall workforce. That is, in order make a plausible

“charge[]” that a companywide evaluation method is infected “with bias[,]” Wal-M a rt,

564 U.S. at 353, it is clear that a plaintiff must provide some “detail about how th[at]

examination[] operated in a biased way.” Burton, 277 F.R.D. at 229 (emphasis in

original); see also Wards Cove, 490 U.S. at 657 (explaining that in a disparate impact

case, “a plaintiff must demonstrate that it is the application of a specific or particular

38 employment practice that has created the disparate impact under attack”). P laintiffs

here have taken no steps whatsoever toward accomplishing this critical goal.

Nor have P laintiffs provided “significant proof” that Lockheed “operated under a

general policy of discrimination.” Wal-M art, 564 U.S. at 353. As was the case in Wa l-

M a rt, P laintiffs have not identified any affirmative policy that had a demonstrably

discriminatory intent or effect on African-American Lockheed employees; instead, the

only connection that P laintiffs have mustered between Lockheed’s policies and the

allegedly racially disparate performance-review outcomes is the allegation that “[t]he

absence of measurable indicators” in Lockheed’s individual performance reviews

“resulted in inadequate safeguards against bias in the assessment of African American

employees.” (Compl. ¶ 18; see also id. ¶ 19.) But just as in Wal-M art, that allegation

attributes racially disparate outcomes to the “policy” of committing unrestrained

discretion to individual supervisors, see 564 U.S. at 355, and such a discretionary

system can only amount to a policy of discrimination that is susceptible to common

proof if P laintiffs “identif[y] a common mode of exercising discretion that pervades the

entire company[,]” id. at 356. The mere fact that all of Lockheed’s supervisors used the

same allegedly ill-defined numerical rubric to grade employee performance (see Compl.

¶¶ 17– 21)—an aspect of the system that constrained supervisor discretion, even if

inadequately—says nothing about how individual supervisors exercised what discretion

was left to them, and after Wal-M art, it is clear beyond cavil that such silence isn’t

enough.

To state the point succinctly: in order to establish the requisite commonality with

respect to a discrimination challenge to an employee-review system that permits various

39 managers to exercise discretion, P laintiffs needed to demonstrate “that all managers

would exercise their discretion in a common way[,]” Wal-M art, 564 U.S. at 356, and

they have not done so. Other than pleading, “upon information and belief,” that “the

racial disparity in ratings [under Lockheed’s performance evaluation system] is

statistically significant” (Compl. ¶ 15), P laintiffs have pointed to no evidence of biased

decision making of any kind, and certainly not statistical evidence of the type that

demonstrates that the discretionary ratings decisions led to racially disparate outcomes

in a co mmon way. See Wal-Mart, 564 U.S. at 357; see also Watson, 487 U.S. at 994

(plurality opinion) (noting that in a disparate impact case, “the plaintiff must offer

statistical evidence of a kind and degree sufficient to show that the practice in question

has caused the exclusion of applicants for jobs or promotions because of their

membership in a protected group”).

Notably, even the anecdotal allegations of the two named plaintiffs fall short of

giving rise to any belief that a common mode of discretionary decision making resulted

in consistent race discrimination against the entire class. First of all, two anecdotes in a

class of over 5,500 almost certainly do not constitute “substantial proof” that any

commonalities between them are pervasive throughout the class. See Wa l-Mart, 564

U.S. at 358 (explaining that “roughly one account for every eight members of the class”

might substantiate an inference that discrimination was pervasive, but “about 1 for

every 12,500 class members” would not). Second, if anything, the allegations of the

two named plaintiffs are more notable for their differences than for their similarities.

P laintiff Josey points to a disparity between her high individualized numerical ratings

and her below-average tier rating as evidence of discrimination (see Compl. ¶ 36),

40 whereas P laintiff Ross alleges no such disparity (see id. ¶¶ 45– 56). P laintiff Ross

intimates that he was discriminated against by virtue of being lumped in with other

employees during calibration sessions even though “there are no proper comparators for

his position” (id. ¶ 50), whereas P laintiff Josey alleges that her calibration sessions

were suspect because she was compared against both managers and non-managers (see

id . ¶ 38). All in all, then, it is clear to this Court that P laintiffs have failed to

demonstrate that the challenged performance evaluation system resulted in race

discrimination against all class members through a mechanism that could be established

through common proof.

