Seyfarth Synopsis: In our continuing coverage of the top trends found in Seyfarth’s 2021 Workplace Class Action Litigation Report, wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar over the past year. Based on sheer volume and statistical numbers, workers certified more class and collective actions in the wage & hour space in 2020 as compared to any other area of workplace law and the plaintiffs’ bar achieved a higher rate of success on first-stage conditional certification motions in 2020 than in any other year of the past 15 years.
Complex workplace litigation remains one of the chief exposures driving corporate legal budgetary expenditures. Class actions and multi-plaintiff lawsuits, in particular, continue to provide a source of concern for companies. Layered on top of those problems are the spike in workplace litigation caused by the COVID-19 pandemic.
A prime component in that array of risks is indisputably complex wage & hour litigation. The following map sets forth a circuit-by-circuit analysis of 314 class certification decisions in all varieties of workplace class action litigation, including wage & hour, employment discrimination, and ERISA. As the map reflects, in 2020, complex wage & hour litigation under the FLSA drove more certification briefing and a greater number of certification decisions than other areas combined.
The ease with which plaintiffs have achieved first-stage certification in the FLSA wage & hour context surely has contributed to the number of filings in that area, and plaintiffs achieved a higher rate of success on initial certification motions in 2020 than in any other year of the past decade, indicating that wage & hour remains a sweet spot for the plaintiffs’ bar.
For only the fifth time in over a decade, and for the fifth year in a row, wage & hour lawsuit filings in federal courts decreased. That being said, more FLSA lawsuits were filed during each of the preceding eight years – during 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019 – than were filed in any year of the past several decades. Many of these cases remain in the pipeline within federal courts, and the result is a burgeoning case load of wage & hour issues.
To be sure, the significant volume of FLSA filings over the past several years has caused the issuance of more certification rulings in the FLSA areas than in any other substantive area of complex employment litigation. Despite the pandemic’s crippling impact on court operations and personnel, courts issued more rulings on wage & hour certification issues in 2020 than they issued in each of the past five years. In particular, federal courts issued 286 decisions on FLSA certification and decertification issues in 2020, an increase from the 267 certification rulings issued in 2019, the 273 certification rulings in 2018, and the 257 certification rulings in 2017.
Of these rulings, 274 addressed first-stage motions for conditional certification of wage & hour collective actions under 29 U.S.C. § 216(b), whereas 12 addressed second-stage motions for decertification. Plaintiffs secured a higher rate of success on the former in 2020, while employers secured a lower rate of success on the latter. In fact, as noted above, plaintiffs achieved a higher rate of success on first stage conditional certification motions in 2020 than they achieved in any year of the past decade. Plaintiffs saw an increase in their rate of success to 84%, up from 81% in 2019 and 79% in 2018, whereas employers saw their rate of success on decertification motions dip to 50% in 2020, down from 58% in 2019 and 52% in 2018.
The analysis of these rulings – discussed in Chapter V of this Report – shows that plaintiffs filed a high predominance of cases against employers in “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. For the second time in a decade, however, rulings were equally voluminous out of the Fifth and Sixth Circuits, which also tended to favor workers over employers in conditional certification rulings.
The following map illustrates this trend:
The statistical underpinnings of this circuit-by-circuit analysis of FLSA certification rulings is telling in several respects.
First, it substantiates that the district courts within the Second, Fifth, Sixth, and Ninth Circuits are the epi-centers of wage & hour class actions and collective actions. More cases were prosecuted and conditionally certified – 40 certification orders in the Second Circuit, 30 certification orders in the Fifth Circuit, 29 certification orders in the Ninth Circuit, and 28 certification orders in the Sixth Circuit – in the district courts in those circuits than in any other areas of the country. For the second time in two years, the Fifth and Sixth Circuits – which encompass the states of Texas, Louisiana, Mississippi, Michigan, Ohio, Kentucky, and Tennessee – had nearly as many (or more) certifications than either the Second or Ninth Circuits.
Second, as the burdens of proof under 29 U.S.C. § 216(b) suggest, plaintiffs won the overwhelming majority of “first stage” conditional certification motions (231 of 274 rulings, or approximately 84%) in 2020, which was even higher than the 2019 numbers (198 of 243 or approximately 81%) and the 2018 numbers (196 of 248 rulings, or approximately 79%), which were themselves the highest percentages of plaintiff wins recorded in the last decade. Further, in terms of “second stage” decertification motions, employers won 50% of those rulings (6 of 12 rulings) in 2020, which represented a dip from the 2019 numbers (14 of 24 rulings, or approximately 58%) and the lowest percentage since 2016.
