supreme-court-546279_960_720As profiled in our recent publication of the 13th  Annual Workplace Class Action Report, the U.S. Supreme Court’s rulings have a profound impact on employers and the tools they may utilize to defend high-stakes litigation. Rulings by the Supreme Court in 2016 were no exception.

In this videoJerry Maatman discusses the first of the 6 key findings of our 2017 Workplace Class Action Report relative to the Supreme Court’s class action and employment-related rulings. Is the Supreme Court pro-worker or pro-employer? How do its rulings impact workplace class action litigation? Which rulings are the most important and the ones we should be focusing on in planning compliance strategies?  Tune in to find out.

Blog readers, don’t forget to order your Workplace Class Action Report for 2017 here.

 

 

supreme courtSeyfarth Synopsis: As profiled in our recent publication of the 13th Annual Workplace Class Action Litigation Report, the U.S. Supreme Court’s rulings have a profound impact on employers and the tools they may utilize to defend high-stakes litigation. Rulings by the Supreme Court in 2016 were no exception.

Is The Supreme Court Pro-Worker Or Pro-Employer?

Over the past decade, the U.S. Supreme Court led by Chief Justice John Roberts increasingly has shaped the contours of complex litigation exposures through its rulings on class action and governmental enforcement litigation issues. Many of these decisions have elucidated the requirements for pursuing employment-related class actions. The decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and the decision in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), are the two most significant examples. Those rulings are at the core of class certification issues under Rule 23. To that end, in 2016, federal and state courts cited Wal-Mart in 536 rulings in 2016; they cited Comcast in 216 cases.

Over the past several years, the Supreme Court has accepted more cases for review – and issued more rulings than ever before that have impacted the prosecution and defense of class actions and government enforcement litigation. The past year continued that trend, with several key decisions on complex employment litigation and class action issues, and more cases accepted for review that are posed for rulings in 2017. The key class action decisions this past year in the Tyson Foods and Spokeo cases were arguably more pro-plaintiff and pro-class action than business-oriented or anti-class action.  While the Supreme Court led by Chief Justice John Roberts is often thought to be pro-business, the array of its key rulings impacting class action workplace issues is anything but one-dimensional. Some decisions may be viewed as hostile to the expansive use of Rule 23, while others are hospitable and strengthen the availability of class actions and/or make proof requirements easier for plaintiffs.  Further, the Supreme Court declined several opportunities to impose more restraints on class actions, and by often deciding cases on narrow grounds, it has left many gaps to be filled in by and thereby has fueled disagreements arising amongst lower federal courts. Suffice it to say, the range of rulings form a complex tapestry that precludes an overarching generalization that the Supreme Court is either pro-business or pro-worker on class actions.

Rulings In 2016

In terms of direct decisions by the Supreme Court impacting workplace class actions, this past year was no exception. In 2016, the Supreme Court decided seven cases five employment-related cases and two class action cases that will influence complex employment-related litigation in the coming years.

These rulings included two wage & hour cases, two statutory violation cases (under the Fair Credit Reporting Act (“FCRA”) and the Telephone Consumer Protection Act (“TCPA”)), two ERISA cases, and one EEOC case.  A rough scorecard of the decisions reflects three distinct plaintiff-side victories, defense-oriented rulings in three cases, and one toss-up.

Tyson Foods, Inc. v. Bouaphakeo, et al., 136 S. Ct. 1036 (2016)Tyson Foods involved review of a ruling where workers pursued class claims u14-1146_0pm1nder the FLSA and Iowa state law for unpaid work and overtime for time spent putting on and taking off hard hats, work boots, hair nets, aprons, gloves, and earplugs. The employer objected to class certification on a host of grounds, including that the variations in protective gear, the differences in the time to don and doff the gear, and the varying hours worked gave rise to individualized issues precluding class certification.  The workers proved their donning and doffing time and their hours over 40 hours per week based on expert testimony via a time and motion study that calculated average times donning and doffing. At trial the jury awarded $2.89 million to 3,344 class members, which the district court increased to $5.8 million with liquidated damages, and the Eight Circuit affirmed.  In a 6 to 2 decision, the Supreme Court answered the vexing “trial by formula” problem it touched upon in Wal-Mart, and determined that the representative evidence offered via statistics and expert testimony was appropriate in this case, and supported both class certification and the jury verdict for the class. The Supreme Court declined to craft a general rule governing the use of statistical evidence, or so-called representative evidence, in all types of class actions, although in general it elucidated when such evidence would be allowed in a class action and when class members can rely on statistical samples to establish their claims. For these reasons, more so than the other Supreme Court case in 2016, Tyson Foods was the Rule 23 workplace class action decision of the year.  The ruling opens a door that many thought the Supreme Court closed in Wal-Mart and Comcast, and provides plaintiffs’ counsel with a new theoretical approach for class certification. Most notably, the dissenters in Tyson Foods claimed that the Supreme Court had turned its back on Comcast by redefining and diluting the predominance standard for class certification under Rule 23(b)(3).

Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) – Widely considered the 13-1339dif_3m92other key class action ruling of the past Supreme Court term, Spokeo concerned whether people without an injury can still file class actions. The case involved whether a job applicant had the ability to bring a complaint against credit reporting firms under the FCRA, where the plaintiff alleged that a people search engine violated the FCRA when it reported he was wealthy and had a graduate degree; in reality, he was struggling to find work. The district court had dismissed the lawsuit because plaintiff lacked standing, and the Ninth Circuit reversed. In its 6 to 2 ruling, the Supreme Court held that the wrong analysis of standing had been undertaken, and it remanded the case for further findings. In so doing, the Supreme Court articulated that standing requires a showing of a “concrete injury” that is not necessarily synonymous with a tangible injury. Hence, certain types of intangible harms may be sufficient to satisfy standing requirements. The decision reflects that the Supreme Court’s class action jurisprudence has taken a more nuanced and measured approach toward constraints on the ability of representative parties to litigate class actions. By opening the door to more expanded standing principles, Spokeo is apt to subject employers to more litigation under statutes like the FCRA.

EEOC v. CRST Van Expedited, Inc., 136 S. Ct. 1642 (2016) – This case concerned the largest fee sanction award approximately $4.7 million ever issued against the EEOC. It arose from a systemic sexual harassment lawsuit that the agency lost for failing to meet pre-suit obligations relative to the claims of 67 female employees for whom the EEOC sued, but whose claims the Commission failed to investigate before filing suit. The dispute over legal fees arose when the employer subsequently secured a fee award for its expenditures in fighting the claims. The Eighth Circuit subsequently upended that award on the basis that the district court improperly ruled that it had to determine on an individual basis whether each of the 67 claims in question were frivolous or groundless (and as the employer’s victory on procedural grounds was not a victory on the merits). On further appeal to the Supreme Court, it unanimously held that a favorable outcome on the merits is not a prerequisite for an employer to recover fees against the EEOC. As a result, it remanded the case for an examination of the fee issue and resuscitated the employer’s quest to recover millions of dollars from the Commission. In so doing, it gave the EEOC a significant bench-slap over its arguments. While the decision dealt specifically with Title VII’s attorneys’ fee provision, it is likely that the attorneys’ fee provisions in many other statutes will be intercepted in a similar fashion.

Campbell-Ewald Co. v. Gomez, et al., 136 S. Ct. 663 (2016)Campbell-Ewald concerned whether a company can moot and defeat a class action brought under the TCPA by offering a settlement by way of a Rule 68 offer of judgment, and what happens to potential class actions when such proposals are accepted. In this case, defendant made the Rule 68 offer before plaintiff filed a motion for class certification, and it moved to dismiss the lawsuit as moot after plaintiff declined the offer. In a 6 to 3 ruling, the Supreme Court held that under basic contract principles, an unaccepted offer creates no lasting right or obligation, and plaintiff’s claims were not rendered moot. In so ruling, the Supreme Court eliminated a potential defense strategy that employers had used to eviscerate class actions with “pick off” offers to the named plaintiff.

Amgen, Inc. v. Harris, et al., 136 S. Ct. 758 (2016) – In this unanimous ruling, the Supreme Court reversed and remanded a breach of fiduciary duty claim under the ERISA on the grounds that ERISA fiduciaries that manage publically-traded employee stock investments in 401(k) plans need not overcome a presumption of prudence. In so ruling, the Supreme Court reaffirmed its ruling in Fifth Third Bank v. Dudenhoeffer, 134 S. Ct. 2459 (2014). The Supreme Court reversed on the basis that the Ninth Circuit imposed too low of a burden on plaintiffs when attempting to show that the ERISA fiduciaries should have done something to halt the decline in stock values.

Encino Motorcars, LLC v. Navarro, et al., 136 S. Ct. 2117 (2016) – This case involved interpretation of an exemption for service advisors at automobile dealerships who sued for unpaid overtime under the FLSA. The district court had dismissed the claim on the basis of an exemption for salesmen, partsmen, and mechanics under the FLSA, but the Ninth Circuit reversed on the basis of an interpretative regulation of the DOL in 2011 (that reversed the DOL’s position on the exemption without explanation). In a 6 to 2 ruling, the Supreme Court reversed the Ninth Circuit’s decision, holding that reliance on the DOL’s interpretative regulation lacked the force of law because it was arbitrary and capricious. The Supreme Court criticized the DOL’s position and instructed the Ninth Circuit to reinterpret the FLSA exemption without giving any deference to the DOL’s 2011 regulation.

Gobeille, et al. v. Liberty Mutual Insurance Co., 136 S. Ct. 936 (2016) – In this case, the Supreme Court held in a 6 to 2 ruling that a Vermont state law – that required the disclosure of payments relating to healthcare claims and information about healthcare services – was preempted by the ERISA to the extent the Vermont law applied to ERISA-governed plans. In so ruling, the Supreme Court articulated the contours of how the ERISA preempts state law attempts to regulate healthcare benefit issues.