The cases that P laintiffs highlight in which courts have certified employment-

discrimination classes on the basis of companywide discretionary evaluation systems all

involved some thread that tied the many discretionary decisions together—the very

thing that is absent here. For example, P laintiffs rely on M cReyn olds v. M errill Lyn ch,

Pierce, Fenner & Smith, Inc., a Seventh Circuit decision affirming certification of a

class of African-American financial advisors that sued their employer for racially

discriminatory compensation practices. See 672 F.3d 482, 483 (7th Cir. 2012),

a b ro gated on other grounds as recognized by Ph illips v. S h eriff o f Co ok Cty., 828 F.3d

541, 559 (7th Cir. 2016). (S ee Suppl. Mem. at 5– 6.) In that case, the defendant

“delegate[d] discretion over decisions that influence the compensation” of individual

employees to many different supervisors, but the plaintiffs pointed to a companywide

policy that plausibly infected those decisions with discrimination in a common manner.

Id . at 488. Specifically, the plaintiffs identified a “teaming policy” that enabled brokers

who were members of teams to increase their compensation, see id., and they alleged

41 that, because individual brokers were allowed to pick their own team members pursuant

to that policy, the teams became “little fraternities” in which “brokers choose as team

members people who are like themselves” along racial lines, id . at 489. Thus, the

companywide “teaming” policy explained the common and allegedly discriminatory

manner in which the brokers were exercising their discretion in a way that was central

to the plaintiffs’ disparate impact claims, and as a result, the court found that the

policy’s legality was susceptible to common proof. See id.

P laintiffs also highlight M oore v. Napolitano, a decision from this District in

which current and former employees of the United States Secret Service sought

certification for a putative class action alleging discrimination in the Secret Service’s

promotion practices. S ee 926 F. Supp. 2d 8, 11–12 (D.D.C. 2013), p et. f o r p ermission

to a p p eal d enied sub nom. In re Jo hnson, 760 F.3d 66 (D.C. Cir. 2014). (See Mot. at

29.) “[D]ifferent decision makers no doubt injected some subjectivity into the

evaluations of different class members” in that case; however, crucially, “every

promotion decision was ultimately made by the Director of the Secret Service.” In re

Jo h n son, 760 F.3d at 73; see also Wal-Mart, 564 U.S. at 350 (hypothesizing that “the

assertion of discriminatory bias on the part of the same supervisor” could satisfy the

commonality requirement). P laintiffs have not alleged any similarly centralized

performance evaluation process here.

Consequently, unlike in the cases P laintiffs cite, P laintiffs have not identified a

“common contention” that “is central to the validity of each one of the [class members’]

claims” and that “is capable of classwide resolution[.]” Wal-Mart, 564 U.S. at 350. It

cannot be overstated that P laintiffs’ mere reliance on an alleged racial disparity in

42 overall employment outcomes (see Compl. ¶ 15) does not establish commonality,

because “merely proving that [a] discretionary system has produced a racial or sexual

disparity is not enough[,]” Wal-Mart, 564 U.S. at 357 (emphasis in original). And it is

similarly insufficient to point to the performance appraisal system as a whole and

contend, as P laintiffs do, that it acted as “an identical or similar headwind against all

class members.” (Suppl. Mem. at 4.) Rather, in any disparate impact case, “a plaintiff

must demonstrate that it is the application of a specific or particular employment

p ra ctice that has created the disparate impact under attack.” Wards Cove, 490 U.S. at

657 (emphasis added). This important work is required in all disparate impact cases,

but it “is all the more necessary when a class of plaintiffs is sought to be certified”

because the court must satisfy itself that the class members’ claims are susceptible to

common proof. Wal-M art, 564 U.S. at 357.

With neither an account of how the common features of the performance

appraisal system led to racially disparate outcomes (other than by enabling

discretionary decisions by individual supervisors), nor “statistical evidence of a kind

and degree sufficient to show that the practice in question has caused” race

discrimination, see Wa tso n, 487 U.S. at 994 (plurality opinion), P laintiffs cannot assure

this Court that class members will actually share “a common answer to the crucial

question why was I disf avored.” Wal-Mart, 564 U.S. at 352 (emphasis in original).

Indeed, common answers are especially elusive under the circumstances presented here,

as P laintiffs apparently anticipated, given the broad class definition (which contains no

limitation that ensures all class members have suffered the same adverse action or have

otherwise been personally affected by Lockheed Martin’s performance appraisal

43 system), and the expansive series of probing questions on the proposed claim form.

