By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Seyfarth’s 16th Annual Workplace Class Action Litigation Report analyzes 1,467 rulings and is our most comprehensive Report ever at 800 pages.

Click here to access the microsite featuring all the Report highlights. You can read about the five major trends of the past year, order your copy of the eBook, and download Chapters 1 and 2 on the 2020 Executive Summary and key class action settlements.

The Report has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We are humbled and honored by the recent review of our 2019 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. Here is what EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation. Anyone who practices in this area, whether as a corporate counsel, a private attorney, a business execu­tive, a risk manager, an underwriter, a consul­tant, or a broker, cannot afford to be without it. Importantly, the Report is the only publication of its kind in the United States. It is the sole compendium that analyzes workplace class ac­tions from ‘A to Z.’ In short, it is ‘the bible’ for class action legal practitioners, corporate coun­sel, employment practices liability insurers, and anyone who works in related areas.”

The 2020 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 2019 for employment discrimination, wage & hour, ERISA class actions, and statutory workplace laws, 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

The prosecution of workplace class action litigation by the plaintiffs’ bar has continued to escalate over the past decade. Class actions often pose unique “bet-the-company” risks for employers. As cost-effective approaches to class action litigation involve complex variables, these risks have grown exponentially since 2010. At the same time, the prosecution and defense of class action litigation has been transformed over the past decade. As has become readily apparent in the #MeToo era, an adverse judgment in a class action has the potential to bankrupt a business. Further, adverse publicity eviscerate a company’s market share. Likewise, the on-going defense of a class action can drain corporate resources long before the case even 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. This risk is particularly acute in wage & hour cases. Hence, workplace class actions can impair a corporation’s business operations, jeopardize the careers of senior management, and cost millions of dollars to defend.

For these reasons, workplace class actions remain at the top of the list of challenges that keep business leaders up late at night worrying about compliance and litigation.

Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are not making this challenge any easier for companies. They are continuing to develop new theories and approaches to the successful prosecution of complex employment litigation and government-backed lawsuits. New rulings by federal and state courts have added to this patchwork quilt of compliance problems and litigation 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. Notwithstanding the business-friendly policies of the Trump Administration, governmental enforcement litigation pursued by the U.S. Equal Employment Commission (“EEOC”) and other federal agencies continue to manifest an aggressive agenda. Conversely, litigation issues stemming from the U.S. Department of Labor (“DOL”) reflected a slight pull-back from previous efforts to push a pronounced pro-worker/anti-business agenda.

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 2020 is the continuing evolution in federal policies emanating from the Trump White House, the recent appointments of new Supreme Court Justices and lower federal court judges, and the uncertainty over impeachment inquiries and the upcoming Presidential election.

Furthermore, while changes to government priorities started on the previous Inauguration Day and are on-going, others are being carried out by new leadership at the agency level who were appointed over this past year. As expected, many changes represent 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, one sure bet is that the plaintiffs’ class action bar will continue to evolve and adapt to changes in case law precedents. As a result, class action litigation will remain fluid and dynamic, and corporate America will continue to face new litigation challenges

Key Trends Over The Past Year

An overview of workplace class action litigation developments in 2019 reveals five key trends.

First, the plaintiffs’ bar was successful in prosecuting class certification motions at the highest rates ever as compared to previous years in the areas of ERISA and wage & hour litigation, as well as employment discrimination class actions. While evolving case law precedents and new defense approaches resulted in many good outcomes for employers in opposing class certification requests, federal and state courts issued more favorable class certification rulings for the plaintiffs’ bar in 2019 than in any other year in the past decade. Plaintiffs’ lawyers continued to craft refined 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). As a result, in the areas of wage & hour and ERISA class actions, the plaintiffs’ bar scored exceedingly well in securing class certification rulings in federal courts in 2019 (over comparative figures for 2018 and 2017). Class actions were certified in significantly higher numbers in “magnet” jurisdictions that continued to issue decisions that encourage or, in effect, force the resolution of large numbers of claims through class-wide mechanisms. Furthermore, the sheer volume of wage & hour certification decisions in 2019 equated to similar levels as last year, while plaintiffs fared better in litigating those class certification motions in federal court than in the prior year. Of the 271 wage & hour certification decisions in 2019, plaintiffs won 199 of 245 conditional certification rulings (approximately 81%), and lost 15 of 26 decertification rulings (approximately 58%). By comparison, there were 273 wage & hour certification decisions in 2018, where plaintiffs won 196 of 248 conditional certification rulings (approximately 79%) and lost 13 of 25 decertification rulings (approximately 52%). In sum, employers lost more first stage conditional certification motions in 2019, while bettering their odds – an increase of nearly 6% – of fracturing cases with successful decertification motions.

Second, class action litigation has been shaped and influenced to a large degree by recent rulings of the U.S. Supreme Court. Over the past several years, the U.S. Supreme Court has accepted more cases for review than in previous years – and as a result, has issued more rulings – 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 that were arguably more pro-business than decisions in past terms. Among those rulings, Lamps Plus v. Varela and Nutraceutical Corp. v. Lambert reflected a conservative, strict constructionist reading of statutes and class action procedures. Furthermore, a case decided last year – Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), which upheld the legality of class action waivers in mandatory arbitration agreements – proved to be a transformative decision that is one of the most important workplace class action rulings in the last two decades. In 2019, it had a profound impact on the prosecution and defense of workplace class action litigation, and in the long run, Epic Systems may well shift class action litigation dynamics in critical ways. Coupled with the possibility of more appointments to the Supreme Court by the Republican-controlled White House, litigation may well be reshaped by Supreme Court decisional law in ways that change the playbook for prosecuting and defending class actions.