The decisions in Spokeo, Campbell-Ewalt, and Tyson Foods are sure to shape and influence class action litigation in a profound manner relative to preemptive defense strategies and “pick-off” attempts, standing concepts, and statistical evidence for class certification and proof of class claims for damages. To the extent that extrinsic restrictions on class actions – i.e., limits on the ability of representative plaintiffs to litigate class actions, such as Article III standing concepts and the mootness doctrine – are relaxed or lessened (as in Spokeo and Campbell-Ewalt), class actions are easier to maintain and litigate. Further, Tyson Foods is certainly a setback for employers and reflects an approach to class certification that seems at odds with Wal-Mart and Comcast. To that end, one indication of their impact is the fact that after the Supreme Court’s rulings in these cases, lower federal and state courts cited Spokeo in 365 decisions, cited Campbell-Ewald in 185 decisions, and cited Tyson Foods in 104 decisions during the remainder of 2016.

Amgen, Navarro, Gobeille, and CRST Van Expedited are also apt to shape the future of workplace  litigation in the contexts of ERISA fiduciary duty claims, deference to DOL regulations in wage & hour litigation, ERISA preemption, and claims for breaches of statutory duty against the EEOC. While arguably defense-oriented rulings, they are not as significant for employers as Spokeo, Campbell-Ewalt, and Tyson Foods are for plaintiffs.

Rulings Expected In 2017

Equally important for the coming year, the Supreme Court accepted five additional cases for review in 2016 that are likely to be decided in 2017 that also will impact and shape class action litigation and government enforcement lawsuits faced by employers. Those cases include four employment lawsuits and one class action case. The Supreme Court undertook oral arguments on two of these cases in 2016; the other three will have oral arguments in 2017. The corporate defendants in each case have sought rulings seeking to limit the use of class actions or control government enforcement lawsuits.

NLRB v. SW General, No. 15-1251 – In this case, which was argued on November 7, 2016, the Supreme Court will determine whether an unfair labor practice charge was unauthorized due to the NLRB’s acting general counsel serving in violation of a federal statute in terms of NLRB procedure. The Supreme Court is apt to decide the scope of Presidential authority with executive agencies, the contours of federal labor law, and a blueprint for how future Administrations can exercise power over labor policies.

Microsoft v. Baker, et al., No. 15-457 – Although not an employment case, this case may well impact the ability of employers to defend class action litigation. It involves a consumer fraud class action where the district court denied class certification, which was reversed on appeal by the Ninth Circuit. The Supreme Court will determine the impact and implications in a class action when the named plaintiffs voluntarily dismiss their claims with prejudice while others in the class wish to proceed with the class litigation. This case is expected to be set for oral argument in 2017.

Czyzewski, et al, v. Jevic Holding, No. 15-649 –  Argued on December 7, 2016, this case involves the Worker Adjustment and Retraining Notification (“WARN”) Act and the interplay between worker rights under that statute and bankruptcy proceedings after a company allegedly violates the WARN Act. The Supreme Court likely will determine whether priority in distributing assets in bankruptcy may proceed in a manner that allegedly violates the priority scheme in the Bankruptcy Code. The case also may decide rules for priority in reorganizations and liquidations that impact employers and workers in economically challenged industries and organizations.

EEOC v. McLane Co., Inc., No. 15-1248 – In this case, the Supreme Court will examine whether a district court’s decision to quash or enforce a subpoena in an EEOC administrative enforcement proceeding should be reviewed de novo, or reviewed deferentially. The process of responding to or challenging an EEOC subpoena may become considerably more expensive if the Supreme Court sides with the Commission’s position, especially as the EEOC been exceedingly aggressive in pursuing systemic administrative investigations through liberal use of subpoenas for all sorts of employer data. This case is expected to be set for oral argument in 2017.

Advocate Health Care Network v. Stapleton, et al., No. 16-74 – In this case (a consolidation of three separate appeals), the Supreme Court will examine whether church-affiliated hospitals are exempt from the ERISA. The hospitals assert that their retirement plans are excluded from the ERISA’s coverage and that they should not face class actions over alleged breaches of fiduciary obligations and minimum funding requirements. This case is expected to be set for oral argument in 2017.

The Supreme Court is expected to issue decisions in these five cases in 2017.

Each decision may have significant implications for employers and for the defense of high-stakes workplace litigation.

The Key Decision Expected In 2017

On January 13, 2017, 3 cases were accepted for review that pose what may be the most important issue for employers presently before the Supreme Court on the legality of class action waivers in arbitration agreements. Those cases – NLRB v. Murphy Oil USA, Inc. (No. 16-307), Epic Systems Corp. v. Lewis (No. 16-285), and Ernst & Young, LLP v. Morris (No. 16-300) – will examine whether a class action waiver illegally interferes with the right of employees under the National Labor Relations Act to engage in concerted activity for their mutual aid or protection if the waiver precludes them from pursuing class or collective actions in any judicial forum.

Hanging in the balance is a litigation management tool that many employers have utilized with success to combat and minimize their exposure to class actions and collective actions.

Filling The Scalia Vacancy On The U.S. Supreme Court

Days out from the Presidential inauguration, the Supreme Court remains shorthanded after the death of Justice Antonin Scalia in February of 2016. The potential exists for 4-to-4 deadlocks on key issues. Given the timing of President Trump’s nomination for Justice Scalia’s successor, the Supreme Court is apt to be short one member until the late spring or potentially even longer given the politics and logistics of the confirmation process.

