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Workplace Class Actions Undergoing Changes

By Joanne Deschenaux  2/21/2014
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“Workplace class-action litigation is in a state of flux,” according to Gerald L. Maatman Jr., author of law firm Seyfarth Shaw’s 10th annual study of U.S. workplace class-action cases and rulings. 

“In the past two years we have seen a combination of Supreme Court decisions help create a defensive barrier for employers in class-action cases,” said Maatman, an employment litigator who co-chairs the firm’s class-action defense group. “Enough time has passed, however, that plaintiff lawyers have begun to breach this barrier with new theories and approaches, and, combined with increasing and aggressive government enforcement litigation, employers may once again find themselves facing bet-the-company-type class actions in 2014.”

At 803 pages, the 2014 Workplace Class Action Litigation Report covers 1,123 class-action rulings on a circuit-by-circuit and state-by-state basis.  

According to the report, 2013 was a year of evolving changes for workplace class-action litigation.

The U.S. Supreme Court issued important class-action rulings that year. For one, in Comcast Corp. v. Behrend, 133 S. Ct. 1426, the high court held that, as a prerequisite for certification of a class action, a plaintiff must introduce admissible evidence to show that the case is susceptible to awarding damages on a classwide basis. And in American Express Co. v. Italian Restaurant, 133 S. Ct. 2304, the court ruled that a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act even if the cost of proving an individual claim in arbitration exceeds the potential recovery. Also, in Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345, the justices concluded that a class representative cannot prevent the removal of a class action from state to federal court by stipulating that he will seek less than $5 million in damages for the class.  

But more than any other development in 2013, Maatman said, the decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), continued to have a wide-ranging impact on virtually all types of class actions pending in both federal and state courts. In Wal-Mart, the Supreme Court reversed a class-certification decision that joined the claims of 1.5 million female salaried and hourly employees who held any number of positions across Wal-Mart’s 3,400 stores because the plaintiffs could not articulate a common question that was capable of common answers as to the entire class.

In many respects, Wal-Mart was the “800-pound gorilla” in courtrooms in 2013, Maatman said, as litigants argued and judges analyzed class-certification issues. Class-action certification decisions in 2013 in large part depended on Wal-Mart and the manner in which judges interpreted and applied the decision.

Key Trends in 2013

An overview of workplace class-action developments in 2013 reveals seven key trends, Maatman said.

*The Supreme Court’s opinions in Wal-Mart and Comcast Corp. had a profound influence in shaping the course of class-action litigation rulings throughout that year. Wal-Mart and Comcast Corp. prompted defendants to mount challenges to class certification based on several theories. This resulted in new types of case-law rulings on myriad class-action-related issues. These evolving precedents are expected to continue to develop in the coming year.

*Government enforcement litigation in 2013 increased from the previous year. As an inevitable byproduct of the economy’s unemployment rates, more discrimination charges were filed with the Equal Employment Opportunity Commission (EEOC) in 2013 than in all but three previous years since the commission’s founding in 1964. The EEOC’s systemic investigation program expanded yet again over prior years.

*Wal-Mart and Comcast Corp. influenced settlement strategies in workplace class actions. Employers settled fewer employment-discrimination class actions than at any time over the past decade and at a fraction of the levels as in 2006 to 2012.

*The continued dislocations in the economy in 2013 fueled more class-action and collective-action litigation over wage and hour laws. Even more wage and hour and EEOC litigation is expected in 2014.

*Case law developed under the Class Action Fairness Act of 2005 (CAFA), and the Supreme Court decided its first CAFA case in Standard Fire Insurance Co. v. Knowles. The high court rejected the increasingly frequent tactic of the plaintiffs’ bar to stipulate to damages of less than $5 million (the CAFA’s amount-in-controversy requirement), in an effort to prevent removal of class actions from state to federal court.

*The Supreme Court’s ruling on class-arbitration issues in American Express Co. v. Italian Restaurant (AMEX) informed the ever-growing body of case law that allows employers to use carefully crafted workplace arbitration agreements to manage their class-action litigation risks. Corporate counsel are expected to give workplace arbitration a thorough evaluation in the post-AMEX world.

*In reaction to the Supreme Court’s rulings in Wal-Mart and Comcast Corp., the plaintiffs’ class-action bar continued the process of “rebooting” classwide theories of certification, as well as new methods for establishing liability and damages on a classwide basis. As a result, new certification approaches and cutting-edge strategies are rapidly evolving, and more change is inevitable in 2014.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.

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