class action litigation

supreme-court-546279_960_720By: Michael L. DeMarino and Gerald L. Maatman, Jr.

Seyfarth Synopsis:  In Bristol-Myers Squibb Company v. Superior Court of California, et al., No. 16-466 (U.S. June 19, 2017), the U.S. Supreme Court articulated the narrow circumstances under which specific jurisdiction will lie when it rejected the California Supreme Court’s “sliding scale” approach to evaluating specific jurisdiction. The decision is decidedly employer-friendly. As a new weapon against forum shopping, this case is a must read for any employer facing class action litigation in a jurisdiction where the company is not incorporated or does not have its principal place of business.

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Case Background

In Bristol-Myers Squibb Company v. Superior Court of California, et al., No. 16-466 (U.S. June 19, 2017), 86 California residents and 592 non-residents from 33 other states sued Bristol-Myers in California  state court, asserting California state law claims for product liability, negligent representation, and misleading advertising. Id. at 2. Plaintiffs specifically alleged that the company’s drug, Plavix, damaged their health.  Id. In contrast to the California residents, the non-resident plaintiffs did not allege that they obtained Plavix in California, nor did they claim that they were injured by Plavix or treated for their injuries in California. Id.

After Bristol-Myers challenged personal jurisdiction with respect to the non-residents’ claims in the trial Court and the California Court of Appeal, the California Supreme Court held that specific jurisdiction existed. Id.

Although the California Supreme Court determined that general jurisdiction was lacking, it nonetheless found that specific jurisdiction existed under its “sliding scale” approach. Under this approach, the more wide-ranging the defendants’ forum contacts, the greater the connection between the forum contacts and the claim. Id. at 3. Because of Bristol-Myers’ extensive contacts with California, the California Supreme Court required less direct connection between the company’s forum activities and the non-residents’ claims than otherwise might be required. Id. Particularly important to the California Supreme Court’s determination that specific jurisdiction existed was that the claims of the California residents and the claims of the non-residents were similar. Id.

The Company thereafter successfully secured review by the U.S. Supreme Court.

The Decision

In an 8-1 decision, the U.S. Supreme Court held that the California Supreme Court failed to identify an adequate link between the State of California and the 592 non-resident plaintiffs to support specific jurisdiction.  After explaining that specific jurisdiction requires an “affiliation between the forum and the underlying controversy” the Supreme Court noted that the “sliding scale” approach relaxes this requirement and “resembles a loose and spurious form of general jurisdiction.”  Id. at 7.

The Supreme Court further explained that “[t]he mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California — and allegedly sustained the same injuries as did the non-residents — does not allow the State to assert specific jurisdiction over the non-residents’ claims.” Id. at 8. Importantly, the Supreme Court emphasized “[w]hat is needed —  and what is missing here — is a connection between the forum and the specific claims [i.e., the non-residents’ claims] at issue.” Id.

Implication For Employers

Although the Supreme Court’s decision does little to alter the requirements of specific jurisdiction, it is nonetheless important in its practical effect of impeding forum shopping in the class action context. Plaintiffs, for instance, will have a much more difficult time suing in a jurisdiction where the company is not “at home” for general jurisdiction purposes and where the company’s conduct in the forum state is not sufficiently connected to the claims of nonresident plaintiffs.

This decision is particularly important to employers with a national presence or satellite offices. The lesson here is employers should not take personal jurisdiction for granted, particularly when defending claims brought by residents and nonresidents of a forum state where there is no general jurisdiction.

supreme-court-546279_960_720By Gerald L. Maatman, Jr., Michael L. DeMarino, and John S. Marrese

Seyfarth Synopsis:  In Microsoft Corp. v. Baker, No. 15-457 (U.S. June 12, 2017), the U.S. Supreme Court ruled on a procedural issue that is of importance in any class action in terms of when and in what circumstances a plaintiff may appeal orders that terminate their rights in a case. In that respect, the decision is required reading for any employer involved in class action litigation.

