Employment Class Action Blog

Employment Class Action Blog

Information and Commentary on Class Action Cases Affecting Employers

The California Divide: Federal Courts Refuse to Follow State Supreme Court’s Iskanian Decision

Posted in Arbitration, PAGA

One of the last barriers to full enforcement of arbitration agreements with class action waivers sustained another blow last week.  A California federal district court disagreed with the California Supreme Court in holding that an employment arbitration agreement can waive an employee’s right to pursue a representative claim under the state’s Private Attorney General Act (“PAGA”).  Langston v. 20/20 Companies, Case No. EDCV 14-1360 JGB (C.D. Cal. Oct. 17, 2014).

It is well known by now that the U.S. Supreme Court has taken a favorable view of arbitration agreements that waive a litigant’s ability to pursue class or representative action claims, either in court or arbitration.  Since 2009, the Court has chiseled away at the obstacles and procedural rules preventing enforcement of such arbitration agreements based upon the Federal Arbitration Act (“FAA”).  Indeed, in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the Court held that the FAA’s policy of enforcing arbitration agreements pre-empted a California rule requiring the availability of class-wide arbitration. Continue Reading

Another Federal Court Decertifies FLSA Collective Action of Hospital Workers Challenging Auto-Deduct Policy

Posted in Collective Action, FLSA, Meal and Rest Periods

We have previously discussed that, while medical providers have become a common target of plaintiffs asserting wage and hour claims arising out of so-called “auto-deduct” policies, more and more courts are realizing that the inherently fact-specific nature of these lawsuits make class treatment very difficult.  See our posts from June 23, 2014, and September 17, 2014].  The recent case of Jarosz v. St. Mary Medical Center, 10-cv-3330 (E.D. Pa. Sept. 22, 2014), is the latest court to continue this trend.

In Jarosz, the plaintiffs were current and former health care employees of St. Mary Medical Center who were subject to an automatic 30 minute meal period deduction which, they claimed, applied even when they worked during this period.  There was no system-wide mechanism for scheduling or cancelling the automatic meal deductions.  Rather, this process was left largely to the discretion of the 175 or so individual departments.  St. Mary’s eventually agreed to conditional certification of all its current and former employees who had direct patient care duties during the class period under the FLSA.  Notice was sent out to 2,211 such employees, of which only 64 decided to join the class.  Of those 64, the court dismissed 34 on various grounds.  After discovery, St. Mary’s moved to decertify the remnants of the class. Continue Reading

California District Court Finds Bankrupt Named Plaintiffs Not Adequate Representatives

Posted in Rule 23, Wage and Hour

Anyone questioning whether the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), has had an impact need look no further than the decision in Alakozai v. Chase Investment Services Corp., Case No. CV 11-09178 SJO (JCx) (C.D. Cal. Oct. 6, 2014).   The Alakozai matter was a wage and hour case in the Central District of California. The plaintiffs, who were financial advisors selling securities and other financial products, contended that they were misclassified as exempt and sought overtime under state and federal law and penalties for missed meal breaks under California law.  They moved to certify a class of approximately 1,000 other financial advisors.  Particularly in California, this is the kind of case that one would have expected to be certified virtually as a matter of course only five years ago, but the post-Dukes outcome was very different.

As to the merits, the defendant relied on several exemptions, including the administrative and commissioned sales exemptions under state and federal law, and the federal exemption for highly compensated employees.  The number of exemptions, and their detailed requirements, alone would prove a problem for the plaintiffs.

The District Court cited Dukes at the outset of its opinion, and went on to deny certification for a number of reasons. Continue Reading

District Judge Allows Rail Union to Side Step Rule 23 with Pattern-Or-Practice Claim

Posted in Discrimination, Rule 23, Title VII

A federal district judge in Hammond, Indiana, has permitted a rail union to pursue injunctive remedies in a Title VII pattern-or-practice discrimination claim on behalf of its black members without compliance with Rule 23.  In Brotherhood of Maintenance of Way Employees v. Ind. Harbor Belt R.R. Co., (Case No. 2:13-cv-00018, 2014 WL 4987972,October 7, 2014), Chief Judge Philip P. Simon, in ruling on a motion for reconsideration, again rejected the argument that outside the class action context private plaintiffs cannot use the pattern-or-practice method of proof.  The union sought to represent African-Americans who allegedly experienced systemic race discrimination and a racially hostile work environment.  The allegations include the railroad’s preventing black employees from training for higher rated positions, applying a racially disparate discipline policy, failing to recall black employees after workforce reductions, allowing white employees to arrive late for work, and not advising employees of its anti-discrimination policy and to correct discriminatory actions.  Originally filed as a class action, the union subsequently filed an amended complaint without class allegations.

