Preview
1 FPAUL HASTINGS LLP
FELICIA A. DAVIS (SB# 266523)
2 feliciadavis@paulhastings.com
ELIZABETH S. MINOOFAR (SB# 307102)
3 elizabethminoofar@paulhastings.com
DEISY CASTRO (SB# 311816)
4 deisycastro@paulhastings.com
515 South Flower Street, Twenty-Fifth Floor
5 Los Angeles, California 90071-2228
Telephone: 1(213) 683-6000
6 Facsimile: 1(213) 627-0705
7 PAUL HASTINGS LLP
CARSON H. SULLIVAN (D.C. SB# 488139)
8 (admitted pro hac vice)
carsonsullivan@paulhastings.com
9 SARAH G. BESNOFF (D.C. SB# 1047295)
(admitted pro hac vice)
10 sarahbesnoff@paulhastings.com
CLAIRE A. SABA MURPHY (D.C. SB# 1659844)
11 (admitted pro hac vice)
clairesabamurphy@paulhastings.com
12 2050 M Street, N.W.
Washington, D.C. 20036
13 Telephone: 1(202) 551-1700
Facsimile: 1(202) 551-1705
14
Attorneys for Defendants
15 THE WALT DISNEY COMPANY, et al.
16 SUPERIOR COURT OF THE STATE OF CALIFORNIA
17 COUNTY OF LOS ANGELES
18 LARONDA RASMUSSEN, et al., on behalf of CASE NO. 19STCV10974
themselves and all others similarly situated,
19 DEFENDANTS’ MEMORANDUM OF
Plaintiffs, POINTS AND AUTHORITIES IN
20 SUPPORT OF MOTION TO STRIKE
vs. OR EXCLUDE THE EXPERT REPORT
21 OF DAVID NEUMARK
THE WALT DISNEY COMPANY, et al.,
22 Date: November 15, 2023
Defendants. Time: 9:00 a.m.
23 Dept.: 6
Judge: Hon. Elihu M. Berle
24
Trial Date: None Set
25
26
[PUBLIC - REDACTS MATERIALS FROM CONDITIONALLY SEALED RECORD]
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 TABLE OF CONTENTS
2 Page
3 I. INTRODUCTION ............................................................................................................... 5
4 II. LEGAL STANDARD .......................................................................................................... 7
III. DR. NEUMARK’S AGGREGATED ANALYSES ARE IRRELEVANT, AND
5 THEREFORE, INADMISSIBLE ........................................................................................ 8
6 A. Aggregated analyses obscure and distort the underlying variations in the
data and provide irrelevant and unreliable information to the factfinder................. 8
7 B. For the EPA claims, aggregated analyses cannot answer the central
question of whether a woman is underpaid compared to colleagues
8 performing substantially similar work. .................................................................... 9
9 C. For the FEHA claims, aggregated analyses assume commonality, but do
not prove it. ............................................................................................................ 11
10 IV. DR. NEUMARK’S FAILURE TO IDENTIFY EMPLOYEES PERFORMING
SUBSTANTIALLY SIMILAR WORK RENDERS HIS ANALYSES
11 IRRELEVANT AND UNRELIABLE ............................................................................... 12
12 A. Dr. Neumark performed no testing and uncritically relies on the opinions of
other experts to conclude that employees in the same Job Family-Level are
13 performing substantially similar work. .................................................................. 12
B. Dr. Neumark’s opinion that employees in the same Job Function-Level are
14 similarly situated is not based on any reliable methodology and is an
inadmissible expert opinion. .................................................................................. 14
15
V. DR. NEUMARK’S STARTING SALARY ANALYSES ARE UNRELIABLE.............. 15
16 VI. DR. NEUMARK’S ANALYSES ARE UNRELIABLE BECAUSE THEY
IGNORE CRITICAL VARIABLES .................................................................................. 16
17
A. Dr. Neumark’s model is unreliable and irrelevant because it omits critical
18 variables that explain pay. ...................................................................................... 16
B. Dr. Neumark’s so-called “richer” controls are completely unreliable. .................. 17
19
VII. CONCLUSION .................................................................................................................. 19
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 TABLE OF AUTHORITIES
2 Page(s)
3 CASES
4 Abram v. UPS,
200 F.R.D. 424 (E.D. Wis. 2001) ............................................................................................. 9
5
Anderson v. Westinghouse Savannah River Co.,
6 406 F.3d 248 (4th Cir. 2005)............................................................................................. 14, 15
7 Apple Inc. v Superior Court,
19 Cal. App. 5th 1101 (2018) ................................................................................................... 7
8 Bazemore v. Friday,
9 478 U.S. 385 (1986) ................................................................................................................ 17
Cooper v. S. Co.,
10 260 F.Supp.2d 1305 (N.D. Ga. 2003), aff’d,
11 390 F.3d 695 (11th Cir. 2004)................................................................................................. 17
Daubert v. Merrell Dow Pharms., Inc.,
12 509 U.S. 579 (1993) ................................................................................................................ 18
13 Davis v. Cintas Corp.,
717 F.3d 476 (6th Cir. 2013)................................................................................................... 11
14
E.E.O.C. v. Bloomberg L.P.,
15 2010 WL 3466370 (S D.N.Y. Aug. 31, 2010) ........................................................................ 15
16 Forte v. Liquidnet Holdings, Inc.,
675 F. App’x 21 (2d Cir. 2017) (unpublished) ....................................................................... 17
17 Fosmire v. Progressive Max Ins. Co.,
18 277 F.R.D. 625 (W.D. Wash. 2011) ....................................................................................... 14
Hall v. County of Los Angeles,
19 148 Cal. App. 4th 318 (2007) ................................................................................................. 12
20 Hyatt v. Sierra Boat Co.,
79 Cal. App. 3d 325 (1978)..................................................................................................... 13
21
In re ConAgra Foods, Inc.,
22 302 F.R.D. 537 (C.D. Cal. 2014) ............................................................................................ 14
23 Jennings v. Palomar Pomerado Health Sys., Inc.,
114 Cal. App. 4th 1108 (2003) ............................................................................................... 13
24 Lockheed Litig. Cases,
25 115 Cal. App. 4th 558 (2004)) ............................................................................................ 7, 14
Lott v. Westinghouse Savannah River Co.,
26 200 F.R.D. 539 (D.S.C. 2000), aff’d and remanded,
27 406 F.3d 248 (4th Cir. 2005)..................................................................................................... 9
28
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 Majo v. Sony Interactive Ent. LLC,
2022 WL 1188871 (N.D. Cal., Apr. 21, 2022) ....................................................................... 12
2
Moussouris v. Microsoft Corp.,
3 2018 WL 3328418 (W.D. Wash. June 25, 2018), aff’d,
799 F. App’x 459 (9th Cir. 2019) ........................................................................................... 11
4
Negley v. Jud. Council of Cal.,
5 2010 WL 11545605 (N.D. Cal., June 21, 2010), aff’d,
458 F. App’x 682 (9th Cir. 2011) ........................................................................................... 12
6
Penk v. Or. State Bd. of Higher Educ.,
7 1985 WL 25631 (D. Or. Feb. 13, 1985), aff’d
816 F.2d 458 (9th Cir. 1987)................................................................................................... 11
8
Sargon Enters., Inc. v. Univ. of S. Cal.,
9 55 Cal. 4th 747 (2012) .............................................................................................................. 7
10 Shiffer v. CBS Corp.,
240 Cal. App. 4th 246 (2015) ................................................................................................. 14
11 Tagatz v. Marquette Univ.,
12 861 F.2d 1040 (7th Cir. 1988)................................................................................................. 14
U.S. v. Artero,
13 121 F.3d 1256 (9th Cir. 1997)................................................................................................. 17
14 Wells v. Kawasaki Motors Corp., U.S.A.,
2019 WL 5842921 (D. Utah Nov. 7, 2019) ............................................................................ 18
15
STATUTES
16 CAL. EVID. CODE § 801................................................................................................................... 5
17 CAL. EVID. CODE § 802................................................................................................................... 5
18 CAL. GOV'T CODE § 12900 (FAIR EMPLOYMENT AND HOUSING ACT (FEHA)) .................... passim
CAL. LAB. CODE § 1197.5 (CALIFORNIA EQUAL PAY ACT) ............................................... 5, 11, 12
19
CAL. LAB. CODE § 1197.5(a) .................................................................................................... 9, 12
20
CAL. LAB. CODE § 1197.5(a)(1)(D) .............................................................................................. 17
21 OTHER AUTHORITIES
22 CACI 2740 (rev. May 2020) ......................................................................................................... 11
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 I. INTRODUCTION
2 Dr. Neumark’s third amended expert report1 contains opinions that are irrelevant,
3 unreliable, and inadmissible under California Evidence Code Sections 801 and 802. They should
be excluded.
4
First, Dr. Neumark admits that his aggregated analyses cannot answer whether women
5
were paid less than men performing substantially similar work. See, e.g., Ex. A,2 Transcript of
6 Deposition of David Neumark 173:16-174:7 (“Neumark Tr.”) (admitting “I have no knowledge”
7 when asked “whether women in LaRonda Rasmussen’s job family and job level grouping are
8 underpaid compared to men”). Further, Dr. Neumark’s aggregated model assumes commonality,
9 it does not prove it. Every application of this model is designed to return a single common result
showing one alleged pay difference for all 12,500 potential class members in the proposed Fair
10
Employment and Housing Act (FEHA) class, and a separate alleged pay difference for all 9,800
11
potential class members in the proposed Equal Pay Act (EPA) subclass, across more than 3,100
12
different job groups, as defined by Dr. Neumark. This distorts the reality that the vast majority of
13 the potential class were in Business Areas and Segments in which men and women were paid
14 statistically equally for substantially similar work.
