By Gerald L. Maatman, Jr., Timothy F. Haley, and Ashley K. Laken

Seyfarth Synopsis: Over the past few weeks, we have been covering the release of our 14th Annual Workplace Class Action Litigation Report. Today’s post focuses on an emerging trend in the workplace class action space — regarding workplace antitrust class actions. In this video blog, Associate Ashley Laken of Seyfarth Shaw, joined by Partner Jerry Maatman and Senior Counsel Tim Haley, provides an overview on the expected rise in class action filings alleging no-hire or no-poaching agreements.

At the core of our topic today are anticipated filings of workplace class actions alleging wage suppression in violation of Section 1 of the Sherman Act.  The Department of Justice (“DOJ”) has recently stated that it is currently investigating a number of no-hire or no-poaching agreements among employers, and it anticipates announcing what may be criminal enforcement actions in the next couple of months.  We previously blogged about this announcement here.

DOJ enforcement actions such as this frequently lead to follow-on private class actions.  For example, this is what occurred in the highly publicized consolidated class action entitled In Re High-Tech Employee Antitrust LitigationHigh-Tech involved and alleged series of agreements among large Silicon Valley companies not to cold call each other’s employees.  After the Court granted plaintiffs’ motion for class certification, the case settled for a total of $435 million.

As our team explains in this video, we believe the key issue in these cases is class certification.  Employers have had little success prevailing on motions to dismiss or motions for summary judgment.  The potential damages, which are trebled under the antitrust laws, are staggering putting enormous pressure on employers to settle the case if class certification is achieved.  When defendants win at the class certification stage, they are able to resolve these cases on very favorable terms.  However, when they lose class certification, they have settled for tens or hundreds of millions of dollars.  Speaking from decades of experience, Jerry and Tim elaborate on this strategy and more in the video, making the clip an absolute must-watch for employers!

Seyfarth Synopsis:  This year we were lucky enough to have Perry Cooper, Senior Legal Editor of Bloomberg BNA, as our special guest at Seyfarth Shaw’s “Top Trends In Workplace Class Action Litigation” event.  Perry provided our over 1,000 in-person and webcast attendees with an overview of major Supreme Court class action decisions, as well as led the discussion on other important topics for employers including arbitration, ascertainability, and the Fairness in Class Action Litigation Act.  Today’s post allows our blog readers to watch Perry’s entire presentation.  Check it out in the link below!

Seyfarth Synopsis:  Earlier this week, we hosted a webcast with over 1,000 participants on “Top Trends In Workplace Class Action Litigation Panel Discussion”.  The event was a tremendous success, and gave every employer in attendance the tips they need to approach the increasingly complicated class action landscape.  In today’s blog, readers are given the footage from the presentation of Seyfarth Shaw Partner Jerry Maatman at this event.  Watch in the link below! 

By Gerald L. Maatman, Jr. and Peter J. Wozniak

Seyfarth Synopsis:  In a TCPA class action where final settlement (including attorneys’ fees) had already received final approval, a federal district court in California denied class counsel’s request to enjoin a pending state court action brought by their former colleague to recoup a portion of the attorneys’ fees awarded as part of the settlement.

For employers negotiating class action settlements including attorneys’ fees, this ruling provides insight into the potential complications in dealing with fractured class counsel constituencies, and a reminder about the limits of federal courts’ willingness to enjoin parallel state court proceedings.


