By: Gerald L. Maatman, Jr.

Seyfarth Synopsis: On the governmental enforcement front, the change-over from the Obama Administration to the Trump Administration had little to no impact on reducing the pace of litigation filings and settlements in 2018 at least insofar as EEOC litigation was concerned. At the same time, while the number of lawsuits filed went up, the aggregate recoveries – measured by the top 10 settlements in government enforcement litigation – went down.

To the extent the Trump Administration aims to change those dynamics, its agency appointees at the DOL either were not nominated in time to influence their respective agencies or were not put into place until mid to late 2018. Insofar as the EEOC is concerned, the Trump nominees for the Chair, two Commissioners, and the general counsel were never voted upon by the Senate in 2018. The result was a delay in changes to agency policies and priorities. In this respect, fundamental changes to patterns in government enforcement litigation are more akin to changing the direction of a large sea-going cargo tanker than a small motor boat. Change is inevitable, but it takes time. Thus, the impact of change on governmental litigation enforcement trends is not likely to be felt until well into 2019.

As a result, the EEOC’s lawsuit count increased again in 2018. It filed 199 merits lawsuits, and 20 subpoena enforcement actions. By continuing to follow through on the systemic enforcement and litigation strategy plan it announced in April of 2006 (that centers on the government bringing more systemic discrimination cases affecting large numbers of workers), the EEOC filed more cases as well as more systemic lawsuits. As 2018 demonstrated, the EEOC’s prosecution of pattern or practice lawsuits remained an agency-wide priority backed up by the numbers. Many of the high-level investigations started in the last three years mushroomed into the institution of EEOC pattern or practice lawsuits in 2018.

By comparison to previous years, 2018 was a big one for the EEOC in terms of the number of lawsuits filed. Total merits filings were up more than 100% as compared to 2016. In fact, the EEOC filed more lawsuits in the month of September of 2018 than it did in all of the months of 2016 combined.

This past year also marked the second year of the EEOC’s new Strategic Enforcement Plan (“SEP”), which is intended to guide enforcement activity for 2017 to 2021. Although the new SEP outlines the same six enforcement priorities as in prior years, few people familiar with how the agency pursues its objectives expect that the EEOC will continue to enforce those priorities in the same way under the Trump Administration. The six enforcement priorities include: (1) the elimination of systemic barriers in recruitment and hiring; (2) protection of immigrant, migrant, and other vulnerable workers; (3) addressing emerging and developing issues; (4) enforcing equal pay laws; (5) preserving access to the legal system; and (6) preventing harassment through systemic enforcement and targeted outreach.

Each of these priorities can be interpreted in multiple ways. For example, the EEOC has consistently focused on the protection of lesbians, gay men, bisexuals, and transgender people as one of the most important emerging and developing issues in the workplace. The EEOC’s efforts in this area have resulted in a body of case law in many jurisdictions over the past several years that now holds that discrimination against transgender individuals, or on the basis of sexual orientation, is a form of sex discrimination prohibited by Title VII. However, the Department of Justice under President Trump has recently disagreed with that interpretation. This may signal that this is one area that will shift in 2019 as high-level personnel changes are made within the EEOC.

The EEOC also focused in the past year on employers’ utilization of social media and the use of algorithms and information available on the internet to screen job applicants. Recent comments by the EEOC’s staff indicate that this may be one of the “barriers to recruitment and hiring” that the agency will focus on in 2019 and beyond. Along the same lines, the EEOC has shown an increased willingness to bring ADEA lawsuits against employers – especially in the hospitality industry – that it believes are discriminating against hiring applicants aged 40 and over.

The EEOC also recently issued new guidance impacting two of its enforcement priorities, including preserving access to the legal system (i.e., through increased enforcement of the anti-retaliation provisions of Title VII, the ADA, and the ADEA) and preventing harassment in the workplace. Among other things, the retaliation guidance expands the definition of “adverse action” to include one-off incidents and warnings, as well as anything that reasonably could be likely to deter protected activity. With respect to preventing harassment, the new guidance clarifies the EEOC’s thinking about what constitutes a hostile work environment and the defenses available to employers when that hostile work environment is the result of supervisors’ misconduct. Although important developments in their own right, the real impact of these new guidelines may not be clear until employers see how they are interpreted by the EEOC in active litigation situations. Like the priorities themselves, that will be impacted by whatever new policies and directives are put in place by the new Trump appointees.

Furthermore, the EEOC has focused on #MeToo issues with more intensity than ever before. The most striking trend of all is the substantial increase in sex-based discrimination filings, as 74% of the EEOC’s Title VII filings this past year targeted sex-based discrimination. By comparison, in 2017, sex-based discrimination accounted for 65% of Title VII filings. Of the 2018 sex discrimination filings, 41 filings included claims of sexual harassment. The total number of sexual harassment filings was notably more than 2017, where sexual harassment claims accounted for 33 filings.

It also appears that the EEOC is finally executing on its oft-stated intention to increase enforcement under the Equal Pay Act (“EPA”). The EEOC filed 11 EPA lawsuits in 2018. This is a significant increase over prior years (six EPA lawsuits were filed in 2016, five in 2015, and two in 2014). However, its enforcement efforts in this area may have suffered a setback when the changes the EEOC planned to make to the EEO-1 reporting requirements were put on hold in 2018. It was widely speculated that the new reporting requirements would have assisted the EEOC in bringing more claims under the EPA. Under the leadership of the new Administration, the Office of Management and Budget, pursuant to its authority under the Paperwork Reduction Act, stayed implementation of the EEOC’s new EEO-1 regulations this past year.

The Commission’s 2018 Performance Accountability Report announced that its systemic litigation program continues to be a focus for the EEOC. The EEOC labels a case “systemic” if it “has a broad impact on an industry, company, or geographic area.” The EEOC’s FY 2018 report outlined the EEOC’s activity from October 1, 2017 to September 30, 2018. It showed the following:

The EEOC’s field offices resolved 409 systemic investigations and collected $30 million in remedies (compared to 329 systemic investigations and $38.4 million in 2017). The figures for 2018 constitute a significant increase in the number of investigations over the previous year, but a marked decrease in the amounts for monetary relief for systemic cases.

The EEOC also issued cause determinations finding discrimination in 204 systemic investigations (compared to 167 in 2017 and 113 in 2016). Hence, the EEOC resolve more systemic investigations compared to 2017, and made considerably more cause determinations that may well result in an increase in systemic lawsuits filed in the coming year.

The EEOC secured approximately $505 million in total relief in 2018 in litigation, mediations, and pre-litigation investigations. This tracks closely the total relief figure of $484 million for 2017. It also includes $354 million obtained through mediation, conciliation, and settlement for victims of discrimination in private, state and local government, and federal workplaces. That number was marginally down from 2017, which saw $355.6 million in such recoveries.

Litigation recoveries, on the other hand, were relatively flat as compared to the past few years, hitting only $53.5 million in 2018. This was slightly higher than in 2017 and 2016, which saw the EEOC obtain $42.4 million and $52.2 million respectively, and lower than in 2015 when the EEOC obtained $65.3 million in litigation recoveries.

The EEOC filed 199 merits lawsuits in 2018. This is up from 184 lawsuits in 2017, and more than double the 86 merits lawsuits that were filed in 2016. Of the lawsuits, 117 were on behalf of individuals, 45 were non-systemic suits with multiple victims, and the other 37 were systemic claims. The EEOC also filed 20 subpoena enforcement actions in 2018. Hence, the EEOC in the first and second years of the Trump Administration was far more active in filing lawsuits than in the final year of the Obama Administration.

In FY 2018, the EEOC received 76,418 charges, as compared to 99,109 charges in 2017. Furthermore, the EEOC decreased its charge inventory by 19.5%, to 49,607 charges. This is the lowest level of charge inventory in 10 years and represents a significant reduction compared to FY 2017, when the EEOC reduced its outstanding charges by 16.2%.

