By Gerald L. Maatman, Jr., Christopher DeGroff, Matthew J. Gagnon, and Alex S. Oxyer

Seyfarth Synopsis:  The EEOC recently released its enforcement and litigation statistics for Fiscal Year 2019. Notably, the statistics indicate that 2019 saw the lowest number of charges filed in over 20 years, though there was almost no perceptible dip in retaliation charges. For example, despite the #MeToo movement remaining prevalent in 2019, the number of sex discrimination charges fell to their lowest number since 1997. However, monetary benefits recovered through mediation, conciliation, and settlement jumped in some areas, including for charges alleging sexual harassment.

On January 24, 2020, the EEOC released its comprehensive enforcement and litigation statistics for Fiscal Year 2019 (available here). In addition to enforcement and litigation activity, the data breaks down charge statistics by allegation and state – showing which charges are being filed and where. The dip in the number of charges that employers saw in 2018 continued through 2019, with the number of charges reaching its lowest point since 1997. The prominence of sex discrimination charges seen in 2018 due to the #MeToo movement all but disappeared, with sex discrimination charges falling from the second-most filed charge to the fourth, dropping to their lowest number in over 20 years. 

Charges Are Down Overall

In total, 72,675 charges were filed in FY 2019. Not only is this down from the 76,418 charges that were filed in FY 2018, but also FY 2019 saw the fewest charges filed for all fiscal years going back to FY 1997 (the second lowest, 75,428 charges, occurred in FY 2005). Putting this number in perspective, the number of charges filed exceeded 80,000 per year in every year from FY 2007 until FY 2018, sometimes by wide margins.

Consistent with this overall decline, there was a decrease in almost every category of charges in FY 2019 as compared to FY 2018, with the exception of some very modest increases in charges alleging “color” discrimination (a separate protected class under Title VII) and violations of the Equal Pay Act. The categories that decreased the most were age and sex discrimination, by almost 1,600 and 1,100 charges, respectively. It should be noted, however, that this does not necessarily mean that fewer individuals are reaching out to the EEOC. This dip could be attributed, at least in part, to the agency’s implementation of new charge intake procedures in an effort to increase efficiencies. 

Texas And Florida Are Still Hot Spots; Illinois Falls From The Top Five

Looking at the states where the most charges were filed, the hot spots largely remained the same in FY 2019 as in FY 2018. Like FY 2018 and FY 2017, Texas (with 10.2 % of all charges filed) and Florida (with 8.2%) were the top two states for charges in FY 2019.

Texas and Florida are no surprise, given their relative populations. But population is still not everything when it comes to charges. For example, Georgia (at number 3) surpasses states with higher populations, and Pennsylvania (tied with California for fourth) has more filings than New York. Notably, Illinois fell out of the top five states this year, moving from fifth to sixth place with 5.4% of all charges filed.

Retaliation Charges Remain In First, With Disability Discrimination Charges Moving To Second

In total, 39,110 retaliation charges were filed with the EEOC in FY 2019. As has been the case for over five years, this made retaliation the most frequently filed charge in FY 2019. Behind retaliation were disability, race, and sex discrimination charges, each alleged in approximately 32%-33% of the charges filed with the EEOC. As the EEOC’s report noted, the percentages total more than 100 because some charges allege multiple bases of discrimination.

Disability discrimination was the second-most-often alleged theory of discrimination, seeing the highest percentage of charges filed since 1997 at 33.4%. Race discrimination came in a close third. Interestingly, sex discrimination charges (which would include pregnancy discrimination, gender discrimination, and sexual harassment) fell from the number two slot in FY 2018 back to the fourth most frequently filed charge, which was where it was in FY 2017. The #MeToo movement remained a prevalent media topic in FY 2019, so this drop in charges cannot be chalked up to decreased visibility.

Although the raw numbers do not provide any explanation, one would hope that the increased public scrutiny on this issue has led to greater adoption of effective measures to address sex discrimination, which are having an actual impact in the workplace.

EEOC Saw A Slight Dip in Overall Recoveries But Increases In Particular Areas

As we reported here, FY 2019 saw a slight drop in recoveries by the EEOC. During FY 2019, the EEOC recovered more than $486 million for alleged discrimination victims. This represents a 4% decrease from $505 million in FY 2018 and is roughly on par with the $484 million recovered during FY 2017. In particular, the relief obtained through mediation, conciliation, and settlement declined marginally from $354 million in FY 2018 to $347 million in FY 2019. Further, litigation recoveries dropped to $39.1 million in FY 2019 from $53.6 million in FY 2018 (the FY 2017 and 2016 numbers were $42.4 million and $52.2 million respectively).

Despite the overall marginal decrease in recoveries, FY 2019 saw recoveries in some particular areas increased. For example, relief obtained through mediation, conciliation, and settlement for sex harassment charges surged from $56.6 million in FY 2018 to $68.2 million in FY 2019. Recoveries for race discrimination-based charges similarly increased, jumping from $71.3 million in FY 2018 to $79.8 million in FY 2019.

Implications For Employers

Despite the dips in the overall number of charges, the EEOC’s enforcement efforts show no sign of waning. Employers should treat these statistics as an early warning system that shows where the Commission’s enforcement efforts may be heading next – to that end, it is notable that retaliation and disability discrimination issues are firmly in the forefront. By continuing to set the culture in their workplaces through leadership and accountability, along with sound human resources practices, employers can guard against these issues and avoid hefty settlements and litigation with the EEOC.