15 Second, Dr. Neumark’s model applied to both the FEHA class and the EPA subclass relies
on faulty assumptions about the right comparator groups, rendering his analysis unreliable and
16
irrelevant. Because Dr. Neumark’s analyses (for both FEHA and EPA) compare jobs that are not
17
substantially similar, he is not accounting for important differences between jobs that may explain
18
why employees are paid differently, and any pay differences he observes may be the result of
19 those job differences (rather than caused by gender, as he alleges). With respect to the EPA
20 subclass, Dr. Neumark’s model should be excluded because he uncritically, and without any of
21 his own testing, relied upon Plaintiffs’ industrial organizational psychologist’s erroneous
22 conclusions that all employees in the same Job Family and Job Level perform substantially
23
24
1
To date, Plaintiffs have served three versions of Dr. Neumark’s expert report. The first on
25 June 30, 2023, Plaintiffs’ filing deadline. The second at 8:15 a.m. PT on July 26, 2023, just 45
minutes before Dr. Neumark’s deposition was set to begin. The third was dated August 3, 2023,
26 but was sent to Defendants on August 4, 2023, nine days after his deposition concluded (which
Plaintiffs did not file until two weeks later, on August 21, 2023). All cites within Defendants’
27 filings refer to Dr. Neumark’s third report, Amended Expert Report of David Neumark dated
August 3, 2023, unless otherwise noted. It is referred to as “Neumark R.”.
2
28 All exhibits referenced herein are provided as exhibits to the Declaration of Felicia A. Davis,
filed concurrently herewith.
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 similar work.3 He compares employees who are plainly not in comparable jobs, for example a
2 Landscape Architect Studio Executive with an Executive Interior Designer, or a Director of
3 Horticulture/Resort Enhancement with an Executive Show Technical Production Manager, or an
Environmental Project Manager with an Athletic Training Program Manager. See Expert Report
4
of Dr. John H. Johnson, IV (“Johnson R.”) ¶95 fn. 206, filed concurrently.
5
With respect to the FEHA class, Dr. Neumark’s model assumes that an even broader
6 grouping of employees can be compared (those within the broad Job Function and Job Level).
7 Dr. Neumark’s invention that employees in the same Job Function and Level can be grouped
8 together because they are “similarly situated” requires him to originate an imagined lesser legal
9 standard than the EPA (he is not a lawyer; in fact, the standard is the same). A cursory review of
jobs grouped in this manner shows that jobs within the same Job Function and Level cannot be
10
compared. For example, his Job Function-Level methodology compares the pay of a Director of
11
Environmental Affairs and a Director of Safety. Common sense would tell you that any difference
12
in pay between a Director of Environmental Affairs and a Director of Safety likely results from
13 the fact that these are different jobs (with different qualifications, educational requirements,
14 performance expectations, industry standards, etc.). Yet, Dr. Neumark’s model is unable to
15 account for these meaningful job differences, leading his model to allege that job-related
differences in pay are a result of gender discrimination. Analyses comparing the pay of
16
employees who do not perform similar work are misleading, irrelevant, and inadmissible. They
17
should be excluded.
18
Third, Dr. Neumark’s model purporting to measure the impact of prior pay on starting pay
19 does not analyze prior pay at all. Rather, he claims he can prove a causal link between
20 consideration of prior pay (which he admits was never a common practice throughout
21 Defendants’ companies) and starting pay because when his model is applied to the FEHA class,
22 he sees a “substantial decline” in the observed pay difference between men and women before
and after October 2017, the date Plaintiffs agree Defendants ceased any inquiry into prior pay
23
information. However, his model does not test for causality, and he fails to admit that the
24
“substantial decline” in pay differences he observes between men and women also occurs after
25 October 2016, and April 2017, dates before the alleged practice change. Johnson R. ¶182, Ex. 29.
26 Moreover, what may be driving his alleged starting pay difference over time are flaws in his
27
3
Please see concurrently-filed Motion to Strike or Exclude the Expert Report of Leaetta M.
28 Hough, Ph.D.
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 model, not a change in Defendants’ alleged practice. In the earlier part of the class period, his
2 model forces ill-fitting comparisons between employees in the broader Job Functions, while in
3 the latter part of the period, he compares employees sorted into the more specific Job Families.
Fourth, Dr. Neumark’s “preferred” applications of his model to the FEHA class and EPA
4
subclass fail to appropriately control for legitimate business-related factors that he admits
5
influence pay, such as education, relevant prior experience, and performance. He admits that he
6 cannot create a class-wide model that includes these controls because the class is too diverse.
7 Instead, for a subset of the proposed classes, he applies self-titled “richer” controls for education
8 and relevant prior experience. These studies are irrelevant because his “richer” controls are
9 unreliable. Johnson R. ¶¶210-39. For all the foregoing reasons, the Court should strike
Dr. Neumark’s report.
10
II. LEGAL STANDARD
11
“[T]he trial court acts as a gatekeeper to exclude speculative or irrelevant expert
12
opinion[s],” including to exclude opinion testimony that is “(1) based on matter of a type on
13 which an expert may not reasonably rely, (2) based on reasons unsupported by the material on
14 which the expert relies, or (3) speculative.” Sargon Enters., Inc. v. Univ. of S. Cal., 55 Cal. 4th
15 747, 770-72 (2012). This critical gatekeeping role “appl[ies] equally in the context of class
certification motions.” Apple Inc. v Superior Court, 19 Cal. App. 5th 1101, 1119 (2018); see also
16
id. 1106 (“A trial court may consider only admissible expert opinion evidence on class
17
certification . . . .”). “[C]ertifying a proposed class based on inadmissible expert opinion evidence
18
would merely lead to its exclusion at trial, imperiling continued certification of the class and
19 wasting the time and resources of the parties and the court.” Id. at 1117. “The goal of trial court
20 gatekeeping is simply to exclude ‘clearly invalid and unreliable’ expert opinion. . . . In short, the
21 gatekeeper’s role ‘is to make certain that an expert, whether basing testimony upon professional
22 studies or personal experience, employs in the courtroom the same level of intellectual rigor that
characterizes the practice of an expert in the relevant field.’” Id. at 1118 (quoting Sargon, 55 Cal.
23
4th at 772). Thus, “the matter relied on [by an expert] must provide a reasonable basis for the
24
particular opinion offered, and . . . opinion based on speculation or conjecture is inadmissible.”
25 Sargon, 55 Cal. 4th at 770 (quoting Lockheed Litig. Cases, 115 Cal. App. 4th 558, 564 (2004)).
26 “[T]he expert’s opinion may not be based ‘on assumptions of fact without evidentiary support’;
27 nor may it be based on “guess, surmise or conjecture.” Id. (citations omitted). In determining
28 whether an expert’s opinion satisfies this standard, “a court may inquire into, not only the type of
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 material on which an expert relies, but also whether that material actually supports the expert’s
2 reasoning.” Id. at 771. When a court “conclude[s] that there is simply too great an analytical gap
3 between the data and the opinion proffered,” the opinion should be excluded. Id. (citation
omitted).
4
5 III. DR. NEUMARK’S AGGREGATED ANALYSES ARE IRRELEVANT, AND
THEREFORE, INADMISSIBLE
6
A. Aggregated analyses obscure and distort the underlying variations in the data
7 and provide irrelevant and unreliable information to the factfinder.
Dr. Neumark’s model reports one alleged average pay shortfall for all women in all years,
8
across all jobs: 2.01% for the putative FEHA class and 0.81% for the putative EPA subclass. See,
9
e.g., Neumark R. ¶82, tbl. 3, Model II (preferred FEHA model); id. ¶135, tbl. 11, Model II
10 (preferred EPA model). He admits, however, that neither are necessarily the result for any
11 particular woman or group of women. Neumark Tr. 173:16-174:7, 175:5-13; Neumark R. ¶67. He
12 also admits that there likely are job groups where women are paid more than men, and job groups
13 that only contain women, to whom neither of the alleged pay shortfalls would apply. Neumark Tr.
89:12-91:20 (“I realize in court in an equal pay claim . . . one might be instructed to . . . not
14
include those people because, strictly speaking, there is nobody in the same job in the same
15
business making less than them”).
16 A simple hypothetical demonstrates the risk of relying on aggregated statistics. Assume
17 two Job Family-Levels are populated and paid as follows: (1) Casting Director—10 men each
18 paid $200,000 per year, and 10 women each paid $200,000 per year; (2) Casting Manager—10
19 men each paid $150,000 and 10 women each paid $140,000 per year. Assume that all Casting
Directors and Casting Managers are similarly productive, regardless of gender. The numbers are
20
clear—not one female Casting Director has a pay discrimination claim as the men and women are
21
paid identically. But an aggregate model, where Casting Directors and Casting Managers are
22
combined into a single model with a control for Job Family-Level—like Dr. Neumark’s model—
23 suggests that all female Casting leaders are paid, on average, $5,000 less then all male Casting
24 leaders ($170,000 average pay for women vs. $175,000 average pay for men). This average
25 shortfall is not accurate for any of the women analyzed: the average invents a shortfall for the
Directors that does not exist, and underestimates the shortfall for the Managers.
26
Dr. Neumark disclaimed that his aggregated model did not accurately predict the pay
27
difference for every potential class member; he went so far as to say that he would be “very
28
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 shocked if a really big segment gave you a very different result” from his aggregated statistic.
2 Neumark Tr. 181:3-24. In fact, a “really big” Segment does give “very different” results.
3 Disaggregating Dr. Neumark’s model when applied to employees within the same Job Family and
Level (which reflects the entirety of the EPA subclass and a majority of the FEHA class), by
4
Segment, and making no other modifications, reveals that the vast majority of Segments show no
5
statistically significant pay difference, including the four largest segments. Notably, the largest
6 segment in the data, Disney Parks, Experience, and Products (DPEP) (called DPECP in the data),
7 with more than 18,000 observations across the putative class period, shows a positive estimated
8 pay difference for women. Johnson R. ¶203, Ex. 33. In fact, Plaintiffs’ model (without any
9 modifications)—applied separately to each Segment—find that 83 percent of all potential class
member observations are paid statistically equal to men. Id. Similarly, Dr. Neumark’s model
10
(without any modifications) finds that 91 percent of all potential class member observations in
11
the top 25 Business Areas are paid statistically equal to men. Johnson R. ¶207, Ex. 35.