Overall, these statistics show robust numbers for the plaintiffs’ bar, as plaintiffs prevailed on “first stage” conditional certification motions at a higher rate in 2020 and lost “second stage” decertification motions at a lower rate. The “first stage” conditional certification statistics for plaintiffs at 84% in 2020 were even more favorable to workers than in 2019, when plaintiffs won 81% of “first stage” conditional certification motions, and 2018, when plaintiffs won 79% of “first stage” conditional certification motions. The “second stage” decertification statistics for employers at 50% in 2020 were less favorable to employers than in 2019, when employers won 58% of “second stage” decertification motions, and 2018, when employers won 52% of decertification rulings, and 2017, when employers won 63% of decertification rulings.
The following chart illustrates this trend for 2020:
Third, these numbers reflect the ongoing migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space. Experienced and able plaintiffs’ class action counsel typically secure better results. Securing initial “first stage” conditional certification – and foisting settlement pressure on an employer – can be done quickly (almost right after the case is filed), with a minimal monetary investment in the case (e.g., no expert support is needed, unlike a motion for class certification in an employment discrimination class action or an ERISA class action), and without significant discovery in accordance with the case law that has developed under 29 U.S.C. § 216(b).
As a result, to the extent litigation of class actions and collective actions by plaintiffs’ lawyers is viewed as an investment of time and money, prosecution of wage & hour lawsuits is a relatively low cost investment, without significant barriers to entry, and with the prospect of immediate returns as compared to other types of workplace class action litigation.
Hence, as compared to employment discrimination and ERISA class actions, FLSA litigation is less difficult or protracted for the plaintiffs’ bar, and more cost-effective and predictable. In terms of their “rate of return,” the plaintiffs’ bar can convert their case filings more readily into certification orders, and create the conditions for opportunistic settlements over shorter periods of time.
The certification statistics for 2020 confirm these factors. Despite the on-set of the COVID-19 pandemic by March of 2020 (and the slowdown in business and closures of courthouses due to safety concerns), the plaintiffs’ bar secured more certification victories than at any time over the past 15 years.
The extent to which Epic Systems will continue to impact wage & hour certification trends remains uncertain. As 2020 reflected, the number of FLSA lawsuits filed in 2020 fell as compared to 2019, along with settlement values, but not to rates altogether different than the filing numbers we saw in 2019 or settlement numbers we saw in 2018, suggesting that the plaintiff’s class action is not losing interest in these suits. To the contrary, the number of rulings issued by federal courts, in spite of the COVID-19 pandemic, suggests that plaintiffs’ counsel are not exiting these cases from the court system either voluntarily or via motions to compel arbitration, before courts have passed on motions for conditional certification. Further, the rate at which courts granted conditional certification in 2020 suggests that arbitration provisions are not getting in the way of these motions and that, instead, plaintiffs are being more selective in filing their cases or in narrowing the groups of employees that they are seeking to represent.
As mentioned above, as the Biden Administration takes office, and particularly if Democrats regain control of the Senate during his term, employers may see new legislative efforts to overturn Epic Systems and eventually may see those efforts gain traction. Their success, however, in altering the force of the Federal Arbitration Act in the workplace, may depend upon future ideological and political dynamics. As a result, we expect that Epic Systems will continue to impact case filing numbers in the near term.
Employment Discrimination & ERISA Certification Trends
Against the backdrop of wage & hour litigation, the rulings in Wal-Mart and Epic Systems fueled more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2020. The Supreme Court’s Rule 23 decisions have had the effect of forcing the plaintiffs’ bar to “re-boot” the architecture of their class action theories. At least one result was the decision in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016), in which the U.S. Supreme Court accepted the plaintiffs’ arguments that, in effect, appeared to soften the requirements previously imposed in Wal-Mart for maintaining and proving class claims, at least in wage & hour litigation.
Hence, it is clear that the playbook on Rule 23 strategies is undergoing a continuous process of evolution. The plaintiffs’ class action bar is continually testing ways to navigate around and to wear away the force of these precedents. One work-around is the filing of “smaller” employment discrimination class actions. We have seen statewide or regional-type classes asserted more often than the type of nationwide mega-case that Wal-Mart discouraged. Plaintiffs’ counsel are being more selective, strategic, and savvy relative to calibrating the focus of their cases and aligning the size of the proposed class to the limits of Rule 23 certification theories.