In Dakota Medical, Inc. v. RehabCare Group, Inc. et al., No. 14-CV-2081, 2018 U.S. Dist. LEXIS 15972 (E.D. Cal. Jan. 30, 2018), the parties reached a settlement of a TCPA class action. The settlement included an award of $8,333.33 in attorneys’ fees to class counsel.  Id. at *3. Weeks after the settlement received final approval, class counsel moved the District Court to enjoin a state court lawsuit against them by their former colleague, attorney Scott Zimmerman.  Zimmerman’s state court suit sought payment from class counsel for his work on the Dakota Medical action, as well as for his work on a prior putative class action (against the same defendants) on which he also worked with class counsel.  Id. at *4-5.  In the District Court, class counsel sought to enjoin Zimmerman’s state court action under the All Writs Act (28 U.S.C. § 1651(a)) and the Anti-Injunction Act (28 U.S.C. § 2283).  Class counsel argued that an injunction from the district court was necessary “in aid of” the District Court’s jurisdiction in the now-settled class Dakota Medical action, and to avoid relitigation of issues already decided by the district court.  Id. at *5.  Judge Dale A. Drozd of the U.S. District Court for the Eastern District of California denied the motion to enjoin the pending state court action.

Employers can use this decision in to guide their settlement negotiations with class counsel constituencies and inform the sort of assurances that might be sought even when relatively small amounts of attorneys’ fees are at stake, and to bear in mind the occasional reticence of federal courts to interfere with parallel state court actions.

Case Background

The underlying litigation involved the alleged sending of a “huge number of junk faxes to various nursing homes and healthcare facilities.”  Id. at *3.  After “substantial litigation,” the parties settled their dispute.  The settlement agreement provided for class counsel to receive one-third of the $25,000 common fund.  Id.

Zimmerman acted as class counsel in the Dakota Medical action until he was dismissed by the named plaintiffs in March 2016.  Id. at *5 n.1.  He also previously worked with class counsel on another class action against the Dakota Medical defendants, where class certification was ultimately denied.  Id.  Shortly after judgment was entered in the Dakota Medical action, Zimmerman brought a state court action against the Dakota Medical class counsel under a quantum meruit theory, seeking to be paid for his work on both class actions.  Id.

Under the All Writs Act, class counsel moved the district court in Dakota Medical to enjoin Zimmerman’s state court suit against them, arguing that “two of the exceptions to the Anti-Injunction Act — the necessary in aid of jurisdiction exception and the relitigation exception — appl[ied] here, permitting [the district court] to enjoin the state court action.”  Id. at *7.  Class counsel argued that the “necessary in aid of jurisdiction” exception applied for four reasons: “(1) the state court action ‘threatens to frustrate proceedings and disrupt the orderly resolution’ of [the Dakota Medical action]; (2) the state court action ‘undermines the due process rights of [Dakota Medical] class members to receive notice of and object to attorneys’ fees’; (3) allowing the state court action to proceed undermines the procedures set forth in Rule 23 for the awarding of attorneys’ fees; and (4) the state court action unfairly penalizes named plaintiff and class representative Dakota Medical.”  Id. at *10. Class counsel argued that the “relitigation exception” applied because Zimmerman had a “full and fair” opportunity to litigate his entitlement to fees before the district court in Dakota Medical and that Zimmerman’s state court action was “an effort to relitigate [the Dakota Medical] court’s decision with respect to the award of attorneys’ fees.”  Id. at *18.

The Court’s Decision

The Court denied class counsel’s motion to enjoin Zimmerman’s state court lawsuit action on both grounds.

First, the Court addressed class counsel’s arguments regarding the “necessary in aid of jurisdiction” exception.  The Court explained that class counsel’s first argument fell short, because frustration “and even some disruption” of a federal action are insufficient.  Id. at *8-10..  The Court explained that Zimmerman’s state court action would not “damage the settlement of [the Dakota Medical] action in any way.”  Id. at *10.  The state court “would presumably award a money judgment in [Zimmerman’s] favor” against class counsel, but would not “invade the funds set aside for the class” or otherwise affect the Dakota Medical settlement.  Id.  The Court explained that class counsel’s second argument was insufficient because due process does not require class members to be informed as to how attorneys’ fees are divided among class counsel.  Id. at *13-14.  The court rejected class counsel’s third argument because Zimmerman’s state court action did not seek an award of attorneys’ fees under Rule 23, it sought quantum meruit damages against class counsel for “the value of the work performed.”  Id. at 14.  The Court summarily rejected class counsel’s fourth argument as being unsupported by any authority, and noted that class counsel’s concerns were “separate and apart” from the Dakota Medical suit itself.