By Gerald L. Maatman, Jr.

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

The Report has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. 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.

The Workplace Class Action Litigation Report eBook is fully searchable and readers can easily access it from any computer or mobile device.

Click here to download the eBook today!


By: Gerald L. Maatman, Jr.

Seyfarth Synopsis: Yesterday’s blog closely analyzed another busy year on the governmental enforcement front, with a key focus on the U.S. Equal Employment Opportunity Commission (“EEOC”). Today, the Workplace Class Action Report (WCAR) video series continues with Seyfarth partner Jerry Maatman’s explanation of the third trend of 2019, governmental enforcement litigation. In addition to discussing enforcement priorities over the past several years, Jerry will discuss how unique challenges have impacted governmental enforcement litigation in 2019 and what to expect for 2020. Watch in the link below!





Seyfarth Synopsis: The 2019 annual report on developments and trends in EEOC-initiated litigation is now available as an eBook. This year’s book, entitled EEOC-Initiated Litigation: FY 2019, examines the EEOC’s filings in 2019, and analyzes the significant legal decisions and trends impacting EEOC litigation in 2020. We hope that employers will benefit from this deeper dive into how the EEOC’s priorities play out in litigation, and in the process, undertake optimal compliance strategies during FY 2020 and beyond.

 The EEOC-Initiated Litigation eBook is fully searchable and readers can easily access it from any computer or mobile device.

Click here to download the eBook today!


Seyfarth Synopsis: The third key trend from our 16th Annual Workplace Class Action Litigation Report involves governmental enforcement litigation, including an overview of priorities and filings by the EEOC, the U.S. Department of Labor, and the National Labor Relations Board.  Read the full breakdown below!

On the governmental enforcement front, the past several years have demonstrated that the Trump Administration and its appointed officials at the EEOC have not appreciably deviated from the Commission’s spirited pursuit of litigation filings and settlements.

This past year, however, posed unique challenges beyond the control of the EEOC. The Commission is a five-seat agency that has operated without a full panel of five Commissioners for the entirety of the Trump Administration.  When former Commissioner Chai Feldblum’s term expired at the end of last year, the result was a lack of quorum on the Commission, which hobbled the EEOC’s efforts to pursue its mission. Although President Trump had re-nominated Commissioner Feldblum for another term, she was not confirmed by the Senate due to her perceived views on LGBT issues. This resulted in an empty Commissioner seat and a loss of quorum for roughly one-third of the year. Either by coincidence or as a result, the pace of EEOC lawsuit filings and settlements slowed significantly. Despite this setback, there was only a modest 4% reduction in aggregate recoveries relative to the totals from 2018, thereby demonstrating the Commission’s commitment to resolving disputes expediently.

Although the total number of new lawsuits filed by the EEOC decreased, when considered on a percentage basis, the distribution of cases filed in terms of the theory of discrimination alleged remained broadly consistent compared to 2018. Title VII and ADA cases once again comprised the majority of cases filed by the Commission. This suggests that the priorities and patterns of government enforcement litigation have not shifted dramatically under the Trump Administration. During 2019, the new agency appointees were installed during the latter half of the year, which inevitably will result in delayed policy changes. Compounded by the lack of quorum at the Commission for part of this past year, additional time may be necessary for the EEOC to incubate and execute fundamental changes to enforcement priorities. Stepping into a new year with the new EEOC officials in place and a quorum at the Commission, 2020 may finally reveal what changes are in store for governmental enforcement litigation.

During 2019, the Commission filed 144 merits lawsuits and 8 subpoena enforcement actions. This is a stark decline relative to the 197 merits suits and 20 subpoena enforcement actions of 2018, which constituted an over 30% reduction in total actions commenced by the Commission year over year. This past year also marked the third year of the EEOC’s 2017-2021 Strategic Enforcement Plan (“SEP”), which was implemented to guide enforcement activity. The six enforcement priorities include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach

The Commission maintains discretion to interpret and pursue these priorities as it deems appropriate. While the priorities are defined, they are broad and apply to an expansive landscape of issues. For example, the EEOC has consistently focused on the protection of lesbian, gay, bisexual, and transgender individuals as a primary emerging and developing issue in the workplace. The EEOC’s efforts in this area have resulted in a body of case law across many jurisdictions, which holds that discrimination against transgender individuals or on the basis of sexual orientation is a form of discrimination prohibited by Title VII. This issue is set to be decided once and for all by the U.S. Supreme Court in a trio of high-profile cases, R.G. & G.R. Harris Funeral Homes v. EEOC, Altitude Express, Inc. v. Zarda, and Bostock v. Clayton County, Georgia Harris Funeral Homes was brought by a transgender woman who was terminated after putting her employer on notice of her forthcoming transition. Zarda and Bostock involve sexual-orientation discrimination. The issues at stake even divide government policy-makers, for the U.S. Department of Justice under President Trump filed briefs with the Supreme Court stating that Title VII protections do not extend to transgender and sexual orientation discrimination, confirming the Administration’s position on this issue.