Third, while filings and settlements of government enforcement litigation in 2019 did not reflect a head-snapping pivot from the ideological pro-worker outlook of the Obama Administration to a pro-business, less regulation/litigation viewpoint of the Trump Administration, the numbers began to trend downward in terms of a diminishment in the aggressive agenda of prior government enforcement litigation. As an example, the EEOC brought 144 lawsuits in 2019, as compared to 199 lawsuits in 2018, and 184 lawsuits in 2017 (though the 2019 numbers still outpaced 2016, the last year of the Obama Administration, when the EEOC filed 86 lawsuits). Furthermore, the settlement value of the top ten settlements in government enforcement cases decreased dramatically to $57.52 million, which was down from $126.7 million in 2018 and from $485.25 million in 2017. The explanations for this phenomenon are varied, and include the time-lag between Obama-appointed enforcement personnel vacating their offices and Trump-appointed personnel taking charge of agency decision-making power; the number of lawsuits “in the pipeline” that were filed during the Obama Administration that came to conclusion in the past two years; and the “hold-over” effect whereby Obama-appointed policy-makers remained in their positions long enough to continue their enforcement efforts before being replaced in the last half of 2018 or in 2019. This is especially true at the EEOC, where the Trump nominations for the Commission’s Chair, two Commissioners, and its general counsel did not reach the Senate floor until the second half on 2019. These factors are critical to employers, as both the DOL and the EEOC have had a focus on “big impact” lawsuits against companies and “lead by example” in terms of areas that the private plaintiffs’ bar aims to pursue. As 2020 opens, it appears that the content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration will continue to tilt away from the pro-employee/anti-big business mindset of the previous Administration. Trump appointees at the EEOC and the DOL are slowly but surely “peeling back” on aggressive litigation enforcement tactics that were the watchwords under the Obama Administration. As a result, it appears inevitable that the volume of government enforcement litigation and the value of settlement numbers from those cases will decrease even further in 2020.

Fourth, the monetary value of the overall aggregate workplace class action settlements increased slightly in 2019, but as compared to the last several years, it was one of the lowest marks for settlements after those values plummeted to their lowest level ever in 2018. For most of the past decade, these settlement numbers had been increasing on an annual basis, and reached all-time highs in 2017. The 2019 numbers, showed increases in settlement values for ERISA and wage & hour class action settlements, while there were large drop-offs in the values of settlements for employment discrimination and other workplace statutory class actions. The plaintiffs’ employment class action bar and governmental enforcement litigators were exceedingly successful in monetizing their case filings into large class-wide settlements this past year, but they did so at decidedly lower values in 2019 than in previous years. The top ten settlements in various employment-related class action categories totaled $1.34 billion in 2019, as compared to $1.32 billion in 2018 (and a stark decrease of over $1.38 billion from the $2.72 billion total in 2017 and a decrease of $410 million from the $1.75 billion total in 2016). At the same time, the settlement figure of $449.05 million in wage & hour class actions constituted nearly a 50% increase in value – up from $253 million in 2018 (while considerably less, however, from the high-water mark of $525 million in 2017); ERISA class actions also saw an increase to $376.35 million from $313.4 million in 2018 (but still a far cry from the 2017 level at $927 million). Conversely, the top employment discrimination class actions decreased to $139.2 million (down from 216 million in 2018). Finally, government enforcement litigation settlements registered a significant decrease to $57.52 million (as compared to $125.8 million in 2018, and $485.2 million in 2017). Whether this is the beginning of a long-range trend or a short-term aberration remains to be seen as 2020 unfolds.

Fifth and finally, as it continues to gain momentum on a worldwide basis, the #MeToo movement is fueling employment litigation issues in general and workplace class action litigation in particular. On account of news reports and social media, it has raised the level of awareness of workplace rights and emboldened many to utilize the judicial system to vindicate those rights. Several large sex harassment class-based settlements were effectuated in 2019 that stemmed at least in part from #MeToo initiatives. Likewise, the EEOC’s enforcement litigation activity in 2019 focused in large part on the filing of #MeToo lawsuits while riding the wave of social media attention to such workplace issues. Of the EEOC’s 2019 sex discrimination lawsuit filings, 28 cases included claims of sexual harassment, and 57 of the 84 Title VII lawsuits were based on gender discrimination allegations. The total number of sexual harassment filings decreased slightly in 2019 as compared to 2018 and 2017, when sexual harassment claims accounted for 41 and 33 filings, respectively.

Implications For Employers

The one constant in workplace class action litigation is change. More than any other year in recent memory, 2019 was a year of great change in the landscape of Rule 23. As these issues play out in 2020, additional chapters in the class action playbook will be written.

The lesson to draw from 2019 is that the private plaintiffs’ bar and government enforcement attorneys at the state level are apt to be equally, if not more, aggressive in 2020 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 2020.