Workplace Class Action Blog

The 2014 Judicial “Hellholes” Report Is Out!

Posted in Class Action Litigation

By Gerald L. Maatman, Jr.

Each year the American Tort Reform Association (“ATRA”) publishes its “Judicial Hellholes Report” and examines problems in state court systems and challenges for corporate defendants in the fair and unbiased administration of justice.

The ATRA’s 2014 Report was published this morning; a copy is here, as well as an executive summary here.

Insofar as the Report identifies and defines a judicial hellhole as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, the Judicial Hellholes Report is an important read for corporate counsel facing class action exposures. In sum, if one has to litigate class actions and make decisions with respect to venue strategy, the Report is a “must read.”

The 2014 Hellholes

The ATRA included 7 jurisdictions on its hellholes list – including New York (especially in its treatment of asbestosis litigation in New York City), California, West Virginia, Florida (especially rulings of the Florida Supreme Court), Illinois (especially Madison County, Illinois), Missouri (especially rulings of the Missouri Supreme Court), and Louisiana – where it ranked the venues as the “most unfair” in their handling of civil litigation. Commenting on California in particular, the Report asserts that it is characterized by “a generally permissive judiciary that invites wholly absurd lawsuits that clog dockets, even as the state’s perpetually precarious finances have led to sharp cuts in court budgets.”

The 2014 “Watch List”

The ATRA included 6 jurisdictions on its “watch list,” including New Jersey (especially Atlantic County), Mississippi (in the Delta region), Montana, Nevada, Virginia (principally in the Newport News area), and Pennsylvania (especially in Philadelphia). Just a notch below the 7 hellholes, the “watch list” jurisdictions also present significant challenges for corporate defendants.

Implications For Employers

The Judicial Hellholes Report dovetails with the experience of employers in high-stakes workplace class actions, as California, Florida, Illinois, Nevada, New Jersey, New York, and Pennsylvania are among the leading states where plaintiffs’ lawyers file employment discrimination and wage & hour class actions in state courts. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and generous damages recoveries under state laws.

Supreme Court Allows Removal Of Class Actions Under CAFA Without Evidence In Removal Notice Of Amount-In-Controversy

Posted in Class Action Litigation

By Gerald L. Maatman, Jr. and Rebecca S. Bjork

The U.S. Supreme Court ruled on a 5-4 vote today — across perceived “liberal/conservative” lines, at least until the very end — that defendants may remove class action lawsuits under the Class Action Fairness Act (“CAFA”) without submitting evidence to support the $5 million amount-in-controversy threshold.  In Dart Cherokee Basin Operating Co., LLC v. Owens, No. 13-719 (U.S. Dec. 15, 2015), Justice Ginsburg, just back from heart surgery, authored the majority opinion that was joined by Chief Justice Roberts and Justices Alito, Breyer, and Sotomayor. The majority issued two holdings: (1) that the liberal pleading requirements of Rule 8 apply also to notices removing cases to federal, from state, court; and (2) the Tenth Circuit abused its discretion when it denied Defendant Dart’s petition to review the remand order the district court issued sending the case back to state court.

While not a workplace class action, the decision in Dart Cherokee Basin Operating Co., LLC v. Owens ought to make it easier for employers to remove employment-related class actions from state court to federal court.

Background To The Case

Dart, an oil and gas operating company, along with a pipeline operator, were sued in a state court class action alleging they underpaid royalties to mineral rights owners in Kansas. Dart , slip op, at 2. In removing the case to federal court, the defendants asserted plaintiffs would recover $8.2 million in damages, far in excess of the CAFA’s $5 million threshold. Id. Plaintiff moved to remand to state court, arguing the removal notice was deficient as a matter of law for lack of any evidence supporting the figure.  Id.  In response, Dart submitted an affidavit from an executive supporting the figure, but the district court agreed with the plaintiff that it was too late, and remanded back to state court. Id. at 2-3. And although Dart appealed to the Tenth Circuit under the CAFA exception to the bar against appealing remand orders, codified at 28 U.S.C. § 1453(c)(1), the Tenth Circuit refused to take the case. Id. at 3. In dissent from denial of en banc review, Judge Hartz of the Tenth Circuit explained the decision erroneously imposed high pleading requirements in removal notices beyond even those required by code pleading rejected long ago, and that the error would not be corrected in future cases because no attorney going forward would risk remand and not taking the time to collect and present evidence in a removal notice. Id. at 4.

The parties subsequently sought certiorari to the U.S. Supreme Court to ask whether evidence is needed in removal notices under the CAFA.

