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By Gerald L. Maatman, Jr., Thomas Ahlering, Alex Karasik, and Sarah Bauman

Seyfarth Synopsis: On September 20, 2021, the Seventh Circuit ruled in Fernandez v. Kerry, Inc., No. 21-1067 (7th Cir. Sept. 20, 2021), that a cause of action filed under the Illinois Biometric Information Privacy Act (“BIPA”) by employees of Kerry, Inc., was preempted by Section 301 of the Labor Management and Relations Act because the claims were premised on an alleged failure by the employer to obtain consent before requiring their employees to scan their fingerprints, and the issue of consent was covered by a collective bargaining agreement. As a result, the Seventh Circuit held that the class action claims could not be pursued by the employees against Kerry, Inc. in federal court.

The Fernandez ruling exemplifies that certain employee disputes implicating the BIPA will be dismissed if the parties intended such disputes to be resolved by the employer and the employees’ collective bargaining representative.

Case Background

Five former employees of Kerry, Inc. (“Plaintiffs”) filed a class action under the BIPA, alleging that Kerry, Inc. failed to obtain their consent before requiring Plaintiffs to scan their fingerprints for timekeeping purposes.  Id. at 1-2.  Defendant moved to dismiss on the grounds that the suit was preempted by Section 301 of the Labor Management Relations Act, 29 U.S.C. §185 (“LMRA”), because the resolution of the claims depended on interpretation of collective bargaining agreements between Defendant and the union that represented Plaintiffs while employed with Kerry.  Id. at 2.  Pursuant to preemption principles, federal law prevents states from interfering in relations between private employers and unions.  Id.  The district court agreed with Defendant and dismissed the lawsuit. Plaintiffs thereafter filed an appeal with the Seventh Circuit.

The Seventh Circuit’s Decision

In reviewing the district court’s ruling, the Seventh Circuit relied primarily on its decision in Miller v. Southwest Airlines Co., 926 F.3d 898, 903-05 (7th Cir. 2019).  There, it held that provisions in the Railway Labor Act that parallel Section 301 prohibit employees from “bypassing their employers about how to clock in and out.”  Id. at 2.  The Miller decision further “doubted that Illinois has attempted to give unionized workers a privilege to bargain directly with employers — after all, the [BIPA] permits an employee’s ‘legally authorized representative’ to consent to the collection and use of biometric information.”  Id. (citing 740 ILCS 14/15(b)).  Relying on Miller, the Seventh Circuit held that where an employer asserts that a union has consented, any dispute regarding the accuracy of such consent must be resolved between the employer and the union.  Id. at 2.  And if any employer “plausibly contends that the union[] has consented,” that “is enough to prevent suits by individual workers.”  Id. at 3.

The Seventh Circuit rejected Plaintiffs’ argument that the Railway Labor Act is “more preemptive” than the LMRA, recognizing that the U.S. Supreme Court “has equated the two” in Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 260 (1994).  Id. at 3.  The Seventh Circuit similarly rejected Plaintiffs’ suggestion that a permissive topic (i.e., with respect to the LMRA, clocking in and out) of bargaining need not be subject to the union’s representation.  Id.  Rather, it held that “a certified union is each worker’s exclusive representation on collective issues,” and thus covers disputes regarding timekeeping.  Id.

In conclusion, the Seventh Circuit held that as in Miller, Defendant “invoke[d] a management rights clause,” and whether “‘unions did consent to the collection and use of biometric data, or perhaps grant authority through a management-rights clause, is a question for [decision under the agreement].  Similarly, the retention and destruction schedules for biometric data, and whether [employers] may use third parties to implement timekeeping . . . are topics bargaining between unions and management.’”  Id. at 4 (quoting Miller, 926 F.3d at 903).  Accordingly, the Seventh Circuit explained it would be impossible to litigate a dispute about how an employer uses biometric information without asking whether the union has consented on the employees’ behalf — as such, states “cannot by-pass the mechanisms” of federal law and allow direct negotiation or litigation between workers and their employers.  Id. 

Finally, the Seventh Circuit rejected Plaintiffs’ request to send the dispute to arbitration to the extent that the collective bargaining agreements at issue did not allow workers to demand arbitration if the union forgoes the procedure, and the union had not requested arbitration.  Id.  For these reasons, the Seventh Circuit upheld the district court’s decision and dismissed the case.  Id.

Takeaways For Employers

The ruling in Fernandez v. Kerry doubles down on the Seventh Circuit’s refusal to litigate employee-initiated BIPA class actions where the issue of consent is covered by a collective bargaining agreement.  Accordingly, if sued under the BIPA, employers should consider this ruling to assess whether their employees’ claims are premised on a dispute that is covered by an applicable collective bargaining agreement.  Doing so could significantly limit an employer’s liability for damages, and provide another mechanism for seeking dismissal on the pleadings.

By Gerald L. Maatman, Jr.

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.

Wage & Hour Certification Trends

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:

ERISA Trends

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:

Overall Trends

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.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: In our continuing series of discussion points from the 2021 Workplace Class Action Litigation Report, somewhat counter-intuitively, the aggregate monetary value of workplace class action settlements increased in 2020, as settlement numbers went up and plaintiffs’ lawyers and government enforcement actions monetarized their claims at higher rates. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements in the new “cash is king” approach to the business cycle. Instead, workplace class action litigation defied the odds.

As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased in 2020, as compared to the prior two years. After settlement numbers reached an all-time high in 2017, those numbers fell dramatically in 2018, and then leveled off in 2019.

Although many employers and commentators alike expected the pandemic to depress the size and pace of settlements even further as businesses sought to conserve cash in the wake of the COVID-19 pandemic, workplace class action settlements defied expectations.

The numbers show that, in 2020, the plaintiffs’ bar was successful in monetizing their class action filings at a higher level than the past two years, perhaps signaling the beginning of an upward climb toward the numbers we saw in 2016 and 2017.