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

At the same time, however, the DOL increased its focus on compliance assistance, holding more than 3,600 outreach events, which also represented a record high for the agency. The DOL also returned to its historical practice (abandoned during the Obama Administration) of issuing opinion letters, which allows employers and employees alike to seek formal guidance from the WHD on some of the most challenging wage & hour issues. In 2018, the WHD issued nearly 30 such letters, which addressed tipped employees, the salary basis test, volunteer status, travel time obligation, and pay required by the FMLA, among a number of other topics.

This past year also brought the return of another program – the WHD’s supervision of wage & hour back pay awards following an employer’s self-audit or similar practice. Early in the year, the DOL announced the Payroll Audit Independent Determination (“PAID”) program. The PAID program allows employers to identify potential violations, the affected employees, the relevant time frame, and the amounts due, and then present that information to the WHD, in addition to some additional certifications regarding compliance. Upon review by the DOL, the back wages are paid, and, if the employee accepts the back wages, the employee waives his or her right to a private right of action. That waiver, however, is limited to the scope of the issues and timeframe. Initially launched as a six-month pilot program, the PAID program was extended for an additional six months, thereby keeping this option open for employers well into 2019.

Not to be outdone, the National Labor Relations Board (“NLRB”) also undertook an ambitious agenda in 2018. It reconsidered well-settled NLRB principles on joint employer rules and representative elections, entertained the possibility of extending the protections of the National Labor Relations Act (“NLRA”) to college athletes, and litigated novel claims seeking to hold franchisors liable for the personnel decisions of franchisees. By the end of the year, however, the Trump Administration’s appointees began to roll-back NLRB precedents and positions that had been espoused during the Obama Administration, such as a reversal of the expansive view of joint employer liability, allowing more deference to employer workplace rules, and eliminating protections for obscene, vulgar, and inappropriate activity under the NLRA.

Implications For Employers

Despite predictions to the contrary, the EEOC has continued its “business as usual” aggressive litigation despite two years under the Trump administration. Changes are, however, afoot. The Senate has still not confirmed two Trump-nominated Republican Commissioners, including one who is set to become Chair of the Commission, or Trump’s pick to be the EEOC’s General Counsel. (One of those nominated to be a Commissioner, Daniel Gade, recently withdrew from consideration on December 21, 2018, citing the delays in the nomination process as the reason.) Eventually, the impact of the injection of new decision makers will be felt, perhaps dramatically. That makes it especially important for employers to monitor these developments in 2019. Of course, we will have our ear to the ground, and look forward to sharing our thoughts and prognostications with our readers throughout the new year!

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: As our 2019 Workplace Class Action Report describes, 2018 was quite an interesting year for employers in terms of class certification rulings. Plaintiffs achieved robust numbers of initial conditional certification rulings of wage & hour collective actions in 2018, while employers secured less defeats of conditional certification motions and decertification of § 216(b) collective actions. Check out the extensive analysis below!

Anecdotally, surveys of corporate counsel confirm that complex workplace litigation – and especially class actions and multi-plaintiff lawsuits – remains one of the chief exposures driving corporate legal budgetary expenditures, as well as the type of legal dispute that causes the most concern for companies. The prime component in that array of risks is indisputably complex wage & hour litigation.

The circuit-by-circuit analysis of 301 class certification decisions in all varieties of workplace class action litigation is detailed in the following map:

Wage & Hour Certification Trends

Plaintiffs achieved robust numbers of initial conditional certification rulings of wage & hour collective actions in 2018, while employers secured less defeats of conditional certification motions and decertification of § 216(b) collective actions. The percentage of successful motions for decertification brought by employers saw a significant dip in 2018 to 52%. This was fully 11% less than the figure of 63% in 2017.

Most significantly, for only the second time in over a decade, and for the second year in a row, wage & hour lawsuit filings in federal courts decreased. That being said, the volume of FLSA lawsuit filings for the preceding four years – during 2014, 2015, 2016, and 2017 – were at the highest levels in the last several decades.

As a result, an increase in FLSA filings over the past several years had caused the issuance of more FLSA certification rulings than in any other substantive area of complex employment litigation – 273 certification rulings in 2018, as compared to 257 certification rulings in 2017, 224 certification rulings in 2016, and 175 certification rulings in 2015.

The analysis of these rulings – discussed in Chapter V of this Report – shows that a high predominance of cases are brought against employers in “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. For the first time in a decade, however, rulings were equally voluminous out of the Fifth Circuit, which also tended to favor workers over employers in conditional certification rulings. This trend is shown in the following map:

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, and Ninth Circuits are the epi-centers of wage & hour class actions and collective actions. More cases were prosecuted and conditionally certified – 50 certification orders in the Ninth Circuit, 42 certification orders in the Fifth Circuit, and 32 certification orders in the Second Circuit – in the district courts in those circuits than in any other areas of the country. That being said, the district courts in the Third, Fourth, and Sixth Circuits were not far behind, with 22, 23, and 29 certification orders respectively in those jurisdictions.

Second, as the burdens of proof reflect under 29 U.S.C. § 216(b), plaintiffs won the overwhelming majority of “first stage” conditional certification motions (196 of 248 rulings, or approximately 79%). However, in terms of “second stage” decertification motions, employers prevailed in just over half of those cases (13 of 25 rulings, or approximately 52% of the time).

The “first stage” conditional certification statistics for plaintiffs at 79% for 2018 were even more favorable to workers than in 2017, when plaintiffs won 73% of “first stage” conditional certification motions. However, employers fared much worse in 2018 on “second stage” decertification motions. Employers won decertification motions at a rate of 52%, which was down from 63% in 2017 (but up slightly from 45% in 2016).

The following chart illustrates this trend for 2018:

Third, this reflects that there has been an on-going migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space for close to a decade. Experienced and able plaintiffs’ class action counsel typically secure better results. Further, 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 is needed, unlike the situation when certification is sought in an employment discrimination class action or an ERISA class action), and without having to conduct significant discovery (per 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 ERISA and employment discrimination 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 2018 confirm these factors.

The great unknown for workplace class action litigation is the impact of the Epic Systems ruling, and whether it reduces class action activity in the judicial system and depresses settlement values of workplace lawsuits.

At the same time, a future Congress may effectuate a legislative response to abrogate or limit the impact of workplace arbitration agreements with class action waivers, but that will be dependent upon ideological and political dynamics based on future elections.

As a result, Epic Systems may well impact case filing numbers in the near term, and as a result, class action settlement numbers are likely to decrease.

Employment Discrimination & ERISA Certification Trends

Against the backdrop of wage & hour litigation, the ruling in Wal-Mart also fueled more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2018.

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 two years ago in Tyson Foods v. Bouaphakeo, 136 S. Ct. 1036 (2016), in which the 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.

Filings of “smaller” employment discrimination class actions have increased due to a strategy whereby state or regional-type classes are asserted more often than the type of nationwide mega-cases that Wal-Mart discouraged.

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.”

In turn, whereas employment-related class certification motions were a mixed bag or tantamount to a “jump ball” in 2017 – when 7 of 11 motions were granted and 4 of 11 were denied – employers were far more successful in 2018, where only 3 of 11 motions were granted for plaintiffs and 8 of 11 were denied.

The certification rate of 27% was the lowest on record over the last decade.

The following map demonstrates this array of certification rulings in Title VII and ADEA discrimination cases:

In terms of the ERISA class action litigation scene in 2018, 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 2018 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 less than in previous years. In 2018, plaintiffs won 11 of 17 certification rulings or 65%. By comparison, in 2017, plaintiffs won 17 of 22 certification motions, with 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 2018?