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In Microsoft Corp. v. Baker, No. 15-457, 582 U.S. ___ (2017), the Supreme Court was confronted with the question of whether courts of appeal have jurisdiction to review an order denying class certification after the named plaintiffs  have voluntary dismissed their claims with prejudice.

Litigants have an immediate right to appellate review only of “final decisions of the district courts,” as set forth in 28 U.S.C. § 1291. The denial of class certification is not a final order and, therefore, not necessarily entitled to such immediate review.  Nonetheless, Fed. R. Civ. P. 23(f) provides litigants the opportunity to appeal an adverse class certification decision, which the appellate court has unfettered discretion to review or not.

If the appellate court decides not to exercise discretion over such an appeal, plaintiffs still have options to ultimately obtain appellate review, including petitioning the district court to certify the interlocutory order for appeal pursuant to 28 U.S.C.  § 1292 or pursuing the litigation to a final judgment at which point the class certification denial becomes final and appealable.  However, as the Supreme Court’s decision in Baker makes clear, what plaintiffs may not do is circumvent that process by dismissing a case with prejudice after the denial of class certification in order to manufacture the appellate court’s jurisdiction over such an appeal. According to the Supreme Court, such a tactic impermissibly stretches Section 1291, circumvents the rules governing interlocutory appeals, including 23(f), and leads to protracted and piecemeal litigation.

Case Background

Plaintiffs, purchasers of Microsoft’s Xbox 360 console, filed a class action alleging design defect of the console.  (Slip Op. 8.)  The district court struck Plaintiffs’ class allegations based on the denial of class certification in a previously-filed case of the same nature, finding that comity mandated its decision.  (Id. at 8-9.)

Plaintiffs petitioned the Ninth Circuit for appellate review of the interlocutory order under Rule 23(f), but the Ninth Circuit declined to exercise jurisdiction.  Id. at 9.  Rather than pursue their individual claims further, Plaintiffs moved to voluntarily dismiss their claims with prejudice and represented to the district court that they would appeal the order striking their class allegations thereafter. (Id. at 10.)  Microsoft stipulated to the voluntary dismissal with prejudice, but argued that Plaintiff would have no right to appeal.  The district court granted the stipulated motion to dismiss.  Id.

As promised, Plaintiffs only appealed the district court’s decision to strike their class allegations.  Id.  The Ninth Circuit held that it had jurisdiction to entertain the appeal under the 28 U.S.C. § 1291, rejecting Microsoft’s argument that Plaintiffs had impermissibly circumvented Rule 23(f).  Id.  Then the Ninth Circuit reversed the district court’s decision to strike Plaintiffs’ class allegations. Id. at 11.  The Ninth Circuit expressed no opinion as to the merits of class certification, but merely found that comity did not require denial on the pleadings; such a decision would more properly be made on Plaintiffs’ eventual motion for class certification.  Id.

The Supreme Court granted certiorari to address a Circuit split over the question: “Do federal courts of appeals have jurisdiction under [28 U.S.C.] § 1291 and Article III of the Constitution to review an order denying class certification (or . . . an order striking class allegations) after the named plaintiffs have voluntarily dismissed their claims with prejudice?”  Id.

The Decision

The Supreme Court, sitting with eight justices, unanimously found that the Ninth Circuit had improperly exercised discretion over Plaintiffs’ appeal.

Justice Ginsburg, authoring the opinion of the Court in which Justices Kennedy, Breyer, Sotomayor and Kagan joined, ruled that Plaintiffs’ voluntary dismissal with prejudice did not transform the district court’s denial of class certification into a final order.  Such a tactic, the Supreme Court concluded, impermissibly attempts to subvert the final judgment rule in § 1291 as well as the process Congress implemented for refining that rule and providing for appeals of interlocutory orders.  Id. at 12.