The Supreme Court’s Ruling

As for the majority’s first holding, Justice Ginsburg explained that the removal statute by its own terminology, bolstered by legislative history and other statutory provisions, provides the answer. Dart, slip op. at 2, 5-6. Briefly, 28 U.S.C. § 1446(a) states that a party removing a case needs to provide a “short and plain statement” supporting the basis for federal jurisdiction.  Id. at 5.  Justice Ginsburg reasoned that Congress wanted to simplify removal, and disapproved amendments making it more onerous. Id. at 5. She also concluded that the CAFA evidences no presumption against removal, if such a thing even exists in diversity jurisdiction cases (a question she expressly reserved for another case). Id. at 7.

Then the majority dealt with a jurisdictional challenge to the Supreme Court’s ability to hear the case filed by amicus curiae Public Citizen, Inc. on behalf of the plaintiff. It had argued that because the court of appeals used its discretion to deny Dart’s appeal, the merits of the case at the district court level were not before the Supreme Court. Id. at 8. But because “[d]iscretion to review a remand order is not rudderless[,]” the majority explained the Tenth Circuit and Supreme Court could in this case because where, as here, the district court relied on an erroneous view of the law, and hence the district court “necessarily” abuses its discretion. Id. at 8-9. The majority adopted Judge Hartz’s view, including that no attorney would in the future file a removal notice in the Tenth Circuit without evidence of the amount-in-controversy. Id. at 9-10. The majority did state, however, that if on remand the Tenth Circuit articulates a reason — other than the need to provide evidence upon removal — for its discretion to deny hearing the appeal, it may do so. Id. at 14 at n.8.

The four dissenters agreed with Public Citizen that the only issue the Supreme Court could review, i.e., the Tenth Circuit’s decision not to take the appeal, was not presented by the parties, who both engaged the district court’s decision to require evidence, not the Tenth Circuit’s reasons for rejecting review. Id. at 1-2 (Scalia, J., dissenting). Describing this as a “little snag” discovered during the briefing, the dissent argued the Supreme Court should have dismissed the writ of certiorari as improvidently granted, but did not, instead issuing a ruling relating to the district court’s decision. Id. at 2. Justice Scalia further wrote that upon Justice Ginsburg pointing out that he made a similar mistake in an important class action case decided last year, Standard Fire v. Knowles, he “will take [the mistake] to the grave.”

Implications For Employers

Notwithstanding the “Supreme Court intrigue” one can read into this decision and the dissenting opinions, it should matter to our readers for the following reason — the CAFA was enacted in part to streamline removal proceedings, which had become overly complicated in class action cases, and too heavily weighted in favor of the plaintiffs’ interests. In this opinion, the Supreme Court has provided needed clarity and consistency in the law.

 

Fifth Circuit Rules That Plaintiffs’ Desire To Conduct Class-Wide Discovery Cannot Defeat Summary Judgment On Individual USERRA Claims

Posted in Class Action Litigation

By Kyle Hartman

The U.S. Court of Appeals for the Fifth Circuit recently issued its decision in Calder et al. v. Continental Airlines, Inc., No. 14-20291 (5th. Cir. Dec. 10, 2014), affirming the district court’s award of summary judgment in favor of Continental on Plaintiffs’ Uniformed Services Employment and Reemployment Rights Act (USERRA) claims. The Fifth Circuit also affirmed the district court’s denial of Plaintiffs’ Rule 56(d) motion, which argued that more discovery on class issues was necessary before Continental’s motion for summary judgment could be considered, and affirmed the district court’s decision to grant a stay of discovery pending a ruling on the dispositive motion. Plaintiffs relied solely on their Rule 56(d) motion to ward off complete summary judgment, and the difference in standards of review applicable to those motions (abuse of discretion versus de novo) was a critical factor in the outcome reached by the Fifth Circuit.

Case Background

Plaintiffs, each current or former members of the armed services, filed a class action in 2009 alleging several causes of action against Continental under the USERRA, including claims for the denial of vacation and sick leave accrual, denial of retirement benefits accrual, denial of health benefits coverage, hostile work environment, and failure to hire one of the four named Plaintiffs.

Earlier in the case, the district court dismissed the hostile work environment claim, ruling that the statute did not provide for such a claim, and the Fifth Circuit affirmed. Carder v. Cont’l Airlines, Inc., 636 F.3d 172, 182 (5th Cir. 2011), cert. denied, 132 S. Ct. 369 (2011) (abrogated by statute). The district court also granted an unopposed motion to dismiss Plaintiffs’ retirement benefits claim because the claim was precluded by the Railway Labor Act (“RLA”).