P laintiffs’ expected class clearly encompasses individuals with widely varying

experiences of discrimination. (S ee Compl. ¶ 57 (proposing a class definition that lacks

any injury criteria and thus includes a broad and diverse swath of employees); see also

Suppl. Decl. of Cyrus Mehri, ECF No. 13-6, ¶ 4 (admitting that “[t]he Claim Form . . .

does not limit the compensation, promotion, and termination claims for which

Claimants will be compensated to those for which they could establish a link between

their performance appraisal ratings and the allegedly discriminatory actions”).) 12 Such

potential breadth of experiences and claims among the putative class members is not the

mark of a class that meets the commonality requirement of Rule 23(a).

B. Plaintiffs Have Failed To M ake A Pre liminary Sho wing That The Te rms Of The Pro posed Settlement Agreement Are “Fair, Reasonable, And Ade quate”

Even if this lawsuit could be certified as a class action consistent with Rule 23,

its settlement could not be approved at this juncture without “a preliminary

determination on the fairness, reasonableness, and adequacy of the settlement terms[.]”

M a n ua l f o r Complex Litigation § 21.632; see also Fed. R. Civ. P . 23(e)(2) (“If [a

proposed settlement] would bind class members, the court may approve it only after a

12 Th e absence of any in jury-focused limit ation in Plaintiffs’ class d efinition is t elling, and it stands in s t ark contrast with class d efinitions in similar cases in which classes h ave b een certified. S ee, e.g., Mo o re, 926 F. Su pp. 2d at 16 (certifying class o f “[a]ll current and fo rmer African-American Special A g ents who b id for p romo tion to a GS-14 p osition from 1995–2004 and w ere not p romoted t o GS-14 on t h e fi rst b id l ist o n which they bid” (emphasis added)); McReynolds v. S odexho Marriott Servs., Inc., 208 F.R.D. 428 (D.D.C. 2002) (certifying class of “all A frican-Americans wh o are o r were s alaried emp lo yees o f So dexho . . . wh o h ave held or sought t o obtain [management p ositions], and who h ave b een, continue to b e, o r may in t he future b e a dversely impacted b y Sodexh o’s racially d iscrimin atory p o licies and practices affecting p romo tions o r advancement” (emphasis added)).

44 hearing and on finding that it is fair, reasonable, and adequate.”). As explained above,

in this district, courts presented with motions for preliminary approval of class

settlement agreements consider such fairness-related factors as “(1) whether the

proposed settlement appears to be the product of serious, informed, non-collusive

negotiations, (2) whether it falls within the range of possible judicial approval, and

(3) whether it has any obvious deficiencies, such as granting unduly preferential

treatment.” Richardson, 951 F. Supp. 2d at 106– 07 (internal quotation marks and

citation omitted). These and other related considerations, which are discussed below,

compel this Court to conclude that the terms of P laintiffs’ proposed Settlement

Agreement are sufficiently problematic that the agreement cannot be approved, even

preliminarily.

To be sure, and to the parties’ credit, this Agreement “appears to be the product

of serious, informed, non-collusive negotiations.” Id. P laintiffs report that the parties

engaged in “eleven days of in-person and numerous telephonic mediation sessions[,]”

during which they discussed “statistical analyses, company policies and practices, and

anecdotal evidence in this case.” (Mot. at 12.) Lockheed apparently “produced

electronic human resource data[,]” and P laintiffs’ counsel “retained a labor economics

expert . . . to conduct statistical analyses of [that] data.” (Id.) These facts satisfy the

Court that the parties’ negotiations were vigorous and well-informed. See Richardson,

951 F. Supp. 2d at 106– 07. But that alone is not enough to establish that the resulting

agreement is f air to the absentee class members. And the terms of the Settlement

Agreement that bear on the other fairness considerations mentioned above plainly

45 indicate that the negotiating parties have given the absentee class members’ interests

short shrift in several respects.

First, and most notably, there is a gross imbalance between the claims that are

actually at issue in this case and the claims that the class members who participate in

the settlement would be required to release. See M anual f or Complex Litigation § 21.62

(explaining that the “[r]easonableness [of a settlement agreement] depends on an

analysis of the class allegations and claims and the responsiveness of the settlement to

those claims”). P laintiffs have consistently and unabashedly maintained that “the

primary focus of the Complaint is on flaws in the performance appraisal system”