In the areas of wage & hour and ERISA claims, 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. Conversely, plaintiffs’ success rate in the context of employment discrimination class actions is modest, as employers have a high success rate in blocking such certification motions.

Whereas class certification for employment discrimination cases (3 motions granted and 8 motions denied in 2018) was far less possible, class certification is relatively easier in ERISA cases 11 motions granted and 6 motions denied in 2018), but most prevalent in wage & hour litigation (with 196 conditional certification motions granted and 52 motions denied, as well as 13 decertification motions granted and 12 motions denied).

The following bar graph details the win/loss percentages in each of these substantive areas:

–          a 27% success rate for certification of employment discrimination class actions (both Title VII and age discrimination cases);

–          a 65% success rate for certification of ERISA class actions; and,

–          a 79% success rate for conditional certification of wage & hour collective actions.

Obviously, the most certification activity in workplace class action litigation is in the wage & hour space.

The trend over the last three years in the wage & hour space reflects a steady success rate that ranged from a low of 70% to a high of 79% (with 2018 representing the highest success rate ever) for the plaintiffs’ bar, which is tilted toward plaintiff-friendly “magnet” jurisdictions were the case law favors workers and presents challenges to employers seeking to block certification.

Yet, the key statistic in 2018 for employers was a significant decrease in the odds of successful decertification of wage & hour cases to 52%, as compared to 63% in 2017, a decrease of 11%.

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. The new wrinkle to influence these factors in 2018 was the Supreme Court’s ruling in 2018 in Epic Systems and in 2016 in Tyson Foods. To the extent it assists plaintiffs in their certification theories, future certification decisions may well trend further upward for workers.

Lessons From 2018

There are multiple lessons to be drawn from these trends in 2018.

First, while the Wal-Mart ruling undoubtedly heightened commonality standards under Rule 23(a)(2) starting in 2011, and the Comcast decision tightened the predominance factors at least for damages under Rule 23(b) in 2013, the plaintiffs’ bar has crafted theories and “work arounds” to maintain or increase their chances of successfully securing certification orders in ERISA and wage & hour cases. This did not hold true in the context of employment discrimination lawsuits. In 2018, their certification numbers were up for ERISA and wage & hour case, and down for employment discrimination litigation.

Second, the defense-minded decisions in Wal-Mart and Comcast have not taken hold in any significant respect in the context of FLSA certification decisions for wage & hour cases. Efforts by the defense bar to use the commonality standards from Wal-Mart and the predominance analysis from Comcast have not impacted the ability of the plaintiffs’ bar to secure first-stage conditional certification orders under 29 U.S.C. § 216(b). If anything, the ruling two years ago in Tyson Foods has made certification prospects even easier for plaintiffs in the wage & hour space, insofar as conditional certification motions are concerned. The conversion rate of successful certification motions hit an all-time high of 79% in 2018.

Third, while monetary relief in a Rule 23(b)(2) context is severely limited, certification is the “holy grail” in class action litigation, and certification of any type of class – even a non-monetary injunctive relief class claim – often drives settlement decisions. This is especially true for employment discrimination and ERISA class actions, as plaintiffs’ lawyers can recover awards of attorneys’ fees under fee-shifting statutes in an employment litigation context. In this respect, the plaintiffs’ bar is nothing if not ingenuous, and targeted certification theories (e.g., issue certification on a limited discrete aspect of a case) are the new norm in federal and state courthouses.

Fourth, during the certification stage, courts are more willing than ever before to assess facts that overlap with both certification and merits issues, and to apply a more practical assessment of the Rule 23(b) requirement of predominance, which focuses on the utility and superiority of a preclusive class-wide trial of common issues. Courts are also more willing to apply a heightened degree of scrutiny to expert opinions offered to establish proof of the Rule 23 requirements.

Finally, employers now have a weapon to short-circuit the decision points for class action exposure through use of mandatory workplace arbitration agreements. Based on the Epic Systems ruling, a class waiver in an arbitration agreement is now an effective first-line defense to class-based litigation.

In sum, notwithstanding these shifts in proof standards and the contours of judicial decision-making, the likelihood of class certification rulings favoring plaintiffs are not only “alive and well” in the post-Wal-Mart and post-Comcast era, but also thriving. The battle ground may shift, however, as employers may create a bulwark against such class-based claims based on the Epic Systems ruling.

By: Gerald L. Maatman, Jr.

Seyfarth Synopsis: The first key trend from our 15th 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 2018, as well as which upcoming decisions employers should watch for in 2019.  Read the full breakdown below!

Over the past decade, the U.S. Supreme Court led by Chief Justice John Roberts increasingly has shaped the contours of complex litigation exposures through its rulings on class action and governmental enforcement litigation issues. Many of these decisions have elucidated the requirements for pursuing employment-related class actions under Rule 23 of the Federal Rules of Civil Procedure.

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.

This year saw another signal ruling in Epic Systems Corp. v. Lewis, which marks a gateway device to block prosecution of class actions in the judicial system and forces adjudication of claims on an individual, bi-lateral basis in arbitration.

To that end, federal and state courts cited Wal-Mart in 608 rulings in 2018; they cited Comcast in 235 cases in 2018; and despite its issuance in May of 2018, they cited Epic Systems in 119 decisions by year’s end.

The past year also saw a change in the composition of the Supreme Court in April of 2018, with Justice Neil Gorsuch assuming the seat of Antonin Scalia after his passing in 2016, and Justice Brett Kavanaugh taking the seat of Anthony Kennedy in October 2018, after Kennedy’s retirement and a bruising Senate confirmation battle.

Given the age of some of the other sitting Justices, President Trump may have the opportunity to fill additional seats on the Supreme Court in 2019 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 2018

In terms of decisions by the Supreme Court impacting workplace class actions, this past year was no exception. In 2018, the Supreme Court decided seven cases four employment-related cases and three class action cases that will influence complex employment-related litigation in the coming years.

The employment-related rulings included two wage & hour collective actions and two union cases, and in class actions that involved securities and human rights. A rough scorecard of the decisions reflects one distinct plaintiff/worker-side victory, and defense-oriented rulings in six cases.

Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) – Decided on May 21, 2018, this employment case involved the interpretation of mandatory workplace arbitration agreements between employers and employees and whether class action waivers within such agreements – which require workers to arbitrate any claims on an individual, bi-lateral basis (and waive the ability to bring or participate in a class action or collective action) – violate employees’ rights under the National Labor Relations Act to engage in “concerted activities” in pursuit. In a 5 to 4 ruling, the Supreme Court held that class action waivers in arbitration agreements are valid. The decision is likely to have far-reaching implications for litigation of class actions and collective actions.

Cyan, Inc., et al. v. Beaver County Employees Retirement Fund, 138 S. Ct. 1061 (2018) – Decided on March 20, 2018, this class action case posed the issue of whether federal law bars state courts from hearing certain securities class actions. The case turned on interpretation of the Private Securities Litigation Reform Act of 1995 (“SLUSA”) – which imposes tougher standards on securities class actions brought in federal courts – and whether it mandated that state courts can no longer hear class actions based on the Securities Act of 1933. In a 9 to 0 decision, the Supreme Court held that SLUSA did not strip state courts of jurisdiction over class actions alleging violations of securities laws and that defendants cannot remove such lawsuits from federal court to state court. In this regard, it did not spell the end of what many have viewed as a “cottage industry” of state court-based class action filings in states such as California where class action lawyers target public companies with securities claims over drops in stock process.

Encino Motors, LLC v. Navarro, et al., 138 S. Ct. 1134 (2018) – Decided on April 2, 2018, in this wage & hour case the Supreme Court examined whether service advisors at car dealerships are exempt under 29 U.S.C. § 213(b)(10)(A) from the overtime pay provisions of the Fair Labor Standards Act (“FLSA”). The Supreme Court held 5 to 4 that service advisors are exempt under the FLSA. The ruling is apt to have far-reaching implications on the legal tests for interpretation of statutory exemptions under the FLSA, as the broader reading of the exemption potentially could reduce the number of workers allowed to assert wage & hour claims against their employers.