In terms of the impact of the successor to Justice Scalia, it is reasonable to assume that he or she will be conservative and cut more in the mold of the types of judges that President Trump described in his campaign in terms of the significance of the judicial process in general and the Supreme Court in particular. While the current ideological alignments on the Supreme Court are fragile, a “conservative” replacement of Justice Scalia would almost certainly preserve the current moderate-conservative approach to class action questions. That being said, Justice Scalia had an outsized influence on class action issues during his tenure on the Supreme Court. As illustrated by his opinions in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. v. Behrend, Justice Scalia advocated putting the spotlight on class action litigation, and the consistent thread of his opinions were to make class actions more difficult to certify and more challenging  to win. In sum, skeptics of class actions lost their strongest judicial ally, and his passing likely will weaken the intellectual championing of counter-points to a future rebound of class action jurisprudence at the Supreme Court.

For more in depth analysis of workplace class action trends, please click here to order Seyfarth’s 2017 Workplace Class Action Report eBook and here to download Chapter 1 on the 2017 Executive Summary/Key Trends.  Our annual webinar on the Report is now set for February 21, 2017, click here to register.

#16-3836 2017 WCAR Front Cover for Word

With the publication of our Annual Workplace Class Action Report, the reaction from clients and loyal blog readers has been fantastic. The Report has been reported widely by the media year after year. Our upcoming February 21st webinar on the Report already has 500 participants signed up! The report manifests the notion that workplace class action litigation is one of those workplace issues that keep executives, corporate counsel, and HR professionals up at night.

 

In this video, Jerry Maatman discusses the key findings and top trends of 2016 and the data may not be exactly what you expect based on previous years.

Click here to request the Workplace Class Action eBook today!

 

#16-3836 2017 WCAR Front Cover for WordOur 2017 Workplace Class Action Report is now available.

At 881 pages, our 13th Annual Report analyzes 1,331 rulings and is our biggest and best Report ever.

Click here to order your copy in eBook format. Click here to download Chapter 1 on the 2017 Executive Summary/Key Trends.

Our annual webinar on the Report is now set for February 21, 2017 and a link to register for the webinar is here.

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 again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, risk manager, underwriter, or broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States.”  You can read more about the review here.  Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2017 Report analyzes 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 2016 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.

We hope our loyal blog readers will enjoy it!

Executive Summary

Workplace class action litigation has increased geometrically over the past decade. More often than not, it poses unique “bet-the-company” risks for employers.  An adverse judgment in a class action has the potential to bankrupt a business or eviscerate its market share. Likewise, the on-going defense of a class action can drain corporate resources long before the case reaches a decision point. Companies that do business in multiple states are also susceptible to “copy-cat” class actions, whereby plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time. Hence, workplace class actions can adversely impact a corporation’s business operations, jeopardize or end the careers of senior management, and cost millions of dollars to defend. For these reasons, workplace class action litigation risks are at the top of the list of problems that keep business leaders from sleeping at night.

Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are not making this challenge any easier. They are continuing to develop new theories and approaches to the successful prosecution of complex employment litigation.  New rulings by federal and state courts add to this patchwork quilt of compliance problems and risk management issues. In turn, the events of the past year in the workplace class action world demonstrate that the array of litigation issues facing businesses are continuing to accelerate at a rapid pace while also undergoing significant change.  Governmental enforcement litigation pursued by the U.S. Equal Employment Commission (“EEOC”) and the U.S. Department of Labor (“DOL”) has also manifested an aggressive “push-the-envelope” agenda of two activist agencies, with regulatory oversight of workplace issues continuing as a high priority in the Obama Administration.  The combination of these factors are challenging businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. These challenges are especially acute for businesses in the context of complex workplace litigation.

Adding to this mosaic of challenges in 2017 is the first change-over of the political party occupying the White House in eight years. One of the initial items both political parties will address is President Trump’s nominee to fill the vacant seat on the U.S. Supreme Court. The fragile alliances amongst the conservative and liberal factions will hang in the balance, as future workplace class action rulings will pivot at least in part on the new composition of the Supreme Court once the nominee is confirmed and takes the bench sometime in 2017. Furthermore, changes to government priorities will start on Inauguration Day, and some may well be stark reversals in policy that are sure to have a cascading impact on private class action litigation. While predictions about the future of workplace class action litigation may cover a wide array of potential outcomes, the one sure bet is that change is inevitable and corporate America will encounter new litigation challenges.

Key Trends Of 2016

An overview of workplace class action litigation developments in 2016 reveals six key trends.