In October 2013, Continental filed for summary judgment on Plaintiffs’ remaining claims. In response, Plaintiffs’ filed a Rule 56(d) motion arguing that Plaintiffs could not respond to Continental’s summary judgment motion until Continental produced class-wide discovery documents, including a list of all pilots who took military and other leaves, all pilot applications, a list of all pilots hired, documents related to Continentals hiring practices, and a list of everyone involved in pilot hiring decisions, all dating back to 1994. Plaintiffs did not respond to the merits of Continental’s motion for summary judgment.

In March 2014, with the summary judgment and Rule 56(d) motions pending, Continental moved for a stay of discovery. The district court ordered Plaintiffs to respond to the motion, but then granted the stay five days before Plaintiffs were due to respond. The next day, on April 3, 2014, the district court issued a take-nothing-judgment denying Plaintiffs’ Rule 56(d) motion and granting summary judgment in favor of Continental with respect to all of Plaintiffs’ claims.

Fifth Circuit’s Decision

On appeal, taking the Rule 56(d) motion first, the Fifth Circuit agreed with the district court that the additional, class-wide discovery Plaintiffs sought was not necessary to the individual claims on which Continental had moved for summary judgment.

The Fifth Circuit found that Plaintiffs’ vacation and leave claims, like their dismissed retirement benefits claims, where precluded by the RLA, making class-wide discovery on the issue unnecessary. Likewise, class-wide discovery was not necessary on Plaintiffs’ individual health benefits claims because Continental established that Plaintiffs voluntarily dropped their coverage during their military leaves. Lastly, on the failure to hire claim, Plaintiffs argued that they needed additional, class-wide discovery to establish that Continental had a hiring bias against applicants with military affiliation.  However, according to the Fifth Circuit, establishing such a bias would not rebut the legitimate, non-discriminatory reason offered for Continental’s decision not to hire the individual Plaintiff — he had a poor score on his flight simulator evaluation.

Perhaps more important to the eventual outcome, the Fifth Circuit reviewed the Rule 56(d) ruling only for abuse of discretion and refused to consider Plaintiffs’ same arguments under the de novo standard as they related to the summary judgment decision. Plaintiffs made no argument about the merits of Continental’s motion for summary judgment at the district court or on appeal; instead, Plaintiffs relied solely on their argument that they needed class-wide discovery. When the district court, in its discretion, disagreed, Continental’s motion for summary judgment was unrefuted.

Finally, the Fifth Circuit held that the district court did not abuse its discretion by granting Continental’s motion to stay discovery before Plaintiffs had a chance to respond to the motion. While the Fifth Circuit noted that “at first blush” it may seem like error to set a response deadline and then grant the motion before Plaintiffs got a chance to respond, Plaintiffs were not deprived of their right to be heard on the issue because the substance of their Rule 56(d) motion was devoted to their argument that additional discovery was necessary.

Lessons Learned

First, as this ruling shows, an early motion for complete or partial summary judgment can be an effective way to stop a class action before it gets started, or at the very least, limit the scope of discovery by narrowing the claims at issue.

Second, when faced with an early motion for summary judgment, beware of putting all of your eggs in the Rule 56(d) basket. District courts have greater discretion in ruling on a Rule 56(d) motion, and their decision does not receive the same de novo review that a summary judgment ruling receives.  A party facing an early motion for summary judgment should seek expedited ruling on a 56(d) motion, request a stay of briefing on the underlying motion for summary judgment until the Rule 56(d) motion is decided, and ultimately be prepared to timely oppose the merits of the underlying motion for summary judgment.

Court Orders The EEOC To Produce Internal Hiring Policies Regarding Background Checks

Posted in EEOC Litigation

By Gerald L. Maatman Jr. and Howard M. Wexler

In the closely watched case of EEOC v. BMW Manufacturing Co., LLC, 13-CV-1583 (D.S.C.), which concerns the EEOC’s “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Under Title VII (most recently discussed here, the parties have waged a discovery battle over whether the EEOC should be forced to respond to discovery concerning its own use of criminal background checks and credit histories during the hiring practices.  Although the EEOC won the initial battle when a Magistrate Judge held that the it did not have to produce this evidence, the dust has settled and BMW has won the war. In a ruling of December 8, 2014, U.S. District Court Judge Henry M. Herlong Jr. ordered the EEOC to produce “all documents that constitute, contain, describe, reflect, mention, or refer or relate to any policy, guideline, standard, or practice utilized by the EEOC in accessing the criminal conviction record of applicants for employment with the EEOC.” EEOC v. BMW Manufacturing Co., LLC, 13-CV-1583, 2014 U.S. Dist. LEXIS 169849, at *4 (D.S.C. Dec. 2, 2014).