CNH Industrial N.V. v. Reese, et al., 138 S. Ct. 761 (2018) – Decided on February 20, 2018, in this employment case the Supreme Court held in a per curium opinion that collective bargaining agreements are to be interpreted according to ordinary principles of contract law, including the rule that a contract is not ambiguous unless it is subject to more than one reasonable interpretation. The case involved a collective bargaining agreement, which provided health care benefits under a group benefit plan to certain employees who retired under the pension plan. The agreement expired by its terms in May 2004. At that time, a class of CNH retirees and surviving spouses filed a lawsuit seeking a declaration that their health care benefits vested for life. In reversing lower court rulings that determined that the collective bargaining agreement was ambiguous and they therefore could rely on extrinsic evidence in interpreting the contract to favor the claims of the union members, the Supreme Court held that the “only reasonable interpretation of the 1998 agreement was that the health care benefits expired when the collective bargaining agreement expired in 2004.

Janus, et al. v. AFSCME, 138 S. Ct. 2448 (2018) – Decided on June 27, 2018, in this employment case the Supreme Court considered whether Abood v. Detroit Board of Education, 431 U.S. 209 (1977), should be overruled and public-sector “agency shop” arrangements invalidated under the First Amendment so as to prevent public-sector unions from collecting mandatory fees from non-members. In ruling 5 to 4, the Supreme Court held that the application of a mandatory public sector union fee requirement is a violation of the First Amendment, thereby overruling Abood. This ruling had an immediate impact on millions of workers in 22 states that do not have right-to-work laws. Since many workers are apt to cease paying union dues with the abolishment of the fair share fee payments requirement, the decision will have a significant impact on the ability of public-sector unions to conduct their business.

China Agritech, Inc. v. Resh, et al., 138 S. Ct. 1800 (2018) – Decided on June 11, 2018, in this class action case the Supreme Court examined whether the tolling rule for class actions established in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), tolled the statute of limitations to permit a previously absent class member to bring a subsequent class action outside the applicable limitations period. American Pipe had held that the filing of a class action tolls the running of the statute of limitations for all putative members of the class who make timely motions to intervene after the lawsuit is deemed inappropriate for class action status. The Supreme Court interpreted American Pipe more narrowly, and held that it does not permit the maintenance of a follow-on class action past the expiration of the statute of limitations. In essence, the ruling limits the tolling rule in American Pipe to apply only to subsequent individual claims.

Jesner, et al. v. Arab Bank, PLC, 138 S. Ct. 1386 (2018) – Decided on April 24, 2018, this class action posed the issue of whether foreign-based corporations can be sued in U.S. courts for alleged violations of the Alien Tort Statute. The Supreme Court decided 5 to 4 that Plaintiffs may not do so. The end result will be to bring a halt to class actions brought to hold foreign-based corporations responsible in U.S. courts for alleged human rights violations committed overseas.

The decisions in Epic Systems, Beaver County, Navarro, Reese, Janus, China Agritech, and Jesner are sure to shape and influence workplace class action litigation in a profound manner.

These cases will impact rules on American Pipe tolling and application of statute of limitations in class actions; the ability of foreign-based claimants to prosecute class actions based on overseas labor and human rights abuses; the obligations of corporations to fund lifetime retiree benefits under collective bargaining agreements; the scope of exemptions in wage & hour litigation; union fee litigation and membership rights; securities fraud class action litigation in state courts; and defenses to workplace class actions based on class waivers in mandatory arbitration agreements.

In addition, Epic Systems may turn out to be one of the most important workplace class action decisions over the last several decades in terms of its ultimate impact on litigation dynamics.

Rulings Expected In 2019

Equally important for the coming year, the Supreme Court accepted five additional cases for review in 2018 that will be decided in 2019 that also will impact and shape class action litigation and government enforcement lawsuits faced by employers.

Those cases include two employment lawsuits and three class action cases.

The Supreme Court undertook oral arguments on four of these cases in 2018; the other case underwent oral argument in early 2019.

Frank, et al. v. Gaos, No. 17-961 – Argued on October 31, 2018, this case concerns whether and in what circumstances a cy pres award in a class action – that supplies no direct relief to class members – nonetheless comports with the Rule 23 requirement that a settlement binding class members must be fair, reasonable, and adequate. The ultimate ruling by the Supreme Court likely will determine the legality of cy pres awards, and if approved, create guidelines for the appropriateness of cy pres awards in class action settlements.

Home Depot U.S.A. v. Jackson, et al., No. 17-1471 – Argued on January 15, 2019, this case involves the Class Action Fairness Act and the circumstances under which Defendants may remove a class action to federal court where Defendants file a counter-claim. The ultimate decision likely will determine if the Supreme Court’s earlier ruling in Shamrock Oil & Gas Co. v. Sheets, 313 U.S. 100 (1941) – that a Plaintiff may not remove a counter-claim against it – extends to third-party Defendants bringing counter-claims.

Lamps Plus, Inc. v. Varela, et al., No. 17-988 – Argued on October 29, 2018, this case poses the issue of whether the Federal Arbitration Act (“FAA”) forecloses a broad interpretation of an arbitration agreement that allows prosecution of a class arbitration based solely on general language commonly used in arbitration agreements. Given the ruling in Epic Systems in 2018, the upcoming decision in this case will be of critical significance to employers involved in arbitration of workplace disputes.

New Prime Inc. v. Oliveria, et al., No. 17-340 – Argued on October 29, 2018, this case presents the issue of whether a court or an arbitrator must determine the applicability of § 1 of the FAA – which applies only to “contracts of employment” – to independent contractor agreements. The future decision in this case will be important to employers seeking to use class action waivers in workplace arbitration agreements used with independent contractors.

Mount Lemon Fire District v. Guido, No. 17-587 – Argued on October 1, 2018, this case raises the issue of whether the Age Discrimination in Employment Act (“ADEA”) applies to state and local governmental entities. A future decision will determine the coverage of the ADEA relative to the public sector employees.

The Supreme Court is expected to issue decisions in these five cases by the end of the 2018/2019 term in June of 2019.

Rulings in these cases will have significance for employers in complying with employment discrimination laws, structuring arbitration proceedings, and defending class action litigation.

Implications For Employers

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

By Gerald L. Maatman, Jr.

Seyfarth Synopsis: At 852 pages, Seyfarth’s 15th Annual Workplace Class Action Litigation Report analyzes 1,453 rulings and is our most comprehensive Report ever.

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 2019 Executive Summary and key class action settlements.

The Report was featured today in an exclusive article in MarketWatch. Click here to read the coverage!

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We were again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a must-have 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.’” Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2019 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 2018 for employment discrimination, wage & hour, ERISA class actions, and statutory workplace laws, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

We hope our loyal blog readers will enjoy it!

Executive Summary

The prosecution of workplace class action litigation by the plaintiffs’ bar has continued to escalate over the past decade. Class actions often pose unique “bet-the-company” risks for employers. As has become readily apparent in the #MeToo era, an adverse judgment in a class action has the potential to bankrupt a business and adverse publicity can eviscerate its market share. Likewise, the on-going defense of a class action can drain corporate resources long before the case even reaches a decision point. Companies that do business in multiple states are also susceptible to “copy-cat” class actions, whereby plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time. Hence, workplace class actions can impair a corporation’s business operations, jeopardize or cut short the careers of senior management, and cost millions of dollars to defend. For these reasons, workplace class actions remain at the top of the list of challenges that keep business leaders up late at night with worries about compliance and litigation. Skilled plaintiffs’ class action lawyers and governmental enforcement litigators are not making this challenge any easier for companies. They are continuing to develop new theories and approaches to the successful prosecution of complex employment litigation and government-backed lawsuits.