12
Simply put, Dr. Neumark’s model reinforces the dangers of an aggregated model—it
13 ascribes a pay difference to all women in all Segments and Business Areas, despite the reality that
14 the vast majority are paid statistically equally to men. The “perils and misuses” of an aggregated
15 statistical model are well documented in case law. “If Microsoft-founder Bill Gates and nine
monks are together in a room, it is accurate to say that on average the people in the room are
16
extremely well-to-do, but this kind of aggregate analysis obscures the fact that 90% of the people
17
in the room have taken a vow of poverty.” Abram v. UPS, 200 F.R.D. 424, 431 (E.D. Wis. 2001);
18
Lott v. Westinghouse Savannah River Co., 200 F.R.D. 539, 560-61 (D.S.C. 2000), aff’d and
19 remanded, 406 F.3d 248 (4th Cir. 2005) (“[a]ggregated statistics . . . are of scant utility to the
20 court in conducting a certification analysis“). This faulty aggregation approach renders both Dr.
21 Neumark’s EPA and FEHA analyses unreliable and irrelevant, as described below.
22 B. For EPA claims, aggregated analyses cannot answer the central question of
whether a woman is underpaid compared to colleagues performing
23 substantially similar work.
24 For EPA claims, these analyses cannot answer the central question of whether a particular
25 female employee is in fact underpaid compared to her male colleagues performing substantially
similar work. To state a prima facie pay discrimination claim, a plaintiff must show that they are
26
27
28
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 paid less than a comparable male. Being paid “less” is an element of the claim.4 Yet,
2 Dr. Neumark’s aggregated analyses cannot tell the jury whether within any of the 3,100 EPA
3 groupings (Job Family-Level), women are actually paid less than men. Dr. Neumark concedes
this. See Neumark Tr. 84:5-17 (“I estimated an aggregated regression model that controls for all
4
those things but does not estimate a separate gender gap for lots and lots and lots of small cells of
5
data.”); 85:1-6 (“I don’t have a specific estimate for each job family, job level…”).5 For example,
6 Dr. Neumark admits that his analyses cannot answer whether Named Plaintiff LaRonda
7 Rasmussen (or other women) in the Job Family TCH Product Management, Level M2 was
8 underpaid compared to “similarly situated” men or men performing “substantially similar work.”
9 Neumark Tr. 86:13–20 (“I don’t have a direct estimate of underpayment or overpayment for that
particular job family and level.”). In fact, his analysis cannot answer this question for any
10
potential class member in any of the thousands of job groupings Plaintiffs allege.
11
This issue is laid bare when Dr. Neumark is forced to admit which Named Plaintiffs could
12
actually sustain an EPA claim. He reports that Named Plaintiffs Train, Joo, and Rasmussen are
13 the only Named Plaintiffs in the EPA subclass. Neumark R. App’x tbl. E.7. Yet Plaintiffs Dolan,
14 Eady-Marshall, and Hanke were also assigned a Job Family and Level (and thus should be in the
15 EPA subclass) and, in fact, they are included in the data Dr. Neumark presents for his EPA
analysis. Johnson R. ¶43. Yet, they are excluded from his reported list of Named Plaintiff EPA
16
subclass members (and in Plaintiffs’ brief, Plaintiffs claim they are not Named Plaintiffs for their
17
EPA class). Plaintiffs’ Motion for Class Certification (“Br.”) at p. 19 fn. 60. Why? Because
18
Dolan, Eady-Marshall, and Hanke were never paid less than a man in the same Segment and
19 Job Family-Level—thus they have no EPA claim. Johnson R. ¶43. They are not alone. Nearly
20 20% of the proposed EPA class members never had a male comparator in their Job Family-Level
21 who was ever paid less than they were; including 7% of the proposed EPA class who never had a
22 single male comparator period, according to Plaintiffs’ definition. Id. Dr. Neumark’s model
23
4
Equal Pay Act, Cal. Labor Code § 1197.5(a) (“shall not pay any of its employees at wage rates
24 less than the rates paid to employees of the opposite sex for substantially similar work, when
viewed as a composite of skill, effort, and responsibility, and performed under similar working
25 conditions”) (emphasis added).
5
See also Neumark Tr. 87:24-88:11 (“I have an aggregated model. I do not estimate a model—a
26 parameter specifically for that family and level or for her.”), 88:18-89:11 (“I have an aggregated
regression model that controls for function level or family and I don’t—I don’t report specific
27 parameters for a function—I think you said function level cell.”), 173:7-15 (“This is a regression
estimate. It is meant to answer that question for any—any job family level pay, but it is a single
28 aggregated estimate. It’s not a—it’s not an estimate specific to each family level combination.”).
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 would tell you that they are all underpaid by 0.81%, and yet, none of them was. If Dr. Neumark’s
2 analysis does not answer whether a specific woman or group of women were “paid less,” then it
3 does not answer a question before the jury,6 and should be excluded.
4 C. For the FEHA claims, aggregated analyses assume commonality, but do not
prove it.
5
While Plaintiffs claim that Dr. Neumark’s analyses provide evidence of commonality
6 sufficient to certify a class, an aggregated analysis does not prove common evidence of
7 discrimination across the class—it assumes it. See Neumark Tr. 178:15-18 (“A fully aggregated
8 [model], yes, gives you one number as an outcome.”). “[A]ggregating statistical results over [all
9 decision-making units] in order to prove that a pattern or practice of discrimination exists at each
[unit] ‘puts the cart before the horse’”—for “[i]f plaintiffs’ statistical evidence does not show
10
statistically significant sex-based differences at four of the eight [units], for example, this is
11
information that must be considered by the court when it determines both whether a system-wide
12 class is appropriate and whether system-wide aggregation is appropriate.” Penk v. Or. State Bd. of
13 Higher Educ., 1985 WL 25631, at *35 (D. Or. Feb. 13, 1985), aff’d, 816 F.2d 458 (9th Cir.
14 1987); see also Moussouris v. Microsoft Corp., 2018 WL 3328418, at *24 n.20 (W.D. Wash.
15 June 25, 2018), aff’d, 799 F. App’x 459 (9th Cir. 2019) (“[I]f Microsoft had 25 managers, 5 of
whom discriminated in making pay and promotion decisions, aggregate data would show that
16
female employees fared worse than male employees. But that result would not imply that all 25
17
[managers] behaved similarly, so it would not demonstrate commonality.”) (internal quotation
18
marks and citation omitted); Davis v. Cintas Corp., 717 F.3d 476, 488 (6th Cir. 2013) (no
19 commonality based on plaintiffs’ aggregated statistics; “although some Cintas locations under-
20 hired women and racial minorities, other locations over-hired women and racial minorities during
21 the same period”) (citation omitted). Plaintiffs’ aggregated analyses are irrelevant and should be
excluded.
22
23
24
6
See Judicial Council of California Civil Jury Instructions 2740 (rev. May 2020) (“Violation of
25 Equal Pay Act—Essential Factual Elements”) (Lab. Code § 1197.5) (“To establish this claim,
[name of plaintiff] must prove all of the following: (1) That [name of plaintiff] was paid less than
26 the rate paid to [a] person[s] of [the opposite sex] working for [name of defendant]; (2) That
[name of plaintiff] was performing substantially similar work as the other person[s], considering
27 the overall combination of skill, effort, and responsibility required; and (3) That [name of
plaintiff] was working under similar working conditions as the other person[s].”) (emphasis
28 added).
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 IV. DR. NEUMARK’S FAILURE TO IDENTIFY EMPLOYEES PERFORMING
SUBSTANTIALLY SIMILAR WORK RENDERS HIS ANALYSES IRRELEVANT
2 AND UNRELIABLE
3 Plaintiffs move to certify pay discrimination claims under two California statutes—the
FEHA and the EPA. Critical to a pay discrimination claim under either statute is the identification
4
of relevant comparators. After all, neither statute requires that all employees must be paid the
5
same. The EPA requires equal pay for “substantially similar work.” Cal. Lab. Code § 1197.5(a).
6
FEHA prohibits pay discrimination between “similarly situated” employees. See, e.g., Hall v.
7 County of Los Angeles, 148 Cal. App. 4th 318, 322 (2007). Although the terminology varies
8 (“substantially similar work” vs. “similarly situated”), the legal standard based on Plaintiffs’
9 theories is the same. “[W]hen a plaintiff asserts a discriminatory compensation claim under
FEHA, that claim must meet the same standard as an Equal Pay Act claim.” Negley v. Jud.
10
Council of Cal., 2010 WL 11545605, at *5 (N.D. Cal., June 21, 2010), aff’d, 458 F. App’x 682
11
(9th Cir. 2011). See also Majo v. Sony Interactive Ent. LLC, 2022 WL 1188871, at *5 (N.D. Cal.,
12
Apr. 21, 2022) (finding Plaintiff’s FEHA pay discrimination claim “fails for the same reasons the
13 [federal and California] Equal Pay Act claims fail. ‘[W]hen a plaintiff asserts a discriminatory
14 compensation claim under FEHA, [it] must meet the same standard as an Equal Pay Act claim.’”)
15 (quoting Negley, 2010 WL 11545605, at *5). This means that FEHA pay discrimination claim
16 comparators must perform “substantially similar work,” just as they do under the EPA.
A. Dr. Neumark performed no testing and uncritically relies on the opinions of
17 other experts to conclude that employees in the same Job Family-Level are
performing substantially similar work.
18
Dr. Neumark’s studies comparing employees within the same Job Family-Level should be
19 excluded because they uncritically rely on Plaintiffs’ industrial organizational psychologist expert
20 Dr. Leaetta Hough’s unreliable conclusion that employees within the same Job Family-Level
21 group perform substantially similar work, which Dr. Neumark never independently tested or
22 analyzed. Neumark Tr. 53:17-54:8, 137:10-22. In doing so, Dr. Neumark ignores the fact that
Dr. Hough never studied the work performed by putative class members, performed no job
23
analysis, and interviewed no employees (not even the Named Plaintiffs). See generally Motion to
24
Strike or Exclude the Expert Report of Leaetta M. Hough, Ph.D., concurrently filed herewith.