This decision represents a big win for BMW as well as all employers staring down the barrel of the EEOC’s “do as we say, not as we do” enforcement policies.

Case Background

The EEOC filed suit against BMW alleging that “its criminal conviction background check policy constitutes an unlawful employment practice in violation of…Title VII…because BMW’s policy had, and continues to have, a significant disparate impact on black employees and applicants and is not job-related and consistent with business necessity.” Id. at *1. This case is one of a handful of systemic cases that the EEOC has filed in recent years over employers use of background check policies.  The EEOC has suffered several resounding defeats in their pursuit of this initiative, including the landmark case against Kaplan Higher Education Corp. (most recently discussed here) where the Sixth Circuit upbraided the EEOC for the “homemade” methodology that the agency used to determine race in that case – namely, by asking “race raters” to assign race based on drivers’ license photographs – concluding that it was “crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.”

The Court’s Decision

Upon the Magistrate Judge’s denial of its motion to compel, BMW filed Rule 72 objections with Judge Herlong requesting that he overrule the Magistrate Judge’s decision given the relevance of the requested information. Id. at *1. The Magistrate Judge denied BMW’s request because “considering the burdens of proof in a disparate impact case and in light of BMW’s motion to compel, BMW has failed to explain how production of the EEOC’s convictions policy contributes to its ability to prove that BMW’s criminal conviction policy at issue is job-related and/or is consistent with a stated business necessity.” Id. at *2-3.

Judge Herlong disagreed with the Magistrate Judge’s reasoning, instead finding that the EEOC had the burden of establishing “why its objections are proper given the broad and liberal construction of the federal rules” and that it failed to meet this burden. Id. at *3. Although Judge Herlong noted that the EEOC based its argument on the fact that its own policies are not relevant because “the positions for which the EEOC utilized its policy were not similar to the positions at issue in this litigation,” he held that BMW is not simply required to sit back and “accept the EEOC’s position” without discovery as to its policies or information concerning the positions for which they are used. Id. Accordingly, Judge Herlong ordered the EEOC to produce the requested information since “this production should not be burdensome to the EEOC, and the Court can perceive no harm to the EEOC in producing its internal policies.” Id.

Implications For Employers

This decision represents a big win for employers given the EEOC’s general reluctance to allow a “look behind the curtain.” This is not a surprise since in affirming dismissal of the EEOC’s case against Kaplan, the Sixth Circuit honed in on the fact that the EEOC had initiated a pattern or practice lawsuit against an employer for using “the same type of background check that the EEOC itself uses.” This is yet another decision that highlights the fact that simply because the EEOC says certain information is not relevant does not make it so. Employers should be able to put this ruling to good use for current and future discovery battles with the EEOC.

Readers can also find this post on our EEOC Countdown blog here.

Court Dismisses Class Claims Brought By Same-Sex Domestic Partners

Posted in Class Action Litigation

By Eric M. Lloyd and Laura J. Maechtlen 

Late last week, plaintiffs in the U.S. District Court for the Northern District of California felt the ripple effects of the U.S. Supreme Court’s landmark decisions regarding same-sex marriage in United States v. Windsor and Hollingsworth v. Perry.

In Dragovich v. U.S. Dep’t of the Treasury, et al., No. C-10-01564 (N.D. Cal. Dec. 4, 2014), the Judge Claudia Wilken dismissed the class claims brought by plaintiffs seeking long-term care benefits for their same-sex domestic partners since any barriers precluding them from obtaining coverage also applied to heterosexual couples.

The ruling is important for all employers involved in workplace class action litigation.

Background To The Ruling

As of the date the Dragovich litigation started, same-sex spouses and registered domestic partners were ineligible to receive long-term care benefits under the California Public Employees’ Retirement System pursuant to the Health Insurance Portability and Accountability Act, 26 U.S.C. § 7702B(f) (“HIPAA”). The HIPAA, in turn, excluded such individuals from coverage under state-run benefits plans since it restricted benefits for spouses to heterosexual married couples pursuant to the Defense of Marriage Act, 1 U.S.C. § 7 (“DOMA”), and, omitted unmarried couples from eligibility for benefits. The plaintiffs, who are public employees of the State of California, thus sought long-term care benefits for their same-sex spouses and registered domestic partners. The Court certified the class in June 2011, and then granted summary judgment in the plaintiffs’ favor in May 2012. The defendants appealed the Court’s order granting summary judgment thereafter.