First, class action dynamics increasingly have been shaped and influenced by recent rulings of the U.S. Supreme Court. Over the past several years, the Supreme Court has accepted more cases for review – and issued more rulings than ever before that have impacted the prosecution and defense of class actions and government enforcement litigation. The past year continued that trend, with several key decisions on complex employment litigation and class action issues, and more cases accepted for review that are posed for rulings in 2017. The key class action decisions this past year in the Tyson Foods and Spokeo cases were arguably more pro-plaintiff and pro-class action than business-oriented or anti-class action.  While the Supreme Court led by Chief Justice John Roberts is often thought to be pro-business, the array of its key rulings impacting class action workplace issues is anything but one-dimensional. Some decisions may be viewed as hostile to the expansive use of Rule 23, while others are hospitable and strengthen the availability of class actions and/or make proof requirements easier for plaintiffs.  Further, the Supreme Court declined several opportunities to impose more restraints on class actions, and by often deciding cases on narrow grounds, it has left many gaps to be filled in by and thereby has fueled disagreements arising amongst lower federal courts. Suffice it to say, the range of rulings form a complex tapestry that precludes an overarching generalization that the Supreme Court is either pro-business or pro-worker on class actions.

Second, the monetary value of the top employment-related class action settlements declined significantly in 2016 after they reached all-time highs in 2014 and 2015. The plaintiffs’ employment class action bar and governmental enforcement litigators successfully translated their case filings into large class-wide settlements, but they did so at lower values than in the two previous years. The top ten settlements in various employment-related categories totaled $1.75 billion in 2016, which declined from $2.48 billion in 2015 and $1.87 billion in 2014. Whether this is the start of a trend or a short-term aberration remains to be seen as 2017 unfolds.

Third, federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar in 2016 than in past years. Plaintiffs’ lawyers continued to craft refined and more successful class certification theories to counter the more stringent Rule 23 certification requirements established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), and Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). In the areas of employment discrimination, wage & hour, and ERISA class actions, the plaintiffs’ bar scored exceedingly well in securing class certification rulings in 2016. In sum, class actions continue to be certified in significant numbers and certain “magnet” jurisdictions continue to issue decisions that encourage or, in effect, force the resolution of large numbers of claims through class action mechanisms.

Fourth, overall complex employment-related litigation filings increased in 2016 insofar as employment discrimination cases were concerned, but decreased in the areas of ERISA class actions, governmental enforcement litigation, and wage & hour collective actions and class actions. For the past decade, wage & hour class actions and collective actions have been the leading type of “high stakes” lawsuits being pursued by the plaintiffs’ bar. Each year the number of such case filings increased. However, for the first time in over a decade, case filing statistics for 2016 reflected that wage & hour litigation decreased over the past year. Additional factors set to coalesce in 2017 – including litigation over the new FLSA regulations and the direction of wage & hour enforcement under the Trump Administration – are apt to drive these exposures for Corporate America. To the extent that government enforcement of wage & hour laws is ratcheted down, the private plaintiffs’ bar likely will “fill the void” and again increase the number of wage & hour lawsuit filings.

Fifth, wage & hour certification decisions in 2016 increased geometrically as compared to last year. Of the 224 wage & hour certification decisions in 2016, there were 195 conditional certification rulings and 29 decertification rulings. In contrast, in 2015, there were 175 wage & hour certification decisions, including 153 conditional certification rulings and 22 decertification rulings. While plaintiffs’ lawyers won more conditional certification motions than compared to prior years, employers also won decertification motions at higher rates than as compared to 2015. At the same time, that led to a more rapid and robust development of case law on conditional certification and decertification issues in the wage & hour context.  It also reflects the simple truism that with more wage & hour litigation case filings over the last 36 months, there have been more conditional certification and decertification decisions in that space than in any other area of workplace class action litigation.

Sixth, and finally, government enforcement lawsuits brought by the DOL and EEOC continued the aggressive litigation programs of both agencies, but by sheer numbers of cases, their enforcement activities were arguably limited in their effectiveness, at least when measured by lawsuit filings and recoveries compared to previous years. Settlement numbers for government enforcement litigation in 2016 decreased substantially as compared to 2015, as did the litigation dockets of the DOL and the EEOC. This trend is critical to employers, as both agencies have a focus on “big impact” lawsuits against companies and “lead by example” in terms of areas that the private plaintiffs’ bar aims to pursue. The content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration remains to be seen; most believe there will be wholesale changes, which may well prompt the private plaintiffs’ class action bar to “fill the void” and expand the volume of litigation pursued against employers over the coming year.

Implications For Employers

The one constant in workplace class action litigation is change.  More than any other year in recent memory, 2016 was a year of great change in the landscape of Rule 23.  As these issues play out in 2017, additional chapters in the class action playbook will be written.

The lesson to draw from 2016 is that the private plaintiffs’ bar and government enforcement attorneys are apt to be equally, if not more, aggressive in 2017 in bringing class action and collective action litigation against employers.

These novel challenges demand a shift of thinking in the way companies formulate their strategies.  As class actions and collective actions are a pervasive aspect of litigation in Corporate America, defending and defeating this type of litigation is a top priority for corporate counsel.  Identifying, addressing, and remediating class action vulnerabilities, therefore, deserves a place at the top of corporate counsel’s priorities list for 2017.

f41e0e294d1b6ebf550c2badccce4b68Seyfarth Synopsis: In the high-profile EEOC race discrimination litigation against Bass Pro, the Court denied the EEOC’s motion for a ruling that would have allowed it to include in its § 706 claims those individuals who had not yet applied to work for Bass Pro when the mandatory Title VII conciliation process took place.