Additionally, the EEOC issued landmark determinations addressing digital bias in July 2019, which it has identified as an emerging trend and a potential barrier in recruitment and hiring. The EEOC has especially targeted on-line advertising that uses algorithms that have the potential to allow employers to deliberately target and exclude certain classes of people by age, gender, and race when disseminating job advertisements. The Communications Workers of America filed discrimination charges against 66 employers for engaging in discriminatory advertising on Facebook, alleging that their advertising excluded women and older workers from receiving the job ads. Of the employers charged, seven were subject to an EEOC finding of “reasonable cause” to believe that the employers violated Title VII and/or the ADEA. While findings of reasonable cause do not affirmatively indicate that the employers violated federal law, they do provide insight as to how the EEOC is apt to analyze claims of digital bias in the years ahead.

In its FY 2019 Congressional Budget Justification, the EEOC stated that one of its strategic objectives is to prevent employment discrimination through education and outreach. This was reiterated in the inaugural Agency Financial Report (“AFR”) released on November 15, 2019. The EEOC conducts both free and fee-based events targeting particularly vulnerable communities that may be unfamiliar with employment law protections (i.e., low-skilled workers, new immigrant workers, etc.). This past year, the White House also launched the Initiative on Asian-Americans and Pacific Islanders and the Initiative on Historically Black Colleges and Universities. In conjunction with the White House programs, the EEOC hosted outreach events involving over 100,000 participants nationally. Based on statements made throughout the AFR, the Commission is expected to further expand its outreach efforts in 2020.

The EEOC has also prioritized initiatives to mitigate sexual harassment in the workplace that rose to prominence through the #MeToo movement. The EEOC now offers a customizable fee-based harassment prevention training for supervisors. Furthermore, the Commission held an Industry Leaders Roundtable discussion on harassment prevention. Prominently highlighted was the hospitality industry, resulting in a published statement by leaders of that industry committing themselves to various safety measures, including furnishing employees with security devices and trainings to improve hotel safety for employees and guests. The EEOC’s continued focus on #MeToo claims is reflected in its filing numbers as well. Of the 2019 Title VII filings, 68% arose out of claims of sex-based discrimination.

Arguably, the most significant step the EEOC has taken in the last few years relating to its priority of ensuring equal pay for all workers is its attempted modifications to the EEO-1 reporting obligations. Employers with more than 100 employees, and federal contractors or sub-contractors with more than 50 employees, are required to collect and provide to the EEOC demographic information (gender, race, and ethnicity) in each of ten job categories. Under the Obama Administration, the EEOC tried to expand those reporting obligations to include salary and wage data. Shortly after President Trump’s inauguration, those changes were stayed by the Office of Management and Budget (“OMB”). In 2019, a federal district court unexpectedly ordered those changes reinstated – for a time – finding that the OMB’s decision to stay those regulations was “arbitrary and capricious.” Ultimately, it was held that the EEOC must complete 2017-2018 pay data collection, according to the Obama-era rules, by January 31, 2020. When completed, that collection will provide the Commission with data regarding potential pay disparities across gender, race, and ethnicity. Whether and to what extent it will make use of this data to guide its enforcement efforts remains to be seen.

The EEOC also changed how it will report its financial and performance results. In November of 2019, it announced that the new AFR will replace the combined Performance Accountability Report (“PAR”) that was customarily published annually in November. The EEOC explained in the 2019 AFR that it will separate the information that had been contained in the combined PAR into two separate reports. The AFR will continue to be published in November and will focus on financial results and a high-level discussion of performance results. A new Annual Performance Report will be published in February of 2020 in coordination with the EEOC’s Congressional Budget Justification, which will provide a more detailed analysis of performance results. The 2019 AFR provided a snapshot of FY 2019 performance highlights, including the following:

  • The Commission reported a 12.1% decrease in the backlog of pending charges as compared with the previous year. The total number of pending private sector charges was 43,850 – the lowest reported backlog number in 13 years.
  • The EEOC secured approximately $486 million in relief for victims of discrimination through litigation and pre-litigation investigations. This represented a significant decrease from the total relief figure of $505 million for 2018, and was closely aligned with the recovery total of $484 million for 2017.
  • The total relief figures in 2019 included $347 million for victims of employment discrimination in private sector and state and local government workplaces through mediation, conciliation, and settlements, a slight decrease from the $354 million obtained in 2018.
  • Recoveries through litigation dropped significantly. The EEOC secured $39.1 million in litigation recoveries on behalf of charging parties and other aggrieved individuals this past year, as compared to the $53.5 million in recoveries in 2018. The 2019 number reflects a significant drop from the last several years as well as compared to 2015 ($65.3 million), 2016 ($52.2 million), and 2017 ($42.4 million).

Furthermore, the EEOC has continued to focus on #MeToo issues with more intensity than ever before over the past three years. In 2019, the EEOC reported a 14% increase in claims of sexual harassment. In turn, the Commission filed 28 lawsuits that advanced #MeToo-type allegations. This is a drop-off from the filings of sex discrimination lawsuit filings in 2018, when 41 cases included claims of sexual harassment. The total number of sexual harassment lawsuit filings in 2019 was closer to the total in 2017, where sexual harassment claims accounted for 33 lawsuit filings. Nonetheless, the 2019 lawsuit filing patterns reflected a consistent focus on workplace harassment litigation.