The Northern District of California’s recent rulings in Dragovich were prompted by developments that arose after the plaintiffs prevailed on summary judgment. In July 2013, the U.S. Supreme Court ruled that the DOMA’s restriction of the institution of marriage to heterosexual unions was unconstitutional in United States v. Windsor, 570 U.S. ___ (2013). On the same day as the Windsor decision, the Supreme Court also issued its ruling in Hollingsworth v. Perry, 570 U.S. ___ (2013), in which it declined to disturb the California Supreme Court’s ruling that the state’s ban on same-sex marriage was unconstitutional. Following the companion Windsor and Perry rulings, the Ninth Circuit vacated the Northern District of California’s grant of summary judgment in favor of the domestic partner plaintiffs and remanded the case for further consideration. The Ninth Circuit also dismissed the appeal as it applied to the plaintiffs involved in same-sex marriages, since the DOMA no longer operated to exclude same-sex spouses from eligibility for benefits.

The Court’s Ruling

On remand, the Judge Wilken granted the Federal and State defendants’ cross-motions for summary judgment as to the claims brought by plaintiffs involved in same-sex domestic partnerships. While the HIPAA still excluded domestic partners from eligibility for coverage under state-run plans, the Court held that the plaintiffs’ equal protection and substantive due process claims failed because the law impacted same-sex and heterosexual couples involved in a registered domestic partnership equally. Because same-sex couples in California could choose to marry following Perry, and, since the DOMA no longer restricted eligibility for benefits to heterosexual unions after Windsor, the barriers to benefits faced by all class members mirrored those faced by individuals involved in heterosexual domestic partnerships. The plaintiffs argued that couples involved in same-sex domestic partnerships faced barriers to marriage not faced by heterosexual couples, but the Court concluded that this argument was speculative and too individualized for resolution in a class action. The Court then denied the plaintiffs’ motion for class notice, since there was no on-going constitutional violation following Perry and Windsor.

In tandem with its summary judgment order, the Court denied the plaintiffs’ motion for additional remedies, which sought an order permitting class members to purchase benefits for the premiums they would have paid at the time they originally sought to enroll their same-sex partners. The Court held that providing the requested discounts would require complicated individualized inquiries which were not suitable for a class action, and, in any event that prospective relief was not available in the absence of an ongoing constitutional violation. The Court also denied the plaintiffs’ request for leave to file a supplemental complaint adding claims for alleged Title VII violations since such claims would necessarily be premised on multiple, complicated individualized inquiries.

Implications For Employers

Windsor and Perry were expected to unleash a cascade of rulings defining the rights of same-sex couples, as predicted in our prior blog postings hereDragovich is the latest indicator of the impact of these cases. The Court’s ruling that heterosexual and same-sex registered domestic partnerships in California are on equal footing is likely to impact employers down the line. Dragovich also provides employers seeking summary judgment of class claims with some nice language holding that speculative, individualized claims cannot be resolved in a class action.

Separation Agreement Attack Redux – EEOC Takes Another Swing At Employer’s Standard Release Language, And Loses On Key Claims

Posted in EEOC Litigation

By Chris DeGroff and Laura Maechtlen

Earlier this year, we blogged about the EEOC’s aggressive attack on CVS Pharmacy Inc.’s standard release agreement which contained terms more expansive in favor of employees than the EEOC’s own interpretive guidance, and agreements held enforceable by in key court decisions. The EEOC v. CVS case was eventually dismissed on procedural grounds because the EEOC had not met its obligation to conciliate the claims filed in that case, so failed to provide additional guidance on the EEOC’s aggressive theories. Unfortunately, it also failed to quell the EEOC’s thirst to pursue similar claims, as evidenced by the EEOC’s complaint against CollegeAmerica Denver, Inc. that alleges the private college’s separation agreements improperly prevented employees from filing age discrimination complaints — claims similar to those the EEOC made against CVS.

On December 2, 2014, Judge Lewis Babcock of the U.S. District Court for the District of Colorado granted in part the defense motion to throw out the EEOC’s lawsuit. The decision in EEOC v. CollegeAmerica Denver, Inc., Case No. 14-CV-1232, 2014 U.S. Dist. LEXIS 167333 (D. Colo. Dec. 2, 2014), is well worth a read for corporate counsel.

Background To The Case

The CollegeAmerica action arose when the Charging Party, Debbi Potts, resigned her employment and afterwards entered in to a single settlement agreement with CollegeAmerica in which Potts agreed to:

(1.) … refrain from personally (or through the use of any third party) contacting any governmental or regulatory agency with the purpose of filing any complaint or grievance that shall bring harm to CollegeAmerica ….

(3.) To not intentionally with malicious intent (publicly or privately) disparage the reputation of CollegeAmerica….

