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Posts Tagged ‘FLSA’

A key trend in employment-related class actions these days is a surge in lawsuits alleging that employers have violated wage and hour or employee benefits laws by misclassifying employees as independent contractors.  BakerHostetler Partner Todd Lebowitz has authored an excellent white paper on the subject, titled Independent Contractor Misclassification, 2016 Legal Analysis.  The paper details the analytical framework by which a particular worker is properly classified as employee or independent contractor and discusses the potential legal and regulatory implications arising from an employer’s misclassification of workers.  To download the paper, CLICK HERE.

 

 

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Thomson Reuters contributor Alison Frankel interviewed me for an article she posted today on the class action cases pending during the current Supreme Court term.  Here is a link to her article.  For those who are not familiar with Frankel’s On the Case Blog, be sure to add it to your regular reading list.  She is one of the best in the business.

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Today, the Supreme Court issued its ruling in Genesis Healthcare Corp. v. Symczyk, No. 11–1059, which addresses the practice of “picking off” a named plaintiff in a FLSA collective action by making a full offer of judgment under Rule 68 for the amount of the named plaintiffs’ claim.  In a 5-4 majority opinion authored by Justice Thomas, the Court held that the relation back doctrine does not apply to save the collective action from mootness simply because the named plaintiff also sought relief on behalf of others.  The majority distinguished the case from other decisions applying the relation back doctrine in the Rule 23 context after class certification had been denied, pointing out that a certified class under Rule 23 has an independent legal existence from the named plaintiff.  However, the reasoning of the majority’s decision in Genesis Healthcare Corp. could potentially be applied to support the conclusion that an unaccepted offer of judgment moots even a Rule 23 class action if the offer is accepted or expires prior to a ruling on a motion for class certification one way or the other.

The majority’s decision comes with a major caveat.  The majority declined to address the issue whether a non-accepted offer of judgment actually moots an individual’s claim, despite recognizing a split in the circuits on that issue.  This prompted the following commentary in Justice Kagan’s dissent:

The decision would turn out to be the most one-off of one-offs, explaining only what (the majority thinks) should happen to a proposed collective FLSA action when something that in fact never happens to an individual FLSA claim is errantly thought to have done so. That is the case here, for reasons I’ll describe. Feel free to relegate the majority’s decision to the furthest reaches of your mind: The situation it addresses should never again arise. . . .  [T]he individual claims in such cases will never become moot, and a court will therefore never need to reach the issue the majority resolves. The majority’s decision is fit for nothing: Aside from getting this case wrong, it serves only to address a make-believe problem. 

Whether Justice Kagan’s cheeky prediction turns out to be prophetic will be up to the lower courts, who are left to decide the underlying question of mootness.  In the short-term, there is little doubt that the Genesis Healthcare decision will prompt a rash of offers of judgment in both FLSA cases and class actions.

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This is the first in what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last Thursday in Chicago.  The National Institute sets the gold standard for class action conferences, and this year was no exception.  Program Chair Daniel Karon and the rest of the organizing committee did an excellent job selecting six of the most timely and relevant topics facing class action practitioners today.  As always, the list of panelists was a veritable who’s who in the class action field.  If you ever have the opportunity to attend this annual conference, I highly recommend it.

As has become the custom at the National Institute, Columbia Law Professor John C. Coffee, Jr. kicked off this year’s program with a comprehensive and insightful summary of the year’s key developments in class action law.  This year’s presentation saw what has been a hit solo act turn into an even better duet, as Professor Coffee shared the stage with Connecticut Law Professor Alexandra Lahav.  The session was titled “Holy Cow!  This Year the Courts Said What?!” A Brief History of this Year’s Developments in Class Action Jurisprudence.  Attendees were also treated to a comprehensive, 179-page summary of the year in class actions by Professors Coffee and Lahav entitled The New Class Action Landscape: Trends and Developments in Class Certification and Related Topics.