Second, with regard to the “relitigation exception,” the Court noted that “class counsel fall far short of establishing the applicability of that exception . . . .”  Id. at *18.  First, the Court explained that class counsel failed to demonstrate that Zimmerman –a non-party in the Dakota Medical suit – was in privity with the parties.  Id. at *19.  According to the Court, some of “the parties to the settlement in this action” were actually adversarial to “Zimmerman’s interest in the outcome of the attorneys’ fees dispute.”  Id. at *20.  The Court also explained that there was no identity of claims between the suits.  As the Court noted, the Dakota Medical suit involved purported TCPA violations involving “junk faxes advertising seminars and workshops on Medicare and Medicaid billing and other issues to healthcare facilities.”  Id. at *22.  Zimmerman’s suit, however, “concerns what compensation, if any, should be paid to a former attorney of the named plaintiff for his work allegedly performed in connection with both [the Dakota Medical suit] and another lawsuit.”  Id.

Accordingly, the Court denied class counsel’s motion to enjoin Zimmerman’s state court lawsuit.

Implications For Employers

It is not uncommon for the makeup of class counsel constituencies to change over the course of a protracted litigation, or for disputes to arise among plaintiffs’ counsel regarding the appropriate payment of attorneys’ fees.

In Dakota Medical, final settlement was approved by the Court on September 21, 2017, but the ensuing motion practice regarding the injunction was not resolved for more than four additional months.  Thus, when negotiating class actions settlements, to help ensure expedient resolution of agreed-upon settlements, employers should consider whether and to what extent assurances regarding former class counsel can and should be secured.

Further, particularly in the Ninth Circuit, employers can use this decision to remind themselves of the reluctance of federal courts to interfere with state court actions, even those which from a pragmatic perspective may frustrate or disrupt a federal action.

Seyfarth Synopsis: On February 6, 2018, Seyfarth Shaw Partner Jerry Maatman and Bloomberg Law Senior Legal Editor Perry Cooper presented a timely event on “Top Trends In Workplace Class Action Litigation Panel Discussion.” The discussions focused on views of cutting edge issues relative to the workplace class action litigation landscape.  With over 1,000 people attending either in person at our Chicago office or via our live Webcast, Maatman and Cooper’s discussion was a “must see” for representatives of businesses across the country.

Following Seyfarth Shaw’s recent launch of its 2018 Workplace Class Action Litigation Report, Jerry Maatman distilled the 900-page publication into key trends and takeaways on the most important developments impacting employers from the past year in class action litigation, as well as future trends that businesses should keep on their radar.  Perry Cooper added further in-depth analysis relative to many of the key U.S. Supreme Court cases affecting employment law and class actions, which she has been tracking and writing about extensively on Bloomberg’s behalf.

The engaging discussion focused on four key trends that were identified in the 2018 Workplace Class Action Litigation Report, including: (1) the monetary value of the top workplace class action settlements rose dramatically in 2017; (2) while federal and state courts issued many favorable class certification rulings for the plaintiffs’ bar in 2017, evolving case law precedents and new defense approaches resulted in better outcomes for employers in opposing class certification requests; (3) filings and settlements of government enforcement litigation in 2017 did not reflect a head-snapping pivot from the ideological pro-worker (or anti-big business) outlook of the Obama Administration to a pro-business, less regulation/less litigation viewpoint of the Trump Administration; and (4) class action litigation increasingly has been shaped and influenced by recent rulings of the U.S. Supreme Court.