The Supreme Court explained that Plaintiffs’ tactic encouraged “protracted litigation and piecemeal appeals” as well as indiscriminate review of interlocutory orders.  Id.  Indeed, as the Supreme Court pointed out, under Plaintiffs’ theory, “the decision whether an immediate appeal will lie resides exclusively with the plaintiff” because plaintiff “need only dismiss her claims with prejudice whereupon she may appeal the district court’s order denying class certification.” Id. at 12-13. Thus, if Plaintiffs here had subsequently been denied class certification on remand from the Ninth Circuit, they could have again voluntarily dismissed and forced an appeal of that decision, thereby circumventing the purpose of Rule 23(f) and, in conjunction, the rulemaking process Congress bestowed upon the Supreme Court.  Id. at 13-16.

Justice Thomas, joined by Chief Justice Roberts and Justice Alito issued a concurring opinion, concurring only in the judgment.  Justice Thomas agreed that Plaintiffs could not appeal under the circumstances of this case, but under a different rationale.  Specifically, Justice Thomas concluded that Plaintiffs’ voluntary dismissal with prejudice had indeed resulted in a final appealable order.  However, such dismissal destroyed any live case or controversy.  Accordingly, Plaintiffs had no standing under Article III of the Constitution to bring the appeal.

Implication for Employers

A decision on class certification is often the most significant event in the life of class litigation.  As such, plaintiffs who are denied certification craft inventive strategies to circumvent rules limiting their appellate rights.  With the Baker decision, one such strategy is no longer available to plaintiffs.  Employers should pay careful attention to alternative tactics similarly contravening the purpose and structure of the federal statutes and rules governing appellate review.

#16-3836 2017 WCAR Front Cover for WordBy Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

Seyfarth’s Annual Workplace Class Action Report Webinar is next Tuesday, February 21, 2017. Click here to register and attend. It’s free!

As we face a new year, Seyfarth is pleased to offer strategic guidance through our 13th Annual Workplace Class Action Litigation Report. Across all varieties of workplace litigation, class action dynamics increasingly have been shaped and influenced by recent rulings in the U.S. Supreme Court. This past year the Supreme Court issued several key decisions on complex employment litigation issues and accepted more cases for review that are posed for rulings this coming year. 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 against employers.

For an interactive analysis of 2016 decisions and emerging trends, please join us for our annual webinar. The Report’s author, Gerald L. Maatman, Jr., along with Lorie Almon, chair of our wage & hour group, and Ian Morrison, co-chair of our ERISA class action group, will cover a changed national landscape in workplace class action litigation.   In our workplace class action webinar, highlights from the Report will outline a number of key trends for employers in 2017, including:

  • The implications and fall-out from the Supreme Court’s key decisions on complex employment litigation and class action issues of 2016, and discussion of the cases accepted for review that are posed for rulings in 2017.
  • Lessons to be learned from the monetary value of the top employment-related class action settlements and why they declined significantly in 2016 after they reached all-time highs in 2014 and 2015.
  • The background on why more favorable class certification rulings for the plaintiffs’ bar were issued in 2016 than in past years.
  • How the private plaintiffs’ bar is likely to “fill the void” after the Trump inauguration and increase the number of wage & hour lawsuit filings in 2017, following case filing statistics reflecting that wage & hour litigation filings decreased over the past year for the first time in a decade.
  • Why there were more conditional certification and decertification decisions in the wage & hour space than in any other area of workplace class action litigation.
  • The dynamics behind the U.S. Department of Labor and Equal Employment Opportunity Commission’s continued aggressive litigation approaches in 2016 and what is in store for government enforcement litigation under the Trump Administration.

The date and time of the webinar is February 21, 2017:

1:00 p.m. to 2:00 p.m. Eastern Time

12:00 p.m. to 1:00 p.m. Central Time

11:00 a.m. to 12:00 p.m. Mountain Time

10:00 a.m. to 11:00 a.m. Pacific Time

Speakers: Lorie Almon, Gerald L. Maatman, Jr., and Ian Morrison

 

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On February 9, 2017, Seyfarth Shaw hosted a signal event regarding workplace class action litigation in 2016 and the implications for employers looking to anticipate and prepare for workplace trends in 2017.