The first part of Professor Coffee’s presentation covered each of the class action-related cases on the U.S. Supreme Court’s docket this term.  Here is a list of those cases with some of Professor Coffee’s insights:

  • Connecticut Retirement Plans & Trust Funds v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011) – Amgen raises the question whether the plaintiff must establish the materiality of an alleged false statement at the class certification stage of a securities fraud class action.  Professor Coffee believes that this case is a close call, but whichever way it comes out, it does not threaten to end securities class action litigation as we know it.
  • Behrend v. Comcast Corporation, 655 F.3d 182 (3d Cir. 2011) – In Behrend, the Court could decide whether a trial court must perform a full Daubert analysis of expert testimony offered in support of or in opposition to class certification.  The case raises the question, at least in the antitrust context, whether the plaintiff must present a  formal damages model or whether the mere possibility of common proof is enough.
  • Symczyk v. Genesis Healthcare Corp., 656 F.3d 189 (3d Cir. 2011) – This is a wage and hour case under the FLSA, which has a different procedure than Rule 23.  FLSA claims are more accurately characterized as collective actions, rather than class action.  The issue is whether a settlement offer for the full amount of the named plaintiff’s FLSA claim can moot the claim and prevent the case from proceeding on a collective basis, a concept also known as “picking off.”   One of the arguments that has been raised is that the writ of certiorari should be dismissed as improvident granted, so it is unclear whether the Court will actually enter a substantive ruling.
  • Knowles v. The Standard Fire Insurance Company, 2011 U.S. Dist. LEXIS 130077 (W.D. Ark. December 2, 2011) – This case raises the question whether a plaintiff can plead around CAFA removal jurisdiction by stipulating to less than $5 million in damages on behalf of the putative class.  Professor Coffee felt confident in making the prediction that the defendant will win.  He points to dicta in the Court’s recent decision in Smith v. Bayer Corporation calling into question whether a plaintiff can do anything to bind the members of a putative class before it is certified.

Professor Coffee then went on to highlight some of the big developments in the lower courts from over the past year, which include:

The proper burden of proof to be applied at class certification.  The circuits are split on this issue, with some applying a preponderance of the evidence standard and others simply requiring a rigorous analysis with no particular evidentiary standard.

Treatment of expert testimony.  The federal district courts continue to resist resolving a battle of the experts at the class certification stage, but dicta from the Supreme Court in Dukes, as well as holdings by several of the circuits, are putting increasing pressure on the federal courts to perform a Daubert analysis (and the Court could resolve this issue for good in Behrend).

Class Arbitration Waivers.  Some lower courts, especially the Second Circuit, continue to carve out exceptions to the Supreme Court’s ruling favoring arbitration agreements in Concepcion.   One key issue is whether a class arbitration waiver may still be held unconscionable as a matter of federal law.  Professor Coffee quipped that the Second Circuit will only change if the Supreme Court “stuffs it down their throat.”  While unconscionability under state law is no longer a viable argument against enforcing an arbitration clause, clauses with fee-shifting provisions continue to be susceptible to attack.

Settlement Only and Limited Fund Classes.  There is a lower court trend in permitting certification in settlement classes in cases that could not be certified as class actions in contested cases, notwithstanding the Supreme Court’s opinion in Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997).  The primary justification tends to be that any individualized issues of fact in the case went to manageability, which is no longer an issue in the settlement context.   In cases where courts have found that individualized issues impact both predominance and manageability, settlement classes have continued to be rejected.

Partial Certification.   The question of issue certification has been one of the hottest trends in the federal courts in the wake of Dukes.  Professor Coffee pointed out that the resolution of whether courts allow partial certification tends to be determined whether the fact of certification creates an extortionate threat to settle the case.

Class Action Settlements.  If you read just one class certification decision this year, Professor Coffee recommends Judge Rosenthal’s memorandum opinion in In re: Heartland Payment Systems, Inc. Customer Data Security Breach Litigation, MDL No. 09-2046 (S.D. Tex. March 20, 2012), which has a well-organized, step-by-step analysis of the approval of a class action settlement.

