Diversity — by Judge’s Order

Support for diversity has been a familiar feature of the legal industry. Generally liberal and always image-conscious, law firms have long practiced affirmative action. Every year, events such as the Legal Inclusiveness & Diversity Summit and the New York City Bar Association’s Annual Diversity Conference — to name just a few — hand out awards to the most aggressive firms in diversity-hiring.

It is less known, however, that federal judges themselves can impose racial quotas on law firms that represent clients in class action suits. These are suits in which there are multiple complainants, treated together as a class, who are usually suing companies for providing faulty goods or services. In cases of this kind, judges may issue so-called “diversity orders” to require the lawyers representing the class be diverse enough to “effectively represent” the members of the class. These orders, which require race and/or sex matching between class plaintiffs and plaintiff counsel, have apparently been met with few complaints by the firms that are forced to rearrange their litigation teams.

A 2007 diversity order issued in class action proceedings involving a clothing company stated that because “the proposed class includes thousands of participants, both male and female, arguably from diverse backgrounds . . . [it is] therefore important to all concerned that there is evidence of diversity, in terms of race and gender, in the class counsel.” The judge ordered that both co-lead counsel firms “make every effort to assign . . . at least one minority lawyer and one woman lawyer . . . .” Because this was a private, civil matter, it has not been publicly disclosed whether the firms complied with the order, but lawyers almost invariably do what judges tell them to do.

In another case, U.S. District Judge Cathy Seibel of White Plains, New York, recently instructed plaintiff firms applying for lead counsel roles in a class action suit against Bayer AG to consider adding female lawyers to their teams.

The legal justification for these orders relies on a highly strained reading of the Federal Rules of Civil Procedure, which govern the way counsel is appointed in class action cases. In 2003, following criticism that lawyers were putting their interests above those of their class-member clients, the rules were amended to grant judges more power to approve and regulate class counsel.

Under the amendments, law firms were to be approved according to four factors having to do with such things as experience and resources that affect a firm’s ability to represent clients. A fifth factor was added, allowing a judge to consider “any other matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class.” This does not specifically mention race or sex, and whether it can be read that broadly is highly questionable. But such a reading means that any ideological federal judge can issue an order on the makeup of a legal team.

Diversity orders could be very burdensome. Blacks and Hispanics are 4.8 percent and 3.7 percent of licensed attorneys, but are 13 percent and 16 percent of the population. If these orders become the norm, law firms would have no choice but to hire by quota. Women are 30 percent of licensed attorneys — a four-fold increase since 1980 — but this is not enough to meet strict diversity orders either.

Just last week the Supreme Court refused to consider a legal challenge to diversity orders. By refusing to take up the case, it implicitly approved the practice, which means it could spread to other kinds of lawsuits. The case was Martin v Blessing, which was about a diversity order issued by Manhattan U.S. District Court Judge Harold Baer. The appeal originated from a 2010 class action suit against satellite radio broadcaster, Sirius XM Radio. According to the class complaint, the company, then called Sirius Satellite Radio, broke antitrust laws when it raised fees on its subscribers following the 2008 takeover of its only industry rival, XM Satellite Holdings. In addition to objecting to an “inadequate” settlement and an “unreasonable” lawyers’ fee award (plaintiffs got a 5-month price-freeze on their subscriptions, while the lawyers got $13 million in fees), class members also objected to the diversity order. Judge Baer required that counsel “ensure that the lawyers staffed on the case fairly reflect the class composition in terms of relevant race and gender metrics.” The firm, Grant & Eisenhofer PA, no doubt mindful of the windfall fees such suits often produce, complied with the order and dutifully tailored its counsel to achieve Judge Baer’s racial matching objectives.

In the petition to the Supreme Court, class member Nicholas Martin asked that only the diversity order be considered. He argued that it violated the Equal Protection part of the Fifth Amendment’s Due Process Clause by failing to offer any evidence that racial matching could benefit a class’s representation.

On appeal before the Second Circuit, a three-judge panel declined to rule on the diversity order, finding that the class members lacked standing to sue (the court couldn’t find that Mr. Martin and the other class members actually suffered any harm because of the diversity order.) However, according to “friend of the court” briefs filed on behalf of class members by the Pacific Legal Foundation and the Center for Individual Rights, there is precedent in other circuit courts for standing to be granted to plaintiffs when they are “irrationally classified by the government on the basis of race” or when their “rights are affected by discrimination against third parties,” such as in cases of criminal defendants whose jurors are included or excluded because of race. In both kinds of cases, according to the briefs, contrary to what the Second Circuit has asserted, specific injury was not required for claimants to proceed.

The briefs in this case argue that because Judge Baer required class counsel to classify members — irrationally — by race in order to assign to them a proportionate number of non-white and female lawyers, any member of the class should have standing. As for the argument about third-party damage, any class member, they argue, should be able to mount a challenge because Judge Baer clearly ordered that discrimination be practiced against white male lawyers — even though those white male lawyers did not file their own complaint.

Typical of diversity-proponents, Judge Baer, who frequently issues diversity orders, neglected to explain what benefits could possibly flow from forcing law firms to choose attorneys whose races match those of the class. He also failed to cite any statutory law or case precedent to support his order. He explained only that law firms are “behind where they should be.”

There have been racial preferences in law school admissions since the 1978 Bakke ruling, but apparently this hasn’t produced enough non-white lawyers for Judge Baer. In any case, rules on ethics and professional responsibility already require that lawyers take clients as they come, and that all clients’ interests be zealously represented. A vague complaint about law firms being “behind” does not meet the exacting standards of reasoning normally required by courts of law.

In Grutter v Bollinger, which affirmed the use of racial preferences in higher education, the justification offered by Justice Sandra Day O’Connor in her controlling opinion likewise made no sense. She said law school admissions could take a “holistic view” of student applications, which could include race as a factor, but that administrators must be sure not to treat race as a determining factor. It is nearly impossible to show how such a vague standard has been violated.

Justice O’Connor also wrote that a university’s goal of achieving a “critical mass” of racial minorities was permissible, but using racial quotas was not — as if it were possible to distinguish between the two. These inexplicable standards used to justify diversity by the courts seem intended to allow ideological judges–as well as university administrators–to bypass true constitutional scrutiny and to practice racial preference policies by stealth.

Interestingly, both Judge Baer and former Justice O’Connor appear to be text-book WASPs. Judge Baer is an 80-year old veteran and a graduate of Yale Law School–not some radical upstart or minority with a chip on his shoulder. He seems to find no irony in trying to remedy past discrimination — if that is even the basis of his order — by mandating discrimination against white men. By working against his own group interests, he is an example of what a “good” education and life in the elite class do to group instincts.

If the Martin petition had been granted Supreme Court review and had resulted in a ban on diversity orders, firms could have gone back to picking lawyers by ability. That would obviously be in their interests, but plaintiff firms have put up with diversity orders for years without objecting to them. Mr. Martin was represented by a nonprofit public-interest law firm, the Center for Class Action Fairness. The only organizations filing friend-of-the-court briefs on the class’s behalf were other nonprofits, not private law firms.

The 2003 amendments of the class counsel certification rules were intended to protect class members, but it’s unclear how attorney-client racial matching achieves this. If it could be shown that lawyers and clients of different races have a problem communicating, wouldn’t lawyers of different races have the same problem among themselves? Judges who issue diversity orders are clearly motivated by social engineering rather than justice. The Supreme Court’s failure even to consider a ban diversity orders means they will only become more common.