25
Regardless, Dr. Neumark admits that he did no independent testing to justify his use of
26 Job Family-Level: he did not perform a job analysis, interview any employees, and did not even
27 read the Named Plaintiffs’ depositions. Neumark Tr. 53:17-54:11, 55:24-56:24. In fact, he did no
28 empirical investigation or testing of the putative class jobs at all. Neumark Tr. 51:9-12 (“Q. [Y]ou
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 didn’t look at the jobs? A. I did not. . . .”), 56:11-16 (“I didn’t do any empirical investigation of
2 what people are doing in their jobs.”), 59:1-10 (“I haven’t analyzed the content of jobs”). If he
3 had done any independent testing, he would have found that many of the comparisons between
employees within a Job Family-Level are absurd on their face. For example, “similarly situated”
4
comparators under Dr. Neumark’s definition compare a Senior Image & Color Engineer with a
5
Senior Software Engineer – Full Stack, or a Financial Accounting Analyst with a Brand and
6 Product Management Administrator. See Johnson R. ¶67, Ex. 7; see also id. ¶¶95-97, Ex. 14-15
7 (collecting Job Family-Level groupings). These are plainly not substantially similar jobs.
8 Dr. Neumark’s only independent reasons for relying upon Job Family-Level are factually
9 incorrect and underscore this lack of independent testing of Dr. Hough’s theories. First,
Dr. Neumark claims that jobs in the same Job Family-Level were “almost always” in the same
10
pay grade. Neumark Tr. 265:18-266:5. That is demonstrably false. Across the 3,100 unique Job
11
Family-Levels observed during the class period, 60 percent of the putative EPA subclass
12
members were associated with Job Family-Levels using multiple pay grades. Johnson R. n.195.7
13 Second, Dr. Neumark claimed at his deposition that Defendants “benchmark[] pay based on
14 family and level.” Neumark Tr. 134:18-136:6, 154:18-24. That too is false. Numerous witnesses
15 report the opposite—that jobs are benchmarked by job, not Job Family-Level.8 Dr. Neumark
admitted that if he learned that jobs are benchmarked by job, and not Job Family, he might
16
reconsider his analysis. Neumark Tr. 154:25-155:6. Dr. Neumark should read the record and
17
reconsider. See Hyatt v. Sierra Boat Co., 79 Cal. App. 3d 325, 338-39 (1978) (“It is well settled
18
that an expert’s assumption of facts contrary to the proof destroys the opinion[s].”); Jennings v.
19 Palomar Pomerado Health Sys., Inc., 114 Cal. App. 4th 1108, 1117 (2003) (“[A]n expert opinion
20 is worth no more than the reasons upon which it rests.”) (internal citation omitted); Shiffer v. CBS
21
22 7
In addition, 69% of putative EPA subclass members were associated with Job Family-Level
cells that contain two or more Job Codes, 60% of putative EPA subclass members on average
23 were associated with the EPA cells that have two or more Pay Grades, and 23% are in groups
with both employees receiving TWDC annual bonuses and not receiving any TWDC annual
24 bonus. Johnson R. n.195, 206, 235.
8
See, e.g., Ex. C, Transcript of the Deposition of Janet Burnley (VP Compensation, HR Systems
25 and Analytics in DPEP) 73:21–75:1, 76:20–76:23 (within DPEP, “each individual job is mapped
to the—to the market data that then establishes the grade . . . what gets matched to the market that
26 then establishes the pay grade is the actual job, not the job family”); Ex. D, Transcript of the
Deposition of Mark Larson (VP of Compensation in DPEP) 215:24–216:10 (“One survey match
27 is more about one job and not about a job family.”); Ex. E, Transcript of the Deposition of Janet
Temple (Director of Compensation in DGE) 44:7-23 (within DGE, “when we benchmark a job,
28 we’re looking at the specific job and job responsibilities”).
-13-
DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 Corp., 240 Cal. App. 4th 246, 254 (2015) (affirming exclusion of experts based on “foundational”
2 problem that they “did not analyze the complete set of facts”); Lockheed Litig. Cases, 115 Cal.
3 App. 4th at 565 (expert opinion excluded where it cited support “provide[s] no reasonable basis
for the [expert’s] opinion”).9
4
Dr. Neumark’s analyses relying upon comparisons of employees within the same Job
5
Family-Level, based on Dr. Hough’s unreliable opinions that were never independently studied
6 by Dr. Neumark, are flawed and should be excluded. See, e.g., In re ConAgra Foods, Inc., 302
7 F.R.D. 537, 556-57 (C.D. Cal. 2014) (excluding expert opinion at class certification in part for
8 relying on opinions of other experts without performing an independent analysis or evaluation);
9 c.f. Fosmire v. Progressive Max Ins. Co., 277 F.R.D. 625, 630 (W.D. Wash. 2011) (“The [R]ules
[of Evidence] do not permit an expert to rely upon opinions developed by another expert for
10
purposes of litigation without independent verification of the underlying expert’s work.”).
11
B. Dr. Neumark’s opinion that employees in the same Job Function-Level are
12 similarly situated is not based on any reliable methodology and is an
inadmissible expert opinion.
13 Dr. Neumark invents a new definition for what constitutes “similarly situated” work that
14 is scientifically unsound, wholly untested, and without the expertise necessary to issue the
15 opinion. Dr. Neumark ignores that the standard is the same for FEHA and EPA comparators, and
16 instead finds that for the FEHA class, comparators can include both employees in the same Job
Family-Level, or if Job Family is not assigned, employees in the same Job Function-Level. He
17
has asserted no basis for this opinion, and it is patently outside of his expertise to opine on
18
whether jobs are similarly situated. Neumark Tr. 69:7-25 (“I’m not a job analyst.”).
19 For an example of the absurdities in his studies, comparing employees within the same
20 Job Function-Level assumes that an Occupational Nurse Manager and Warehouse Manager are
21 appropriate comparators because they are both in Job Function Other, Level M1. Neumark Tr.
22 50:2-17. His model assumes that there are no job-related differences between an Occupational
Nurse Manager and a Warehouse Manager that could explain differences in pay. Neumark Tr.
23
49:14-24. That defies common sense; substantial differences in the qualifications and skills
24
25
9
Notably, when Dr. Neumark’s EPA models (without making any other changes) control for Job
26 Code, they find no statistically significant shortfall in pay in any class period. Johnson R. Ex. 32.
See Anderson v. Westinghouse Savannah River Co., 406 F.3d 248, 263 (4th Cir. 2005) (excluding
27 analysis that failed to control for “the actual job title or the job duties”); Tagatz v. Marquette
Univ., 861 F.2d 1040, 1045 (7th Cir. 1988) (expert’s “failure to control for differences in rank”
28 made his analysis “essentially worthless”).
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 between these two jobs may explain differences in how the two roles are compensated. Yet, he
2 claims he cannot create a class-wide model that controls for all of the important differences
3 between jobs because the jobs are too diverse to model. Dr. Neumark admitted, “one might have
to know more that I don’t think I know from the data and I don’t think we can tell from the data.”
4
Neumark Tr. 59:21-61:15. This is precisely why his opinion is irrelevant to the factfinder in this
5
case (and why his models fail).10
6 This is critical, because all but two of Dr. Neumark’s studies use Job Function-Level to
7 identify comparators. This includes the studies Plaintiffs rely on to allege that women are paid
8 2.01% less than men during the putative class period, that women are paid less than men in
9 starting salary, and that Plaintiffs’ damages amount to more than $150 million. Dr. Neumark’s
model applied to Job Function-Level groupings plainly do not control for differences between
10
jobs. Thus, they are incapable of determining whether differences in compensation between these
11
jobs are caused by gender discrimination, or simply job differences.
12 V. DR. NEUMARK’S STARTING SALARY ANALYSES ARE UNRELIABLE
13 Dr. Neumark opines on the impact of prior pay on starting pay, but never actually studies
14 prior pay.11 Dr. Neumark claims, instead, to prove that Defendants used prior pay to set starting
15 pay by analyzing starting pay data before and after October 2017, the date Plaintiffs agree
Defendants ceased any inquiry into prior pay information. Dr. Neumark opines that the data show
16
a “substantial decline” in the difference in starting pay between men and women before and after
17
October 2017. Neumark R. ¶13. He concludes that this is consistent with his hypothesis that
18 Defendants used prior pay to set starting pay prior to October 2017 (but not after), and that doing
19 so harmed women. Neumark Tr. 155:15-21. But this study does not—and cannot—actually show
20
21
10
Accord Anderson, 406 F.3d at 263 (affirming exclusion of statistical analysis that lumped
22 employees into overbroad job groupings, finding that “there [was] simply too much disparity in
the groups” and no “factor that would control for the actual . . . job duties”); E.E.O.C. v.
23 Bloomberg L.P., 2010 WL 3466370, at *12 (S D.N.Y. Aug. 31, 2010) (striking expert statistical
report which failed to “accurately compare class members to other similarly situated Bloomberg
24 employees”).
11
Dr. Neumark admitted he never ran any analysis on the limited prior pay data and salary
25 expectations data that was in the record. Neumark Tr. 250:1-251:4. Prior pay and salary
expectations data was not uniformly collected for all potential class members during the class
26 period because there was never a common policy or practice of relying on prior pay or salary
expectations to set starting pay, which Dr. Neumark admits. See Neumark Tr. 163:24-164:3 (“Q.
27 But there is also evidence, as you said earlier, that people were not using prior pay before 2017.
A. There are some statements to that effect, yes.”); see also id. 249:10-18, 330:17-331:8;
28 Neumark R. ¶30.
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DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK
1 any causality between the two.12
2 Labor Economist Dr. John Johnson repeated the same analysis as Dr. Neumark, but split
3 the data at October 2016 and April 2017, dates before the alleged change in practice. Dr. Johnson
found the same “substantial decline” Dr. Neumark observed before/after October 2016 and
4
before/after April 2017. Johnson R. ¶183, Ex. 29. In other words, Dr. Neumark’s conclusions
5
based on his October 2017 cutoff would have been the same had he examined starting pay using
6 an October 2016 or April 2017 cutoff (and likely on many other randomly selected dates before
7 and after). Plainly, Dr. Neumark cannot show causation of an observed change that occurs before
8 the alleged change in practice.