These trends harken back to the U.S. Supreme Court’s 2011 decision in Wal-Mart, Inc. v. Dukes, 564 U.S. 338 (2011). By tightening Rule 23 standards and raising the bar for class certification, Wal-Mart made it more difficult for plaintiffs to certify class actions and, as a result, more difficult to convert their class action filings into substantial settlements. These barriers became more formidable in 2018 with the Supreme Court’s ruling in Epic Systems v. Lewis, which upheld the validity of class action waivers in mandatory workplace arbitration agreements.

The “Wal-Mart/Epic Systems” phenomenon provided employers a “one-two punch” relative to their defense strategies that continues to impact the contours of class action litigation in 2020. To that end, federal and state courts cited Wal-Mart in 673 rulings in 2020, and they cited Epic Systems in 189 decisions by year’s end.

This past year, the plaintiffs’ bar continued to identify and develop work-arounds that helped to force the settlement of high-value class actions in multiple areas. Considering all types of workplace class actions, settlement numbers in 2020 totaled $1.58 billion, an increase compared to settlements in 2019, which totaled $1.34 billion, and from 2018, when they totaled $1.32 billion. These totals, however, remain significantly lower than their high-water mark in 2017, when such settlements topped $2.72 billion, and slightly lower than 2016, when such settlements totaled $1.75 billion. The following graphic shows this trend:

In terms of the story behind the numbers, the breakouts by types of workplace class action settlements are instructive.

In 2020, we saw a significant upward trend regarding the settlement values of employment discrimination claims, government enforcement litigation, and a slight upward trend regarding ERISA class actions. In contrast, we saw significant decreases across-the-board for resolutions of class actions involving wage & hour claims and private statutory claims.

The results in these categories are illustrated by the following chart for 2020 settlement numbers:

By type of case, settlement values in employment discrimination class actions and government enforcement cases experienced the most significant increases.

Employment discrimination class action settlements showed a significant increase in 2020. The top ten settlements totaled $422.68 million, as compared to $139.2 million in 2019, $216.09 million in 2018, and $293.5 million in 2017. The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

In 2020, the value of the top ten largest employment discrimination class action settlements of $422.68 million was the highest figure reached since we began tracking numbers, and $76.28 million higher than the next highest year recorded (2010).

As such, 2020 represents the reversal of a trend that started in 2011 (after Wal-Mart was decided) that kept the value of the top ten settlements under $300 million in each of the subsequent nine years.

Relatedly, the top ten settlements in government enforcement litigation experienced a sharp upward turn in 2020, as it increased to $241.0 million, a significant jump from the $57.52 million we saw in 2019 and from the $126.7 million recorded in 2018. Although the numbers did not approach the 2017 high-water mark of $485.25 million, they outpaced the numbers lodged in every other year since 2012.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

ERISA class action settlements rose slightly in 2020. The top ten settlements totaled $380.10 million, which topped the 2019 total of $376.35 million, as well as the 2018 total of $313.4 million. ERISA settlements in 2020, however, remained well below prior years, including the $1.31 billion we saw in 2014, the $926.5 million we recorded in 2015, the $807 million we saw in 2016, and the $927.8 million we logged in 2017. Given that ERISA class action settlements over the four-year period from 2014 through 2017 averaged $992.93 million, 2020 continues a trend toward a lower conversion rate for the plaintiffs’ bar.

This trend is illustrated by the following chart of settlements from 2012 to 2020:

The upward year-over-year trend did not hold for wage & hour class action settlements. The value of those settlements in 2020 fell off significantly from the previous year. In 2020, the value of the top ten wage & hour settlements was $294.60 million, compared with $449.05 million in 2019.

Although a significant decrease from 2019, the value held slightly above the lowest levels of the past decade, including above four of the past eight years with values of $292 million (2012), $248.45 million (2013), $215.3 million (2014), and $253.5 million (2018).

On a comparative basis, the top 10 settlements in 2020 likewise fell well short of the spikes we saw in the other four of the previous eight years, with values of $463.6 million (2015), $695.5 million (2016), $525 million (2017), and $449.05 million (2019).

When combined, however, the top 10 wage & hour settlements for the three-year period of 2015, 2016, and 2017 totaled over $1.68 billion. Adding 2018 and 2019 settlements, corporate America saw over $2.386 billion devoted to settling the top 10 wage & hour settlements over that five-year period.

As the impact of the 2018 ruling in Epic Systems continues to provide defenses for businesses inclined to adopt mandatory workplace arbitration programs with class action waivers, and cases filed prior to such adoption continue to work their way out of the pipeline, we could see settlement numbers continue to follow a downward trajectory in 2021.

The top ten settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, workplace antitrust laws, or statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) likewise fell off in 2020. The settlements totaled $244.55 million, which represented a significant decrease from 2019 and the continuation of a downward year-over-year trend that began in 2018. In 2017, such settlements totaled $487.28 million; in 2018, they totaled $411.15 million; and in 2019, they totaled $319.65 million.

The following chart tracks these figures:

Settlement trends in workplace class action litigation are impacted by many factors. In the coming year, settlement activity is apt to be influenced by developing case law interpreting U.S. Supreme Court rulings such as Epic Systems, the Biden Administration’s labor and employment enforcement policies, case filing trends of the plaintiffs’ class action bar, and class certification rulings.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis:  The data and analysis from workplace class action rulings, case filings, and settlements showed that change is the new normal in 2020-2021. As many pro-business precedents continued to roll out and take hold in 2020, voters elected to turn the White House from red to blue and, as a result, likely precipitated changes in numerous areas that will expand worker rights. Along with changes in the arbitration landscape, the shift in Administrations is likely to bring increased regulation of businesses, renewed enforcement efforts, and policy changes at the agency level that will result in efforts to abandon or overturn pro-business rules of the Trump Administration.

With the final election results in, and the White House set to turn “blue” for the next four years, employers can expect this change to bring shifts to the workplace class action landscape. Employers should anticipate that, while leadership of the EEOC will remain in place through the short-term, the Biden Administration will bring policy changes on other fronts that may take shape through legislative efforts, agency action and regulation, and enforcement litigation.

