2nd Circuit punts on constitutionality of judge’s diversity effort

December 24, 2012

Benjamin Wilson of Beveridge & Diamond and John Daniels of Quarles & Brady are two of the three African-American chairmen of Am Law 200 firms (Maurice Watson of Husch Blackwell is the third). Wilson and Daniels, who have known each other since they overlapped at Harvard Law School in the 1970s, sat down with a few Reuters journalists last week to talk about the African American Managing Partners Network, a networking group of law firm leaders that they’re championing. Daniels, in particular, talked about his goal of promoting African Americans as great lawyers and rainmakers, not as supporting partners. Both he and Wilson told us that one way to achieve this sort of Diversity 2.0 is to encourage a legal industry version of the National Football League’s “Rooney Rule,” in which, beginning in 2003, the NFL required teams to interview minority candidates for high-level coaching jobs. Just as the ranks of minority coaches have increased considerably since the Rooney Rule was instituted, Wilson and Daniels believe that if general counsel make an effort to interview black candidates when they’re looking for outside lawyers, African Americans will win those assignments.

One federal judge in Manhattan has been using the power of his position to impose a version of the Rooney Rule for the last several years. Since 2007, when U.S. District Judge Harold Baer appoints plaintiffs’ firms to serve as lead counsel in class actions in his courtroom, he requires them to include at least one women and one minority lawyer to staff the case. Baer has been unapologetic about his motives. In a 2010 interview with The New York Law Journal, the judge said firms “are behind where they should be” in promoting diversity. He “saw the counsel approval process as a tool at his disposal” to address what he regards as a persistent problem, the Law Journal wrote.

Plaintiffs’ firms now expect that they’ll have to wear diversity on their sleeves when they appear before Baer, but last December the judge’s policy came under attack from Ted Frank of the Center for Class Action Fairness. Frank appealed Baer’s approval of Sirius XM’s settlement of an antitrust class action, arguing (as he usually does) that the only true beneficiaries of the deal were plaintiffs’ lawyers, in this case Grant & Eisenhofer. Frank also claimed, with amicus support from The Center for Individual Rights, that Baer violated the due process and equal protection rights of the class when he imposed a diversity requirement on the class’s lawyers. The class action gadfly compared Baer’s order to excluding jurors from a trial on the basis of their race. “We have lots of precedent that the judicial system is supposed to be above this,” he told me last year. “It’s counter to what America stands for.”

The 2nd Circuit Court of Appeals on Thursday declined to take up Frank’s challenge. In a non-precedential summary order, Judges Robert SackDenny Chin and Raymond Lohier said Baer had not abused his discretion in approving the Sirius settlement, which they said was substantively fair, given the class’s slim chance of prevailing at trial and the difficulty of evaluating the benefit to class members. The appeals court also said Grant & Eisenhofer’s $13 million in fees and expenses was reasonable. The panel acknowledged Frank’s diversity argument, but then sidestepped it.

Frank’s clients, objectors to the settlement, hadn’t shown that the class received inferior representation from Grant & Eisenhofer, the panel said. So, regardless of Baer’s diversity directive, objectors couldn’t point to any injury. As a result, the appeals court said, Frank’s clients didn’t have standing to challenge Baer’s class certification order calling on class counsel to include minority lawyers in staffing the case. The 2nd Circuit didn’t even reach Frank’s constitutional arguments.

In an interview Friday, Frank said he’s considering his clients’ options. He continued to compare Baer’s diversity requirements to the exclusion of minorities from juries, arguing that both sorts of race-based decisions are unconstitutional. The 2nd Circuit, he said, wanted to find a way to avoid the difficult issues his objection raised.

I left a message with Judge Baer’s chambers, but didn’t hear back.

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