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The latest chapter of the EEOC’s race discrimination case against Bass Pro (which we blogged about here and here) involves yet another attempt by the government to cast a broad net and increase the number of claimants in its lawsuit.  This week, in EEOC v. Bass Pro Outdoor World, LLC, et al., Case No. 11-CV-3425 (S.D. Tex. Jan. 3, 2017), Judge Keith P. Ellison of the U.S. District Court for Southern District of Texas denied the EEOC’s motion for a ruling that would have allowed it to include claims in its lawsuit for individuals who had not yet applied to work for Bass Pro at the time conciliation took place, which is a mandatory pre-suit duty under Title VII.

For employers confronted with EEOC litigation, this ruling is positive in that shows how courts may be unwilling to allow to the EEOC to add claimants with whom it never conciliated.

Case Background

The EEOC brought a lawsuit alleging discriminatory hiring practices in violation of Title VII on behalf of a group of individuals allegedly discriminated against on the basis of their gender or race, both as a representative action (under § 706) and based on a pattern or practice theory (under § 707).  On March 4, 2014, the Court issued several rulings (which we blogged about here) regarding whether the EEOC had satisfied Title VII’s pre-suit requirements.  Id. at 1.  At the outset, the Court ruled that it must undertake a distinct analyses of the EEOC’s § 706 and § 707 claims on the issue of conciliation.  Accordingly, the Court held that while the EEOC had satisfied Title VII’s conciliation requirements with regards to its § 707 claims, it failed to do so with its § 706 claims.  The Court thus ordered a stay as the remedy for the EEOC’s failure to properly conciliate the § 706 claims.  Id. at 1-2.  Further, the Court dismissed from the case all individuals who had not yet applied to work for Bass Pro by April 26, 2010, the date on which the EEOC issued its Letter of Determination (hereinafter “post-LOD applicants”).  The Court reasoned that the EEOC could not have possibly conciliated the claims of these individuals as they had not yet applied to work for Bass Pro at the time the conciliation took place.

On July 30, 2014, in reversing an earlier ruling, the Court held (as we blogged about here) that the EEOC may prove its § 706 claims using the framework established in Franks v. Bowman Transportation Company, Inc., 424 U.S. 747 (1976), and later refined in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977).  Id. at 2.  The Court further held that the EEOC had satisfied its Title VII administrative prerequisites (including its duties to investigate and conciliate) with regards to its § 706 claims, even for individuals not specifically identified in the investigation.  After this ruling was affirmed by the Fifth Circuit, the EEOC argued that the post-LOD applicants must be restored to eligibility in the § 706 class. 

The Decision

The Court denied the EEOC’s motion for a ruling that the post-LOD applicants were eligible to participate with respect to the EEOC’s § 706 claims.  The EEOC claimed that Court’s dismissal of the post-LOD applicants was fundamentally tied to two rulings that were subsequently overturned: (1) that the § 706 and § 707 claims must be analyzed separately on the issue of conciliation, and (2) that the Franks/Teamsters model could not be applied to § 706 claims.  The Court rejected this argument, noting that when it dismissed the post-LOD applicants, it made no reference to those arguments and instead focused on the proper sequence of EEOC enforcement under Title VII.  Id. at 3.  Referencing its March 4, 2014 order, the Court explained that because by definition the post-LOD applicants applied after the EEOC’s investigation was completed, the EEOC could not possibly have conciliated their claims.  Accordingly, the Court opined that its reversal on the issues of separate conciliation and the application of the Franks/Teamsters model had no effect on the dismissal of the post-LOD applicants.  Thus, the Court denied the EEOC’s motion and held that the post-LOD applicants remained ineligible for the § 706 claims.

Implications For Employers

For employers facing EEOC litigation, any ruling that limits the size of the case is no doubt favorable in terms of minimizing potential financial exposure.  While employers should be encouraged by this Court’s willingness to hold the EEOC to its obligation to conciliate, there are several recent cases that argue that the courts’ review of the EEOC’s Title VII pre-suit duties remains limited.  Ideally, this ruling will send the EEOC a message that it must abide by the conciliation process or risk losing its ability to bring suit on behalf of claimants with whom it did not conciliate.

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

2017 EEOC Book Cover Design (3)We are once again pleased to offer our loyal readers our annual analysis of the five most intriguing developments in EEOC litigation in 2016, along with a pre-publication preview of our annual report on developments and trends in EEOC-initiated litigation. That book, titled EEOC-Initiated Litigation: FY 2016, is a thorough analysis of the lawsuits that were filed by the EEOC in FY 2016 (spanning October 2015 through September 2016), and the major decisions impacting EEOC litigation.

We have analyzed those filings and decisions to provide our loyal readers with a comprehensive examination of trends affecting EEOC litigation. Every employer wants to avoid becoming a target of a government lawsuit. We believe the best way to do that is to develop a clear understanding of the EEOC’s enforcement agenda, litigation activities, and priorities. Our annual report is intended to give corporate counsel, HR professionals, and other decision-makers the tools they need to keep their companies out of the line of fire.