In contrast to the EEOC, the DOL’s agenda in 2018 reflected that its new Republican-appointed decision-makers had been in place for the better part of the past year. That being said, however, the DOL’s Wage & Hour Division (“WHD”) still did not have a Senate-confirmed Administrator nominated by the Trump Administration. Despite the lack of a confirmed leader (or perhaps because of it), the WHD continued its aggressive enforcement activities, setting a new record of $304 million in back wages recovered during 2018, which represents an increase of more than $30 million over the previous year.

With a confirmed Wage & Hour Administrator and a new Secretary of Labor, the WHD was in full swing in 2019. This year, WHD had a record-setting enforcement program, with a focus on improvement and expansion of its data-driven approach. By targeting relevant industries and sectors, WHD was able to deploy its resources in an effective manner, resulting in back wage recoveries of $322 million.

The WHD was not, however, singularly tasked with enforcement. Indeed, its 3,700 educational outreach events represent another record for the agency. In addition, WHD issued more than a dozen opinion letters, providing valuable guidance on such critical issues as overtime exemptions, independent contractors in the gig economy, rounding, commissioned sales, and regular rate of pay.

The year also saw WHD with a busy regulatory agenda. The WHD issued a final regulation increasing the salary threshold for the FLSA’s white-collar overtime rule and exemptions, and is expected to issue final rules providing much needed clarity on computing the regular rate of pay and establishing joint employment.

The WHD has also proposed revisions to the fluctuating workweek method of computing overtime and a number of provisions related to tipped employees, both of which are anticipated to be finalized in 2020.

Not to be outdone, the National Labor Relations Board (“NLRB”) also undertook an ambitious agenda in 2019. It swung the pendulum back toward more conservative views of labor laws, and in certain respects, peeled back on Obama-era Board precedents. It reconsidered well-settled NLRB principles on joint employer rules and representative elections, entertained the possibility of extending the protections of the National Labor Relations Act (“NLRA”) to college athletes, and litigated novel claims seeking to hold franchisors liable for the personnel decisions of franchisees. By the end of the year, however, the Trump Administration’s appointees began to roll-back NLRB precedents and positions that had been espoused during the Obama Administration, such as a reversal of the expansive view of joint employer liability, allowing more deference to employer workplace rules, and eliminating protections for obscene, vulgar, and inappropriate activity under the NLRA.

Implications For Employers

Given the change in leadership at the EEOC and the DOL that took place during 2019, it seems reasonable to expect that employers will see more changes to those agencies’ enforcement priorities in 2020 that are more in line with the Trump Administration’s business-friendly priorities. Overall, employers may be able to look forward to less aggressive enforcement of employment-related laws and regulations by the EEOC, the DOL, and the NLRB.

Seyfarth Synopsis: Our recent blog post closely examined pivotal rulings by the U.S. Supreme Court in 2019, which was the second trend of the 16th Annual Workplace Class Action Litigation Report (WCAR). Today in the WCAR video series, watch Seyfarth partner Jerry Maatman’s analysis of the Supreme Court’s significant rulings in 2019. In addition to providing an overview of a groundbreaking year at the Supreme Court, Jerry also previews what employers should expect from the Court in 2020. Watch our video in the link below!


By Gerald L. Maatman, Jr., Jennifer A. Riley, Alex S. Oxyer, Andrew D. Welker

Seyfarth Synopsis: On January 15, 2020, in Guzman v. Chipotle Mexican Grill, Inc., No. 17-CV-02606-HSG, 2020 WL 227567 (N.D. Cal. Jan. 15, 2020), Judge Haywood Gilliam of the U.S. District Court for the Northern District of California denied a motion for class certification brought by Chipotle employees of Mexican and/or Hispanic national origin working in the company’s California restaurants. The plaintiffs alleged that Chipotle unlawfully subjected them to company-wide policies requiring that they only speak English while working in the restaurants and that employees were only eligible for promotion if they can speak proficient English. The Court ultimately declined to certify the class because the plaintiffs failed to show that their experiences at the company were common to or typical of the class.

The decision is a must-read for corporate counsel on class action litigation over workplace policies in general, and Rule 23 defenses in particular.

Case Background

This case began when three plaintiffs brought individual and class claims of discrimination, harassment, and retaliation against Chipotle pursuant to California’s Fair Employment and Housing Act (“FEHA”). The plaintiffs sought to certify a class of all current and former employees of Hispanic and/or Mexican national origin working in Chipotle restaurants in California, which included approximately 43,000 employees across 400 restaurants.  Plaintiffs’ class certification motion focused on two allegations, that: (i) Chipotle allegedly maintained a discriminatory, unwritten policy that employees were required to only speak English while working in the restaurants; and (ii) Chipotle maintained a promotion policy that employees must demonstrate a subjective level of English proficiency to be eligible for promotion to management positions.

In their motion for class certification, plaintiffs argued they satisfied the numerosity, commonality, typicality, and adequacy of representation requirements for class certification outlined in Rule 23(a).  In support of their motion, plaintiffs submitted declarations from eight former employees outlining their experiences related to the alleged English-only and promotion policies. All eight former employees averred that their former managers spoke English; six asserted that they were told they could not speak Spanish at least some of the time in the restaurants; and six also claimed to have understood that they had to speak English proficiently to be eligible for further promotion.