9 In fact, Dr. Neumark admitted that the change he observes in the data before and after
Preview
1 FPAUL HASTINGS LLP FELICIA A. DAVIS (SB# 266523) 2 feliciadavis@paulhastings.com ELIZABETH S. MINOOFAR (SB# 307102) 3 elizabethminoofar@paulhastings.com DEISY CASTRO (SB# 311816) 4 deisycastro@paulhastings.com 515 South Flower Street, Twenty-Fifth Floor 5 Los Angeles, California 90071-2228 Telephone: 1(213) 683-6000 6 Facsimile: 1(213) 627-0705 7 PAUL HASTINGS LLP CARSON H. SULLIVAN (D.C. SB# 488139) 8 (admitted pro hac vice) carsonsullivan@paulhastings.com 9 SARAH G. BESNOFF (D.C. SB# 1047295) (admitted pro hac vice) 10 sarahbesnoff@paulhastings.com CLAIRE A. SABA MURPHY (D.C. SB# 1659844) 11 (admitted pro hac vice) clairesabamurphy@paulhastings.com 12 2050 M Street, N.W. Washington, D.C. 20036 13 Telephone: 1(202) 551-1700 Facsimile: 1(202) 551-1705 14 Attorneys for Defendants 15 THE WALT DISNEY COMPANY, et al. 16 SUPERIOR COURT OF THE STATE OF CALIFORNIA 17 COUNTY OF LOS ANGELES 18 LARONDA RASMUSSEN, et al., on behalf of CASE NO. 19STCV10974 themselves and all others similarly situated, 19 DEFENDANTS’ MEMORANDUM OF Plaintiffs, POINTS AND AUTHORITIES IN 20 SUPPORT OF MOTION TO STRIKE vs. OR EXCLUDE THE EXPERT REPORT 21 OF DAVID NEUMARK THE WALT DISNEY COMPANY, et al., 22 Date: November 15, 2023 Defendants. Time: 9:00 a.m. 23 Dept.: 6 Judge: Hon. Elihu M. Berle 24 Trial Date: None Set 25 26 [PUBLIC - REDACTS MATERIALS FROM CONDITIONALLY SEALED RECORD] 27 28 DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 TABLE OF CONTENTS 2 Page 3 I. INTRODUCTION ............................................................................................................... 5 4 II. LEGAL STANDARD .......................................................................................................... 7 III. DR. NEUMARK’S AGGREGATED ANALYSES ARE IRRELEVANT, AND 5 THEREFORE, INADMISSIBLE ........................................................................................ 8 6 A. Aggregated analyses obscure and distort the underlying variations in the data and provide irrelevant and unreliable information to the factfinder................. 8 7 B. For the EPA claims, aggregated analyses cannot answer the central question of whether a woman is underpaid compared to colleagues 8 performing substantially similar work. .................................................................... 9 9 C. For the FEHA claims, aggregated analyses assume commonality, but do not prove it. ............................................................................................................ 11 10 IV. DR. NEUMARK’S FAILURE TO IDENTIFY EMPLOYEES PERFORMING SUBSTANTIALLY SIMILAR WORK RENDERS HIS ANALYSES 11 IRRELEVANT AND UNRELIABLE ............................................................................... 12 12 A. Dr. Neumark performed no testing and uncritically relies on the opinions of other experts to conclude that employees in the same Job Family-Level are 13 performing substantially similar work. .................................................................. 12 B. Dr. Neumark’s opinion that employees in the same Job Function-Level are 14 similarly situated is not based on any reliable methodology and is an inadmissible expert opinion. .................................................................................. 14 15 V. DR. NEUMARK’S STARTING SALARY ANALYSES ARE UNRELIABLE.............. 15 16 VI. DR. NEUMARK’S ANALYSES ARE UNRELIABLE BECAUSE THEY IGNORE CRITICAL VARIABLES .................................................................................. 16 17 A. Dr. Neumark’s model is unreliable and irrelevant because it omits critical 18 variables that explain pay. ...................................................................................... 16 B. Dr. Neumark’s so-called “richer” controls are completely unreliable. .................. 17 19 VII. CONCLUSION .................................................................................................................. 19 20 21 22 23 24 25 26 27 28 -2- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 TABLE OF AUTHORITIES 2 Page(s) 3 CASES 4 Abram v. UPS, 200 F.R.D. 424 (E.D. Wis. 2001) ............................................................................................. 9 5 Anderson v. Westinghouse Savannah River Co., 6 406 F.3d 248 (4th Cir. 2005)............................................................................................. 14, 15 7 Apple Inc. v Superior Court, 19 Cal. App. 5th 1101 (2018) ................................................................................................... 7 8 Bazemore v. Friday, 9 478 U.S. 385 (1986) ................................................................................................................ 17 Cooper v. S. Co., 10 260 F.Supp.2d 1305 (N.D. Ga. 2003), aff’d, 11 390 F.3d 695 (11th Cir. 2004)................................................................................................. 17 Daubert v. Merrell Dow Pharms., Inc., 12 509 U.S. 579 (1993) ................................................................................................................ 18 13 Davis v. Cintas Corp., 717 F.3d 476 (6th Cir. 2013)................................................................................................... 11 14 E.E.O.C. v. Bloomberg L.P., 15 2010 WL 3466370 (S D.N.Y. Aug. 31, 2010) ........................................................................ 15 16 Forte v. Liquidnet Holdings, Inc., 675 F. App’x 21 (2d Cir. 2017) (unpublished) ....................................................................... 17 17 Fosmire v. Progressive Max Ins. Co., 18 277 F.R.D. 625 (W.D. Wash. 2011) ....................................................................................... 14 Hall v. County of Los Angeles, 19 148 Cal. App. 4th 318 (2007) ................................................................................................. 12 20 Hyatt v. Sierra Boat Co., 79 Cal. App. 3d 325 (1978)..................................................................................................... 13 21 In re ConAgra Foods, Inc., 22 302 F.R.D. 537 (C.D. Cal. 2014) ............................................................................................ 14 23 Jennings v. Palomar Pomerado Health Sys., Inc., 114 Cal. App. 4th 1108 (2003) ............................................................................................... 13 24 Lockheed Litig. Cases, 25 115 Cal. App. 4th 558 (2004)) ............................................................................................ 7, 14 Lott v. Westinghouse Savannah River Co., 26 200 F.R.D. 539 (D.S.C. 2000), aff’d and remanded, 27 406 F.3d 248 (4th Cir. 2005)..................................................................................................... 9 28 -3- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 Majo v. Sony Interactive Ent. LLC, 2022 WL 1188871 (N.D. Cal., Apr. 21, 2022) ....................................................................... 12 2 Moussouris v. Microsoft Corp., 3 2018 WL 3328418 (W.D. Wash. June 25, 2018), aff’d, 799 F. App’x 459 (9th Cir. 2019) ........................................................................................... 11 4 Negley v. Jud. Council of Cal., 5 2010 WL 11545605 (N.D. Cal., June 21, 2010), aff’d, 458 F. App’x 682 (9th Cir. 2011) ........................................................................................... 12 6 Penk v. Or. State Bd. of Higher Educ., 7 1985 WL 25631 (D. Or. Feb. 13, 1985), aff’d 816 F.2d 458 (9th Cir. 1987)................................................................................................... 11 8 Sargon Enters., Inc. v. Univ. of S. Cal., 9 55 Cal. 4th 747 (2012) .............................................................................................................. 7 10 Shiffer v. CBS Corp., 240 Cal. App. 4th 246 (2015) ................................................................................................. 14 11 Tagatz v. Marquette Univ., 12 861 F.2d 1040 (7th Cir. 1988)................................................................................................. 14 U.S. v. Artero, 13 121 F.3d 1256 (9th Cir. 1997)................................................................................................. 17 14 Wells v. Kawasaki Motors Corp., U.S.A., 2019 WL 5842921 (D. Utah Nov. 7, 2019) ............................................................................ 18 15 STATUTES 16 CAL. EVID. CODE § 801................................................................................................................... 5 17 CAL. EVID. CODE § 802................................................................................................................... 5 18 CAL. GOV'T CODE § 12900 (FAIR EMPLOYMENT AND HOUSING ACT (FEHA)) .................... passim CAL. LAB. CODE § 1197.5 (CALIFORNIA EQUAL PAY ACT) ............................................... 5, 11, 12 19 CAL. LAB. CODE § 1197.5(a) .................................................................................................... 9, 12 20 CAL. LAB. CODE § 1197.5(a)(1)(D) .............................................................................................. 17 21 OTHER AUTHORITIES 22 CACI 2740 (rev. May 2020) ......................................................................................................... 11 23 24 25 26 27 28 -4- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 I. INTRODUCTION 2 Dr. Neumark’s third amended expert report1 contains opinions that are irrelevant, 3 unreliable, and inadmissible under California Evidence Code Sections 801 and 802. They should be excluded. 