This year’s report once again analyzes enforcement trends impacting employers in the retail, hospitality, manufacturing, healthcare, national resources/construction, and business services industries. That analysis can be found here.

We have also organized the substantive developments according to the EEOC’s strategic priorities. FY 2016 was the last year of the EEOC’s 2012 Strategic Enforcement Plan (SEP). Now is a perfect time to look back and take stock of what the EEOC has actually done with respect to each of those priorities over the past four years.  We think our readers will benefit from understanding how the EEOC interpreted and advanced those priorities over the past four years, especially since the new SEP (covering FY 2017-2021) identifies the exact same priorities.

The full publication will be offered for download as an eBook. To order a copy, please click here.

We always like to end our year with a look back at some of the most interesting decisions and developments of the year. Here is our list of the “top five” most intriguing developments of 2016:

FY 2017-2021 Strategic Enforcement Plan

In FY 2016, the EEOC created and announced a new SEP for fiscal years 2017 through 2021. The new SEP establishes the enforcement priorities that will guide its enforcement efforts over the next four years. Our readers can read all about it here.  We closely monitored how the EEOC adjusted its tactics and enforcement agenda in light of its previous SEP and found that it was a reliable guide to how the EEOC pursues its enforcement agenda. The same will probably be true of the new SEP as well.

The new SEP identifies the same six priorities as the earlier SEP. However, it added two substantive areas of focus regarding what it sees as developing and emerging issues in the workplace. Those include “complex” employment relationships, such as temporary workers, staffing agencies, independent contractor relationships, and those that arise in the on-demand economy. The EEOC also identified “backlash discrimination” against Muslims, Sikhs, and other persons of Arab, Middle Eastern, or South Asian descent. Employers that operate within any of the “complex” employment relationships identified by the EEOC, or who employ sizable populations of Muslim or Middle Eastern workers, should take heed.

Continuing Impact Of Mach Mining v. EEOC, 135 S. Ct. 1645 (2015).

In Mach Mining, LLC v. EEOC, the Supreme Court unanimously held that the EEOC’s statutorily-required conciliation activities are subject to judicial review. At the same time, however, the Court outlined a very narrow scope of that review. The Court then left it to the lower courts to harmonize those two aspects of its ruling. Despite some initial victories for employers, courts deciding cases in FY 2016 have tended to find that the EEOC had met its obligation, even when the evidence amounted to little more than the EEOC’s say-so and was contradicted by the employer. The die is not cast just yet, but if this trend continues, it may become much more difficult for employers to contest the EEOC’s “take it or leave it” approach to the conciliation process. Our analysis of this trend can be found here.

Continued Focus On LGBT Discrimination

The EEOC has expended considerable effort advocating for the protection of LGBT rights under the existing anti-discrimination laws. In 2012, it decided – in its own administrative decision – that transgender discrimination is a form of sex discrimination because it is tantamount to discrimination on the basis of a perceived failure to adhere to gender stereotypes. Over the next few years it successfully used that decision to obtain favorable precedent in the federal courts. The EEOC is now using the same tactics to try to establish that Title VII prohibits discrimination on the basis of sexual orientation. On July 15, 2015, the EEOC issued another administrative opinion, which held that Title VII extends to claims of sexual orientation discrimination. It then filed two lawsuits in FY 2016 that allege sexual orientation discrimination, one of which survived a motion to dismiss. Employers should expect that these LGBT issues will remain a centerpiece of the EEOC’s enforcement agenda under the new SEP. Our discussion of these developments can be found here.

New EEO-1 Reporting Requirements

The EEO-1 Report requires employers with more than 100 employees (and federal contractors or subcontractors with more than 50 employees) to collect and provide to the EEOC certain demographic information in each of ten job categories. On February 1, 2016, the EEOC proposed changes to the EEO-1 report, which would require employers to submit employee compensation data by gender, race, and ethnicity. Unless implementation is delayed or stopped, employers will have to start filing these new reports on March 31, 2018. Many employers expect and fear that the EEOC will use this new data to bring more lawsuits under the EPA and Title VII alleging wage discrimination. We discuss these new regulations here.

Political Changes

The most significant political development that will shape the EEOC’s agenda in the coming years is the election of Trump as the next president of the United States. For at least the first two years of Trump’s administration, he will have a Republican majority in both houses of Congress. The EEOC has increasingly relied on large, high-impact “systemic” cases to push forward its strategic goals. These types of cases can have a big impact because they tend to affect a larger number of employees and employers. But those tactics have also been roundly criticized by Republican members of Congress and are a likely target for reform under the new Republican leadership. At minimum, the new administration will bring significant changes to the high-level leadership at the EEOC. That alone will have a significant impact on the EEOC’s strategic direction. Our predictions regarding these changes can be found here.

FY 2016 is shaping up to be a fulcrum year in terms of the EEOC’s enforcement agenda. Not only does it mark the end of the FY 2013-2016 SEP and the beginning of a new SEP, but also it brings with it the uncertainty of an entirely new political climate and a change-over in the party occupying the White House. In that kind of environment, the only thing that is certain is change itself. We do not know exactly what to expect, but we look forward to reporting on those changes as they happen.