Chipotle denied the truth of plaintiffs’ underlying allegations.  Further, in response to the motion, Chipotle argued that plaintiffs failed to satisfy the commonality, typicality, and adequacy of representation requirements of Rule 23, and that plaintiffs’ proposed class definition was overbroad.  Chipotle further argued that plaintiffs lacked the necessary Article III standing to bring their claims because they had failed to show how they were injured by the allegedly discriminatory policies.

The Court’s Decision

In its opinion, the Court addressed Chipotle’s argument that the plaintiffs lacked Article III standing. The Court reaffirmed the standard promulgated by the Ninth Circuit that putative class representatives must present evidence to establish Article III standing in motions for class certification and cannot rest on the allegations in a complaint.  However, the Court found that the affidavits accompanying the plaintiffs’ motion for class certification were sufficient to satisfy such obligations, because they contained specific examples of alleged discrimination and harassment.

Since Chipotle did not dispute the plaintiffs’ satisfaction of the Rule 23(a) numerosity requirement, the Court turned to the question of commonality, which it called “the crux of this case.” Id. at *8.  Plaintiffs argued that the commonality element was satisfied because the employees in the class were subjected to the same written and unwritten policies and, therefore, common questions of law and fact existed regarding the legality of those policies. The Court, however, rejected the plaintiffs’ argument, finding that their own affidavits showed that the employees all had different experiences with the alleged policies and how those policies were implemented was dependent on the discretion of Chipotle’s managers.  Thus, because individual inquiries would be required to establish the experiences and injuries of each individual class member, the Court concluded that the plaintiffs were unable to satisfy the commonality requirement. 

The Court also determined that the plaintiffs were unable to meet the typicality requirement for the same rationale.  The plaintiffs failed to offer sufficient evidence to convince the Court that the experiences of the named plaintiffs were typical of those of the class or that the alleged discriminatory policies existed on a company-wide basis. Because the plaintiffs did not satisfy the commonality or typicality requirements, the Court denied their motion for class certification.

At the same time, the Court went on to reject Chipotle’s argument that some of the plaintiffs were not adequate representatives of the class because, as former managers, they may have participated actively in administering the allegedly discriminatory policies.  The Court reasoned that Chipotle had not submitted any evidence supporting that claim or cited any legal support showing that such participation would result in a conflict of interest.

Implications For Employers

This case is a departure from the growing trend of decisions granting class certification motions (a trend that we addressed in our 16th Annual Workplace Class Action Report, a summary of which is here). The Court’s ruling is also a reminder that plaintiffs must demonstrate common questions of law and fact and that their experiences are typical to the class to warrant class certification. The opinion further affirms that plaintiffs may not simply rely on the complaint’s allegations to demonstrate standing on class certification, but must support such allegations with evidence. This case provides helpful guidance for employers seeking to defeat class certification, particularly in the discrimination context where employees may have differing experiences and the implementation of company policies may be subject to some level of discretion by employee supervisors. 



By Gerald L. Maatman, Jr.

Seyfarth Synopsis: The second key trend from our 16th Annual Workplace Class Action Litigation Report involves rulings by the U.S. Supreme Court. Over the past few years, the Supreme Court has issued a number of rulings that impacted the prosecution and defense of class actions in significant ways. Today, we provide readers with an outline of the most important workplace rulings issued by the Supreme Court in 2019, as well as which upcoming decisions employers should watch for in 2020.  Read the full breakdown below!

The Impact Of U.S. Supreme Court Rulings

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 procedural requirements for pursuing employment-related class actions under Rule 23 of the Federal Rules of Civil Procedure. These rulings are very important to success or failure in class action litigation. Outcomes on procedural issues often have an outsized influence on class certification rulings and appeals.

The 2011 decision in Wal-Mart Stores, Inc. v. Dukes and the 2013 decision in Comcast Corp. v. Behrend are the two most significant examples. Those rulings are at the core of class certification issues under Rule 23.

The 2018 ruling in Epic Systems Corp. v. Lewis is another example. It green-lighted a gateway device to block prosecution of class and collective actions in the judicial system and force adjudication of claims on an individual, bi-lateral basis in arbitration. Epic Systems built upon a group of pro-employer, pro-arbitration rulings over the past decade – including AT&T v. Concepcion, Italian Colors v. American Express, and this past year’s ruling in Lamps Plus v. Varela – that allow defendants to manage the risks of class actions through arbitration agreements with class action waivers.

To that end, federal and state courts cited Wal-Mart in 641 rulings in 2019; they cited Comcast in 219 cases in 2019; and they cited Epic Systems in 177 decisions by year’s end.

Given the age of some of the sitting Justices of the Supreme Court, President Trump may have the opportunity to fill additional seats on the Supreme Court in 2020 and beyond, and thereby influence a shift in the ideology of the Supreme Court toward a more conservative and strict constructionist jurisprudence. In turn, this is apt to change legal precedents that shape and define the playing field for workplace class action litigation.

Rulings In 2019

In terms of decisions by the Supreme Court impacting workplace class actions, this past year was no exception. In 2019, the Supreme Court decided six cases two employment-related cases and four class action cases that will influence complex employment-related litigation in the coming years.

The employment-related rulings came in two wage & hour collective actions, whereas the class action rulings involved appeal rights, settlement requirements, class arbitration, and removal rights under the Class Action Fairness Act. A rough scorecard of the decisions reflects one distinct plaintiff/worker-side victory, defense-oriented rulings in three cases, and two rulings that may impact all litigants equally.