4 First, Dr. Neumark admits that his aggregated analyses cannot answer whether women 5 were paid less than men performing substantially similar work. See, e.g., Ex. A,2 Transcript of 6 Deposition of David Neumark 173:16-174:7 (“Neumark Tr.”) (admitting “I have no knowledge” 7 when asked “whether women in LaRonda Rasmussen’s job family and job level grouping are 8 underpaid compared to men”). Further, Dr. Neumark’s aggregated model assumes commonality, 9 it does not prove it. Every application of this model is designed to return a single common result showing one alleged pay difference for all 12,500 potential class members in the proposed Fair 10 Employment and Housing Act (FEHA) class, and a separate alleged pay difference for all 9,800 11 potential class members in the proposed Equal Pay Act (EPA) subclass, across more than 3,100 12 different job groups, as defined by Dr. Neumark. This distorts the reality that the vast majority of 13 the potential class were in Business Areas and Segments in which men and women were paid 14 statistically equally for substantially similar work. 15 Second, Dr. Neumark’s model applied to both the FEHA class and the EPA subclass relies on faulty assumptions about the right comparator groups, rendering his analysis unreliable and 16 irrelevant. Because Dr. Neumark’s analyses (for both FEHA and EPA) compare jobs that are not 17 substantially similar, he is not accounting for important differences between jobs that may explain 18 why employees are paid differently, and any pay differences he observes may be the result of 19 those job differences (rather than caused by gender, as he alleges). With respect to the EPA 20 subclass, Dr. Neumark’s model should be excluded because he uncritically, and without any of 21 his own testing, relied upon Plaintiffs’ industrial organizational psychologist’s erroneous 22 conclusions that all employees in the same Job Family and Job Level perform substantially 23 24 1 To date, Plaintiffs have served three versions of Dr. Neumark’s expert report. The first on 25 June 30, 2023, Plaintiffs’ filing deadline. The second at 8:15 a.m. PT on July 26, 2023, just 45 minutes before Dr. Neumark’s deposition was set to begin. The third was dated August 3, 2023, 26 but was sent to Defendants on August 4, 2023, nine days after his deposition concluded (which Plaintiffs did not file until two weeks later, on August 21, 2023). All cites within Defendants’ 27 filings refer to Dr. Neumark’s third report, Amended Expert Report of David Neumark dated August 3, 2023, unless otherwise noted. It is referred to as “Neumark R.”. 2 28 All exhibits referenced herein are provided as exhibits to the Declaration of Felicia A. Davis, filed concurrently herewith. -5- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 similar work.3 He compares employees who are plainly not in comparable jobs, for example a 2 Landscape Architect Studio Executive with an Executive Interior Designer, or a Director of 3 Horticulture/Resort Enhancement with an Executive Show Technical Production Manager, or an Environmental Project Manager with an Athletic Training Program Manager. See Expert Report 4 of Dr. John H. Johnson, IV (“Johnson R.”) ¶95 fn. 206, filed concurrently. 5 With respect to the FEHA class, Dr. Neumark’s model assumes that an even broader 6 grouping of employees can be compared (those within the broad Job Function and Job Level). 7 Dr. Neumark’s invention that employees in the same Job Function and Level can be grouped 8 together because they are “similarly situated” requires him to originate an imagined lesser legal 9 standard than the EPA (he is not a lawyer; in fact, the standard is the same). A cursory review of jobs grouped in this manner shows that jobs within the same Job Function and Level cannot be 10 compared. For example, his Job Function-Level methodology compares the pay of a Director of 11 Environmental Affairs and a Director of Safety. Common sense would tell you that any difference 12 in pay between a Director of Environmental Affairs and a Director of Safety likely results from 13 the fact that these are different jobs (with different qualifications, educational requirements, 14 performance expectations, industry standards, etc.). Yet, Dr. Neumark’s model is unable to 15 account for these meaningful job differences, leading his model to allege that job-related differences in pay are a result of gender discrimination. Analyses comparing the pay of 16 employees who do not perform similar work are misleading, irrelevant, and inadmissible. They 17 should be excluded. 18 Third, Dr. Neumark’s model purporting to measure the impact of prior pay on starting pay 19 does not analyze prior pay at all. Rather, he claims he can prove a causal link between 20 consideration of prior pay (which he admits was never a common practice throughout 21 Defendants’ companies) and starting pay because when his model is applied to the FEHA class, 22 he sees a “substantial decline” in the observed pay difference between men and women before and after October 2017, the date Plaintiffs agree Defendants ceased any inquiry into prior pay 23 information. However, his model does not test for causality, and he fails to admit that the 24 “substantial decline” in pay differences he observes between men and women also occurs after 25 October 2016, and April 2017, dates before the alleged practice change. Johnson R. ¶182, Ex. 29. 26 Moreover, what may be driving his alleged starting pay difference over time are flaws in his 27 3 Please see concurrently-filed Motion to Strike or Exclude the Expert Report of Leaetta M. 28 Hough, Ph.D. -6- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 model, not a change in Defendants’ alleged practice. In the earlier part of the class period, his 2 model forces ill-fitting comparisons between employees in the broader Job Functions, while in 3 the latter part of the period, he compares employees sorted into the more specific Job Families. Fourth, Dr. Neumark’s “preferred” applications of his model to the FEHA class and EPA 4 subclass fail to appropriately control for legitimate business-related factors that he admits 5 influence pay, such as education, relevant prior experience, and performance. He admits that he 6 cannot create a class-wide model that includes these controls because the class is too diverse. 7 Instead, for a subset of the proposed classes, he applies self-titled “richer” controls for education 8 and relevant prior experience. These studies are irrelevant because his “richer” controls are 9 unreliable. Johnson R. ¶¶210-39. For all the foregoing reasons, the Court should strike Dr. Neumark’s report. 10 II. LEGAL STANDARD 11 “[T]he trial court acts as a gatekeeper to exclude speculative or irrelevant expert 12 opinion[s],” including to exclude opinion testimony that is “(1) based on matter of a type on 13 which an expert may not reasonably rely, (2) based on reasons unsupported by the material on 14 which the expert relies, or (3) speculative.” Sargon Enters., Inc. v. Univ. of S. Cal., 55 Cal. 4th 15 747, 770-72 (2012). This critical gatekeeping role “appl[ies] equally in the context of class certification motions.” Apple Inc. v Superior Court, 19 Cal. App. 5th 1101, 1119 (2018); see also 16 id. 1106 (“A trial court may consider only admissible expert opinion evidence on class 17 certification . . . .”). “[C]ertifying a proposed class based on inadmissible expert opinion evidence 18 would merely lead to its exclusion at trial, imperiling continued certification of the class and 19 wasting the time and resources of the parties and the court.” Id. at 1117. “The goal of trial court 20 gatekeeping is simply to exclude ‘clearly invalid and unreliable’ expert opinion. . . . In short, the 21 gatekeeper’s role ‘is to make certain that an expert, whether basing testimony upon professional 22 studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.’” Id. at 1118 (quoting Sargon, 55 Cal. 23 4th at 772). Thus, “the matter relied on [by an expert] must provide a reasonable basis for the 24 particular opinion offered, and . . . opinion based on speculation or conjecture is inadmissible.” 25 Sargon, 55 Cal. 4th at 770 (quoting Lockheed Litig. Cases, 115 Cal. App. 4th 558, 564 (2004)). 26 “[T]he expert’s opinion may not be based ‘on assumptions of fact without evidentiary support’; 27 nor may it be based on “guess, surmise or conjecture.” Id. (citations omitted). In determining 28 whether an expert’s opinion satisfies this standard, “a court may inquire into, not only the type of -7- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 material on which an expert relies, but also whether that material actually supports the expert’s 2 reasoning.” Id. at 771. When a court “conclude[s] that there is simply too great an analytical gap 3 between the data and the opinion proffered,” the opinion should be excluded. Id. (citation omitted). 4 5 III. DR. NEUMARK’S AGGREGATED ANALYSES ARE IRRELEVANT, AND THEREFORE, INADMISSIBLE 6 A. Aggregated analyses obscure and distort the underlying variations in the data 7 and provide irrelevant and unreliable information to the factfinder. Dr. Neumark’s model reports one alleged average pay shortfall for all women in all years, 8 across all jobs: 2.01% for the putative FEHA class and 0.81% for the putative EPA subclass. See, 9 e.g., Neumark R. ¶82, tbl. 3, Model II (preferred FEHA model); id. ¶135, tbl. 11, Model II 10 (preferred EPA model). He admits, however, that neither are necessarily the result for any 11 particular woman or group of women. Neumark Tr. 173:16-174:7, 175:5-13; Neumark R. ¶67. He 12 also admits that there likely are job groups where women are paid more than men, and job groups 13 that only contain women, to whom neither of the alleged pay shortfalls would apply. Neumark Tr. 89:12-91:20 (“I realize in court in an equal pay claim . . . one might be instructed to . . . not 14 include those people because, strictly speaking, there is nobody in the same job in the same 15 business making less than them”). 16 A simple hypothetical demonstrates the risk of relying on aggregated statistics. Assume 17 two Job Family-Levels are populated and paid as follows: (1) Casting Director—10 men each 18 paid $200,000 per year, and 10 women each paid $200,000 per year; (2) Casting Manager—10 19 men each paid $150,000 and 10 women each paid $140,000 per year. Assume that all Casting Directors and Casting Managers are similarly productive, regardless of gender. The numbers are 20 clear—not one female Casting Director has a pay discrimination claim as the men and women are 21 paid identically. But an aggregate model, where Casting Directors and Casting Managers are 22 combined into a single model with a control for Job Family-Level—like Dr. Neumark’s model— 23 suggests that all female Casting leaders are paid, on average, $5,000 less then all male Casting 24 leaders ($170,000 average pay for women vs. $175,000 average pay for men). This average 25 shortfall is not accurate for any of the women analyzed: the average invents a shortfall for the Directors that does not exist, and underestimates the shortfall for the Managers. 26 Dr. Neumark disclaimed that his aggregated model did not accurately predict the pay 27 difference for every potential class member; he went so far as to say that he would be “very 28 -8- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 shocked if a really big segment gave you a very different result” from his aggregated statistic. 2 Neumark Tr. 181:3-24. In fact, a “really big” Segment does give “very different” results. 