Maatman provided several noteworthy takeaways, including three highlights:

  • 2017 was “by far the largest cash-take for plaintiffs’ lawyers” ever in terms of workplace class actions settlements, as the top ten settlements in various employment-related class action categories totaled $2.72 billion in 2017, a “breathtaking and remarkable” increase of over $970 million from $1.75 billion in 2016.  Check out how Jerry explained the importance of this increase in settlements by clicking the video below!

  • In 2018, “as the government’s administration is getting settled in,” employers should anticipated seeing, “smaller governmental enforcement lawsuits brought on behalf of a smaller number of employees.”
  • Regarding the recent onslaught of workplace sexual harassment accusations and investigations in the context of the #MeToo campaign, “although headlines in the paper may be very difficult to stomach for some employers, and the piper must be paid in a certain respect, I’m not convinced it will be through successful prosecution of class action litigation insofar as sex harassment is concerned. That theory will run smack into the Rule 23 barriers created by Wal-Mart Stores, Inc. v. Dukes.”

Overall, Maatman and Cooper’s discussion left little doubt that 2018 will be an eventful year in terms of the workplace class action arena.  Employers should anticipate that the private plaintiffs’ bar and government enforcement attorneys at the state level are apt to be equally, if not more, aggressive in 2018 in bringing class action and collective action litigation against employers.  As such, businesses absolutely should stay tuned in regarding developments in this space.

Thank you to everyone who joined us either here in Chicago or via our live webcast.  For those interested in viewing a video of the presentation, stay tuned. We will be posting a complete video of the event this week.

Seyfarth Synopsis:  Earlier this week, our blog posting analyzed pivotal rulings by the U.S. Supreme Court in 2017, which was the penultimate trend of this year’s Workplace Class Action Report (WCAR).  In today’s finale of the WCAR video series, author Jerry Maatman provides his analysis on the Supreme Court jurisprudence for our readers.  In addition to outlining the highlights of 2017, Jerry discusses the importance of the Supreme Court itself, as well as what hot topics employers should monitor in 2018.  Watch our video in the link below!

Seyfarth Synopsis:  The fourth and final key trend from our 14th Annual Workplace Class Action Litigation Report involves rulings by the U.S. Supreme Court.  Over the past few years, the country’s highest 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 2017, as well as which upcoming decisions employers should watch for in 2018.  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.

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. To that end, federal and state courts cited Wal-Mart in 586 rulings in 2017; they cited Comcast in 238 cases in 2017.

The past year also saw a change in the composition of the Supreme Court in April of 2017, with Justice Neil Gorsuch assuming the seat of Antonin Scalia after his passing in 2016. 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 2018 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 2017

In terms of direct decisions by the Supreme Court impacting workplace class actions, this past year was no exception. In 2017, the Supreme Court decided seven cases – three employment-related cases and four class action cases – that will influence complex employment-related litigation in the coming years. The three “game-changers” in 2017 can be seen in the following graphic:

The employment-related rulings included one case brought under the Worker Adjustment and Retraining Notification Act, one ERISA case, and one EEOC case. A rough scorecard of the decisions reflects two distinct plaintiff/worker-side victories, and defense-oriented rulings in five cases.