Following execution of the individual agreement, CollegeAmerica notified Potts that it considered emails she exchanged with another former employee to be in violation of the non-disparagement provision, and it demanded repayment of consideration paid to her. Potts responded by filing three charges of discrimination with the EEOC. After the first charge was filed, CollegeAmerica filed a state court action against Potts alleging breach of the agreement’s non-disparagement clause.

The EEOC investigated the claims, and issued a Letter of Determination that CollegeAmerica had violated the Age Discrimination in Employment Act (ADEA).  After the letter of determination was issued,  CollegeAmerica provided the EEOC with four Separation and Release Agreements (“Separation Agreements”) that it routinely used, for the purpose of clarifying that the settlement agreement signed by Potts was not CollegeAmerica’s “form” severance agreement, as the EEOC mistakenly believed.  All of those agreements included a release of claims provision and a non-disparagement clause.  After receiving copies of the “form” agreements, the EEOC did not revise or supplement its findings or otherwise notify CollegeAmerica that the scope of the investigation had expanded beyond Potts’ individual agreement. The parties’ efforts to resolve the issues set forth in the Letter of Determination through conciliation were thereafter unsuccessful.

The EEOC then filed a lawsuit, asserting three claims: (1) that Potts’ settlement agreement denied her the full exercise of her rights under the ADEA and interfered with the agency’s ability to investigate charges of discrimination under the ADEA; (2) through the “form” standard separation agreements used with employees other than Potts, CollegeAmerica denied employees full exercise of their rights under the ADEA; and (2) CollegeAmerica retaliated against Potts by filing the state court action alleging breach of her settlement agreement’s non-disparagement clause.

Ruling On Motion To Dismiss

CollegeAmerica sought dismissal of all the EEOC’s claims and, in an Order issued this week, the Court agreed with a majority of the defense arguments.

CollegeAmerica first argued that there is not justiciable controversy over the first claim because it has never asserted, and would never assert, that Potts waived her ADEA rights via the individual settlement agreement. In support, CollegeAmerica provided evidence that it did not assert such a waiver in connection with her EEOC’s charges, or state court action, and provided an affidavit stating that the employer did not and would never assert that the individual settlement agreement constitutes a waiver of ADEA rights. The Court concluded that the claim was moot.

CollegeAmerica also argued that the Court lacked jurisdiction over the second claim because the EEOC failed to provide it with notice that the “form” separation agreements purportedly violate the ADEA or to engage in conciliation with respect to those Agreements. In response, the EEOC argued that notice and conciliation are not jurisdictional prerequisites to suit under the ADEA, trotting out the oft-cited case Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), in which the Supreme Court addressed whether Title VII’s definition of “employer” was an issue of subject matter jurisdiction or an essential element of Title VII.  (For those employers who have litigated this issue with the EEOC, this case is and old standby for the EEOC, overly relied upon, and easily distinguishable in many instances). For obvious reasons, the Court distinguished Arbaugh, and recognized that that the Tenth Circuit has held that exhaustion of administrative remedies, including conciliation, is a jurisdictional prerequisite to filing suit.  It then found that — because the EEOC was unaware of the existence or terms of the “form” separation agreements before it issued its findings in the Letter of Determination — it could not serve as notice to CollegeAmerica that the EEOC was alleging that the “form” agreements violated the ADEA. The Court also found that the EEOC failed raise concerns about the “form” separation agreements at the conciliation meeting; thus, the EEOC failed to conciliate the issue. As a result, the Court dismissed the second claim for lack of jurisdiction.

Finally, CollegeAmerica was unsuccessful in its bid to dismiss the third cause of retaliation. The Court found that the EEOC pled sufficient facts to support a reasonable inference that CollegeAmerica filed the state court action in response to the first charge of discrimination.

Implications For Employers

Employers are well advised to review the separation agreement terms at issue in the EEOC v. CollegeAmerica and EEOC v. CVS cases. While these employers were successful in dismissing claims on procedural grounds, the EEOC appears focused on continuing to litigate terms of individual and/or form separation agreements. In doing so, the EEOC’s position attempts to significantly alter existing authority governing terms of severance agreements, regardless of the Agency’s own guidance and leading case law interpreting such terms.

Readers can also find this post on our EEOC Countdown blog here.