We wish all a happy and safe New Year!

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

2016-cover

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 2016 Report was recently published; 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 2016 Hellholes

The ATRA identified 9 jurisdictions on its hellholes list – including, in order, (1) St. Louis, Missouri (particularly product liability lawsuits and consumer class actions), (2) California, (3) New York (especially in its treatment of asbestosis litigation in New York City), (4) Florida (particularly in the Florida Supreme Court and trial courts in southern Florida), (5) New Jersey, (6) Illinois (especially Cook, Madison, and St. Clair counties), (7) Louisiana, (8) Virginia (notably in the Newport News area), and (9) Texas (particularly Hidalgo County). These are “magnet” venues for Plaintiffs’ lawyers and highly undesirable venues for corporate defendants to be sued.

The 2016 “Watch List”

The ATRA also included 8 jurisdictions on its “watch list,” including Georgia (principally in the Georgia Supreme Court), Illinois (in the McClean County region), Montana (particularly the Montana Supreme Court), Texas (in the Northern District of Texas), Pennsylvania (especially in the Pennsylvania Supreme Court, Allegheny County, and the Philadelphia Court of Common Pleas), and West Virginia. Just a notch below the 9 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 Missouri, California, New York, Florida, New Jersey, Illinois, Louisiana, Virginia, Texas, Georgia, 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.

 

 

santa1Happy Holiday season to our loyal readers of the Workplace Class Action Blog!

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

We anticipate going to press in early January, and launching the 2017 Report to our readers from our Blog.

This will be our Thirteenth Annual Report, and the biggest yet with analysis of over 1,300 class certification rulings from federal and state courts in 2016.  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 again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, risk manager, underwriter, or broker cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States.”  You can read more about the review here.  Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2017 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 201 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 2017 Report will be available on our blog in early January. Happy Holidays!

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Seyfarth SynopsisAfter certifying a class of Haitian blueberry pickers who asserted Title VII discrimination claims, Judge James Moody of the U.S. District Court for the Middle District of Florida issued a sua sponte order decertifying the class because it had become apparent to the Court that the class members’ claims for compensatory damages were too individualized for class treatment.

This ruling is a reminder that courts have broad discretion to revisit and change an earlier class certification ruling — even when a party has not requested it. The lesson learned is that it’s not over until it’s over and employers should not be afraid to file renewed motions for decertification, particularly when new evidence of individualized damages surfaces.

Case Background & Decision

In Shelene Jean-Louis, et al. v. Clear Springs Farming, LLC, No. 13-3084 (M.D. Fla. Dec. 6, 2016), plaintiffs were seasonal workers that were hired by defendants to pick blueberries from defendants’ berry fields during harvesting season. After reporting to work and being sent home without any compensation, plaintiffs filed a class action complaint in the U.S. District Court for the Middle District of Florida, alleging that the defendants discriminated against them because of their race, color, and national origin. Id. at 1. Although the Court initially certified plaintiffs’ proposed class and denied the defendants’ motion to decertify the class, the Court later determined  – in a sua sponte order – that plaintiffs’ bid for compensatory damages was inappropriate for class treatment. Id. Accordingly, on December 6, 2012, the Court issued an order to decertify the class. Id.

In its decertification order, the Court explained that Federal Rule of Civil Procedure 23(c)(1)(C) allows the Court to alter or amend a class certification ruling so long as a final judgment has not been entered. Id. at 2. The Court explained that at the time plaintiffs moved to certify the class, only the named plaintiffs’ depositions had been taken and that, on this record, common questions predominated regarding whether discrimination had occurred. Id.

However,“[a]s the case has proceeded,” the Court noted, “it has become clear that Plaintiffs seek” back pay and compensatory damages, including out of pocket costs and emotional distress. Id. at 3. The Court explained that these “individualized damages require an inquiry into the specific circumstances of each individual class member . . . .” Id. The Court reasoned that that this would result in a number of “mini-trials,” and therefore precluded class treatment under Rule 23. Id. As a result, the Court ordered decertification of the class. Id. at 5.

Implication For Employers

In the class action arena, employers should not forget that the potential for individualized issues to predominate when plaintiffs seek compensatory damages is another possible basis to attack the appropriateness of class treatment. An employer should also keep in mind that, short of a Rule 23(f) appeal, employers can renew a motion to decertify a class because Rule 23(1)(C) allows a judge to alter or amend a class certification ruling before final judgment.

blawg 100To Our Loyal Readers:

Thank you to our loyal readers for your continued support in following our blog.

We have exciting news to share with you all today – the ABA Journal announced that it has selected the Workplace Class Action Blog as one of the top 100 best blogs for a legal audience! We truly thank the ABA Journal for this honor. Our contributors strive daily to provide timely, exciting, and relevant information to our readers. We take great pride in staying on top of all the latest trends and we are very grateful to have our efforts recognized.

Please keep reading – and we promise to keep bringing you the workplace class action information you need! We could not have achieved this honor without your support. Click here to find a full list of honored blawgs and to learn more about the ABA Journal’s award, as well as background on the Award.

Thank you again to the ABA Journal and to all of you!