  • EEOC v. McLane Co., 137 S. Ct. 1159 (2017) – Decided on February 21, 2017, the case involved the applicable standard of appellate review of district court decisions to quash or enforce EEOC subpoenas. The Supreme Court held that the standard must be based on an abuse of discretion, and contrary lower court decisions – which called for de novo review – were rejected. The EEOC has broad statutory authority to issue subpoenas in the course of investigating charges of employment discrimination, and it may seek enforcement of its subpoenas in federal court when employers refuse to comply with them. In that event, the applicable test favors enforcement of the subpoena. The Supreme Court determined that if the charge is proper and the material requested is relevant, the subpoena should be enforced unless the employer can establish that the subpoena is too indefinite, has been issued for an illegitimate purpose, or is unduly burdensome. In sum, the Supreme Court underscored the breadth of the agency’s authority to subpoena information from employers in the course of investigating discrimination charges.
  • Expressions Hair Design, et al. v. Schneiderman, 137 S. Ct. 1144 (2017) – Decided on March 29, 2017, this case involved a class action by a group of New York merchants, arguing that a New York statute that prohibits merchants from charging a surcharge to customers who use credit cards violated the First Amendment because it regulates what they say about their prices. The lower courts had dismissed the suit out of hand, concluding that price regulations regulated conduct alone and thus are immune from scrutiny under the First Amendment. The Supreme Court held that because the statute goes beyond the pure regulation of price sufficiently into the realm of regulating speech, it is subject to scrutiny under the First Amendment. As a result, the case was remanded for further consideration of the validity of the statute under the First Amendment. The ruling is a narrow one, but ensures the continuation of class action litigation over the New York statute.
  • Advocate Health Care Network, et al. v. Stapleton, 137 S. Ct. 1652 (2017) – Decided on June 5, 2017, this ruling determined that pension plans that otherwise meet the definition of a church plan definition under the ERISA can qualify for the exemption without being established by a church. The decision is the culmination of a wave of ERISA class actions brought by employees of religiously affiliated non-profit hospitals who asserted that the employers improperly claimed that their pension plans were ERISA-exempt “church plans.”
  • Microsoft Corp. v. Baker, et al., 137 S. Ct. 1702 (2017) – Decided on June 12, 2017, this ruling determined that the voluntary dismissal of individual claims by class representatives after denial of class certification deprives appellate courts of jurisdiction over review of the underlying class certification decision. The case involved consideration of a strategy for appealing denials of class certification whereby plaintiffs responded to a denial of class certification with a voluntary agreement to dismiss their claims. With that dismissal in hand, they would claim they have a final order that they can appeal, planning to revive their claims if the appeal reversed the certification order. The Supreme Court unanimously rejected this practice. It held that plaintiffs in putative class actions cannot transform a tentative interlocutory order into a final judgment simply by dismissing their claims with prejudice – subject, no less, to the right to revive those claims if the denial of class certification was reversed on appeal. The ruling should help corporate defendants in defeating piece-meal attacks on favorable class certification orders.
  • Bristol-Myers Squibb Co., et al. v. Superior Court Of California, 137 S. Ct. 1773 (2017) – Decided on June 19, 2017, this opinion established limitations on personal jurisdiction over non-resident plaintiffs in “mass actions,” a litigation strategy often utilized by plaintiffs’ class action lawyers to sue corporations in plaintiff-friendly jurisdictions that have little to no connection with the dispute. The Supreme Court determined that the requisite connection between the corporate defendant and the litigation forum must be based on more than a combination of the company’s connections with the state and the similarity of the claims of the resident plaintiffs and the non-resident claimants. The ruling reversed a lower court decision that hundreds of plaintiffs who sued a corporation in California state court over alleged injuries associated with a corporation’s product could not sue in that state because they were not residents. In effect, it reversed a decision of the California Supreme Court and directed the dismissal of 592 non-California claims from 33 other states. The ruling has significant implications for the location and scope of class action litigation. As a result, the ruling supports the view that plaintiffs cannot simply “forum shop” in large class actions, and instead must sue where the corporate defendant has significant contacts for purposes of general jurisdiction or limit the class definition to residents of the state where the lawsuit is filed. It should provide some measure of protection to corporations that often are hauled into plaintiff-friendly jurisdictions across the country to which they have nor the plaintiffs suing them had any connection.
  • CalPERS, et al. v. ANZ Securities, Inc., 137 S. Ct. 2042 (2017) – Decided on June 26, 2017, this decision involved a relatively technical question regarding the right to opt-out of a class action – when plaintiffs file a class action, are members of the class entitled to opt-out and represent themselves, and how statutes of limitations work in that situation. Federal securities laws include two different kinds of filing deadlines for claims about misrepresentations in connection with the issuance of securities, including a one-year deadline running from the discovery of the untrue statement and an outside three-year deadline running from the date on which the statement was made. The Supreme Court held that tolling under American Pipe applies only to the one-year deadline, not the three-year deadline. Applying that rule, it barred the action brought in this case by CalPERS, which had opted-out of a large class action brought against Lehman Brothers; the original action was brought in a timely manner, but CalPERS did not opt-out of that action until more than three years after the challenged statements. The ruling closes off a tactic of successive class claims by barring the traditional power of lower federal courts to modify statutory time limits in the name of equity despite any practical obstacles this creates in class actions.
  • Czyzewski, et al. v. Jevic Holding Co., 137 S. Ct. 973 (2017) – Decided on March 22, 2017, this case involved the Worker Adjustment and Retraining Notification (“WARN”) Act and the interplay between worker rights under that statute and the rights of creditors in bankruptcy proceedings after a company allegedly violates the WARN Act. In considering whether priority in distributing assets in bankruptcy may proceed in a manner that allegedly violates the priority scheme in the Bankruptcy Code, the Supreme Court held that such a distribution is improper and priority rules may not be evaded in Chapter 11 structured dismissals. The Supreme Court’s ruling protects workers with WARN claims and bars priority deviations in bankruptcies implemented through non-consensual structured dismissals.