Eleventh Circuit Rules That Unaccepted Rule 68 Offers of Judgment To Named Plaintiffs, Prior To Motion To Certify, Does Not Moot Class Action

Posted in Class Action Litigation

By Gerald L. Maatman, Jr., and Alexis P. Robertson

On December 1, 2014, in Stein v. Buccaneers Limited Partnership, No.13-15417 (11th Cir. Dec. 1, 2014), the Eleventh Circuit held that an unaccepted offer of judgment, made pursuant to Rule 68 of the Federal Rules of Civil Procedure, does not serve to moot a class action. Although not a workplace class action, the Eleventh Circuit’s decision is notable for all sorts of class action litigation.

Case Background

Six named plaintiffs filed a proposed class action against Buccaneer Limited Partnership (“BLP”). The complaint alleged that, in violation of the Telephone Consumer Protection Act, BLP sent unsolicited faxes to the named plaintiffs and more than 100,00 others.

The named plaintiffs sought to represent a nationwide class of recipients of the unsolicited faxes. The complaint demanded statutory damages of $500 per violation, trebled to $1,500 based on BLP’s willfulness, and an injunction against further violation.

BLP subsequently served each named plaintiff an offer of judgment under Rule 68. The offer provided payment for full relief to each plaintiff. After serving the offers of judgment, BLP moved to dismiss the complaint for lack of jurisdiction, asserting that the unaccepted Rule 68 offers rendered the case moot. A day after BLP filed their motion, plaintiffs moved to certify a class.  Plaintiffs’ motion was long before the deadline for filing such a motion. The District Court denied the motion to certify as premature.

The named plaintiffs did not accept the offers, and the deadline passed. The District Court subsequently entered an order ruling that the action was moot, granting the motion to dismiss, and directing the clerk to close the case. The named plaintiffs then filed an appeal.

The Decision Of The Eleventh Circuit

Applying a de novo standard of review, the Eleventh Circuit considered two questions – first, whether a plaintiff’s claim becomes moot when the plaintiff does not accept a Rule 68 offer judgment, that offered all the relief the plaintiff seeks; and second, if the answer to the prior question is yes, may the named plaintiff act as a class representative.

Effect On The Named Plaintiffs’ Claims

Regarding the survival of the plaintiffs’ claims after the offer of judgment, the Eleventh Circuit found that dismissing a case based on an unaccepted offer was inconsistent with Rule 68. The Eleventh Circuit reasoned that the offers had no effect on the Plaintiffs’ claims. After the expiration of the 14 days, the named plaintiffs could no longer accept the offers. Therefore, they still had their claims and BLP still had it defenses. As the Eleventh Circuit opined, “BLP had not paid the plaintiffs, was not obligated to pay the plaintiffs, and had not been enjoined from sending out more faxes. The named plaintiffs’ individual claims were not moot.” Id.at 5.

The Eleventh Circuit pointed out that this reasoning was consistent with the opinion of the dissent from the U.S. Supreme Court case of Genesis Healthcare Corp., v. Symcsyk, 133 S.Ct. 1523 (2012). In Symczvk, a collective action under the Fair Labor Standards Act, the parties stipulated that an unaccepted Rule 68 offer mooted the individual plaintiff’s claim. The majority accepted the stipulation without addressing the issues, but the four dissenters – the only four who have weighed in on the Rule 68 issue – remarked that an unaccepted offer of judgment could not moot a case. The dissent in Symczvk explained that, like any other unaccepted offer, an unaccepted settlement offer is a legal nullity with no operative affect.

The Eleventh Circuit concluded that this reasoning was further supported by the language contained in the offer itself, which made clear that it would have no effect unless accepted or in a proceeding to determine costs. Therefore, after the offer lapsed, the “legal relationship between BLP and the named plaintiffs was precisely the same as before the offers were made…The individual claims were not moot.” Id. at 10.

Effect On The Class Claims

The Eleventh Circuit next explained an alternative basis for its holding, which was that even if the individual claims were somehow deemed moot, the class claims remained live and the named plaintiffs retained the ability to pursue them.

Based on its precedent, the Eleventh Circuit reasoned that the case still presented a live controversy because a personal stake can be present even when the plaintiff’s own individual claim has become moot. This was exemplified in the various Supreme Court opinion addressing situations that were “capable of repetition, yet evading review.”  Id. at 13. The Eleventh Circuit found it immaterial that the offers were made prior to moving for class certification, explaining that if the individual claims become moot before the court can reasonably be expected to rule on a certification motion, the class certification relates back to the filing of the complaint, and not to the date of when the plaintiff moved to certify the class. “The relation-back doctrine allows a named plaintiff whose individual claims are moot to represent class members not because the named plaintiff has moved to certify a class but because the named plaintiff will adequately present the class claims and unless the named plaintiff is allowed to do so the class claims will be “capable of repetition, yet evading review.” Id. at 17.

