Employment class action law and collective action litigation will become more sophisticated and continue to expose employers to significant financial costs this year, a new report shows.
Released earlier this week by Seyfarth, Shaw LLP, the Ninth Annual Workplace Class Action Litigation Report analyzes 2012’s landmark rulings on employment-related disputes and predicts several trends for class action attorneys and employers to keep an eye on in 2013.
Gerald L. Matman Jr., co-chair of the firm’s class action litigation practice group in Chicago, served as the report’s general editor.
“The events of the past year in the workplace class action world demonstrate the array of bet-the-company litigation issues that businesses face continue to evolve on a landscape that is undergoing significant change,” the report asserts.
Employers, the report adds, should expect that these types of lawsuits "increasingly will combine claims under multiple statutes, thereby requiring the defense bar to have a cross-disciplinary understanding of substantive employment law,” among other procedures.
With more governmental enforcement litigation and regulatory oversight of workplace issues last year than in previous years, the report also suggests that businesses will face challenges “to integrate their litigation and risk mitigation strategies to navigate these exposures.”
According to the report, 2012 saw “significant change for workplace class action litigation” thanks to a trio of 2011 U.S. Supreme Court decisions handed down in Wal-Mart Stores, Inc. v. Dukes, et al.; AT&T Mobility v. Concepcion, et al; and Smith, et al. v Bayer Corp.
Referring to it as the “800-pound gorilla” in the courtroom last year, the report notes that the Wal-Mart ruling “had a wide-ranging impact on virtually all types of class actions pending in both federal and state courts throughout the nation.”
In analyzing more than 1,000 decisions, the report shows that as of the close of 2012, “Wal-Mart had been cited a total of 541 times in lower court rulings, a remarkable figure for a decision rendered in June of 2011.”
The court in Wal-Mart overturned a district court order that certified a class seeking relief and back-pay, holding that individualized monetary relief claims can’t be certified under Rule 23, which governs class actions in federal courts.
“Rule 23 decisions in 2012 pivoted off of Wal-Mart and leverage points in class action litigation increased or decreased depending on the manner in which judges interpreted and applied Wal-Mart,” the report states.
Besides its finding over individualized monetary relief claims, the Wal-Mart ruling, according to the report, clarified Rule 23’s commonality requirement and rejected previous readings of Supreme Court precedent on the rule’s burden of proof.
“As a result, Wal-Mart fostered a tidal wave of decisions in 2012, as litigants and courts grappled with the ruling’s implications in a wide variety of class action litigation contexts,” the report states.
The court in Concepcion, according to the report, determined that the Federal Arbitration Act preempted state precedent in California that deemed class action waivers in consumer contracts unenforceable.
“The decision has been hailed by business interests, which prefers the speed and efficiency of bilateral arbitration for resolving claims arising from consumer and employment contracts,” the report states. “Consumer and civil rights advocates suggest the decision closes the door on many small-dollar consumer claims and allows corporations to perpetrate frauds unchecked.”
This ruling, according to the report, had been cited in 325 rulings by the end of last year.
Both the rulings in Wal-Mart and Concepcion “had a profound influence in shaping the course of class action litigation rulings in 2012, beginning a new wave of creative case law theories that will continue to evolve and impact employers in the defense of their cases in 2013,” the report states.
The report notes that these two rulings have spurred courts to review previous class certification orders in pending cases and defendants to file new motions to decertify classes.
This point about “creative case law theories” was listed as one of six emerging trends that Seyfarth’s report suggests employers pay attention to this year.
Another trend, according to the report, is the impact of the Wal-Mart ruling on settlement strategies.
“Employers settled fewer employment discrimination class actions and at a fraction of the levels experienced from 2006 to 2011,” the report states , adding that a total of about $48 million was reported for the top 10 settlements in 2012, compared to $363 million in 2010.
As a result, the report states, that “the plaintiffs’ class action bar is ‘re-booting’ its approach to class litigation and this trend may reverse itself in 2013.”
In addition, the report points to government enforcement as another emerging trend for 2013.
The report shows that more discrimination charges were filed with the U.S. Equal Opportunity Commission (EEOC) in 2012 than in all but one previous year in the commission’s 48-year history, making 2013 ripe for the filing of these lawsuits.
The EEOC’s investigation program, which identifies claims affecting large groups of alleged victims, saw a four-fold increase last year from 2011, a trend of “significant importance to employers, for it evidences an agency with a laser-focus on high-impact, big stakes litigation.”
The report also hypothesizes that last year’s increase in class action and collective action filings will continue in 2013 “as businesses retool operations in an improving economy and the Obama Administration renews an emphasis on enforcing workplace laws.”
In addition, the report notes that wage and hour litigation will continue to outpace other types of workplace class actions. It shows that nearly 900 more Fair Labor Standards Act lawsuits were filed in 2012 than in 2011.
“Significant growth in wage and hour litigation also was centered at the state court level, and especially in California, Illinois, New Jersey, New York, Massachusetts, Minnesota, Pennsylvania and Washington,” the report states.
It adds, “The crest of the wave of wage and hour litigation is still not in sight and this trend is likely to continue in 2013.”
The report also stresses the need for attorneys to pay attention to the “new approaches to class-wide theories of certification, liability and damages related to the Rule 23 developments” that came out of the Wal-Mart decision.
“The tight-knit plaintiffs’ class action bar has moved quickly to respond to Wal-Mart and craft new approaches,” the report states, adding that this has “in turn impacted defense litigation strategies.”
One of the main lessons to learn from last year, according to Seyfarth’s report, is that the plaintiffs’ bar and governmental enforcement attorneys “are apt to be equally, if not more, aggressive in 2013 in bringing class action and collective action litigation against employers.”
More information about the report can be found at seyfarth.com