The decisions in Advocate Health Care Network, Baker, Bristol-Myers, CalPERS, Expressions Hair Designs, Jevic, and McLane Co. are sure to shape and influence workplace class action litigation and government enforcement litigation in a profound manner. Theses rulings will impact standing concepts and jurisdictional challenges, liability under the WARN and the ERISA, appeals of class certification decisions, challenges to EEOC administrative subpoenas, and rules on American Pipe tolling and application of statute of limitations in class actions. To the extent that extrinsic restrictions on class actions – i.e., limits on the ability of representative plaintiffs to appeal certification orders (as in Baker), and jurisdictional restrictions on bringing cases in “plaintiff-friendly” jurisdictions (as in Bristol-Myers) – were tightened, class actions will become harder to maintain and litigate. On the other hand, McLane Co. is certainly a setback for employers and strengthens the EEOC’s ability to conduct wide-ranging administrative investigations through its subpoena power.

Rulings Expected In 2018

Equally important for the coming year, the Supreme Court accepted five additional cases for review in 2017 – that will be decided in 2018 – that also will impact and shape class action litigation and government enforcement lawsuits faced by employers.

Those cases include three employment lawsuits and two class action cases. The Supreme Court undertook oral arguments on two of these cases in 2017; the other three will have oral arguments in 2018.

The corporate defendants in each case have sought rulings seeking to limit the use of class actions or raise substantive defenses to class actions or employment-related claims. Further complicating several of these cases, government agencies have either taken opposing stances with each other or reversed positions they held in pervious Supreme Court terms or in the lower court proceedings in these cases.