New Prime, Inc. v. Oliveira, et al., 139 S. Ct. 532 (2019) – Decided on January 15, 2019, this collective action under the Fair Labor Standards Act involved a driver for a trucking company under an agreement that classified him as an independent contractor and contained a mandatory arbitration provision with a class/collective action waiver. Defendant invoked the Federal Arbitration Act (“FAA”), arguing that questions regarding arbitrability should be resolved by the arbitrator. Agreeing that a court should determine whether the FAA’s exclusion in § 1 applies before ordering arbitration, the Supreme Court reasoned that the FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Because a “contract of employment” refers to any agreement to perform work, the Supreme Court concluded that Plaintiff’s contract fell within that exception. The Supreme Court opined that at the time of the adoption of the FAA in 1925, the phrase “contract of employment” was not a term of art and did not require a formal employer-employee relationship, as Congress used the term “contracts of employment” broadly.

Nutraceutical Corp. v. Lambert, et al., 139 S. Ct. 710 (2019) – Decided on February 26, 2019, this class action involved allegations that Nutraceutical’s marketing of a dietary supplement violated California consumer protection law. After decertification of the class, Plaintiff had 14 days under Rule 23(f) to ask for permission to appeal the order. Instead, Plaintiff moved for reconsideration more than 14 days later, and the motion was subsequently denied. Fourteen days thereafter, Plaintiff petitioned the Ninth Circuit for permission to appeal the decertification order. The Ninth Circuit held that Rule 23(f)’s deadline should be tolled because Plaintiff had acted diligently and it reversed the decertification order. A unanimous Supreme Court reversed on the basis that Rule 23(f) is “a non-jurisdictional claim-processing rule,” which is not subject to equitable tolling. The Supreme Court concluded that the Federal Rules of Civil Procedure express a clear intent to compel rigorous enforcement of Rule 23(f)’s deadline, even where good cause for equitable tolling might otherwise exist. As a result, the decision provides bright-line clarity for time limits on Rule 23(f) appeals of class certification orders.

Frank, et al. v. Gaos, 139 S. Ct. 1041 (2019) – Decided on March 20, 2019, this case involved a class action brought against Google claiming violations of the Stored Communications Act (Plaintiffs alleged that when an Internet user conducted a Google search and clicked on a hyperlink listed on the search results, Google transmitted information, including the terms of the search, to the server that hosted the selected webpage). As the Act prohibits a person or entity providing an electronic communication service to the public from knowingly divulging to any person or entity the contents of a communication while in electronic storage by that service, Plaintiffs brought a class action for breach or privacy. The parties negotiated a class-wide settlement that required Google to include disclosures on three of its webpages and to pay $8.5 million, whereby most of the money would be distributed to cy pres recipients (in a class action, cy pres refers to distributing settlement funds not amenable to individual claims or meaningful pro rata distribution to non-profit organizations whose work indirectly benefits class members). The Ninth Circuit affirmed approval of the settlement without addressing standing issues that had been the subject of dispute. On review, the U.S. Supreme Court vacated the order. Although the Supreme Court had granted certiorari to decide whether a class action settlement that provides a cy pres award but no direct relief to class members is fair, reasonable, and adequate for purposes of Rule 23(e)(2), it concluded that there is a substantial open question about whether any named Plaintiff had standing. As a proposed class settlement cannot be approved if the reviewing court lacks jurisdiction over the dispute, and jurisdiction might be lacking if no named Plaintiff had standing, the Supreme Court did not decide the cy pres question. As a result, the decision underscores that standing is always a required element of class certification, either as to the contested claim or settlement.

Lamps Plus, Inc., et al. v. Varela, et al., 139 S. Ct. 1407 (2019) – Decided on April 24, 2019, this case involved a data breach involving approximately 1,300 employees of Defendant. After a fraudulent federal income tax return was filed in the name of Plaintiff, he filed a putative class action on behalf of employees whose information had been compromised. Relying on the arbitration agreement in Plaintiff’s employment contract, Defendant sought to compel arbitration on an individual rather than a class-wide basis. The Ninth Circuit affirmed the rejection of the individual arbitration request, and thereby authorized a class arbitration. Although Supreme Court case law precedents held that a court may not compel class-wide arbitration when an agreement is silent on the availability of such arbitration, the Ninth Circuit concluded that those case law precedents did not apply because Defendant’s agreement was ambiguous, not silent, concerning class arbitration. The Supreme Court reversed. It held that under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 2, an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. It reasoned that class arbitration, unlike the individualized arbitration envisioned by the FAA, sacrifices the principal advantage of arbitration (its informality) and makes the process slower, more costly, and more likely to generate procedural problems than final judgment. The Supreme Court held that consent to participate in class arbitration cannot be inferred absent an affirmative contractual basis for concluding that the party agreed to do so. Therefore, contractual silence is not enough and ambiguity does not provide a sufficient basis to infer consent. As a result, the opinion confirms that an employer cannot be coerced into a class arbitration without signing an arbitration agreement with an unambiguous contract provision expressly stating its intent to do so.