3 Disaggregating Dr. Neumark’s model when applied to employees within the same Job Family and Level (which reflects the entirety of the EPA subclass and a majority of the FEHA class), by 4 Segment, and making no other modifications, reveals that the vast majority of Segments show no 5 statistically significant pay difference, including the four largest segments. Notably, the largest 6 segment in the data, Disney Parks, Experience, and Products (DPEP) (called DPECP in the data), 7 with more than 18,000 observations across the putative class period, shows a positive estimated 8 pay difference for women. Johnson R. ¶203, Ex. 33. In fact, Plaintiffs’ model (without any 9 modifications)—applied separately to each Segment—find that 83 percent of all potential class member observations are paid statistically equal to men. Id. Similarly, Dr. Neumark’s model 10 (without any modifications) finds that 91 percent of all potential class member observations in 11 the top 25 Business Areas are paid statistically equal to men. Johnson R. ¶207, Ex. 35. 12 Simply put, Dr. Neumark’s model reinforces the dangers of an aggregated model—it 13 ascribes a pay difference to all women in all Segments and Business Areas, despite the reality that 14 the vast majority are paid statistically equally to men. The “perils and misuses” of an aggregated 15 statistical model are well documented in case law. “If Microsoft-founder Bill Gates and nine monks are together in a room, it is accurate to say that on average the people in the room are 16 extremely well-to-do, but this kind of aggregate analysis obscures the fact that 90% of the people 17 in the room have taken a vow of poverty.” Abram v. UPS, 200 F.R.D. 424, 431 (E.D. Wis. 2001); 18 Lott v. Westinghouse Savannah River Co., 200 F.R.D. 539, 560-61 (D.S.C. 2000), aff’d and 19 remanded, 406 F.3d 248 (4th Cir. 2005) (“[a]ggregated statistics . . . are of scant utility to the 20 court in conducting a certification analysis“). This faulty aggregation approach renders both Dr. 21 Neumark’s EPA and FEHA analyses unreliable and irrelevant, as described below. 22 B. For EPA claims, aggregated analyses cannot answer the central question of whether a woman is underpaid compared to colleagues performing 23 substantially similar work. 24 For EPA claims, these analyses cannot answer the central question of whether a particular 25 female employee is in fact underpaid compared to her male colleagues performing substantially similar work. To state a prima facie pay discrimination claim, a plaintiff must show that they are 26 27 28 -9- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 paid less than a comparable male. Being paid “less” is an element of the claim.4 Yet, 2 Dr. Neumark’s aggregated analyses cannot tell the jury whether within any of the 3,100 EPA 3 groupings (Job Family-Level), women are actually paid less than men. Dr. Neumark concedes this. See Neumark Tr. 84:5-17 (“I estimated an aggregated regression model that controls for all 4 those things but does not estimate a separate gender gap for lots and lots and lots of small cells of 5 data.”); 85:1-6 (“I don’t have a specific estimate for each job family, job level…”).5 For example, 6 Dr. Neumark admits that his analyses cannot answer whether Named Plaintiff LaRonda 7 Rasmussen (or other women) in the Job Family TCH Product Management, Level M2 was 8 underpaid compared to “similarly situated” men or men performing “substantially similar work.” 9 Neumark Tr. 86:13–20 (“I don’t have a direct estimate of underpayment or overpayment for that particular job family and level.”). In fact, his analysis cannot answer this question for any 10 potential class member in any of the thousands of job groupings Plaintiffs allege. 11 This issue is laid bare when Dr. Neumark is forced to admit which Named Plaintiffs could 12 actually sustain an EPA claim. He reports that Named Plaintiffs Train, Joo, and Rasmussen are 13 the only Named Plaintiffs in the EPA subclass. Neumark R. App’x tbl. E.7. Yet Plaintiffs Dolan, 14 Eady-Marshall, and Hanke were also assigned a Job Family and Level (and thus should be in the 15 EPA subclass) and, in fact, they are included in the data Dr. Neumark presents for his EPA analysis. Johnson R. ¶43. Yet, they are excluded from his reported list of Named Plaintiff EPA 16 subclass members (and in Plaintiffs’ brief, Plaintiffs claim they are not Named Plaintiffs for their 17 EPA class). Plaintiffs’ Motion for Class Certification (“Br.”) at p. 19 fn. 60. Why? Because 18 Dolan, Eady-Marshall, and Hanke were never paid less than a man in the same Segment and 19 Job Family-Level—thus they have no EPA claim. Johnson R. ¶43. They are not alone. Nearly 20 20% of the proposed EPA class members never had a male comparator in their Job Family-Level 21 who was ever paid less than they were; including 7% of the proposed EPA class who never had a 22 single male comparator period, according to Plaintiffs’ definition. Id. Dr. Neumark’s model 23 4 Equal Pay Act, Cal. Labor Code § 1197.5(a) (“shall not pay any of its employees at wage rates 24 less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working 25 conditions”) (emphasis added). 5 See also Neumark Tr. 87:24-88:11 (“I have an aggregated model. I do not estimate a model—a 26 parameter specifically for that family and level or for her.”), 88:18-89:11 (“I have an aggregated regression model that controls for function level or family and I don’t—I don’t report specific 27 parameters for a function—I think you said function level cell.”), 173:7-15 (“This is a regression estimate. It is meant to answer that question for any—any job family level pay, but it is a single 28 aggregated estimate. It’s not a—it’s not an estimate specific to each family level combination.”). -10- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 would tell you that they are all underpaid by 0.81%, and yet, none of them was. If Dr. Neumark’s 2 analysis does not answer whether a specific woman or group of women were “paid less,” then it 3 does not answer a question before the jury,6 and should be excluded. 4 C. For the FEHA claims, aggregated analyses assume commonality, but do not prove it. 5 While Plaintiffs claim that Dr. Neumark’s analyses provide evidence of commonality 6 sufficient to certify a class, an aggregated analysis does not prove common evidence of 7 discrimination across the class—it assumes it. See Neumark Tr. 178:15-18 (“A fully aggregated 8 [model], yes, gives you one number as an outcome.”). “[A]ggregating statistical results over [all 9 decision-making units] in order to prove that a pattern or practice of discrimination exists at each [unit] ‘puts the cart before the horse’”—for “[i]f plaintiffs’ statistical evidence does not show 10 statistically significant sex-based differences at four of the eight [units], for example, this is 11 information that must be considered by the court when it determines both whether a system-wide 12 class is appropriate and whether system-wide aggregation is appropriate.” Penk v. Or. State Bd. of 13 Higher Educ., 1985 WL 25631, at *35 (D. Or. Feb. 13, 1985), aff’d, 816 F.2d 458 (9th Cir. 14 1987); see also Moussouris v. Microsoft Corp., 2018 WL 3328418, at *24 n.20 (W.D. Wash. 15 June 25, 2018), aff’d, 799 F. App’x 459 (9th Cir. 2019) (“[I]f Microsoft had 25 managers, 5 of whom discriminated in making pay and promotion decisions, aggregate data would show that 16 female employees fared worse than male employees. But that result would not imply that all 25 17 [managers] behaved similarly, so it would not demonstrate commonality.”) (internal quotation 18 marks and citation omitted); Davis v. Cintas Corp., 717 F.3d 476, 488 (6th Cir. 2013) (no 19 commonality based on plaintiffs’ aggregated statistics; “although some Cintas locations under- 20 hired women and racial minorities, other locations over-hired women and racial minorities during 21 the same period”) (citation omitted). Plaintiffs’ aggregated analyses are irrelevant and should be excluded. 22 23 24 6 See Judicial Council of California Civil Jury Instructions 2740 (rev. May 2020) (“Violation of 25 Equal Pay Act—Essential Factual Elements”) (Lab. Code § 1197.5) (“To establish this claim, [name of plaintiff] must prove all of the following: (1) That [name of plaintiff] was paid less than 26 the rate paid to [a] person[s] of [the opposite sex] working for [name of defendant]; (2) That [name of plaintiff] was performing substantially similar work as the other person[s], considering 27 the overall combination of skill, effort, and responsibility required; and (3) That [name of plaintiff] was working under similar working conditions as the other person[s].”) (emphasis 28 added). -11- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 IV. DR. NEUMARK’S FAILURE TO IDENTIFY EMPLOYEES PERFORMING SUBSTANTIALLY SIMILAR WORK RENDERS HIS ANALYSES IRRELEVANT 2 AND UNRELIABLE 3 Plaintiffs move to certify pay discrimination claims under two California statutes—the FEHA and the EPA. Critical to a pay discrimination claim under either statute is the identification 4 of relevant comparators. After all, neither statute requires that all employees must be paid the 5 same. The EPA requires equal pay for “substantially similar work.” Cal. Lab. Code § 1197.5(a). 6 FEHA prohibits pay discrimination between “similarly situated” employees. See, e.g., Hall v. 7 County of Los Angeles, 148 Cal. App. 4th 318, 322 (2007). Although the terminology varies 8 (“substantially similar work” vs. “similarly situated”), the legal standard based on Plaintiffs’ 9 theories is the same. “[W]hen a plaintiff asserts a discriminatory compensation claim under FEHA, that claim must meet the same standard as an Equal Pay Act claim.” Negley v. Jud. 10 Council of Cal., 2010 WL 11545605, at *5 (N.D. Cal., June 21, 2010), aff’d, 458 F. App’x 682 11 (9th Cir. 2011). See also Majo v. Sony Interactive Ent. LLC, 2022 WL 1188871, at *5 (N.D. Cal., 12 Apr. 21, 2022) (finding Plaintiff’s FEHA pay discrimination claim “fails for the same reasons the 13 [federal and California] Equal Pay Act claims fail. ‘[W]hen a plaintiff asserts a discriminatory 14 compensation claim under FEHA, [it] must meet the same standard as an Equal Pay Act claim.’”) 15 (quoting Negley, 2010 WL 11545605, at *5). This means that FEHA pay discrimination claim 16 comparators must perform “substantially similar work,” just as they do under the EPA. A. Dr. Neumark performed no testing and uncritically relies on the opinions of 17 other experts to conclude that employees in the same Job Family-Level are performing substantially similar work. 18 Dr. Neumark’s studies comparing employees within the same Job Family-Level should be 19 excluded because they uncritically rely on Plaintiffs’ industrial organizational psychologist expert 20 Dr. Leaetta Hough’s unreliable conclusion that employees within the same Job Family-Level 21 group perform substantially similar work, which Dr. Neumark never independently tested or 22 analyzed. Neumark Tr. 53:17-54:8, 137:10-22. In doing so, Dr. Neumark ignores the fact that Dr. Hough never studied the work performed by putative class members, performed no job 23 analysis, and interviewed no employees (not even the Named Plaintiffs). See generally Motion to 24 Strike or Exclude the Expert Report of Leaetta M. Hough, Ph.D., concurrently filed herewith. 