Contrary to the pro-business approach of the Trump Administration, many of these efforts may be intended to expand the rights, remedies, and procedural avenues available to workers and, as a result, have the potential to shake up the workplace class action landscape in several areas.

The U.S. Supreme Court issued one of the most transformative decisions on class action issues – Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) – during the Trump Administration. In Epic Systems, the Supreme Court reaffirmed that the Federal Arbitration Act requires courts to enforce agreements to arbitrate according to their terms, including mandatory agreements with terms providing for individual proceedings and class action waivers. Epic Systems profoundly impacted the prosecution and defense of workplace class actions in 2020 as it led to more front-end attacks by employers on proposed class and collective actions, and the dismantling of more workplace class and collective actions. Clearly, workplace arbitration agreements with class action waivers are one of the most potent tools of employers to manage their risks of class action litigation.

As the Biden Administration takes office, however, advocates for workers and labor may ramp up their activities and efforts to shift this landscape. If Democrats regain control of the Senate during the Biden Administration, employers may see new legislative efforts to overturn the Epic Systems regime and eventually may see those efforts gain traction and succeed in altering the force of the Federal Arbitration Act in the workplace.

In the time period since the Supreme Court decided Epic Systems, businesses facing class action lawsuits have filed more motions to compel arbitration and with a higher rate of success than in the years before this landmark decision. While this trend was likely fueled by other factors as well – such as the simplicity and cost-effectiveness of arbitration and the Supreme Court’s other “pro-business” arbitration rulings in recent years – the latest class action litigation statistics show that motions to compel arbitration have become an increasingly effective defense to class action lawsuits since Epic Systems. The following graphic highlights the number of motions to compel arbitration that were filed, granted, and denied from 2016 to 2020:

Along with the arbitration landscape, the shift in administrations is likely to bring efforts to roll back pro-business rules promulgated under the Trump Administration. The U.S. Department of Labor (the “DOL”), in particular, is apt to attempt to shift priorities on multiple fronts under the Biden Administration. As a key element of Biden’s platform, he decried “wage theft” and claimed that employers “steal” billions each year from working people by paying less than the minimum wage. As a candidate, Biden represented that he would build on efforts by the Obama Administration to drive an effort to dramatically reduce worker misclassification. Such statements, among others, signal that the Biden Administration will take efforts to reverse pro-business measures of the DOL under the Trump Administration that arguably narrowed application of minimum wage and overtime requirements.

On January 12, 2020, the DOL announced a final rule to revise and update its regulations interpreting joint employer status under the Fair Labor Standards Act (the “FLSA”). In the joint employer rule, the DOL provided updated guidance for determining joint employer status when an employee performs work for an employer that simultaneously benefits other individuals or entities, including a four-factor balancing test that considers whether the potential joint employer: (i) hires or fires the employee; (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (iii) determines the employee’s rate and method of payment; and (iv) maintains the employee’s employment records. Important for employers, the DOL clarified that an employee’s “economic dependence” on a potential joint employer does not dictate whether the entity is a joint employer under the FLSA and that a franchise or similar business model does not make joint employer status under the FLSA more or less likely.

After the joint employer rule became effective on March 16, 2020, 17 states and the District of Columbia filed suit alleging that the regulation violated the Administrative Procedures Act. On June 29, 2020, Judge Gregory Wood of the U.S. District Court for the Southern District of New York, in New York v. Scalia, No. 20-CV-1689 (S.D.N.Y. June 29, 2020), granted a motion to intervene filed by several business groups and, on September 8, 2020, vacated a portion of the rule. On November 6, 2020, the DOL and business groups appealed to the U.S. Court of Appeals for the Second Circuit. After Biden takes office, the DOL almost certainly will drop its participation in the appeal and, if the business groups fail, aim to issue joint employer regulations more consistent with Obama-era guidance.

On September 22, 2020, the DOL also unveiled a proposed regulation regarding classification of workers as independent contractors. In the proposed regulation, the DOL adopted a shorter, simpler test for classifying workers as independent contractors rather than employees covered by federal minimum wage and overtime law. It adopted an “economic reality” test and clarified that the concept of economic dependence turns on whether a worker is in business for himself or herself (i.e., as an independent contractor) or is economically dependent on a potential employer for work (i.e., as an employee). The proposed rule described five factors that should be examined as part of the economic reality test, including two “core” factors – (i) the nature and degree of the worker’s control over the work; and (ii) the worker’s opportunity for profit or loss – that are afforded greater weight in the analysis.

The DOL subsequently fast-tracked the rule-drafting and public-comment process in an effort to solidify the regulation before President Trump left office and thereby provide employers a persuasive tool to fend off class actions accusing them of improperly classifying workers as independent contractors. The DOL under President Biden will have the authority to – and likely will – suspend the rule, along with any other Trump Administration regulation that failed to take effect before the transfer of power on January 20, 2021. Nonetheless, employers can expect business groups to defend the regulation, particularly in light of its favorable impact for the gig economy and other industries.

On November 25, 2020, the DOL also submitted a long-anticipated final rule to the White House Office of Information and Regulatory Affairs that would clarify the tip credit for hospitality industry employers. If adopted as proposed, the rule would allow employers to pay tipped employees a minimum wage of $2.13 per hour regardless of the amount of time they spend on non-tipped duties, such as cleaning their work stations. The new measure would eliminate the so-called 80/20 rule, which first appeared in the DOL’s Field Operations Handbook, and required that, when tipped employees spend more than 20% of their workweek performing general preparation work or maintenance, their employers must pay full minimum wage for the time spent in such duties. Even if the DOL completes the rule before January 20, 2021, however, it will face an uncertain future once President Biden takes office. Similar to the joint employer rule, Democratic state attorneys general are likely to challenge the rule under the Administrative Procedure Act, and the Biden DOL is likely to embrace a return to the less-employer-friendly pre-Trump interpretations of the tip credit rules.

