George McReynolds v. Merrill Lynch, 2012 U.S. App. LEXIS 19033

In 2005 a group of black Merrill Lynch brokers sued under 42 U.S.C. §1981 and Title VII alleging discriminatory employment practices, including account distribution and teaming that steered black brokers from lucrative opportunities.
After Bank of America acquired Merrill Lynch, the firms adopted a retention-incentive program awarding bonuses based on production credits tied to prior Merrill Lynch production levels.
McReynolds I (ongoing) challenged Merrill Lynch’s underlying practices; McReynolds II focused narrowly on the retention program and sought class relief.
The district court dismissed, holding the retention program a race-neutral production-based system protected by §703(h) and that the complaint failed to plead discriminatory intent; inputs alleged to reflect past discrimination duplicative of McReynolds I.
The Seventh Circuit affirmed, holding (i) the retention program is a production-based system shielded under §703(h) absent discriminatory intent, (ii) the complaint’s conclusory intent allegations failed under Iqbal/Twombly, (iii) Lilly Ledbetter Fair Pay Act does not create a new Title VII claim here, and (iv) the case is duplicative of McReynolds I so dismissal was appropriate for wise judicial administration.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether retention bonuses qualify under §703(h) as a production-based system	McReynolds II contends the program is not bona fide and reflects past discrimination	Merrill Lynch argues the program measures production neutrally and falls within §703(h)	Yes; program is production-based and race-neutral, protected unless adopted with discriminatory intent
Whether the retention program can be challenged for discriminatory intent under Iqbal/Twombly pleading standards	Intent to discriminate is plausibly alleged	Conclusory allegations fail under Iqbal; need factual support	Dismissal proper; no plausible inference the program itself was adopted with discriminatory purpose
Whether Lilly Ledbetter Fair Pay Act extends to this case	Act creates a new accrual-based challenge to compensation	Act does not create a new substantive Title VII claim here	Act has no role; it affects timing only, not the merits of §703(h) claim
Whether the case is duplicative of McReynolds I and should be dismissed as duplicative	Different class scope requires separate litigation	Claims and remedies overlap; substantial similarity justifies dismissal	Affirmed; case properly dismissed as duplicative to McReynolds I

Teamsters v. United States, 431 U.S. 324 (1977) (production-based systems may be protected if not adopted with intent to discriminate)
Patterson v. American Tobacco Co., 446 U.S. 21? (1982) (scope of §703(h); production/measured by merit intact; note: actual citation used in text is 456 U.S. 63 (1982))
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard; conclusory allegations insufficient)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must plead plausible claim)
Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618 (2007) (statute-of-limitations accrual; Ledbetter chronology)
AT&T Corp. v. Hulteen, 556 U.S. 701 (2009) (Fair Pay Act context; §703(h) survives)
Feeney, 442 U.S. 256 (1979) (intent analysis for discrimination claims)
Teamsters, Local 727 v. United States, 431 U.S. 324 (1977) (analysis of bona fide seniority/merit systems under §703(h))
Am. Nurses' Ass'n v. Illinois, 783 F.2d 716 (7th Cir. 1986) (intent framework for Title VII claims)
EEOC v. Joe's Stone Crab, Inc., 220 F.3d 1263 (11th Cir. 2000) (intent-based discrimination standard)