Vickie Lipnic, the newly appointed Acting Chair of the Equal Employment Opportunity Commission, joined Jerry Maatman in launching Seyfarth’s 2017 Workplace Class Action Litigation Report. Vickie has been a Commissioner with the EEOC since 2010 and her knowledge of the focal points of the government agency tasked with enforcing employee civil rights offered guests a great deal of insight. The EEOC has been increasingly committed to systemic litigation and, while these types of cases are intended to have a broad impact, Vickie stressed the importance of single plaintiff litigation and the impact that single plaintiff lawsuits can have on an industry, company, or geographic area. Vickie also opined on the importance of bi-partisanship as a Commissioner. She is the one remaining Republican-appointee on the Commission with Democratic-appointee Jenny Yang, her successor as Chair of the EEOC, whose term is ending July 1, 2017. Vickie noted that there are currently 2 seats open on the Commission, and President Trump will be tasked with appointing two new Commissioners as well as filling the currently vacant General Counsel position. With regard to these shifting positions and the new Presidential administration, Vickie confirmed that the EEOC is steadfast in its mission to protect and enforce the civil rights of all employees and to ensure that employers are readily prepared to adhere to the laws protecting their employees from discriminatory practices.

Additionally, Jerry discussed the six key trends in workplace class action litigation for 2016 and how those trends will impact employers in 2017. First is the impact of the U.S. Supreme Court decisions in Tyson Foods, Inc. v. Bouaphakeo, et al., and Spokeo, Inc. v. Robins, et al., and how they will influence complex employment-related litigation in the coming years.  Equally important for the coming year, the Supreme Court has accepted five cases that are likely to be decided in 2017 that also will impact and shape class action litigation and government enforcement lawsuits faced by employers; chief among them is the issue of the legality of class action waivers in arbitration agreements. In terms of settlements in 2016, after reaching all-time highs in 2014 and 2015, the monetary value of aggregate top-ten employment class action settlement declined significantly overall, but wage & hour class action settlements sky-rocketed.  Another trend for 2016 was that federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar than in past years. Plaintiffs, for instance, secured certification in 76% of the time in wage & hour class and collective actions. 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. Also in 2016, Plaintiffs’ attorneys were extremely successful in certifying first stage conditional certification motions, which can mean filings are likely to go up in 2017.  Finally, the government enforcement lawsuits brought by the DOL and EEOC continued the aggressive litigation programs of both agencies, but by sheer number, lawsuit filings and recoveries were lower when compared to previous years.

WCAR event pic 2

Thank you to Victoria for visiting us in Chicago for this hugely successful event. We hosted over 150 guests at our Seyfarth Shaw Chicago office and over 1,800 guests via our live Webcast.

Thank you to everyone who joined us either here in Chicago or via our live webcast. For those interested in viewing a video of the presentation, stay tuned. We will be posting a complete video of the event next week.

Readers can find more information about the event on Seyfarth’s Pay Equity Issues & Insights Blog here.

Additionally, if you have not yet registered for the upcoming WCAR webinar, you can do so by clicking here.

 

#16-3836 2017 WCAR Front Cover for WordSeyfarth Shaw is pleased to present an exclusive discussion tomorrow, February 9th, between Victoria Lipnic, newly Trump-Appointed U.S. EEOC Acting Chair, and Gerald Maatman, the Editor of Seyfarth’s 13th Annual Workplace Class Action Litigation Report. There is still time to sign up to attend the discussion via live webcast. Click here to join now!

As we move into a shifting policy landscape, employers are seeking insight to prepare for the challenges of the future workplace.  At this important presentation, Acting Chair Lipnic will provide insights into the EEOC initiatives in 2016 and a look ahead to the agenda for 2017. Jerry will discuss the top class action rulings in 2016 and hot topics for 2017, including key trends in workplace class action and government enforcement litigation.      