In sum, whereas employers saw an array of business-friendly rules promulgated by the Trump Administration, their futures remain uncertain as the Biden Administration takes charge. Employers can expect multiple shifts and realignments of rulemaking and enforcement priorities that may fuel and shape the contours of workplace class action litigation, particularly on the wage & hour front.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Seyfarth’s 17th Annual Workplace Class Action Litigation Report analyzes 1,548 rulings and is our most comprehensive Report ever at 850 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 2021 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 2020 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. 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 2021 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 2020 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

Over the past decade, the plaintiffs’ bar has escalated the prosecution of workplace class action litigation. As the workplace class action litigation landscape has expanded, the risks have grown exponentially, and the defense of class action litigation has transformed. In this unique year of COVID-19, this trend has accelerated.

Today, workplace class actions remain at the top of the list of challenges that keep business leaders up at night. Whereas an adverse judgment has the potential to bankrupt a business, adverse publicity from a threatened or ongoing class action has the potential to eviscerate market share. At the same time, negotiated resolutions bring the potential for “copy-cat” class actions and “follow on” claims, whereby multiple groups of plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time or in succession. 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, the plaintiffs’ bar has grown in numbers and shifted tactics to attempt to capitalize on such potentialities. Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are continuing to develop new theories and approaches to the successful prosecution of complex workplace litigation and government enforcement lawsuits. Rulings by federal and state courts are continually adding to this patchwork quilt of compliance problems and litigation management issues. As a result, managing and combating these risks commands an evolving and strategic approach.

The events of the past year demonstrate that the array of problems facing businesses are continuing to evolve and become more complex. The COVID-19 pandemic created new challenges and new laws, which led to new types of workplace issues, new remote-work challenges, and new class theories that are likely to become part of the fabric of complex workplace litigation for years to come.

As the business-friendly policies of the Trump Administration gave way to a reduced emphasis on governmental enforcement litigation pursued by the U.S. Equal Employment Commission (“EEOC”) and other federal agencies, the plaintiffs’ class action bar filled the void. They continued aggressively to pursue and to certify class and collective actions in record numbers, particularly in the wage & hour space.

Adding to this mosaic of challenges in 2021 is the coming change as the White House flips from red to blue and the incoming Biden Administration commits to a renewed focus on workers’ rights. Employers should anticipate that, while leadership of the EEOC will remain in place through the short term, the Biden Administration will bring policy changes on other fronts that may take shape through legislative efforts, agency rule-making, and enforcement litigation.

Contrary to the pro-business approach of the Trump Administration, many of these efforts may be intended to expand the rights, remedies, and procedural avenues available to workers and, as a result, expand workplace class action litigation. As we move into 2021 and beyond, employers should expect changes that will represent stark reversals in policy and have a cascading impact on private class action litigation.

The combination of these factors will challenge businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. 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 legislation, agency rule-making, and 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 Of The Last Year

An overview of workplace class action litigation developments in 2020 reveals five key trends.

First, the COVID-19 pandemic had a significant impact on all aspects of life in 2020. Its impact extended to the legal system in general and workplace class actions in particular. As state and local governments responded to the COVID-19 threat, many employers moved their employees to tele-work or work-from-home arrangements, many laid off or furloughed workers, and many businesses shut down or postponed critical operations. The pace of court filings, however, did not match this trend as the plaintiffs’ bar filed a slew of COVID-19-related class actions. The pandemic spiked class actions (of all varieties) and litigation over all types of workplace issues. As the pandemic took hold, the plaintiffs’ bar retooled their class action theories to match. As businesses scrambled to confront the realities of stay-at-home and closure orders, their actions drew claims that, for instance, lay-offs caused an unintended disparate impact on protected groups or failed to comply with WARN Act requirements. As businesses rushed to adopt safety requirements, their actions drew claims that they failed to pay minimum wage or overtime for compensable work hours, failed properly to reimburse employee expenses, failed to provide leave required under the patchwork of state and federal laws enacted in response to the pandemic, or failed to go far enough in protecting workers from COVID-19. Employers are apt to see these workplace class actions expand and morph as businesses restart operations in the wake of COVID-19.

Second, 2020 signaled that change is the new normal. As many pro-business precedents continued to roll out and take hold in 2020, voters elected to turn the White House from red to blue and, as a result, likely precipitated changes in numerous areas that will expand worker rights. The U.S. Supreme Court’s transformative ruling in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), continued to profoundly impact the prosecution and defense of workplace class actions in 2020. Epic Systems reaffirmed that the Federal Arbitration Act requires courts to enforce agreements to arbitrate according to their terms, including mandatory agreements with terms providing for individual proceedings and class action waivers. During 2020, Epic Systems continued to shift class action litigation dynamics in critical ways as it led to more front-end attacks on proposed class and collective actions and, as the result of such attacks, led to the defense bar dismantling more workplace class and collective actions by fracturing those proceedings and diverting them into individual arbitrations. The past year demonstrated that change is a constant, however, and, as the Biden Administration takes office, advocates for workers and labor may ramp up their activities and efforts to shift this landscape. If Democrats regain control of the Senate during the Biden Administration, employers may see new legislative efforts to overturn the Epic Systems regime and eventually may see those efforts gain traction and succeed in altering the force of the Federal Arbitration Act in the workplace. Along with the arbitration landscape, the shift in Administrations is likely to bring increased regulation of businesses, renewed enforcement efforts, and policy changes at the agency level that will result in efforts to abandon or overturn pro-business rules of the Trump Administration.

Third, somewhat counterintuitively, the aggregate monetary value of workplace class action settlements increased in 2020, as settlement numbers went up and plaintiffs’ lawyers and government enforcement actions monetarized their claims at higher rates. Many employers and commentators alike expected the pandemic to depress the size and pace of settlements in the new “cash is king” approach to the business cycle. Instead, workplace class action litigation defied the odds. The numbers show that the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher rates than the past two years. After settlement numbers reached an all-time high in 2017, they plummeted to their lowest level ever in 2018, before experiencing a mild recovery in 2019. This past year, settlement numbers continued their upward trend in several areas, signaling a return to prominence of these bet-the-company cases.