Professor Lahav focused her remarks on what has been happening in the lower courts in response to the three key aspects of the Court’s decision in Dukes: 1) the “new commonality” requirement; 2) the rejection of the use of Rule 23(b)(2) to recover individualized money damages; and 3) the rejection of “trial by formula,” of the use of statistical sampling to solve individualized damages problems.

The “new commonality”.  Among Professor Lahav’s key observations was that in the Title VII context, there must be a policy, but if there is an identifiable policy, the courts will allow discretionary elements of that policy to be attacked.  This trend is best exemplified by Judge Posner’s decision in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc.  As many commentators predicted, Plaintiffs have had better success after Dukes by narrowing the geographic scope of discrimination claims.  This has also been true in the consumer context.  In the civil rights context, allegations of systemic constitutional violations have had success when the courts have focused on the systemic nature of the practice, but not when courts have focused on the effects of a systemic practice on the prospective class members.  In general, there has been an increasing reliance on issues classes to overcome individualized issues that might destroy commonality or predominance.

Rule 23(b)(2) and monetary damages.  The majority opinion in Dukes raised the question whether there can ever be a class with monetary damages.  None of the circuit courts have provided further guidance on when damages might be sufficiently “incidental” to still allow relief.  One area that has seen mixed results since Dukes is the area of medical monitoring class actions, where the remedy sought is medical monitoring of the possible health effects of a toxic exposure but the cost of monitoring can vary from person to person.  Professor Lahav pointed to the Third Circuit’s decision in Gates v. Rohm & Haas Co., No. 10-2108 (3d Cir., Aug. 25, 2011), as potentially supporting arguments on both sides.  Hybrid class actions, where classes are certified based on both Rule 23(b)(2) and 23(b)(3), are becoming increasingly common, especially in the Title VII context.  One unanswered question is whether damages claims are precluded if a Rule 23(b)(2) class is certified but not successful.

Statistical evidence and “trial by formula.”   Statistical evidence is still accepted in contexts where it has been accepted traditionally, e.g. civil rights, disparate impact, and antitrust cases.  It is not allowed in cases where the defendant can raise individualized defenses.  One proposed solution is, again, issues classes, but this creates a class action funding problem – How do lawyers get paid?

Professor Lahav also revisited statistical trends in class actions, focusing primarily on data compiled by the Federal Judicial Center in 2008 which analyzed the impact of the Class Action Fairness Act (“CAFA”).  She made the key point that statistical data on class action trends has been severely lacking since the FJC study, making updated empirical analysis of class action trends difficult.

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I’m excited to announce that the Colorado Bar Association Class Actions subsection is teaming up with the Labor & Employment Law Section to bring you CLE luncheon entitled: A Primer on Employment “Class Action” Litigation: Class Actions, Collective Actions, and EEOC Enforcement.  If you are interested in attending, please send me an email at pkarlsgodt@bakerlaw.com.
 
Date and Time: November 22, 2010 at 12:00 noon
Location: Holland & Hart LLP, 555 17th St, Ste 3200, Denver, CO 80202 
 
Summary:
 
Employment and labor law is one of the hottest areas of class action litigation these days.  But the term “employment class action” is often used to describe cases involving a variety of procedures, of which the Rule 23 is only one.  This program will explore the different mechanisms that may used to resolve mass employment litigation and the differences and interplay between class actions, collective actions, and EEOC enforcement actions.
 
Faculty:
 
Steven Moore is the Managing Shareholder of the Denver office of Ogletree Deakins, one of the nation’s leading labor and employment law firms.  Mr. Moore will discuss the interplay between Rule 23 class actions in employment cases and other collective action procedures, such as the opt-in procedure applicable to cases under the Fair Labor Standards Act (FLSA).
 
Stephanie Struble is a Trial Attorney with the Equal Opportunity Employment Commission (EEOC) in Denver.  Ms. Struble will discuss the role of the EEOC and private litigants in cases involving an alleged pattern or practice of employment discrimination.

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It’s that time of the week already.  Here are some blog postings from the past week that might be of interest to class action practitioners. 

The fallout from several plaintiffs’ class action corruption scandals took center stage in the class action blogosphere this week.