New rulings by federal and state courts have added to this patchwork quilt of compliance problems and risk management issues. In turn, the events of the past year in the workplace class action world demonstrate that the array of litigation issues facing businesses are continuing to accelerate at a rapid pace while also undergoing significant change. Notwithstanding the transition to new leadership in the White House with the Trump Administration, governmental enforcement litigation pursued by the U.S. Equal Employment Commission (“EEOC”) and other federal agencies continued to manifest an aggressive agenda, with regulatory oversight of workplace issues continuing as a high priority. Conversely, litigation issues stemming from the U.S. Department of Labor (“DOL”) reflected a slight pull-back from previous efforts to push a pronounced pro-worker/anti-business agenda. The combination of these factors are challenging businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. These challenges are especially acute for businesses in the context of complex workplace litigation. Adding to this mosaic of challenges in 2019 is the continuing evolution in federal policies emanating from the Trump White House, the recent appointments of new Supreme Court Justices, and mid-term elections placing the Senate in control of Republicans and the House in control of Democrats. Furthermore, while changes to government priorities started on the previous Inauguration Day and are on-going, others are being carried out by new leadership at the agency level who were appointed over this past year. As expected, many changes represent stark reversals in policy that are sure to have a cascading impact on private class action litigation.

While predictions about the future of workplace class action litigation may cover a wide array of potential outcomes, the one sure bet is that change is inevitable and corporate America will continue to face new litigation challenges.

Key Trends Of 2018

An overview of workplace class action litigation developments in 2018 reveals five key trends. First, class action litigation has been shaped and influenced to a large degree by recent rulings of the U.S. Supreme Court. Over the past several years, the U.S. Supreme Court has accepted more cases for review than in previous years – and as a result, has issued more rulings that have impacted the prosecution and defense of class actions and government enforcement litigation. The past year continued that trend, with several key decisions on complex employment litigation and class action issues that were arguably more pro-business than decisions in past terms. Among those rulings, Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) – which upheld the legality of class action waivers in mandatory arbitration agreements – is a transformative decision that is one of the most important workplace class action rulings in the last two decades. It is already having a profound impact on the prosecution and defense of workplace class action litigation, and in the long run, Epic Systems may well shift class action litigation dynamics in critical ways. Coupled with the appointments of Justices Neil Gorsuch and Brett Kavanaugh to the Supreme Court in 2018, litigation may well be reshaped in ways that change the playbook for prosecuting and defending class actions.

Second, the plaintiffs’ bar was successful in prosecuting class certification motions at the highest rates ever as compared to previous years in the areas of ERISA and wage & hour litigation, while suffering significant defeats in employment discrimination litigation. While evolving case law precedents and new defense approaches resulted in good outcomes for employers in opposing class certification requests, federal and state courts issued many favorable class certification rulings for the plaintiffs’ bar in 2018. Plaintiffs’ lawyers continued to craft refined class certification theories to counter the more stringent Rule 23 certification requirements established in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). As a result, in the areas of wage & hour and ERISA class actions, the plaintiffs’ bar scored exceedingly well in securing class certification rulings in federal courts in 2018 (over comparative figures for 2017). Class actions were certified in significantly higher numbers in “magnet” jurisdictions that continued to issue decisions that encourage or, in effect, force the resolution of large numbers of claims through class-wide mechanisms. Furthermore, the sheer volume of wage & hour certification decisions in 2018 increased as compared to last year, and plaintiffs fared better in litigating those class certification motions in federal court than in the prior year. Of the 273 wage & hour certification decisions in 2018, plaintiffs won 196 of 248 conditional certification rulings (approximately 79%), and lost only 13 of 25 decertification rulings (approximately 52%). By comparison, there were 257 wage & hour certification decisions in 2017, where plaintiffs won 170 of 233 conditional certification rulings (approximately 73%) and lost 15 of 24 decertification rulings (approximately 63%). In sum, employers lost more first stage conditional certification motions in 2018, and saw a reduction of their odds – a decrease of 11% – of fracturing cases with successful decertification motions.

Third, filings and settlements of government enforcement litigation in 2018 did not reflect a head-snapping pivot from the ideological pro-worker outlook of the Obama Administration to a pro-business, less regulation/litigation viewpoint of the Trump Administration. Instead, as compared to 2016 (the last year of the Obama Administration), government enforcement litigation actually increased in 2018. As an example, the EEOC alone brought 199 lawsuits in 2018 as compared to 184 lawsuits in 2017 and 86 lawsuits in 2016. However, the settlement value of the top ten settlements in government enforcement cases decreased dramatically – from $485.25 million in 2017 to $126.7 million in 2018. The explanations for this phenomenon are varied, and include the time-lag between Obama-appointed enforcement personnel vacating their offices and Trump-appointed personnel taking charge of agency decision-making power; the number of lawsuits “in the pipeline” that were filed during the Obama Administration that came to conclusion in the past year; and the “hold-over” effect whereby Obama-appointed policy-makers remained in their positions long enough to continue their enforcement efforts before being replaced in the last half of 2018. This is especially true at the EEOC, where the Trump nominations for the Commission’s Chair, two Commissioners, and its general counsel were stalled in the Senate waiting for votes of approval (or rejection), and one of the two nominees withdrew at year-end due to the delay. These factors are critical to employers, as both the DOL and the EEOC have had a focus on “big impact” lawsuits against companies and “lead by example” in terms of areas that the private plaintiffs’ bar aims to pursue. As 2019 opens, it appears that the content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration will continue to tilt away from the pro-employee/anti-big business mindset of the previous Administration. Trump appointees at the EEOC and the DOL are slowly but surely “peeling back” on positions previously advocated under the Obama Administration. As a result, it appears inevitable that the volume of government enforcement litigation and value of settlement numbers from those cases will decrease in 2019.

Fourth, the monetary value of the top workplace class action settlements decreased dramatically in 2018. These settlement numbers had been increasing on an annual basis over the past decade, and reached all-time highs in 2017. While the plaintiffs’ employment class action bar and governmental enforcement litigators were exceedingly successful in monetizing their case filings into large class-wide settlements this past year, they did so at decidedly lower values in 2018 than in previous years. The top ten settlements in various employment-related class action categories totaled $1.32 billion in 2018, a decrease of over $1.4 billion from $2.72 billion in 2017 and a decrease of $430 million from $1.75 billion in 2016. Furthermore, settlements of wage & hour class actions experienced over a 50% decrease in value (from $525 million in 2017 down to $253 million in 2018); ERISA class actions saw nearly a three-fold decrease (from $927 million in 2017 down to $313.4 million in 2018); and government enforcement litigation registered nearly a fourfold decrease (from $485.2 million in 2017 down to $126.7 million in 2018). Whether this is the beginning of a long-range trend or a short-term aberration remains to be seen as 2019 unfolds.

Fifth, as it continues to gain momentum on a worldwide basis, the #MeToo movement is fueling employment litigation issues in general and workplace class action litigation in particular. On account of new reports and social media, it has raised the level of awareness of workplace rights and emboldened many to utilize the judicial system to vindicate those rights. Several large sex harassment class-based settlements were effectuated in 2018 that stemmed at least in part from #MeToo initiatives. Likewise, the EEOC’s enforcement litigation activity in 2018 focused on the filing of #MeToo lawsuits while riding the wave of social media attention to such workplace issues; in fact, fully 74% of the EEOC’s Title VII filings this past year targeted sex-based discrimination (compared to 2017, where sex based-discrimination claims accounted for 65% of Title VII filings). Of the EEOC’s 2018 sex discrimination lawsuit filings, 41 filings included claims of sexual harassment. The total number of sexual harassment filings increased notably as compared to 2017, where sexual harassment claims accounted for 33 filings. Employers can expect more of the same in the coming year.