Fourth, government enforcement litigation slowed considerably. Although the value of government enforcement settlements went up, agencies like the EEOC downsized their litigation enforcement programs and brought fewer lawsuits in 2020 than in any year of the past decade. Most significant for employers, during the past year, the EEOC undertook multiple initiatives that reflected a shift away from systemic litigation as a priority. First, on February 4, 2020, Chair Janel Dhillon announced five priorities for 2020, none of which included a systemic litigation focus, and reiterated that litigation is “truly a last resort” for the Commission. Second, on March 10, 2020, the EEOC released its Resolution Concerning the Commission’s Authority to Commence or Intervene in Litigation wherein, in short, it removed authority over EEOC litigation activities from the General Counsel and reassigned the authority to commence or intervene in systemic discrimination litigation solely to the Commissioners. Third, on October 8, 2020, the EEOC released a notice of proposed rule-making that overhauled the conciliation process with the goal of improving its transparency and, thus, its overall effectiveness. The agency’s filings over the past year reflect this trend and a continued shift away from systemic litigation.

Fifth, wage & hour litigation remained the sweet spot for the plaintiffs’ class action bar. 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. Further, while evolving case law precedents and new defense approaches resulted in many good outcomes for employers opposing class and collective action certification requests in 2020, 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. Despite the unprecedented pandemic-related court closures, the overall number of rulings increased in 2020, and plaintiffs prevailed on those first-stage motions at an unprecedented rate.

Implications For Employers

In the ever-changing economy and patchwork quilt of laws and regulations, corporations face new, unique, and challenging litigation risks and legal compliance problems.

Adding to this challenge, the one constant in workplace class action litigation is change. More than any other year in recent memory, 2020 was a year of great change, inside and outside of the workplace. As these issues play out in 2021, additional chapters in the class action playbook will be written.

The private plaintiffs’ bar are apt to be equally, if not more, aggressive in 2021 in bringing class action and collective action litigation against employers. They are likely to be aided by new worker-friendly rulemaking emanating from agencies within the executive branch.

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 2021.

By Gerald L. Maatman, Jr. and Jennifer A. Riley

Seyfarth Synopsis:  With the final election results in (or nearly in…), and the White House set to turn “blue” for the next four years, employers can expect the change to bring shifts to the workplace class action landscape.  Employers should anticipate that, while leadership of the EEOC will remain in place through the short term, Mr. Biden will bring policy changes on other fronts that may take shape through legislative efforts, agency action and regulation, and enforcement litigation.  Contrary to the pro-business approach of the Trump Administration, many of these efforts may be intended to expand the rights, remedies, and procedural avenues available to workers and, as a result, have the potential to shake up the workplace class action landscape.  Employers should expect that, as the Biden Administration takes charge, multiple trends may take shape on the workplace class action front.

1. Continued Refocus Away From Systemic Litigation At The EEOC:   President Trump appointed three Republican commissioners to the EEOC whose terms solidify a Republican majority through at least July 2022, irrespective of which party holds the White House.  As a result, it is likely that the EEOC will continue its shift away from systemic litigation as a priority at least through the first few years of the Biden presidency. That being said, a future Democratic chair at the EEOC – operating in the minority – may seek to turn the Commission’s agenda (even if ever so slightly), or influence it in a way that aligns more closely with the agenda of the Biden Administration.

Significant for employers, during the past year, the EEOC has undertaken multiple initiatives that reflect a shift away from systemic litigation as a priority.  First, on February 4, 2020, Chair Janel Dhillon announced five priorities for 2020, none of which included a systemic litigation focus.  Although the Chair acknowledged that the Commission will continue to pursue litigation as vigorous advocates, she opined that “litigation is truly a last resort and not an appropriate substitute for rule-making or legislation.”  (Read more here.)

Second, on March 10, 2020, the EEOC released its Resolution Concerning the Commission’s Authority to Commence or Intervene in Litigation whereby, in short, it removed authority over EEOC litigation activities from the General Counsel and reassigned the authority to commence or intervene in systemic discrimination litigation solely to the Commissioners. To the extent that Republic appointed Commissioners – who hold the majority – are the decision-makers of last resort when it comes to initiation of agency litigation, employers may see less rather than more government enforcement lawsuits. (Read more here.)

Third, on October 8, 2020, the EEOC released a notice of proposed rule-making that overhauled the conciliation process with the goal of improving its transparency and effectiveness.  The EEOC stated that its proposed amendments will establish “basic information disclosure requirements that will make it more likely that employers have a better understanding of the EEOC’s position in conciliation and, thus, make it more likely that the conciliation will be successful.”  (Read more here.)

The agency’s filings over the past year reflect this trend and a continued shift away from litigation.  For instance, after more than doubling its inventory of systemic filings between FY 2016 and FY 2018 (with 18 in FY 2016, 30 in FY 2017, and 37 in FY 2018), the EEOC’s systemic filings dropped to 17 in FY 2019.  Total filings followed a similar trajectory, with 136 in FY 2016, 202 in FY 2017, 217 in FY 2018, but only 149 in FY 2019 and 101 in FY 2020.  (Read more here.)

2. A Resurgent Plaintiffs’ Class Action Bar: Because the EEOC’s leadership likely will remain in place through at least mid-2022, it is likely that the EEOC will remain on its current trajectory into a Biden Presidency.  But, as forces of change are apt to be in play, employers can expect other factors to fill the void if the Commission is not aligned with the Biden Administration in terms of a pro-worker litigation focus.

Over the past decade, the plaintiffs’ class action bar has been both innovator and activist in finding its way around defense-centric legal precedents – such as the more rigorous class action standards established in Wal-Mart-Stores, Inc. v. Dukes,  564 U.S. 338 (2011). Emboldened by a new public policy focus on workers’ rights, the plaintiffs’ class action bar is apt to ramp up its case-filings and efforts to stretch the legal envelope in workplace litigation. The bottom line is that employers can expect to see the void of government enforcement litigation filled by private employment-related litigation.

3. Renewed Efforts To Change The Arbitration and Class Action Waiver Landscape:   As the U.S. Supreme Court issued a series of rulings culminating in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), which validated the enforceability of mandatory workplace arbitration agreements with class action waivers, lawmakers launched efforts to modify that landscape.  Employers should expect a Biden Administration to reinvigorate those efforts, particularly if accompanied by a shift in the landscape of leadership and compromise in the Senate.