Mass Tort Litigation Blog discusses the sentencing of plaintiffs’ class action lawyer Melvyn Weiss…

http://lawprofessors.typepad.com/mass_tort_litigation/2008/06/mel-weiss-recei.html

… and discusses a possible settlement involving his firm:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/06/milberg-llp-nea.html

See the many other blog entries discussing Mr. Weiss’ sentencing here:

http://www.sphere.com/search?q=sphereit:http://legalblogwatch.typepad.com/legal_blog_watch/2008/06/if-kickbacks-ar.html

Class Reactions quotes a less-than-remourseful class action attorney William Lerach discussing his views on the social benefits of his acts of “fee-sharing” and his belief of the injustice of his imprisonment for those acts …

http://classreactions.com/?p=28

… and see Mr. Lerach’s essay entitled “I am Guilty (My Side of the Story)” at Conde Nast Portfolio.com:

http://www.portfolio.com/executives/features/2008/06/02/Bill-Lerach-Essay

Overlawyered discusses developments in the Kentucky fen-phen settlement fraud scandal:

http://overlawyered.com/2008/06/another-victim-in-the-kentucky-fen-phen-settlement-fraud/

The Complex Litigator provides a critical review whether a recent California Court of Appeal decision addressing the California Song-Beverly Credit Card Act truly “limits” the scope of the Act’s protections of credit card holders:

http://www.thecomplexlitigator.com/2008/05/tjx-companies-i.html (responding to this entry in the Privacy Law Blog; also see a recent entry on the same case from Class Action Defense Blog here)

Class Action Defense Blog and Wage and Hour Blog both have summaries of a recent decision by the California Court of Appeal addressing alleged conflicts of interest by plaintiffs’ counsel and the named plaintiffs where the attorneys represented both individual class representatives and a labor organization interested in promoting union organizing efforts by class members:

http://classactiondefense.jmbm.com/2008/06/class_action_defense_casesshar.html

http://wagelaw.typepad.com/wage_law/2008/06/union-attorneys-can-represent-non-union-employees-in-wage-hour-class-actions.html

D&O Diary discusses potential insurance implications arising from cooperation given by former executive to plaintiffs’ counsel in a class action filed against the executive’s company (where the executive had previously pled guilty to criminal charges arising out of the same scandal):

http://www.dandodiary.com/2008/05/articles/d-o-insurance/former-refco-ceo-aids-class-action-plaintiffsan-insurance-issue/

The UCL Practitioner has an interesting analysis of a press release issued by the San Francisco City Attorney regarding a public prosecutor’s UCL action being brought on behalf of the San Francisco Health Plan and other political subdivisions and California citizens.  The plaintiffs are reportedly being jointly represented by the City Attorney’s office and a private class action firm.

http://www.uclpractitioner.com/2008/05/san-francisco-c.html

Point of Law provides a link to a position paper by California Senator Tom Harman entitled “Incentivizing Appropriate Restitution in Class Action Cases.  (For a previous discussion on ClassActionBlawg.com regarding legislation proposed by Senator Harman, click here).

http://www.pointoflaw.com/archives/2008/06/state-senator-calls-for-tying.php

Classified provides a summary of a recent decision by the U.S. Court for the Middle District of Georgia dismissing a class action regarding “guaranteed auto protection insurance policies” due to the plaintiffs’ failure to provide notice of cancellation required under the policy:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=215

Healthcare HR Solutions Blog comments on an increase in wage and hour class action litigation and provides tips on how employers can avoid potential Fair Labor Standards Act (FLSA) liability:

http://healthcarehrsolutions.com/blog/2008/05/29/increase-in-wage-and-hour-class-action-litigation/

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Employers facing potential layoffs might find interesting a recent article in Workforce.com about the risk of potential class actions as a result of reductions in force.  The article addresses the EEOC’s stated strategy to increase class action filings against employers and provides tips on measures that can be taken to minimize class action exposure.

http://www.workforce.com/section/09/feature/25/45/73/254577.html

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