25 Regardless, Dr. Neumark admits that he did no independent testing to justify his use of 26 Job Family-Level: he did not perform a job analysis, interview any employees, and did not even 27 read the Named Plaintiffs’ depositions. Neumark Tr. 53:17-54:11, 55:24-56:24. In fact, he did no 28 empirical investigation or testing of the putative class jobs at all. Neumark Tr. 51:9-12 (“Q. [Y]ou -12- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 didn’t look at the jobs? A. I did not. . . .”), 56:11-16 (“I didn’t do any empirical investigation of 2 what people are doing in their jobs.”), 59:1-10 (“I haven’t analyzed the content of jobs”). If he 3 had done any independent testing, he would have found that many of the comparisons between employees within a Job Family-Level are absurd on their face. For example, “similarly situated” 4 comparators under Dr. Neumark’s definition compare a Senior Image & Color Engineer with a 5 Senior Software Engineer – Full Stack, or a Financial Accounting Analyst with a Brand and 6 Product Management Administrator. See Johnson R. ¶67, Ex. 7; see also id. ¶¶95-97, Ex. 14-15 7 (collecting Job Family-Level groupings). These are plainly not substantially similar jobs. 8 Dr. Neumark’s only independent reasons for relying upon Job Family-Level are factually 9 incorrect and underscore this lack of independent testing of Dr. Hough’s theories. First, Dr. Neumark claims that jobs in the same Job Family-Level were “almost always” in the same 10 pay grade. Neumark Tr. 265:18-266:5. That is demonstrably false. Across the 3,100 unique Job 11 Family-Levels observed during the class period, 60 percent of the putative EPA subclass 12 members were associated with Job Family-Levels using multiple pay grades. Johnson R. n.195.7 13 Second, Dr. Neumark claimed at his deposition that Defendants “benchmark[] pay based on 14 family and level.” Neumark Tr. 134:18-136:6, 154:18-24. That too is false. Numerous witnesses 15 report the opposite—that jobs are benchmarked by job, not Job Family-Level.8 Dr. Neumark admitted that if he learned that jobs are benchmarked by job, and not Job Family, he might 16 reconsider his analysis. Neumark Tr. 154:25-155:6. Dr. Neumark should read the record and 17 reconsider. See Hyatt v. Sierra Boat Co., 79 Cal. App. 3d 325, 338-39 (1978) (“It is well settled 18 that an expert’s assumption of facts contrary to the proof destroys the opinion[s].”); Jennings v. 19 Palomar Pomerado Health Sys., Inc., 114 Cal. App. 4th 1108, 1117 (2003) (“[A]n expert opinion 20 is worth no more than the reasons upon which it rests.”) (internal citation omitted); Shiffer v. CBS 21 22 7 In addition, 69% of putative EPA subclass members were associated with Job Family-Level cells that contain two or more Job Codes, 60% of putative EPA subclass members on average 23 were associated with the EPA cells that have two or more Pay Grades, and 23% are in groups with both employees receiving TWDC annual bonuses and not receiving any TWDC annual 24 bonus. Johnson R. n.195, 206, 235. 8 See, e.g., Ex. C, Transcript of the Deposition of Janet Burnley (VP Compensation, HR Systems 25 and Analytics in DPEP) 73:21–75:1, 76:20–76:23 (within DPEP, “each individual job is mapped to the—to the market data that then establishes the grade . . . what gets matched to the market that 26 then establishes the pay grade is the actual job, not the job family”); Ex. D, Transcript of the Deposition of Mark Larson (VP of Compensation in DPEP) 215:24–216:10 (“One survey match 27 is more about one job and not about a job family.”); Ex. E, Transcript of the Deposition of Janet Temple (Director of Compensation in DGE) 44:7-23 (within DGE, “when we benchmark a job, 28 we’re looking at the specific job and job responsibilities”). -13- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 Corp., 240 Cal. App. 4th 246, 254 (2015) (affirming exclusion of experts based on “foundational” 2 problem that they “did not analyze the complete set of facts”); Lockheed Litig. Cases, 115 Cal. 3 App. 4th at 565 (expert opinion excluded where it cited support “provide[s] no reasonable basis for the [expert’s] opinion”).9 4 Dr. Neumark’s analyses relying upon comparisons of employees within the same Job 5 Family-Level, based on Dr. Hough’s unreliable opinions that were never independently studied 6 by Dr. Neumark, are flawed and should be excluded. See, e.g., In re ConAgra Foods, Inc., 302 7 F.R.D. 537, 556-57 (C.D. Cal. 2014) (excluding expert opinion at class certification in part for 8 relying on opinions of other experts without performing an independent analysis or evaluation); 9 c.f. Fosmire v. Progressive Max Ins. Co., 277 F.R.D. 625, 630 (W.D. Wash. 2011) (“The [R]ules [of Evidence] do not permit an expert to rely upon opinions developed by another expert for 10 purposes of litigation without independent verification of the underlying expert’s work.”). 11 B. Dr. Neumark’s opinion that employees in the same Job Function-Level are 12 similarly situated is not based on any reliable methodology and is an inadmissible expert opinion. 13 Dr. Neumark invents a new definition for what constitutes “similarly situated” work that 14 is scientifically unsound, wholly untested, and without the expertise necessary to issue the 15 opinion. Dr. Neumark ignores that the standard is the same for FEHA and EPA comparators, and 16 instead finds that for the FEHA class, comparators can include both employees in the same Job Family-Level, or if Job Family is not assigned, employees in the same Job Function-Level. He 17 has asserted no basis for this opinion, and it is patently outside of his expertise to opine on 18 whether jobs are similarly situated. Neumark Tr. 69:7-25 (“I’m not a job analyst.”). 19 For an example of the absurdities in his studies, comparing employees within the same 20 Job Function-Level assumes that an Occupational Nurse Manager and Warehouse Manager are 21 appropriate comparators because they are both in Job Function Other, Level M1. Neumark Tr. 22 50:2-17. His model assumes that there are no job-related differences between an Occupational Nurse Manager and a Warehouse Manager that could explain differences in pay. Neumark Tr. 23 49:14-24. That defies common sense; substantial differences in the qualifications and skills 24 25 9 Notably, when Dr. Neumark’s EPA models (without making any other changes) control for Job 26 Code, they find no statistically significant shortfall in pay in any class period. Johnson R. Ex. 32. See Anderson v. Westinghouse Savannah River Co., 406 F.3d 248, 263 (4th Cir. 2005) (excluding 27 analysis that failed to control for “the actual job title or the job duties”); Tagatz v. Marquette Univ., 861 F.2d 1040, 1045 (7th Cir. 1988) (expert’s “failure to control for differences in rank” 28 made his analysis “essentially worthless”). -14- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 between these two jobs may explain differences in how the two roles are compensated. Yet, he 2 claims he cannot create a class-wide model that controls for all of the important differences 3 between jobs because the jobs are too diverse to model. Dr. Neumark admitted, “one might have to know more that I don’t think I know from the data and I don’t think we can tell from the data.” 4 Neumark Tr. 59:21-61:15. This is precisely why his opinion is irrelevant to the factfinder in this 5 case (and why his models fail).10 6 This is critical, because all but two of Dr. Neumark’s studies use Job Function-Level to 7 identify comparators. This includes the studies Plaintiffs rely on to allege that women are paid 8 2.01% less than men during the putative class period, that women are paid less than men in 9 starting salary, and that Plaintiffs’ damages amount to more than $150 million. Dr. Neumark’s model applied to Job Function-Level groupings plainly do not control for differences between 10 jobs. Thus, they are incapable of determining whether differences in compensation between these 11 jobs are caused by gender discrimination, or simply job differences. 12 V. DR. NEUMARK’S STARTING SALARY ANALYSES ARE UNRELIABLE 13 Dr. Neumark opines on the impact of prior pay on starting pay, but never actually studies 14 prior pay.11 Dr. Neumark claims, instead, to prove that Defendants used prior pay to set starting 15 pay by analyzing starting pay data before and after October 2017, the date Plaintiffs agree Defendants ceased any inquiry into prior pay information. Dr. Neumark opines that the data show 16 a “substantial decline” in the difference in starting pay between men and women before and after 17 October 2017. Neumark R. ¶13. He concludes that this is consistent with his hypothesis that 18 Defendants used prior pay to set starting pay prior to October 2017 (but not after), and that doing 19 so harmed women. Neumark Tr. 155:15-21. But this study does not—and cannot—actually show 20 21 10 Accord Anderson, 406 F.3d at 263 (affirming exclusion of statistical analysis that lumped 22 employees into overbroad job groupings, finding that “there [was] simply too much disparity in the groups” and no “factor that would control for the actual . . . job duties”); E.E.O.C. v. 23 Bloomberg L.P., 2010 WL 3466370, at *12 (S D.N.Y. Aug. 31, 2010) (striking expert statistical report which failed to “accurately compare class members to other similarly situated Bloomberg 24 employees”). 11 Dr. Neumark admitted he never ran any analysis on the limited prior pay data and salary 25 expectations data that was in the record. Neumark Tr. 250:1-251:4. Prior pay and salary expectations data was not uniformly collected for all potential class members during the class 26 period because there was never a common policy or practice of relying on prior pay or salary expectations to set starting pay, which Dr. Neumark admits. See Neumark Tr. 163:24-164:3 (“Q. 27 But there is also evidence, as you said earlier, that people were not using prior pay before 2017. A. There are some statements to that effect, yes.”); see also id. 249:10-18, 330:17-331:8; 28 Neumark R. ¶30. -15- DEFENDANTS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STRIKE OR EXCLUDE THE EXPERT REPORT OF DAVID NEUMARK 1 any causality between the two.12 2 Labor Economist Dr. John Johnson repeated the same analysis as Dr. Neumark, but split 3 the data at October 2016 and April 2017, dates before the alleged change in practice. Dr. Johnson found the same “substantial decline” Dr. Neumark observed before/after October 2016 and 4 before/after April 2017. Johnson R. ¶183, Ex. 29. In other words, Dr. Neumark’s conclusions 5 based on his October 2017 cutoff would have been the same had he examined starting pay using 6 an October 2016 or April 2017 cutoff (and likely on many other randomly selected dates before 7 and after). Plainly, Dr. Neumark cannot show causation of an observed change that occurs before 8 the alleged change in practice. 9 In fact, Dr. Neumark admitted that the change he observes in the data before and after