On February 28, 2019, for instance, U.S. Representative Hank Johnson (D-GA) and U.S. Senator Richard Blumenthal (D-CT) introduced “The Forced Arbitration Injustice Repeal Act” (the “FAIR Act”).  The FAIR Act would have prohibited pre-dispute arbitration agreements that forced employees and other individuals, such as applicants or independent contractors, to arbitrate future disputes and prohibited agreements that restricted such persons from participating in class or collective actions related to employment, consumer, antitrust, or civil rights matters.  Similar efforts took the form of the “Restoring Justice for Workers Act,” introduced in the House on October 30, 2018, and the “Ending Forced Arbitration of Sexual Harassment Act of 2017,” introduced in the Senate on December 6, 2017.  Employers should expect similar efforts during a Biden presidency, particularly if the balance of power shifts closer to a Democratic majority in the Senate.

During the past several years, many employers large and small have adopted mandatory arbitration programs to manage disputes with their prospective hires and existing workforces.  As a result, if taken up for a vote and signed into law, employers should anticipate that such measures would work a sweeping change in both the forums and procedural mechanisms available for dispute resolution in that they would redirect litigation to the courts and reintroduce class and collective action devices into the toolkits of the plaintiffs’ bar.

4. An Uptick In Wage & Hour Litigation:   As a key element of Biden’s platform, he decried “wage theft” and claimed that employers “steal” billions each year from working people by paying less than the minimum wage.  As a candidate, Biden represented that he would push for enactment of legislation that makes worker misclassification a substantive violation of law and build on efforts by the Obama Administration to drive an effort to dramatically reduce worker misclassification.

Such statements, among others, signal that the Biden Administration will take efforts to reverse pro-business measures of the Trump Administration’s Department of Labor (“DOL”) that arguably narrowed application of minimum wage and overtime requirements.  On March 16, 2020, for instance, the Trump DOL adopted a final rule narrowing the definition of “joint employer” thereby limiting the circumstances under which multiple companies could be deemed to “employ” the same workers.  On September 22, 2020, the Trump DOL proposed a rule broadening the “independent contractor” test thereby making it easier for companies to classify workers as independent contractors under the Fair Labor Standards Act (“FLSA”).

Employers can expect the Biden administration to shift these efforts, which may include abandoning defense of the joint employer rule (although a federal district judge struck down portions of the rule on September 8, 2020, he subsequently permitted business groups to intervene in the lawsuit) and may include new rulemaking to rescind the independent contractor rule or adoption of new regulations that provide more worker-protective interpretations of employee status under the FLSA.  By expanding the group of workers who qualify as “employees” under the FLSA, such measures may expand the application of minimum wage and overtime requirements and, in turn, broaden the scope of litigation and raise the stakes for employers.

5. A Narrowing Of Exemption Defenses:  Along a similar line, employers may see renewed efforts to narrow exemption defenses.  Although the FLSA requires employers generally to pay minimum wage and overtime, DOL regulations identify several exceptions, including multiple categories of workers who are exempt from such requirements due to their duties and salary.

In May 2016, the Obama DOL issued new rules that increased the minimum salary required to qualify for white collar exemptions.  After a district judge halted their implementation, however, and found that the DOL exceeded its authority, the agency dismissed its appeal at the U.S. Court of Appeals for the Fifth Circuit.  The Biden Administration, however, may pick up the reigns on these issues and renew efforts to increase the minimum salary test.  Such efforts, if successful, may increase the value of potential litigation over the proper classification of workers, making such suits more attractive to the plaintiffs’ class action bar.

6. A Potential Litigation Shift Away From Federal Courts:  Perceiving that President Trump’s judicial selections have tilted the federal courts, employers may see the Plaintiffs’ bar file and attempt to pursue more lawsuits in state court.

As of November 4, 2020, the Senate has confirmed 220 Article III judges nominated by President Trump, including three associate justices of the U.S. Supreme Court, 53 judges for the United States Courts of Appeals, and 162 judges for the United States District Courts.  Trump’s appointees account for approximately 25% of all active judges in the federal court system.

Given perceived changes to the federal judiciary by President Trump, particularly at the appellate level, employers may expect to see the plaintiffs’ class action bar opting where possible for a state forum or tailoring their complaints to avoid jurisdictional thresholds.

Conclusion

The workplace class action landscape is anything but static.

As the Biden Presidency begins, employers are likely to see shifts.  If Mr. Biden pursues an expected agenda, those shifts may enhance the scope and value of workplace class action litigation

We will continue to monitor those updates here.

By Gerald L. Maatman and Jennifer A. Riley

Seyfarth Synopsis: As businesses chart their paths through the difficulties of reopening their operations in the wake of the COVID-19 pandemic, another risk looms – the danger of being the target of a class action lawsuit.  That trend is in its formative stage already, and members of the plaintiffs’ class action bar have made clear that they envision a target-rich environment for lawsuits on behalf of workers and consumers.  The foreseeable future presents unprecedented challenges for business executives and corporate counsel.

In this post, we outline a playbook that can serve as a class action survival guide for corporations and their decision-makers.  Extensive compliance efforts, well-crafted planning activities, and careful administration of corporate protocols are key to creating a risk management program that gets ahead of post-COVID-19 class action exposures.

Key Risks In The Post-COVID-19 Business Environment

As the pandemic took hold, members of the plaintiffs’ bar retooled their class action theories to match the landscape.  They targeted companies over layoffs, continued work requirements, and allegedly inadequate leave or benefits policies.  As companies move to reopen and rehire, they should anticipate similar adaptation, as the plaintiffs’ bar pivots to address legal risks in the next phase of COVID-19.

In particular, we anticipate a surge of activity on the discrimination, health & safety, and wage & hour fronts.  Those workers left out of mass re-hirings have the potential to assert claims of workplace bias based on their prospective employers’ failure to include them.  Those included in return to work plans have the potential to assert ADA claims for failure to accommodate and public nuisance or breach of duty claims for their employers’ alleged failure to protect them from COVID-19 infections.  Those required to undergo temperature screenings or required to wait during work station cleanings are apt to claim that their employers improperly failed to compensate them for such time.