Implications For Employers

The one constant in workplace class action litigation is change. More than any other year in recent memory, 2018 was a year of great change in the landscape of Rule 23. As these issues play out in 2019, additional chapters in the class action playbook will be written.

The lesson to draw from 2018 is that the private plaintiffs’ bar and government enforcement attorneys at the state level are apt to be equally, if not more, aggressive in 2019 in bringing class action and collective action litigation against employers.

These novel challenges demand a shift of thinking in the way companies formulate their strategies. As class actions and collective actions are a pervasive aspect of litigation in Corporate America, defending and defeating this type of litigation is a top priority for corporate counsel. Identifying, addressing, and remediating class action vulnerabilities, therefore, deserves a place at the top of corporate counsel’s priorities list for 2019.

Seyfarth Synopsis: Happy Holiday season to our loyal readers of the Workplace Class Action Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report. We anticipate going to press in early January, and launching the 2019 Report to our readers from our Blog.

This will be our Fifteenth Annual Report, and the biggest yet with analysis of over 1,400 class certification rulings from federal and state courts in 2018.  The Report will be available for download as an E-Book too.

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We are humbled and honored by the recent review of our 2018 Annual Workplace Class Action Litigation Report by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. Here is what EPLiC said: “The Report is a must-have resource for legal research and in-depth analysis of employment-related class action litigation. Anyone who practices in this area, whether as a corporate counsel, a private attorney, a business execu­tive, a risk manager, an underwriter, a consul­tant, or a broker, cannot afford to be without it. Importantly, the Report is the only publica­tion of its kind in the United States. It is the sole compendium that analyzes workplace class actions from ‘A to Z.’” Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2019 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2018 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

Information on downloading your copy of the 2019 Report will be available on our blog in early January. Happy Holidays!

By Gerald L. Maatman, Jr., Michael L. DeMarino and Rebecca S. Bjork

Seyfarth SynopsisAlthough back pay has been awarded in Age Discrimination in Employment Act (ADEA) cases for quite some time, few courts have specifically addressed whether these damages are discretionary or mandatory.  In EEOC v. Baltimore County., No. 16-2216, 2018 WL 4472062, at *1 (4th Cir. Sept. 19, 2018), the Fourth Circuit answered this straightforward question and held that retroactive monetary awards, such as back pay, are mandatory legal remedies under the ADEA. Because the ADEA incorporates the provisions of the Fair Labor Standards Act (FLSA) that make back pay mandatory, the Fourth Circuit concluded that district courts lack discretion to deny back pay once ADEA liability is established. The key takeaway from this decision is that now more than ever, employers should take steps to minimize exposure to ADEA violations and, if ADEA liability is established, to explore available set offs to back pay awards.

Background

In EEOC v. Baltimore County, the EEOC brought a lawsuit on behalf of two retired corrections officers and a group of similarly-situated employees at least 40 years of age. The EEOC alleged that the County’s pension plan, known as the Employee Retirement System (“ERS”), required older employees to pay more toward their retirement than younger employees, for the same retirement benefits.

The district court granted summary judgment in favor of the EEOC, finding that because the different contribution rates charged to different employees is explained by age rather than pension status, age is the “but-for” cause of the disparate treatment, and the ERS violated the ADEA. On appeal, the Fourth Circuit affirmed and remanded the case to the district court for consideration of damages. We previously blogged about the district court’s decision here and the Fourth Circuit’s decision here.

On remand, the district court considered the EEOC’s claims for retroactive monetary relief –  which was in the form of back pay. Ultimately, the district court rejected the EEOC’s bid for these damages, concluding that it had the discretion under the enforcement provision of the ADEA, 29 U.S.C. § 626(b), to wholly deny back pay. Thereafter, the EEOC appealed.

The Fourth Circuit’s  Decision

On appeal, the County argued that the district court properly exercised its discretion under the ADEA, 28 U.S.C. § 626(b), to deny the EEOC an award of back pay. The Fourth Circuit rejected this contention. Instead, the Fourth Circuit agreed with the EEOC that because back pay is a mandatory legal remedy under the FLSA, and because the ADEA incorporates the FLSA’s liability provisions, the district court lacked the discretion to decline to award back pay.

Specifically, the Fourth Circuit reasoned that “[b]ecause Congress adopted the enforcement procedures and remedies of the FLSA into the ADEA, we construe the ADEA consistent with the cited statutory language in and judicial interpretations of the FLSA.” Id. at *3.  “Back pay,” the Fourth Circuit continued, “is, and was at the time Congress passed the ADEA, a mandatory legal remedy under the FLSA.” Id. The Fourth Circuit reinforced this conclusion, noting that the ADEA’s “legislative history further suggests that Congress consciously chose to incorporate the powers, remedies, and procedures of the FLSA into the ADEA.” Id.

Implication For Employers:

This long-running case demonstrates the complexities and potential pitfalls employers face while trying to navigate the ADEA. Employers should take care to review and consider their justifications for retirement plans that have variable contribution rates for employees based on age.  More broadly, this decision demonstrates that damages for ADEA violations can quickly add up if back pay awards are permanently on the table.

 

By Gerald L. Maatman, Jr. and Alex W. Karasik

Synopsis: In an ADEA collective action alleging that a community college discriminated on the basis of age when it announced it would no longer employ any person receiving an annuity from the State Universities Retirement System (SURS), a federal district court in Illinois granted the college’s motion for summary judgment, holding that the decision to discontinue the employment of all SURS annuitants regardless of age did not amount to discrimination.

For employers considering mass employment actions that may impact a large number of older employees, this ruling provides insight into the factors that courts will examine in potential ADEA collective actions.

***

Case Background

In November 2014, Oakton Community College (“Oakton”) announced that as of July 1, 2015, it would no longer employ any person receiving an annuity from the State Universities Retirement System (“SURS”).  Affected SURS annuitants — all of whom worked at Oakton as part-time, or adjunct, faculty members prior to July 2015 — filed three separate lawsuits against Oakton.  Following the Court’s consolidation of the lawsuits, in Filipek  v. Oakton Community College, No. 16-CV-2902, 2018 U.S. Dist. LEXIS 31727 (N.D. Ill. Feb. 28, 2018), Plaintiffs alleged that Oakton’s decision not to employ SURS annuitants violated the Age Discrimination in Employment Act of 1967 (“ADEA”) and Illinois Human Rights Act (“IHRA”), among other claims.  Id. at *2-3.

The Court granted Plaintiffs’ motion for certification of an ADEA collective action and Rule 23 class certification on the IHRA claims that consisted of “all part-time and adjunct faculty who were denied employment at Oakton Community College as the result of its policy not to employ or re-employ [SURS] and who are not ‘affected annuitants’ pursuant to 40 …”  Id. at *3.  Thereafter, Oakton (and the individual Defendants) moved for summary judgment.

The Court’s Decision

The Court granted Oakton’s motion for summary judgment as to all claims.  First, regarding Plaintiffs’ disparate treatment claims, Oakton argued that summary judgment was warranted because no reasonable factfinder could conclude that age was a “but-for” cause of Oakton’s decision not to employ any SURS annuitants after July 1, 2015.  Id. at *9-10.  Plaintiffs contended that they presented evidence sufficient to make out a prima facie case of disparate treatment under the McDonnell Douglas framework, and that a grant of summary judgment was unwarranted because there were disputed factual issues regarding whether Oakton’s given reason for the decision not to employ any SURS annuitants was pretextual.  Id. at *10.  Noting that all SURS annuitants were fired, and that all employees — regardless of age — who remained employed by the college were not SURS annuitants, the Court held that Plaintiffs did not make out a prima facie case of discrimination under the McDonnell Douglas framework.  Id. at *11.