Home Depot U.S.A., Inc. v. Jackson, et al., 139 S. Ct. 1743 (2019) – Decided on May 28, 2019, this case involved the interpretation of the Class Action Fairness Act (“CAFA”). Citibank had filed a state court debt collection action, alleging that consumer was liable for charges incurred on a Home Depot credit card. The consumer responded by filing third-party class action claims against Home Depot and another entity, alleging that they had engaged in unlawful referral sales and deceptive and unfair trade practices under state law. Home Depot filed a notice to remove the case pursuant to the CAFA. Finding that controlling precedent barred removal by a third-party counterclaim Defendant, the District Court dismissed the case (which was reversed by the Fourth Circuit). The U.S. Supreme Court affirmed on the basis that the general removal provision at 28 U.S.C. § 1441(a) does not permit removal by a third-party counterclaim Defendant. The Supreme Court opined that § 1453(b) of the CAFA did not alter § 1441(a)’s limitation on who can remove, suggesting that Congress intended to leave that limit in place. As a result, removal under the CAFA is not allowed for third-part counterclaims.

Parker Drilling Management Services, Ltd. v. Newton, et al., 139 S. Ct. 1881 (2019) – Decided on June 10, 2019, this employment class action concerned work on drilling platforms off the California coast where workers received pay for on-duty time, but not time spent on stand-by, during which they could not leave the platform. Plaintiff filed a class action, alleging that California laws required compensation for stand-by time. The platforms were subject to the Outer Continental Shelf Lands Act (“OCSLA”), which provides that all law on the Outer Continental Shelf (“OCS”) is federal law and deems an adjacent state’s laws to be inferior to federal law only to “the extent that they are applicable and not inconsistent with” federal law under 43 U.S.C. 1333(a)(2)(A). A unanimous Supreme Court vacated a decision of the Ninth Circuit in favor of Plaintiff on the grounds that where federal law address the relevant issue, state law is not adopted as surrogate federal law on the OCS. The Supreme Court rejected Plaintiff’s proposed preemption analysis and ruled that federal law is the only law on the OCS and there is no overlapping state and federal jurisdiction. The Supreme Court held that as Plaintiff’s claims were premised on California law requiring payment for all stand-by time, the Fair Labor Standards Act already addressed that issue and provides for a minimum wage.

The decisions in New Prime, Lambert, Frank, Lamps Plus, Jackson, and Parker Drilling are sure to shape and influence workplace class action litigation in a profound manner.

New Prime and Lamps Plus further elucidate arbitration principles, and when coupled with Epic Systems, these decisions may turn out to be one of the most important trio of workplace class action decisions over the last several decades in terms of their ultimate impact on class action litigation dynamics.

Rulings Expected In 2020

Equally important for the coming year, the Supreme Court accepted three additional cases for review in 2019 that will be decided in 2020 that also will impact and shape class action litigation and government enforcement lawsuits faced by employers.

All three cases are ERISA class actions.

The Supreme Court undertook oral arguments on two of these cases in 2019; the other case underwent oral argument in early 2020.

Retirement Plans Committee Of IBM v. Jander, et al., No. 18-1165 – Argued on November 6, 2019, this ERISA class action concerns whether and in what circumstances the “more harm than good” pleading standard from Fifth Third Bancorp. v. Dedenhoeffer can be satisfied by general allegations relative to the harm of inevitable disclosure of alleged fraud increases over time. The ultimate ruling by the Supreme Court likely will determine the relative difficulty of prosecuting and defending ERISA class actions based on how 401k plans are impacted by corporate disclosures and the viability of ERISA stock drop cases.

Intel Corp. Investment Policy Committee v. Sulyma, et al., No. 18-1116 – Argued on December 4, 2019, this ERISA class action involves application of the proper statute of limitations and what quantum of information triggers the date on which an employee has knowledge of the breach or violation of the statute. The ultimate decision likely will determine the ease or difficulty that Plaintiffs have in suing over ERISA issues and establish whether workers get three years or six years to file ERISA class actions.

Thole, et al. v. U.S. Bank, N.A., No. 17-1712 – Argued on January 13, 2020, this ERISA class action poses the issue of whether plan participants or beneficiaries may seek injunctive relief against fiduciary misconduct without demonstrating actual or imminent financial loss. The Supreme Court’s ultimate ruling is apt to establish significant guideposts for standing defenses in ERISA class actions and the contours of fiduciary duty class actions against fully funded defined benefit plans..

The Supreme Court is expected to issue decisions in these cases by the end of the 2019/2020 term in June of 2020.

Rulings in these cases will have significance for employers in complying with the ERISA and in defending class action litigation.

Implications For Employers

Each decision outlined above may have significant implications for employers and for the defense of high-stakes class action litigation. As always, we will closely monitor all Supreme Court case developments and report them to our readers. Stay tuned!

By Gerald L. Maatman, Jr., Christina M. Janice, and Alex W. Karasik

Seyfarth Synopsis:  In Ituah, et al. v. Austin State Hospital, a federal magistrate judge in Texas recently recommended the denial of a motion for class certification brought by patients alleging disability discrimination against a state psychiatric hospital for failing to make reasonable accommodations to protect them from sexual assault. The Court denied class certification on the grounds that that the named Plaintiff failed to demonstrate that other class members even existed.

For employers opposing motions for class certification, this ruling provides a helpful primer on why an individual plaintiff’s anecdotal allegations of intentional discrimination alone do not satisfy the requirements of Rule 23.