(Suppl. Mem. at 13); yet, they also candidly acknowledge that, somehow, class

members are required to “release Lockheed Martin from a ll types of racial

discrimination claims” under the terms of the Settlement Agreement (id. at 12

(emphasis added) (citing Settlement Agreement at 22–23)). Plaintiffs have provided no

reasonable explanation for the Settlement Agreement’s mandate that a class member

relinquish her right to bring race discrimination claims that have nothing to do with the

performance review system in order to settle a case about allegedly discriminatory

performance reviews—and this Court sees none. And even more puzzlingly, the

Agreement’s proposed broad release of claims sweeps even further: although the class

period ended in 2016, class members agree release all race discrimination claims th a t

a rise a t a n y time up until the Court finally approves the Settlement Agreement (see

Settlement Agreement at 22), and not only do class members agree to release all race

discrimination claims regarding the terms and conditions of their employment, they also

46 assent to give up “claims of alleged racial discrimination . . . in th e p ro vision o f

emp lo yee b enefits” as well (id. (emphasis added)).

It is perhaps not surprising that Lockheed would assent to such an agreement—in

one fell swoop, this proposed settlement forecloses any and all potential race

discrimination claims that thousands of African-American employees might otherwise

have brought against the company. But it is shocking to this Court that counsel for the

putative class members would contend that a release this broad and consequential is a

“fair” bargain as it relates to the absent individuals whose potential legal claims are

effectively extinguished by it. The sheer breadth of the released claims alone, when

compared to the scope of the claims in the complaint, is enough to cause this Court to

have serious doubts about whether the proposed Settlement Agreement comes anywhere

close to “fall[ing] within the range of possible judicial approval[.]” Richardson, 951 F.

Supp. 2d at 107.

The opt-out procedure laid out in the Settlement Agreement provides another

source of serious concern. Under the Agreement, class members who do not respond to

the class notice in any manner—that is, who neither complete and submit the extensive

claim form nor comply with the prescribed opt-out procedures—will not only release all

of their race discrimination claims against Lockheed Martin but will also become

ineligible to recover any compensation from the settlement fund. (See Settlement

Agreement at 24.) That is exactly the sort of circumstance that raises legitimate

questions about the fairness of a settlement agreement. See 4 Newberg on Class Actions

§ 13:60 (noting that “[c]ompromising claims without compensation” is a “red flag in

proposed settlements”). Additionally, if P laintiffs’ counsel is correct that it is likely

47 that thousands of class members will not even respond to the class notice, much less

affirmatively opt out (see Tr. of Oral Arg. at 33– 34 (counsel’s assertion, based on past

experience, that the response rate is likely to be 30– 50% ), then this Settlement

Agreement effectively allows Lockheed to inoculate itself against any and all race

discrimination and race-related benefits claims by a huge swath of its African-American

employees for a price that hardly seems “adequate.”

This Court is also quite concerned about the miniscule amount of information

that an absent class member will have about (1) the legal claims that are implicated in

the settlement process, and (2) his or her anticipated recovery, at the time the opt-out

decision is made. See M anual f or Co mp lex Litig ation § 21 (listing “the fairness and

reasonableness of the procedure for processing individual claims under the settlement”

as a relevant factor under Rule 23(e)). That is, for all its detail, the class notice

provides no sense of what the minimum recovery is likely to be; no sense of what the

average recovery is likely to be; and no sense of how giving particular answers on the

claim form will likely influence the amount of a class member’s recovery. P laintiffs’

counsel explains that none of this information is discernable until the Claims

Administrator reviews all of the claim forms and develops information regarding the

number and type of race discrimination claims that may exist throughout the class. (See

Tr. of Oral Arg. at 69.) But that is exactly the defect that makes this settlement so

potentially damaging to the absent class members—if they had been participants in this

litigation from the start, P laintiffs’ counsel would have already investigated their

discrimination allegations and would be in a position to provide them with critical

information about the estimated value of the claims that the Settlement Agreement

48 releases. As things currently stand, this Court has no idea how P laintiffs’ counsel could

possibly have determined that the amount that Lockheed is offering to settle this case is

sufficient to redress the legal claims of the class members without having already

gathered information regarding the universe of claims at issue. And of course, if

P laintiffs’ counsel does have some knowledge of, and projections about, the scope of

the absentee class members’ discrimination claims, then the value of those claims can

be estimated, at least in general terms, and this recovery-related information should be

provided to the class as part of the notice. 13 What is more, it is clear to this Court that

no reasonable counsel advising an individual absent class member would encourage his

client to agree ex a n te to release legal claims that the lawyer has not yet evaluated in

exchange for nothing other than the vague hope that a claims official might

subsequently do the work of assessing the strength of his client’s case and paying a

worthy settlement amount. And yet, that appears to be precisely what P laintiffs’

counsel proposes for the absent class members in the context of the settlement at issue

in this case.