Turning to Plaintiffs’ disparate impact claims, Oakton argued that Plaintiffs could not make out a prima facie case because they could not establish that Oakton’s decision to no longer employ SURS annuitants caused a significantly disproportionate adverse impact based on age, and that even if Plaintiffs could make out a prima facie case, summary judgment was warranted because its decision to discontinue the employment of all SURS annuitants was based on a reasonable factor other than age — namely, the desire to eliminate the risk of having to pay a penalty to SURS for employing an affected annuitant.  Id. at *14-15.  Plaintiffs identified a specific, facially neutral employment practice that they alleged adversely impacted them because of their age: i.e., Oakton’s decision not to employ any SURS annuitant after July 1, 2015.  Id. at *15.  The Court held this was likely sufficient to establish a prima facie case under a disparate impact theory.  Id.  However, the Court noted that none of the evidence cited by Plaintiffs undermined Oakton’s explanation that the only sure way to prevent mistaken employment of an affected annuitant and the resulting payment to SURS was to discontinue the employment of all SURS annuitants.  Id. at *16.  Acknowledging that there may have been other reasonable and more narrowly tailored ways for Oakton to address this problem, the Court nonetheless held that no reasonable jury could find that Oakton’s decision to no longer employ any SURS annuitants was unreasonable.  Id. 

Accordingly, the Court granted summary judgment for Oakton (and all other Defendants) on Plaintiffs’ disparate impact age discrimination claims under the ADEA and the IHRA.  The Court also granted summary judgment for Defendants as to the remaining state law and other claims.

Implications For Employers

Employers who are considering whether to discontinue the employment of a large number of older employees must be cognizant that such personnel decisions could make them prime targets for ADEA collective actions and/or class actions under state workplace laws.  In Filipek, the employer emerged victorious at the summary judgment stage because it discontinued the employment of all annuitants, and therefore, its employment decision did not amount to age discrimination.  Nonetheless, employers should exercise extreme caution when considering mass lay-offs or employment discontinuances given how closely courts (and the plaintiffs’ class action bar) scrutinize such decisions.

 

By Gerald L. Maatman, Jr. and Alex W. Karasik

Seyfarth Synopsis:  In an ADEA action brought by the EEOC alleging that the New Mexico Department of Corrections failed to promote correctional officers over the age of 40, a federal district court in New Mexico denied the employer’s motion to dismiss but ordered the EEOC to file a supplemental pleading identifying previously unnamed aggrieved parties.

For employers facing EEOC age discrimination claims, this ruling provides insight into how to attack allegations relative to unidentified aggrieved individuals and to flush out the true size and scope of an EEOC systemic lawsuit.

***

In EEOC v. State of New Mexico, Dep’t of Corrections, No. 15-CV-879, 2017 U.S. Dist. LEXIS 198770 (D.N.Mex. Dec. 4, 2017), the EEOC alleged that from January 2009 to at least December 2014, the New Mexico Department of Corrections (“NMDC”) denied employment opportunities to three specific workers and a group of unidentified aggrieved individuals aged 40 and over on the basis of their age.  The NMDC moved to dismiss with respect to the unidentified aggrieved individuals, arguing those claims were insufficiently plead, and further, that the EEOC failed to provide sufficient notice about any additional aggrieved individuals during the pre-filing conciliation period. 

The EEOC moved to convert the motion to dismiss to a motion for summary judgment after the NMDC attached to its motion exhibits relating to the EEOC’s investigation and conciliation.  Judge Kenneth J. Gonzales of the U.S. District Court for the District of New Mexico denied both motions, but  ordered the EEOC to file a supplemental pleading listing the names of each aggrieved party.

Employers can use this decision in ADEA litigation to argue that the EEOC should identify any unnamed aggrieved individuals at the outset of litigation. In this respect, it is a key ruling for employers.

Case Background

The EEOC alleged that the NMDC failed to promote three correctional officers to various positions at the Central New Mexico Correctional Facility because they were over the age of 40.  The former warden allegedly told the officers that “while [two Claimants] were qualified for the [position], he selected a 31-year-old candidate because he was looking for someone with ‘longevity.’”  Id. at *2.  The EEOC also alleged that the warden: (1) made many of the decisions to deny employment opportunities to older workers; (2) used ageist comments about longevity, preferring younger workers, and not promoting employees near retirement; and (3) instilled a culture of age discrimination that continued to be applied by the NMDC.  As such, the EEOC sought an injunction requiring policy changes and money damages for any individual adversely impacted by the discrimination.

Arguing that the EEOC failed to provide sufficient notice about any additional aggrieved individuals during the pre-filing conciliation period, the NMDC moved to dismiss the amended complaint.  In support of its motion, NMDC sought to offer several exhibits, including: (1) requests for information propounded on the NMDC by the EEOC; (2) the EEOC’s letter to the NMDC’s employees soliciting information or claims; and (3) letters and e-mails between the parties relating to EEOC’s efforts at conference, conciliation, and investigation.  Id. at *5.  The EEOC argued that if the Court was willing to entertain evidence regarding pre-filing communications, then the motion to dismiss should be converted to a motion for summary judgment.  Id. at *3.

The Court’s Decision

The Court denied the NMDC’s motion to dismiss, denied the EEOC’s motion to convert the convert the motion to dismiss to a motion for summary judgment, and ordered the EEOC to file a supplemental pleading listing the names of each aggrieved party involved in this lawsuit.  First, the Court addressed the NMDC’s argument that the exhibits were “implicitly referenced” in the EEOC’s allegations regarding its pre-filing investigation.  Id. at *5.  The Court rejected this argument, opining that “implicit, subtle, or passing references to extraneous evidence” did not justify their inclusion.  Id.  As such, the Court excluded the NMDC’s exhibits, and therefore denied the EEOC’s motion to convert.

Second, the Court addressed the NMDC’s argument that the Court should consider the lack of actual pre-litigation notice as part of the notice pleading inquiry, including its knowledge about the potential number of claimants, facilities, and wrongdoers.  Id. at *6.  According to the NMDC, any potential recovery should be limited to the claimants the EEOC actually knew about when conciliation concluded in September of 2013.  The Court held that it would allow the parties to amend their pending summary judgment motions to supplement any evidence and arguments regarding actual pre-litigation notice and timeliness, but that “a motion to dismiss typically is not the correct vehicle for determining whether a claim is barred based on when it arises.”  Id. at *7.

Third, the Court addressed the NMDC’s argument that the EEOC failed to meet the pleading standards defined in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).  The Court opined that there is no binding case law addressing how much information the EEOC’s complaint must provide about unidentified parties.  Id. at *9.  Further, it instructed that courts are more permissive about the class-type allegations where the complaint is very specific about the charging parties.  Id. at *10 (citations omitted).  Applying these principles, the Court held that the complaint stated a plausible claim for relief on behalf of the unidentified aggrieved individuals since it described the types of discrimination at issue (age); the group of workers (NMDC workers over the age of 40); and the duration of the discriminatory conduct (since 2009 and ongoing).  Id.  Accordingly, the Court denied the NMDC’s motion to dismiss.

Finally, at oral argument, the EEOC offered to file an amended complaint to satisfy the party plaintiff rule, if the Court found it applied.  Id. at *12.  Instructing that the ADEA incorporated the requirements of 29 U.S.C. § 216(c), the Court ordered the EEOC to identify each aggrieved individual in the record by filing a supplemental pleading.  Id. at *11-12.  The Court also permitted the NMDC the option to file a response, but advised that the Court would prefer to address additional substantive arguments through the summary judgment proceedings.  Accordingly, the Court denied the NMDC’s motion to dismiss, denied the EEOC’s motion to convert the convert the motion to dismiss to a motion for summary judgment, and ordered the EEOC to file a supplemental pleading listing the names of each allegedly aggrieved worker on whose behalf the EEOC sought recovery.