In essence, at least in the employment discrimination area, the plaintiffs’ litigation playbook is more akin to a strategy of “aim small to secure certification, and if unsuccessful, then miss small.” Plaintiffs seem apt to file these scaled-down class actions in order to test the prevalence of arbitration agreements among putative class members and, depending on the result, to move forward with a limited class of non-signers or to use the threat of undermining the enforceability of the arbitration program to attempt to leverage a settlement prior to obtaining a ruling on the propriety or scope of certification.
In 2020, settlement numbers in employment discrimination class actions skyrocketed, as mentioned above, whereas the number of rulings on motions for class certification dwindled. In 2020, courts issued only 12 rulings on motions for class certification in employment discrimination actions, compared with 15 rulings in 2019. Plaintiffs prevailed in 5 of the 12 rulings, or 42%, in 2020, with 4 of those rulings emanating from the Ninth Circuit.
The rate of success of the plaintiffs’ bar in 2020 on such motions was not appreciably different from 2019. In 2019, plaintiffs won 7 of the 11 rulings, or 63%, on motions for initial certification of class actions in employment discrimination cases, but plaintiffs lost 4 of 4 motions for decertification, for an overall success rate of 46.7%. By comparison, in 2018, plaintiffs won 3 of the 11 rulings on motions for class certification, or 27%, but, in 2017, plaintiffs won 7 of 11 rulings on such motions.
The following map demonstrates the array of certification rulings in Title VII and ADEA discrimination cases:
In terms of the ERISA class action litigation scene in 2020, the focus continued to rest on precedents of the U.S. Supreme Court as it shaped and refined the scope of potential liability and defenses in ERISA class actions.
The Wal-Mart decision also has changed the ERISA certification playing field by giving employers more grounds to oppose class certification. The decisions in 2020 show that class certification motions have the best chance of denial in the context of ERISA welfare plans, and ERISA defined contribution pension plans, where individualized notions of liability and damages are prevalent.
While plaintiffs were more successful than employers in litigating certification motions in ERISA class actions, their success rate was on par with previous years. In 2020, plaintiffs won 11 of 16 certification rulings, a success rate of 69%. In 2019, plaintiffs won 11 of 17 certification rulings, a success rate of 65%. By comparison, in 2018 plaintiffs won 11 of 17 certification rulings for similarly success rate of 65%, and in 2017, plaintiffs prevailed in 17 of 22 certification rulings, for a success rate of 77%.
A map illustrating these trends is shown below:
So what conclusions overall can be drawn on class certification trends in 2020?
In the areas of wage & hour and ERISA claims, in particular, the plaintiffs’ bar is converting their case filings into certification of classes at a high rate. To the extent class certification aids the plaintiffs’ bar in monetizing their lawsuit filings and converting them into class action settlements, the conversion rate is robust.
Whereas class certification for employment discrimination cases (5 motions granted and 7 motions denied in 2020) and in ERISA cases (11 motions granted and 5 motions denied in 2020) showed an approximate 42% to 69% success rate for plaintiffs, the plaintiffs’ success rate factor in wage & hour litigation (with 231 conditional certification motions granted and 43 motions denied) is pronounced.
The following bar graph details the win/loss percentages in each of these substantive areas:
– a success rate of 42% for certification of employment discrimination class actions (both Title VII and age discrimination cases);
– a success rate of 69% for certification of ERISA class actions; and,
– a success rate of 84% for conditional certification of wage & hour collective actions.
The most certification activity in workplace class action litigation is in the wage & hour space. The trend over the past five years in the wage & hour space reflects a steady success rate that ranged from a low of 73% to a high of 84% (with 2020 representing the highest success rate ever) for the plaintiffs’ bar. The positive results are more concentrated in plaintiff-friendly “magnet” jurisdictions where the case law favors workers and presents challenges to employers seeking to block certification.
Comparatively, the trend over the past five years for certification orders is illustrated in the following chart:
While each case is different, and no two class actions or collective actions are identical, these statistics paint the all-too familiar picture that employers have experienced over the last several years. Although case law precedents and defense approaches continue to evolve and generate many good outcomes for employers, courts continue to grant conditional certification motions at high rates.
Whereas overall case filing numbers were down, these figures suggest that the plaintiffs’ bar is exercising more selectivity and restraint when it comes to filing and seeking certification of narrower or more defined groups, thereby contributing to the success rate of the plaintiffs’ bar.
The key statistic and bright spot in 2020 for employers was an increase in the odds of defeating certification in employment discrimination class actions, where plaintiffs succeeded in certifying classes in less than half of the rulings issued during 2020.