Implications For Employers

Rule 68 offers of judgment are an important part of a class action defense tool box. They offer a method of short circuiting a class action at an early stage. Yet, as illustrated by this ruling, the efficacy of the Rule 68 offer is heavily dependent on whether such offer will serve to moot a class. With this ruling the Eleventh Circuit has joined the Third, Fifth, Ninth, and Tenth Circuits in holding that Rule 68 offers of full relief to the named plaintiff do not moot a class action. Employers and corporate counsel must remain aware of exactly when and where such an offer will be effective.

Publication Of The 2015 Workplace Class Action Litigation Report Is Right Around The Corner

Posted in Class Action Litigation

By Gerald L. Maatman, Jr.

Happy Holiday season to our loyal readers of the Workplace Class Action Blog!

Our elves are busy at work this holiday season in wrapping up the galley proofs of our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report.

We anticipate going to press in the first week of January, and launching the 2015 Report to our readers from our Blog.

This will be our Eleventh Annual Report, and the biggest yet with analysis of over 1,300 class certification rulings from federal and state courts in 2014. As last year, the Report will be available for download as an E-Book too.

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We were humbled and honored by the review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said: “The Report is the singular, definitive source of information, research, and in-depth analysis on employment-related class action litigation. Practitioners and corporate counsel should not be without it on their desk, since the Report is the sole compendium of its kind in the United States.”

The 2015 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions -  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2014 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

Information on downloading your copy of the 2015 Report will be available on our blog in early January. Happy Holidays!

Last Brief Filed Today With The SCOTUS in Mach Mining Case

Posted in EEOC Litigation

By Gerald L. Maatman, Jr.

As our loyal blog readers know, we have followed the course of the Supreme Court proceedings in Mach Mining v. EEOC , No. 13-1019 (U.S.) with keen interest. Our prior posts are here, here, here, and here. Simply stated, this case has the potential to be a real game-changer for employers.

This afternoon Mach Mining filed the last brief with the SCOTUS prior to the oral argument set for January 13, 2015. Mach Mining’s reply brief is here.

The Context And The Stakes

Mach Mining v. EEOC is a big case for employers and for government enforcement litigation. In a game-changing decision in December 2013, the U.S. Court of Appeals for the Seventh Circuit ruled that an alleged failure to conciliate is not an affirmative defense to the merits of an employment discrimination suit brought by the EEOC. That decision has had far-reaching, real world significance to the employment community, for it means the EEOC is virtually immune from review in terms of the settlement positions it takes – “pay millions or we will sue and announce it in a media release – prior to suing employers.

We have analyzed this case at various points before, as the litigation winded through the lower courts and culminated in the precedent-setting decision of the Seventh Circuit reported at 738 F.3d 171 (7th Cir. 2013). In essence, the Seventh Circuit determined that the EEOC’s pre-lawsuit conduct in the context of conciliation activities cannot be judicially reviewed. Subsequently, in what many SCOTUS watchers found ironic, even the though the EEOC prevailed in the Seventh Circuit, the Government also backed Mach Mining’s request for SCOTUS review to resolve the disagreement among the courts of appeals regarding the EEOC’s conciliation obligations. Given the stakes, the SCOTUS accepted Mach Mining’s petition for certiorari in short order to resolve this issue.

Opening Brief And Amicus Briefs For The Defense

Mach Mining filed is opening brief on September 4, 2014. Subsequently, employer groups lined up behind Mach Mining to support reversal of the Seventh Circuit’s decision. Seyfarth Shaw LLP submitted an amicus brief to the U.S. Supreme Court on behalf of the American Insurance Association in Mach Mining. For our loyal blog readers interested in our amicus brief, a copy is here.

Mach Mining’s Reply Brief

The EEOC filed it opposition brief on October 27, 2014. Mach Mining’s reply brief takes the Government’s position to task. It argues that judicial review of the condition precedent for the EEOC instituting a lawsuit must be meaningful. It criticizes the EEOC’s contention that a simple letter of determination – attesting to the failure of conciliation – is perfunctory and a self-serving standard if that is all that Title VII requires. As Mach Mining put it, “[a]t best, the EEOC’s [proposed] letters would show that the Commission is satisfied that it has met its conciliation obligation[,…] but accepting an agency’s representation that it believes it has complied with the law amounts to no judicial review at all.’ Reply Brief, at 2 (emphasis in original). Mach Mining asserts that nothing within Title VII “justifies such toothless review.” Id.

Implications For Employers

Next up is oral argument at the SCOTUS on January 13, 2015. Stay tuned.

Readers can also find this post on our EEOC Countdown blog here.