Nike Hits Roadblock in Lawsuit Over Gender Discrimination — a Fashion Attorney Breaks Down What’s Next for the Brand

Nike Inc.’s attempts to get courts to dismiss a possible class action suit against the company over allegations of gender discrimination have hit a roadblock.

Federal Magistrate Judge Jolie Russo this week recommended that Nike’s motion to dismiss class and collective claims — effectively limiting the number of parties that can be added to the complaint as plaintiffs — be denied. Russo’s decision, handed down Tuesday, will be reviewed by the district judge. The parties have 14 days to file objections with the court.

Two former employees, Kelly Cahill and Sara Johnston, filed a lawsuit against the sportswear giant in August alleging that it “intentionally and willfully” discriminated against women with regard to pay and promotions, and that its majority-male executives fostered a hostile work environment at its Portland, Ore., headquarters.

Since then, two more women and former Nike employees — Lindsay Elizabeth and Heather Hender — have been added to the suit as plaintiffs, and all four women’s attorneys have been seeking class action status for the complaint.

According to fashion law attorney Elizabeth Kurpis, there’s good reason Nike has been aggressively seeking to curtail the former employees’ efforts to receive class action status for their suit.

“The vast majority of class action suits are never tried to verdict but rather settle once the class is actually certified. As a result, a court’s decision on class certification, which the plaintiffs are in the beginning stages of here, is really where all the action lies,” Kurpis explained. “As is the case with Nike, defendants try to avoid such certification so as not to be pressured into settling cases that are truly questionable just to avoid a potentially larger payout at trial. In order to overcome this, Nike would have to argue that the claims of the respective plaintiffs turn on individual issues rather than a ‘pattern or practice’ of discriminatory treatment toward members of [the] protected class.”

The problem for defendants are not just the named plaintiffs, added Kurpis, but “ghost” plaintiffs that fall within the protected class but are unnamed and seeking to recover as well.

“For instance, Nike may have affirmative defenses to the individual facts of those cases and would want to have the opportunity to address each of those issues in turn with the respective plaintiffs,” Kurpis said. “In order to do so, they may continue to argue that the class members are not ‘similarly situated’ and therefore cannot be tried on common evidence. So although [Russo’s] recommendation is a slight setback for Nike, as it will likely be upheld, we’ve only just entered inning one of a long ballgame between the parties.”

The initial plaintiffs in the complaint, Cahill and Johnston, resigned from their roles in July and November 2017, respectively. Cahill had worked as a communications director at the company for close to four years, while Johnston had been employed as an analyst for around a decade.

According to the suit, filed in U.S. District Court in Oregon, both quit because they were being paid less than their male colleagues for substantially similar work and purportedly had fewer promotion opportunities. Further, they alleged, Nike’s HR department failed to adequately address their grievances after they brought complaints internally.

The lawsuit came less than four months after an exposé in The New York Times described a “toxic” boys’ club culture, allegedly prompted by an anonymous internal survey conducted by a group of female employees that addressed sexual harassment, demeaning comments, unfair treatment and other purported misconduct, which they delivered to CEO Mark Parker. The saga saw close to a dozen high-ranking Nike executives exit the brand over a two-month period. In April, Nike admitted that it had fallen short in promoting women and people of color, and in July, it announced a plan to raise salaries for 10 percent of its workforce to help correct pay inequity.

A second sweeping suit came in September when three Nike shareholders sued Nike founder Phil Knight, CEO Mark Parker and former Nike brand president Trevor Edwards, as well as the company’s board, alleging that they “facilitated and knowingly ignored the hostile work environment that has now harmed, and threatens to further tarnish and impair, the company’s financial position.”

Throughout the imbroglio, Nike has maintained that it “opposes discrimination of any type and has a long-standing commitment to diversity and inclusion. We are committed to competitive pay and benefits for our employees. The vast majority of Nike employees live by our values of dignity and respect for others.”

Nike declined to comment on the latest development in the August case. However, a spokesperson for the company reiterated its previous statement.

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