Members of the Plaintiffs’ class action bar have begun testing these theories, and courts have begun to start weaving a patchwork of answers to questions such as whether a non-symptomatic plaintiff can represent or participate in a class that includes individuals who experienced symptoms and whether employers who allegedly failed to follow health & safety guidance are subject to claims for public nuisance or breach of duty. Employers can expect a dizzying array of legal rulings on these novel issues in the coming months.

Compliance Activities – Where To Focus Efforts

With this smorgasbord of potential claims and risks, how can a company best navigate these issues?  In our view, now is a good time to revisit the policies and procedures that govern your workplace and to develop clear protocols to address COVID-19 issues.  On the policy front, employers should reevaluate the terms and conditions of employment, including whether or how to adopt workplace arbitration programs with class action waivers, revisit their job descriptions, and review their complaint or grievance processes to ensure that they have delineated a clear path for raising and addressing employee concerns.

Relative to developing protocols, employees should respond to the pandemic pro-actively by anticipating issues and adopting thoughtful protocols before problems arise.  In other words, rather than wait for a worker to complain that a co-worker is coughing and may be a potential source of the coronavirus, or for the same worker to demand paid leave in response to safety concerns, employers should develop protocols that anticipate these issues and provide practical guidelines and clear rules that managers can implement and workers can understand.  Advance planning can help employers ensure that they take a thoughtful approach across their organization and across all components of their workforce.  Haphazard, one-off decision-making is typically a recipe for legal problems, whereas sound protocols and structured decision-making often builds a solid framework for better outcomes and legally defensible positions.

Planning Activities – Key Decisions To Reduce Or Eliminate Class Actions

A company’s protocols should take into account the nature of its business and workforce.  A fear of reporting to work, for example, is a significant issue that many employers are apt to encounter.  When workers are scared to report to work due to safety concerns, employers should begin by understanding the reason and whether the worker is scared because of a disability.  If so, the employer should utilize an individualized interactive process appropriate to the employee’s circumstances.  The answer might turn on whether the employee can perform the essential functions of his or her job from home and, if so, whether beginning or continuing a work from home arrangement may be a reasonable accommodation.

For employees for whom work from home is not an option, employees should take care to develop protocols that comply with and implement guidance issued by agencies such as the CDC, OSHA, and the EEOC. Further, they should provide clear rules for their managers and workers to follow relative to implementing these protocols.

Administration Of Corporate Protocols – Creation Of Positive Evidence To Nip Class Action Exposures In The Bud Before They Spiral Out Of Control

Beyond merely developing protocols, employers need to think pro-actively about tracking and documenting their compliance efforts.  Many employers have developed cleaning protocols, made masks available, and instructed employees to maintain social distancing.  But employers also need to plan ahead so that they are prepared to demonstrate that, if challenged, their cleaning protocols were implemented and followed on a local level, employees were made aware of policies and procedures, and concerns were investigated and remediated.

These problems require application of the fundamentals of sound human resources administration.  In addition to developing guidelines and protocols, employees should document their compliance efforts.  Employers should consider asking employees to acknowledge their receipt and agreement to abide by workplace protocols, should roll out or reinforce a complaint process for employees to raise or report concerns, and should document their cleaning efforts and corrective measures.

Conclusion – A New Corporate Playbook

Class action litigation will continue to evolve to the realities of the pandemic and post-COVID-19 pandemic workforce.  Employers can augment their defenses to litigation to get ahead of the curve through thoughtful planning, execution, and documentation.

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: Seemingly overnight, the #MeToo movement emerged as a worldwide social phenomenon with significant implications for the workplace and class action litigation. By 2019, it became clear that the movement is here to stay, and was not a passing fancy. In this age of connectivity, societal movements have unprecedented speed and reach. Traditional means of spreading information and generating social change have been supplemented – if not outright replaced – by the near-instantaneous ability of an idea or cause to go viral on social media. Nowhere over the past year was this more evident than with the #MeToo movement, as the chorus of victims’ voices and the media spotlight exposed sexual misconduct in the workplace.

Against this backdrop, many predicted that allegations of on-the-job sexual harassment would increase. The EEOC’s release of data on workplace harassment data in October of 2019 confirmed that reality and the widespread impact of the #MeToo movement throughout the country.

At the same time, many states reviewed their laws in the past 24 months in response to the #MeToo movement. Washington and California changed their laws in 2018 to bar employers from use of mandatory non-disclosure agreements for employees asserting sexual harassment and abuse claims. Illinois also enacted comprehensive legislation in 2019 that became effective on January 1, 2020, which mandates workplace anti-harassment training, bans arbitration and non-disclosure agreements that cover harassment and discrimination complaints, and requires disclosure of adverse judgments or rulings where allegations of sexual harassment formed the complaints. Several states – such as New York and New Jersey – also extended statutes of limitations, spurred on by revelations of sexual abuse in the Catholic Church and in #MeToo reports. More than any other state, California has been in the forefront of introducing “#MeToo bills,” including banning mandatory arbitration clauses in contracts, which require workers to waive the right to take an employer to court in the event of a dispute. In sum, these legislative changes lead to an uptick in #MeToo litigation in these states in 2019, and more case filings are expected in 2020.

The increasing number of sexual harassment claims in the corporate world as part of the #MeToo movement also has led to a number of high-profile employment-related claims. These types of settlements gained momentum in 2019, as plaintiffs’ lawyers secured a $215 million class action settlement for victims of sexual abuse who had sued the University of Southern California.