Thursday, February 9th
12:00 p.m. to 1:00 p.m. Eastern
11:00 a.m. to 12:00 p.m. Central
10:00 a.m. to 11:00 a.m. Mountain
9:00 a.m. to 10:00 a.m. Pacific


There will be a question and answer portion at the end of the program; we encourage you to submit an advance question when you register for the program.

 

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 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.

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Seyfarth Synopsis: Vote today for Seyfarth’s Workplace Class Action blog for the ABA Journal Blawg 100 Award

As many of you may know, our blog is a one-of-a-kind reference site and thought leadership forum that analyzes the latest trends in complex employment litigation. The Workplace Class Action Blog is also one of the primary vehicles for disseminating Seyfarth’s Annual Workplace Class Action Litigation Report. 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.

Please help us gain some extra recognition by nominating us for the ABA’s annual 100 best legal blogs competition today!

Here are some additional information you should know about the nomination.

When: Nominations are open now till August 7, 2016.

Where: Click the link here to nominate. Simply provide a short explanation of why you like this blog.

Why: Check out some of the competition criteria:

The author is recognizable as someone working in a legal field or studying law in the vast majority of the posts. √

The majority of the blog is written with an audience of legal professionals or law students — rather than potential clients or potential law students — in mind. √

The majority of the blog’s content is unique to the blog and not cross-posted or cut and pasted from other publications. √

Hurry over to the site and nominate!  Thank you for your consideration and support!

 

#16-3130 2016 WCAR Tickit Icon R!By Lorie Almon, Gerald L. Maatman, Jr., and Amanda Sonneborn

Back by popular demand, our Annual Workplace Class Action Litigation Report Webinar is on Monday, February 1, 2016. Click here to register and attend. It’s free!

Across all varieties of workplace litigation, class action dynamics increasingly have been shaped and influenced by recent rulings in the U.S. Supreme Court. This past year the Supreme Court issued several key decisions on complex employment litigation issues and accepted more cases for review that are posed for rulings this coming year. 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 against employers.

For an interactive analysis of 2015 decisions and emerging trends, please join us for our annual webinar offered in conjunction with the publication of our 12th Annual Workplace Class Action Litigation Report.  The Report’s author, Gerald L. Maatman, Jr., along with Lorie Almon, chair of our wage & hour group, and Amanda Sonneborn of our ERISA class action group, will cover a changed national landscape in workplace class action litigation.

In our accompanying webinar, highlights from the Report will outline a number of key trends for employers in 2016, including:

  • The Supreme Court’s pro-worker and pro-business rulings through which employers must carefully thread the needle
  • The top 10 employment-related class action settlements that reached an all-time high in 2015 and the federal and state court rulings that were more favorable for the plaintiffs’ bar in employment-related cases in 2015
  • What employers can expect as wage & hour litigation, specifically FLSA filings, rose for the sixth straight year to a new record high and new scrutiny of independent contractor and joint employment relationships are expected to drive this number even higher in 2016
  • The Department of Labor and Equal Employment Opportunity Commission’s continued aggressive litigation approaches in 2015 and rebound from the record low aggregate settlement recoveries of 2014, showing employers the agencies focus on “big impact” lawsuits

The date and time of the webinar is February 1, 2016:

1:00 p.m. to 2:00 p.m. Eastern Time

12:00 p.m. to 1:00 p.m. Central Time

11:00 a.m. to 12:00 p.m. Mountain Time

10:00 a.m. to 11:00 a.m. Pacific Time

Speakers: Lorie Almon, Gerald L. Maatman, Jr., and Amanda Sonneborn

thanksgivingBy Gerald L. Maatman, Jr.

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

We are busy at work as the holiday season begins in finalizing 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 2016 Report to our readers from our Blog.

This will be our Twelfth Annual Report, and the biggest yet with analysis of over 1,300 class certification rulings from federal and state courts in 2015. As in past years, 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 2016 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 2015 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 2016 Report will be available on our blog in early January. Happy Holidays!