  • Epic Systems Corp. v. Lewis, NLRB v. Murphy Oil USA & Ernst & Young LLP v. Morris, 16-285, 16-300 & 16-307 – Argued on October 2, 2017, these three consolidated appeals in employment cases deal with the interpretation of 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 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. The Supreme Court’s ultimate decision is likely to have far-reaching implications for litigation of class actions and collective actions. The issue started when the NLRB under the Obama Administration began challenging employers’ use of arbitration agreements with class action waivers. During briefing of the issue before the Supreme Court, The Department of Justice under President Trump opposed the NLRB’s position, and has sided with employers and argued that the Federal Arbitration Act favors the validity and enforcement of arbitration agreements that include class waivers.
  • Cyan, Inc., et al. v. Beaver County Employees Retirement Fund, 15-1439 – Argued on November 28, 2017, this class action case poses the issue of whether federal law bars state courts from hearing certain securities class actions. The case turns on interpretation of the Private Securities Litigation Reform Act of 1995 – which imposes tougher standards on securities class actions brought in federal courts – and if it mandates that state courts can no longer hear class actions based on the Securities Act of 1933. The ultimate ruling by the Supreme Court will impact what many view 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., 16-1362 – In this case, the Supreme Court will examine 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. The future ruling in the case may have far-reaching implications on the legal tests for interpretation of statutory exemptions under the FLSA. A broader reading of the exemption potentially could reduce the number of workers allowed to assert wage & hour claims against their employers. The case is set for argument on January 17, 2018.
  • Janus, et al. v. AFSCME, 16-1466 – In this employment case, the Supreme Court will consider 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 deciding the constitutionality of “fair share fees” being imposed on public-sector employees as a condition of employment, the Supreme Court’s future ruling likely will impact millions of workers in 22 states that do not have right-to-work laws. Since many workers are apt to cease paying union dues if the fair share fee payments requirement is abolished, the future ruling will have a significant impact on the ability of public-sector unions to conduct their business. The case is set for oral argument on February 26, 2018.
  • Resh, et al. v. China Agritech, Inc., 17-432 – In this class action case, the Supreme Court will examine whether the tolling rule for class actions established in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), tolls the statute of limitations to permit a previously absent class member to bring a subsequent class action outside the applicable limitations period. In American Pipe, the Supreme Court 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. In essence, a future ruling in this case will limit or expand the tolling rule in American Pipe to apply only to subsequent individual claims or if it is expanded broadly to successive class actions where plaintiffs were unnamed class members in failed class actions. The case has yet to be set for oral argument.

The Supreme Court is expected to issue decisions in these five cases in 2018.

Implications For Employers

Each decision outlined above may have significant implications for employers and for the defense of high-stakes class action litigation. Further, the decision in Epic Systems / E & Y / Murphy Oil may well end up being one of the most significant rulings for employers since Wal-Mart Stores, Inc. v. Dukes in 2011. Employers have to keep a close eye on this case, since the decision may shift the class action landscape in terms of the ability of employees to bring suit against a company. As always, we will closely monitor all Supreme Court case developments and report them to our readers. Stay tuned!

Seyfarth Synopsis:  In our recent blog on the second workplace class action litigation trend of 2017, we provided our readers with a comprehensive analysis of class certification statistics.   As this year’s Report profiled, court decisions throughout the country resulted in a favorable landscape for employers in terms of defeating certification motions in the decertification process.  In today’s blog, author Jerry Maatman breaks down all aspects of the Report’s class certification findings, and tells employers what to watch for in 2018.  Check out Jerry’s analysis in the link below!

Seyfarth Synopsis:  As our 2018 Workplace Class Action Report describes, 2017 was quite an interesting year for employers in terms of class certification rulings.  Though courts issued many favorable class certification rulings for the plaintiffs’ bar this year, new defense approaches and case law precedents resulted in positive outcomes for employers in opposing class certification requests.  In today’s blog, readers are given a certification breakdown by type of class action, as well as a look into evolving case law and “magnet” jurisdictions that provided obstacles for employers in 2017.  Check out the extensive analysis below!

Anecdotally, surveys of corporate counsel confirm that complex workplace litigation – and especially class action 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 now indisputably complex wage & hour litigation.

The circuit-by-circuit analysis of 290 class certification decisions in all varieties of workplace class action litigation is detailed in the following map:

Wage & Hour Certification Trends

While plaintiffs continued to achieve robust numbers of initial conditional certification rulings of wage & hour collective actions in 2017, employers also secured significant victories in defeating conditional certification motions and obtaining decertification of § 216(b) collective actions. The percentage of successful motions for decertification brought by employers rose by nearly 18% in 2017. This was the highest success rate over the past decade.