On the heels of those claims are a growing number of shareholder derivative and securities class actions. In 2017, 21st Century Fox reached a $90 million settlement with shareholders over losses related to two harassment scandals. Additional class actions were filed against other organizations in 2019, including a lawsuit that resulted in a $41 million settlement with Wynn Hotels. The derivative lawsuits are brought by plaintiff-shareholders purportedly acting on behalf of the company asserting claims for breaches of fiduciary duty and waste of corporate assets against board members and corporate executives. These complaints generally allege that these executives or board members had actual knowledge of or declined to act on sexual misconduct incidents and that, once aware of the incidents, they failed to take appropriate action or concealed the misconduct from shareholders and other stakeholders in the company. Derivative plaintiffs may also allege the misuse of corporate assets and legal resources for settlements and other payments to alleged harassers.

These derivative actions raise significant issues concerning the legal duties of corporations and their boards to monitor potential sexual misconduct by senior executives and other employees. While a corporate board generally has no duty to monitor a corporate officer’s personal behavior, sexual misconduct by an executive in the workplace may trigger liability if the directors consciously allowed the unlawful conduct to occur or failed to establish a compliance system to facilitate employee reporting of sexual harassment and to ensure that the company appropriately investigates and addresses any such allegations. These types of claims are expected to increase in 2020, as the #MeToo movement continues to expand.

Seyfarth Synopsis: As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased slightly in 2019, but as compared to the last several years, it was one of the lowest overall yields for settlements after those values plummeted to their lowest level ever in 2018. After settlement numbers were at an all-time high in 2017, those numbers fell dramatically. In sum, the ability of the plaintiffs’ bar to monetize their class action filings hit a significant wall.

As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased slightly in 2019, as compared to 2018.

After settlement numbers were at an all-time high in 2017, those numbers fell dramatically in 2018, and then leveled off over the past year. In sum, the ability of the plaintiffs’ bar to monetize their class action filings hit a proverbial wall over the past two years.

This trend harkened back to the U.S. Supreme Court’s decision in Wal-Mart, Inc. v. Dukes in 2011. By tightening Rule 23 standards and raising the bar for class certification, Wal-Mart made it more difficult for plaintiffs to certify class actions, and to convert their class action filings into substantial settlements.

These barriers became more formidable in 2018 with the Supreme Court’s ruling in Epic Systems v. Lewis, which upheld the validity of class action waivers in mandatory workplace arbitration agreements.

The “Wal-Mart/Epic Systems” phenomenon is still being played out, as well as manifesting itself in settlement dynamics. It is expected that the force of this barrier will be felt more profoundly in 2020. Considering all types of workplace class actions, settlement numbers in 2019 totaled $1.34 billion.

This compared to settlements in 2018, which totaled $1.32 billion.

These totals, however, decreased significantly from 2017 when such settlements topped $2.72 billion and in 2016 when such settlements totaled $1.75 billion.

The following graphic shows this trend:

 

In terms of the story behind the numbers, the breakouts by types of workplace class action settlements are instructive.

In 2019, there was a significant downward trend for the value of settlement of government enforcement litigation, employment discrimination claims, and workplace statutory class actions. In contrast, there were significant increases across-the-board for resolutions of class actions involving wage & hour class and collective actions, as well as ERISA class actions.

This phenomenon is shown by the following chart for 2019 settlement numbers:

By type of case, settlements values in workplace statutory class actions and government enforcement cases experienced the most significant decreases.

The top ten settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, and workplace antitrust laws and statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) totaled $319.65 million, which represented a large drop-off from 2018 when such settlements totaled $411.15 million, and still further from $487.28 million in 2017 (but an increase from $114.7 million in 2016).

The following chart tracks these figures:

The pattern for employment discrimination class action settlements likewise followed a slight downward trend in 2019. The top ten settlements totaled $139.20 million, as compared to $216.09 million in 2018 and $293.5 million in 2017. The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

In 2019, the value of the top ten largest employment discrimination class action settlements of $139.2 million was the fourth lowest figure since 2010, and largely aligned with the trend that started in 2011 (after Wal-Mart was decided) that showed decreases in settlement amounts over three years of that four-year period.

This trend did not hold for wage & hour class action settlements. The value of those settlements in 2019 nearly doubled from the previous year. In 2019, the value of the top ten wage & hour settlements was $449.05 million as compared to $253.18 million in 2018. This was a slight decrease from 2017, when the value of the top ten settlements spiked at $574.49 million, which was the second highest annual total in wage & hour class actions ever.

On a comparative basis, 2019 settlements were the fourth highest annual total over the past decade.

When coupled together, the two-year period of 2016 and 2017 saw over $1.2 billion in the top wage & hour settlements. Adding 2018 and 2019 settlements, corporate America saw over $2 billion in wage & hour settlements over the past four years. Further, this is most telling in examining the last four years, for 2016 represented almost a quadrupling (after two years of declining numbers in 2013 and 2014) in the value of the top wage & hour settlements as compared to 2014. Given the ruling in Epic Systems in 2018, settlement numbers more likely to follow a downward trajectory in 2020.

This trend is illustrated by the following chart:

Relatedly, the top ten settlements in government enforcement litigation experienced a steep downward arc, as they decreased to $57.52 million, which was a drop from $126.7 million in 2018. This compared to the figure of $485.2 million in 2017. That being said, these numbers were slightly above the three year trend from 2014 to 2016 when governmental enforcement litigation settlements trended under $100 million for three years running. This trend is illustrated by the following chart of settlements from 2011 to 2019:

ERISA class action settlements rose slightly in 2019. The top ten settlements totaled $376.35 million, which topped the 2018 total of $313.4 million. Relatively, however, ERISA settlements in 2019 were still well below prior years, as those totals were $927 million in 2017 and $807.4 million in 2016.

Further, given that ERISA class action settlements for the two-year period of 2016 and 2018 were a combined $1.73 billion, the figure for 2019 on balance shows a lower conversion rate for the plaintiffs’ bar.

This trend is illustrated by the following chart of settlements from 2011 to 2019:

Settlement trends in workplace class action litigation are impacted by many factors.

Implications For Employers:

In the coming year, settlement activity is apt to be influenced by developing case law interpreting U.S. Supreme Court rulings such as Epic Systems, the Trump Administration’s labor and employment enforcement policies, case filing trends of the plaintiffs’ class action bar, and class certification rulings.

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!