Implications For Employers

In its Strategic Enforcement Plan for Fiscal Years 2017-2021, the EEOC identified eliminating barriers in recruitment and hiring as one of its six priorities (as we blogged about here).  One of the prime areas where the EEOC has been targeting employers involves age discrimination.  This litigation should put employers on notice that promotional and hiring decisions will be closely scrutinized by the EEOC.

Further, although the Court did not reach the issue of whether the EEOC fulfilled its conciliation obligations with respect to the unnamed group of allegedly aggrieved individuals, this employer’s attack of the EEOC’s failure to fulfill its pre-suit obligations under Title VII resulted in the Court ordering the Commission to file a supplemental pleading identifying such individuals.  Although the employer’s motion to dismiss was denied, employers can cite to this ruling in ADEA litigation when arguing that the EEOC should “put its cards on the table” and disclose who exactly is part of the lawsuit.

Readers can also find this post on our EEOC Countdown blog here.

 

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

Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – Seyfarth Shaw’s Annual Workplace Class Action Litigation Report.

We anticipate going to press in early January, and launching the 2018 Report to our readers from our Blog.

This will be our Fourteenth Annual Report, and the biggest yet with analysis of over 1,350 class certification rulings from federal and state courts in 2017.  The Report will be available for download as an E-Book too.

The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become the “go to” research and resource guide for businesses and their corporate counsel facing complex litigation. We were again honored this year with a review of our Report by Employment Practices Liability Consultant Magazine (“EPLiC”). Here is what EPLiC said: “The Report is a definitive ‘must-have’ for legal research and in-depth analysis of employment-related class action litigation.  Anyone who practices in this area, whether as an attorney, 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.’”  You can read more about the review here.  Furthermore, EPLiC recognized our Report as the “state-of-the-art word” on workplace class action litigation.

The 2018 Report will analyze rulings from all state and federal courts – including private plaintiff class actions and collective actions, and government enforcement actions –  in the substantive areas of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and the Class Action Fairness Act of 2005. It also features chapters on EEOC pattern or practice rulings, state law class certification decisions, and non-workplace class action rulings that impact employers. The Report also analyzes the leading class action settlements for 2017 for employment discrimination, wage & hour, and ERISA class actions, as well as settlements of government enforcement actions, both with respect to monetary values and injunctive relief provisions.

Information on downloading your copy of the 2018 Report will be available on our blog in early January. Happy Holidays!

By Matthew J. GagnonChristopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With uncertain times and profound changes anticipated for the EEOC, employers anxiously await what enforcement litigation the EEOC has in store. Although 2016 showed a marked decline in filings, fiscal year 2017 shows a return to vigorous enforcement filings, with a substantial number of filings in the waning days of the fiscal year.

Employers are living in uncertain times. The impact of a Trump Administration and the EEOC’s new Strategic Enforcement Plan (SEP) for fiscal years 2017-2021 are still working themselves out in the FY 2017 filing trends. Nonetheless, one trend has reemerged: a vigorous number of EEOC case filings. It looks like the anemic numbers of FY 2016 were just a bump in the road, as FY 2017 has revealed an increase in total filings, even eclipsing the numbers from FY 2015 and 2014. (Compare here to here and here.) This year, the EEOC filed 202 actions, 184 merits lawsuits and 18 subpoena enforcement actions.

The September filing frenzy is still an EEOC way-of-life, as this past month yet again holds the title for most filings compared to any other month. At the time of publication, 88 lawsuits were filed in September, including 21 in the last two days alone. In fact, the EEOC filed more cases in the last three months of FY 2017 than it did during all of FY 2016. The total number of filings for the remaining months remains consistent with prior years, including a noticeable ramp up period boasting double digit numbers through the summer.

Filings out of the Chicago district office were back up in FY 2017 after an uncharacteristic decline to just 7 total filings in 2016. This year, Chicago hit 21 filings, an enormous increase from last year. This is closer to the total number of Chicago filings in FY 2015 and 2014 (26 in each year). The Los Angeles district office also increased its filings, hitting a high of 22, a substantial jump compared to previous years and the most of any district office in FY 2017. On the other end of the spectrum, the Phoenix district office has seen a notable drop, with only 7 filings compared to 17 in FY 2016.

New SEP, Same Focus

Every year we analyze what the EEOC says about its substantive focus as a way to understand what conduct it is targeting. This year, Title VII takes center stage. Although Title VII has consistently been the largest category of filings, last year showed a dip in the percentage of filings alleging Title VII violations, at only 41%. Nonetheless, this year Title VII has regained its previous proportion, accounting for 53% of all filings. This is on par with FY 2015 and 2014, showing once again that FY 2016 seems to have been an outlier.

Although the 2017-2021 SEP outlined the same general enforcement priorities as the previous version of the SEP (covering FY 2012 to 2016), the new SEP added “backlash discrimination” towards individuals of Muslin/Sikh/Arab/Middle Eastern/South Asian communities as an additional focus. One would expect this focus might increase the number of Title VII claims alleging either religious, racial, or national origin discrimination. However, those filings stayed relatively even, and were even a bit down from previous years. Religious, national origin, and race discrimination claims made up 42% of all Title VII claims, compared to 50% in 2016 and 46% in 2015.

Uncertainty For Equal Pay Claims

With a new administration came a new Acting Chair for the EEOC. President Trump appointed Victoria Lipnic as Acting Chair on January 25, 2017. Employers expected the EEOC’s new leader to steer the EEOC’s agenda in a different direction. Some believed Lipnic was foreshadowing future trends when she made it clear at her first public appearance – hosted by none other than Seyfarth Shaw – that she is “very interested in equal pay issues.” (See here.) And indeed, we have seen a slight uptick in the number of EPA claims filed in FY 2017. In FY 2017, The EEOC filed 11 EPA claims, compared to 6 in 2016, 5 in 2015, and 2 in 2014.

However, on June 28, 2017, President Trump tapped Janet Dhillon as Chair of the EEOC. Dhillon would come to the EEOC with extensive experience in a big law firm and as the lead lawyer at three large corporations, US Airways, J.C. Penney, and Burlington Stores Inc. Although it is too early to know how she could change the direction of the agency if confirmed, it is entirely possible that she could back away from previous goals to pursue equal pay claims more aggressively.

The Trump Administration has also made other moves that may indicate a change in direction with respect to equal pay initiatives. On February 1, 2016, the EEOC proposed changes to the EEO-1 report that would require all employers with more than 100 employees to submit more detailed compensation data to the EEOC, including information regarding total compensation and total hours worked by race, ethnicity, and gender. This was a change from the previous EEO-1 report, which only required employers to report on employee gender and ethnicity in relation to job titles. However, on August 29, 2017, the new EEO-1 reporting requirements were indefinitely suspended. We will have to wait and see whether the slight uptick in EPA claims in FY 2017 was a one-year anomaly.

Implications For Employers

The changes brought by the Trump Administration are still in the process of working themselves down into the rank and file of many federal agencies. The EEOC is no exception. Despite all of the unrest and uncertainty about where the EEOC may be headed, the FY 2017 filing trends largely show a return to previous years, albeit with a slight uptick in EPA claims. Certainly, changes in top personnel will have an impact on how the EEOC pursues its enforcement agenda. Exactly what that impact will be remains to be seen.

Loyal readers know that this post is merely a prelude to our full analysis of trends and developments affecting EEOC litigation, which will be published at the end of the calendar year. Stay tuned for our continued analysis of FY 2017 EEOC filings, and our thoughts about what employers should keep an eye on as we enter FY 2018. We look forward to keeping you in the loop all year long!

Readers can also find this post on our EEOC Countdown blog here.