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 – is the greatest 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 – 257 certification rulings in 2017, as compared to the 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 more cases are brought against employers in “plaintiff-friendly” jurisdictions such as the judicial districts within the Second and Ninth Circuits. 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 Ninth Circuit and the Second Circuit are the epi-centers of wage & hour class actions and collective actions. More cases were prosecuted and conditionally certified – 48 certification orders in the Ninth Circuit and 39 certification orders in the Second Circuit – in the district courts in those circuits than in any other areas of the country. The district courts in the Fifth, Sixth, and Seventh Circuits were not far behind, with 30, 26, and 24 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 (170 of 233 rulings, or approximately 73%). However, in terms of “second stage” decertification motions, employers prevailed in a majority of those cases (15 of 24 rulings, or approximately 63% of the time).

The “first stage” conditional certification statistics for plaintiffs at 73% for 2017 are aligned to the numbers in 2016, when plaintiffs won 75% of “first stage” conditional certification motions. However, employers fared much better in 2017 on “second stage” decertification motions. Employers won decertification at a rate of 63%, which was up from 45% in 2016 and 36% in 2015.

The following chart illustrates this trend for 2017:

Third, this reflects that there has been an on-going migration of skilled plaintiffs’ class action lawyers into the wage & hour litigation space. 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. Finally, as success in litigation often begets copy-cat filings, that the value of top wage & hour settlements in 2017 topped $525 million – and over $1.2 billion in the last two years – is likely to prompt more litigation in 2018.

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 2017 confirm these factors.

Employment Discrimination & ERISA Certification Trends

At the same time, the rulings in Wal-Mart and Comcast also fueled more critical thinking and crafting of case theories in employment discrimination and ERISA class action filings in 2017. The Supreme Court’s two 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 and Comcast 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, employment-related class certification motions outside of the wage & hour area were a mixed bag or tantamount to a “jump ball” in 2017, as 7 of the 11 were granted and 4 of the 11 were denied.

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 2017, 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 2017 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.

Nonetheless, plaintiffs were more successful than defendants in litigating certification motions in ERISA class actions, as plaintiffs won 17 of 22 certification rulings in 2017.

A map illustrating these trends is shown below:

Overall Trends

So what conclusions overall can be drawn on class certification trends in 2017?

In the areas of employment discrimination, wage & hour, and ERISA, 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 was somewhat of a coin toss for employment discrimination cases (7 motions granted and 4 motions denied in 2017), class certification is relatively easier in ERISA cases (17 motions granted and 5 motions denied in 2017), but most prevalent in wage & hour litigation (with 170 conditional certification motions granted and 63 motions denied, as well as 15 decertification motions granted and 9 motions denied).

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

  • a 64% success rate for certification of employment discrimination class actions (both Title VII and age discrimination cases);
  • a 77% success rate for certification of ERISA class actions; and,
  • a 73% 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 76% (with 2017 right in the middle at 73%) 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 2017 for employers was an increase in the odds of successful decertification of wage & hour cases to 63%, as compared to 45% in 2016, 36% in 2015, and 52% in 2014.

The on-going defense of litigation and participation in discovery following conditional certification is often an expensive proposition for employers, and many choose to settle to avoid that scenario. However, for employers that face the costs of discovery and then litigate decertification motions, the pay-off in 2017 was a fracturing of cases at the highest success rate in over a decade – a decertification percentage of 63%.

Comparatively, the trend over the past four 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 2017 was the Supreme Court’s ruling 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.

Implications For Employers

For employers, there are multiple lessons to be drawn from these trends in 2017.

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 2017, their certification numbers were consistent with levels in the last several years.

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.

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.

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.

Seyfarth Synopsis:  In yesterday’s blog, readers were given an extensive overview of the historically high numbers regarding class action settlements in 2017.  Today, author Jerry Maatman provides his own analysis of these class action settlement numbers in our video blog series.  Jerry highlights the most important markers of 2017, and previews the class action landscape employers may have to adjust to in 2018.  Watch in the link below!