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Case Background

In Ituah, et al., v. Austin State Hospital, et al., Case No. 18-CV-11 (W.D. Tex. Jan. 3, 2020), an adult female patient at Austin State Hospital (“ASH”) was purportedly raped by a male patient.  After the incident was reported internally, no rape kit was conducted, the police were not notified, a staff member instructed the patient to “go take a shower,” and her bed sheets were not preserved as possible evidence.  Id. at 2.

Plaintiff brought individual and class claims that ASH violated Section 504 of the Rehabilitation Act and the Americans With Disabilities Act because it, “intentionally discriminated against [Plaintiff] and the Class on the basis of their disability by failing to make reasonable accommodations to protect them from sexual assault, by refusing to adequately investigate their reports of sexual assault, by failing to adequately train or supervise their agents and authorities in the proper prevention and investigation of sexual assaults at ASH, and by systemically discrediting reports of rapes at the ASH.”  Id. at 4.  She moved to certify two sub-classes under Rule 23(a) and 23(b)(2), including: (i) all women who were sexually assaulted in Austin State Hospital (the “Female Victim Sub-class”); and (ii) all patients who reported a sexual assault at Austin State Hospital but whose allegation was not adequately investigated by ASH because of ASH’s negligent and discriminatory policies (the “Inadequate Investigation Sub-class”).

Apart from anecdotal evidence of her own experience, Plaintiff supported her motion by citing to state data that since 2007 over 700 sexual assault allegations were made at ASH; as such, she contended that patients’ reports of assault were not taken seriously and ASH regularly failed to preserve any evidence.  Id. at 2-3.  Plaintiff further alleged that ASH failed to implement safety measures that would prevent sexual assaults, and failed to adequately investigate assaults when they occurred.

The Court’s Decision

The Court recommended denying Plaintiff’s motion for class certification.  To support her motion for class certification, Plaintiff presented testimony and documentary evidence specific to her own assault allegations, as well as a table of investigations by the Texas Department of Family and Protective Services from 2010-2015.  The Court concluded that Plaintiff failed to sustain her burden for class certification under the standards articulated in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-52 (2011), as she submitted insufficient evidence warranting class treatment for intentional discrimination claims.

First, regarding Rule 23(a)(1)’s numerosity prong, the Court held that Plaintiff failed to present evidence that supported her estimated class size of 227 persons.  Id. at 10.  Regarding commonality, the Court opined that, “[i]t is not enough that class members suffer the same type of injury or have been subject to a violation of the same law; rather, a plaintiff must identify a unified common policy, practice, or course of conduct that is the source of their alleged injury.”  Id. at 12 (citation omitted).  As a result, the Court held that factual disputes related to Plaintiff’s own assault demonstrated that resolution of individualized issues would not resolve class-wide issues.  Id. at 14.

Turning to the typicality requirement of Rule 23(a)(3), the Court held that because Plaintiff did not demonstrate any facts with respect to any other class members’ claim, she could not show her claims are typical of those of other class members.  Id. at 16.  As to the adequacy requirement pursuant to Rule 23(a)(4), noting that neither Plaintiff nor her guardian attended the class certification hearing and further raising questions relative to the mental competency of Plaintiff and class members, the Court held that it had “significant concerns about [Plaintiff’s] and her guardian’s, ability and willingness to take an active role in and control the litigation and to protect the class members’ interests.”  Id at 17.  Accordingly, the Court held that Plaintiff failed satisfy Rule 23(a)(1)’s requirements.

The Court further held that Plaintiff did not show that class certification was appropriate under Rule 23(b)(2).  Plaintiff argued that the Rule 23(b)(2) standard was met because ASH’s policies were the same as to each class member such that the injunctive relief she sought would be appropriate as to the class as a whole.  ASH responded that Plaintiff could not show that ASH acted on grounds that apply generally to the class or that injunctive relief was appropriate as to the class as a whole.  Id. at 18.  The Court held that for the same reasons that Plaintiff failed to show commonality and typicality of the class, she failed to show that final injunctive relief or declaratory relief was appropriate respecting the class as a whole based on the predominance of individualized issues.  Id. at 20.

Accordingly, in denying Plaintiff’s motion for class certification, the Court held that, it “will not recommend a class certification that is based solely on Plaintiff’s speculation that other class members may exist, especially considering the factual issues that exist as to Plaintiff’s own claims.”  Id. at 21.

Implications For Employers

This ruling is instructive in terms of defending a motion for class certification brought solely on the strength of one plaintiff’s individual claims.  Although the factual allegations here were unique (and disturbing), the Court’s analysis provides significant insight for attacking class certification motions that ultimately seek authorization of fishing expeditions for additional claimants in the class discovery phrase.

Seyfarth Synopsis: Our latest blog gave readers a detailed breakdown of the second trend of our 16th Annual Workplace Class Action Report (“WCAR”), which was class certification rulings in 2019.  Plaintiffs attained higher than ever rates of success in wage & hour litigation certification, and continued with high certification rates in the areas of ERISA and in the employment discrimination space. In today’s video, Seyfarth partner Jerry Maatman explains the reasoning behind these developments, and provides his perspective on potential outcomes in 2020 with regards to class certification.  Check out Jerry’s in-depth analysis in the link below!