Clerk Case Study: Google Pay Discrimination

Just over two months ago, Google, Inc. was served with a complaint alleging widespread wage discrimination against women, in violation of the California Equal Pay Act.

At the core of the lawsuit, Ellis v. Google, Inc., is the accusation that Google routinely misclassified female employees upon hiring, and that this practice of assigning women to different compensation and career “ladders” than their similarly-skilled male counterparts led to systemic underpayment.

The accusation of gender discrimination in hiring, pay, and promotions is not a new narrative in Silicon Valley. In fact, Tesla, Twitter, Microsoft, and Uber are all involved in similar class action gender-discrimination suits, while Oracle is being sued by the US Department of Labor. The Department of Labor is also investigating Google for pay disparities between sexes outside of the context of this lawsuit.

There’s clearly a tidal swing in terms of women in the tech sector pursuing their fair share. The law is evolving, too. In 2015, the California legislature passed the Fair Pay Act (SB 358), amending the Equal Pay Act in order to strengthen statutory requirements, support claims against employers, and to combat this systemic issue.

We’ve analyzed recent briefs filed in the Ellis v. Google, Inc. lawsuit with Judicata’s brief analysis tool, Clerk. Clerk surfaces three major takeaways:

  1. A big legal question is whether class suitability can be determined on demurrer. The California Courts of Appeal are split on when a presumptive class action can be dismissed at the pleading stage, but the majority of decisions favor Google.
  2. The law is evolving to become more favorable to plaintiffs.
  3. If you like betting, Google’s odds look pretty good.

Background

The complaint in Ellis v. Google, Inc. was filed in San Francisco Superior Court as a class action. The underlying theory of a class action is that the members of the class have all been similarly injured by the same party such that their claims can be litigated jointly, rather than separately. Where the plaintiffs are not all similarly situated, and individual issues would predominate at the trial, a class action will not be certified.

In every class action, the plaintiffs select a few individual plaintiffs whose claims are representative of the group as a whole. In this particular case, the class representatives are three women, all of whom were Google employees at various points of time over the past decade: a software engineer, a network engineer, and a sales communications specialist. The plaintiffs allege they were mis-classified upon hiring and subsequently earned less than their male counterparts performing “substantially equal or similar work.”

Google wants to prevent the class claims from moving forward, because if the lawsuit advances and a class is certified, the cost, risk, and settlement value of the lawsuit will skyrocket.

Google is therefore attempting to dismiss the class claims by filing a demurrer (Google also filed a motion to strike, but our analysis is on the demurrer only). A demurrer is a California-specific pleading that disposes of complaints which fail to state a claim. In lay terms, failing to state a claim means that the plaintiffs did not allege conduct which the law recognizes as a wrong.

A critical question is whether these women’s claims should be litigated together in a single class action or separately in individual lawsuits, and whether that determination can be made at the demurrer stage.

When a demurrer is filed, the moving party (nearly always the defendants) files a brief in support of that demurrer. The plaintiff then files an opposition (“the opposition”), to which the defendant can reply (“the reply”). Importantly, if a demurrer is sustained, then there is the possibility that the plaintiffs will be granted “leave to amend” — an opportunity to rewrite the complaint in the hopes that a new one can survive a demurrer.

Google’s Demurrer

We’ve run Google’s demurrer, the plaintiffs’ opposition, and Google’s reply to the opposition through Clerk. One of the first things that stands out is that the demurrer, opposition, and reply all score “Weak” on Clerk’s vulnerability measure.

Both plaintiffs and defendants cite to and rely heavily on case law that is significantly more likely than average to be distinguished. These are cases that have a history of being disregarded by other decisions.

The reason why the parties are both relying on heavily distinguished case law is that Google is trying to dismiss the class claims via a demurrer, but there is a court split developing on when it is proper to dispose of class claims at the demurrer stage. This is a legal question with significant implications for lawsuit settlement values.

Diving deeper into Clerk’s analysis shows the development of this split.

Clerk’s Analysis of the The Demurrer

Google is relying on several vulnerable, older cases that sustained demurrers to class action allegations without leave to amend:

Clerk surfaces this issue and suggests a critical case for the opposition: Gutierrez v. California Commerce Club, Inc., 187 Cal.App.4th 969 (2010). Gutierrez is a more recent decision which reversed the sustaining of a demurrer without leave to amend, and which distinguishes the cases that Google relies on.

Gutierrez distinguishes these cases because they all involved actions like mass torts in which individual issues predominate. Gutierrez instead follows wage and hour cases that held it was inappropriate to sustain a demurrer without leave to amend. In contrasting these cases, Gutierrez identifies a preference that “class suitability should not be determined by demurrer.”