The bottom line is this: a putative class member needs to be able to make an

informed determination regarding whether or not to opt out of a class settlement, and

this is especially so when the proposed agreement requires him or her to give up

potentially viable legal claims in exchange for the promise of a monetary recovery.

13 Th is is t o say, Plaintiffs’ counsel cannot h ave it b oth ways. Eit her (1) h e h as n o clue about what t he class memb ers will rep ort o n t he claim fo rm regarding t heir exp eriences with race d iscrimin ation, in wh ich case n o in dividual recovery estimates can b e provided, but h e also cannot p ossibly have made a rat io nal d etermination t hat t he $22.8 s ettlement fund is adequate t o cover all o f t he class memb ers’ claims , o r (2) he is sufficiently aware of t he scope and n ature of t he class memb ers’ p otential claims t h at h e can assert with confidence t hat t he settlement fund amount is adequate, but if t his is so, then h e s h ould b e able t o provide t he class memb ers with in formation about the ant icipated recovery if t hey d ecide t o p articipate in t he set tlement.

49 Ordinarily, and ideally, when faced with such a choice, the class member would want to

know how much the claims he is releasing are likely to be worth, so that this figure can

be compared to the amount being offered in settlement of those claims. In the typical

case involving a settlement class, this math is easily done, because the claims in the

complaint are all that is at issue, and class counsel presents a settlement agreement with

a negotiated amount that relates in some discernable way to the legal claims that will be

released. S ee, e.g., In re APA Assessment Fee Litig ., 311 F.R.D. 8, 13, 19 (D.D.C.

2015) (approving settlement agreement that “represent[ed] close[] to 13% of plaintiffs’

best possible recovery” and under which “Claimants w[ould] receive a pro rata share of

the fund based on the amount of . . . fees they paid during the class period”); Alva rez,

303 F.R.D. at 157 (approving settlement agreement that “provide[d] for a monetary

payment to each of the[] class members consisting of 1.37 times the amount owed for

overtime during the relevant period”). But even if the overall value of the released

claims is uncertain, at a minimum, any informed opt-out determination requires

information regarding the estimated amount that a class member would be expected to

receive if she participates, and it is no answer to say, as P laintiffs do here, that ‘an

estimate is not possible because we do not yet know the scope of the claims being

released.’ (See, e.g., Tr. of Oral Arg. at 69.) Far from curing the problem, the fact that

P laintiffs themselves purport to have not yet fully evaluated the claims that class

members are relinquishing in this action underscores the fundamental fairness issues

described above, and suggests that, rather than doing what is necessary to ensure that

all class members’ rights are protected and advanced, P laintiffs have opted to bind their

50 fellow class members indiscriminately and rely on a claims administrator to do the

heavy lifting of sorting it all out on the back end.

In light of all of these deficiencies, which this Court has considered individually

and in the aggregate, the Court is compelled to conclude that P laintiffs have failed to

demonstrate that the proposed Settlement Agreement is sufficiently “fair, reasonable,

and adequate” to satisfy the standard for preliminary approval.

IV. CONCLUSION

In this lawsuit, P laintiffs seek to certify a class for settlement purposes that, in

effect, is comprised of virtually every salaried African-American employee of Lockheed

Martin. P laintiffs say that the 5,500-plus members of their proposed class have

suffered race discrimination as a result of Lockheed’s performance review process, and

have been victimized in a manner that is susceptible to common proof, but P laintiffs do

not present any theory of how the performance appraisal system resulted in racially

disparate outcomes, much less evidence that the challenged system discriminates

against all class members in the same way, as the commonality element of Federal Rule

of Civil P rocedure 23(a) requires. Moreover, the broad release of legal claims in the

proposed Settlement Agreement strongly suggests that the parties have endeavored to

use this case to resolve the entire universe of race discrimination claims that these class

members might have against Lockheed, via a lawsuit that is purportedly much more

limited in scope. This imbalance creates serious fairness concerns with the breadth of

the release, the adequacy of the settlement fund, the prescribed opt-out procedures, and

the overall claims administration process. All this leads this Court to the firm but

reluctant conclusion that this case cannot be preliminarily certified as a class action

51 under Rule 23, and that the parties’ proposed Settlement Agreement is so potentially

unfair that it cannot be preliminarily approved. Accordingly, as set forth in the

accompanying Order, P laintiffs’ motion for preliminary certification and approval will

be DENIED.

DATE: July 28, 2017 Ketanji Brown Jackson KETANJI BROWN JACKSON United States District Judge