These opposing case treatments are easily visualized with Judicata Color:

Contrasting Yellow and Green case highlights signify The Factual Distinction

In their opposition to Google’s demurrer, the plaintiffs in Ellis v. Google, Inc. rely on Gutierrez and Prince v. CLS Trans., Inc. and the preference that class suitability not be determined by demurrer. They argue that Equal Pay Act class claims are like wage and hour class claims, and therefore should not be dismissed via a demurrer.

An important legal question in this lawsuit is therefore whether pay discrimination cases are more akin to mass torts in which individual issues predominate (as in Silva, Brown, and Clausing), or whether they are more akin to wage and hour cases that are dominated by a single set of facts applicable to all class members (as in Prince and Tarkington v. California Unemployment Ins. Appeals Bd.).

There isn’t much California litigation on this point, but a recent United States Supreme Court decision suggests that pay discrimination actions may be more like the former, a type of action where individual issues predominate.

Clerk’s Analysis of the The Opposition

The difference of opinion on the suitability of demurrers doesn’t end with Gutierrez distinguishing Silva, Brown, and Clausing. When the plaintiffs’ opposition brief is analyzed by Clerk, Clerk suggests an important case for Google’s reply: Tucker v. Pacific Bell Mobile Services, 208 Cal.App.4th 201 (2012). Tucker is an even more recent decision that criticizes Gutierrez and Prince, the cases that the plaintiffs rely upon in their opposition.

Tucker takes a broad look at prior precedent and identifies a court split on whether there is a preference that class suitability not be determined by demurrer.

Contrasting Orange and Green case highlights signify The Split

Tucker ultimately disagrees with Gutierrez and Prince, and Google relies heavily on Tucker to attack the plaintiffs’ reliance on those decisions.

Importantly for Google and for the plaintiffs, Tucker is a decision of the First District of the California Court of Appeal, while Gutierrez is a decision of the Second District of the California Court of Appeal. This matters because the plaintiffs filed their lawsuit in San Francisco Superior Court, which is in the First District. That makes it more likely the judge will follow Tucker and distinguish or decline to follow Gutierrez, tilting the balance in Google’s favor.

An interesting question is whether Google’s lawyers were planning to rely on Tucker in their reply when they initially filed their demurrer. They didn’t mention Tucker in their first brief. Was Tucker an ace they were keeping up their sleeve?

The Weight of Authority

Beyond Tucker, the broader weight of authority further favors Google. This is shown by Clerk’s evaluation of each brief’s arguments.

Defendant’s arguments in their demurrer are Very Strong
Plaintiffs’ arguments in their opposition are Weak

Google presents its arguments in such a fashion that a strong majority of cases seem to go their way. Similar cases side with the defendant twice as often as with the plaintiff (57% v. 29%). While the plaintiffs present their arguments in a more favorable way for their position, the case law is still tilted against them (44% v. 36%). This suggests that the plaintiffs are fighting an uphill battle.

The Statute

An interesting insight from Clerk is that the law on pay discrimination has changed. One of Clerk’s many features is that it checks whether the parties are accurately quoting the law. A cursory glance at the quotation checking on Google’s demurrer suggests they made an error quoting the California Labor Code, by inserting the word “equal.”

However, Google is quoting from a former version of the statute, and not trying to mischaracterize the law (though they are attempting to present the law in a light that is more favorable to them).

Removing the word “equal” from the Labor Code was one of the changes brought about by the previously mentioned California Fair Pay Act. This change, and its timing, is the source of a key argument for Google. Because the text of the Labor Code changed in 2016, Google argues that for plaintiffs who worked at Google before that time period, the legal requirements regarding fair pay were different. Google asserts that the work those plaintiffs did pre-2016 was not equal to the male counterparts they’re referencing, and therefore their claims should be dismissed.

Plaintiffs, on the other hand, argue that the statute has always been interpreted as meaning “substantially equal or similar”, and not just “equal,” making the change irrelevant to their claims. It’s unclear which side has the better argument here, but it may be an issue that the judge sidesteps altogether.

Final Thoughts and Predictions

The decision on this demurrer is mostly likely going to revolve around whether the plaintiffs’ claims are sufficiently similar and whether the initial deference extended to wage and hour class actions extends to unequal pay.

We may also get a clear answer to the question: can class actions on pay discrimination be successfully brought in California? At a minimum, there is a court split developing that looks increasingly ripe for resolution by the California Supreme Court.

But more relevant to the parties here, Clerk’s grades for the briefs suggest that the plaintiffs’ odds aren’t good. Google’s demurrer and reply score 82 and 83, respectively, while the plaintiffs’ opposition only scores a 73.

A sizable gap in the scores like this means that Google is likely to have their demurrer sustained. The best bet for the plaintiffs may be that the judge sustains Google’s demurrer, but grants them leave to amend. That would provide the plaintiffs with a second chance to state a class claim, and the opportunity to fight another day.

Update 12/4/17: Google’s demurrer was sustained with leave to amend. The court followed Tucker. Read the order here.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.