While acknowledging that “an individual can’t pursue pattern-or-practice claims in the absence of class certification”, the Judge identified distinguishing characteristics when a union pursues those claims.  “[T]here is something different about a union pursuing these types of claims versus a single private plaintiff or small group of plaintiffs . . . .  Instead, the complaint paints a disturbing picture of systematic discrimination . . . .   If true, this could amount to a pattern of system wide discrimination.”  Thus, the Judge concluded that the union could pursue the pattern-or-practice claims under a theory of associational standing even absent Rule 23 certification. Continue Reading

Conservative Kansas Joins the Liberal Ninth Circuit in Rejecting the Independent Contractor Classification of Delivery Drivers

Posted in Independent Contractors

Last month we blogged about two Ninth Circuit opinions that deemed FedEx Ground drivers to be employees rather than independent contractors under California and Oregon law.  Last week the Kansas Supreme Court joined them, applying Kansas law to reach the same conclusion in Craig v. FedEx Ground System, Inc. (Oct 3, 2014).

While the Ninth Circuit tends to lean pro-employee in its decisions, Kansas is decidedly more conservative.  The Kansas Court’s decision, therefore, may prove more influential to other courts across the country, as independent contractor misclassification cases continue to populate their dockets. Continue Reading

Seventh Circuit Rejects Attorney Fee Award Premised on Administrative Costs

Posted in Uncategorized

As we’ve commented before, class actions frequently take on a life of their own. They involve large sums of money, frequently raise difficult discovery and case management issues, and are subject to surprises for all the litigants. At the same time, recognizing that tensions exist between the class and class counsel regarding attorney fees, courts are more closely scrutinizing settlements, particularly where the attorney fee award approaches, or even surpasses, the relief to the putative class members.

A recent case from the Seventh Circuit addresses all of these things, and rejects a settlement involving a failing company in which the parties sought to support the attorney fee award, at least in part, by the high costs of settlement administration. Although not an employment case, many of the same issues will apply with equal force in the employment setting. Continue Reading

Court Sends Plaintiffs Back to the Locker Room Unhappy When It Denies Conditional Certification

Posted in Conditional Certification, FLSA

In January 2014, NFL Commissioner Roger Goodell raised eyebrows (and ire) when he announced that the league was considering eliminating the extra point after a touchdown.  As Goodell put it, “the extra point is almost automatic,” given that it is kicked from the twenty yard line, and it is exceptionally rare that a professional NFL kicker would miss at such a short distance.

The same can be said for recent decisions regarding conditional certification in FLSA lawsuits.  As courts and plaintiffs have frequently pointed out, the first stage of the near-universally applied Lusardi FLSA certification requires that plaintiffs meet only a “lenient” evidentiary standard. While plaintiffs may try to argue that conditional certification is as “automatic” as an extra point, that may not always be the case.  Just as the Cleveland Browns proved when they botched the play on September 14, 2014, an extra point after a touchdown is never “automatic.”  And as much as no one wants to be compared to the Cleveland Browns, the recent, related cases of Pullen v. McDonald’s Corp., case no. 5:14-cv-11081 and Wilson v. McDonald’s Corp., case no. 2:14-cv-11082 in the Eastern District of Michigan, both managed to miss the “automatic” extra point at the first stage of certification.  Unlike the Browns’ play, however, the court’s reasoning was straight-forward and logical. Continue Reading

Merits Trump Certification Issues in Two Southern District of New York Cases

Posted in Class Certification, Independent Contractors, Overtime Claims

Three years ago, the Supreme Court found in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011) that courts “frequently” will need to look to the merits in determining whether certification is appropriate, particularly where the issues of the merits and certification may overlap.  Despite this pronouncement, plaintiffs often assert that courts should not consider the merits in making the certification determination.  In some instances, however, irrespective of certification, problems as to the merits will dispose of the case entirely, as two cases decided the same day by the United States District Court for the Southern District of New York demonstrate. Lola v. Skadden, Arps, Slate, Meagher & Flom LLP, Case No. 13-cv-5008 (RJS) (S.D.N.Y. Sept. 16, 2014); Saleem v. Corporate Transportation Group, Ltd., Case No. 12-CV-8450 (JMF) (S.D.N.Y. September 16, 2014).  The two cases look very different in many respects, but both failed on dispositive motions because the named plaintiffs, or perhaps the class as a whole, had no claim.

In the first case, Lola, the putative class members were licensed attorneys doing work on a Skadden, Arps project through a legal staffing agency.   While the lead plaintiff worked for the agency, apparently (and successfully) to garner greater publicity, he named the Skadden, Arps firm first as the lead defendant.  The crux of his claim was that although he was an attorney, the work he did was basic document review that did not require any special legal judgment or discretion.  As a result, he contended, he should have been paid overtime for hours worked in excess of 40 hours per week.  Rather than engage in class discovery, the defendants moved to dismiss the claims under Rule 12(b)(6).  They asserted that the work was exempt under the professional exemption regardless of whether it was “glamorous”, “high-profile”, or neither.  The court found that the matter of whether the work was professional or not turned on state law, and as the work was performed in North Carolina, that state’s law controlled.  While the court ultimately concluded that the work could have been done by a non-lawyer under a lawyer’s supervision, that did not change the fact that document review (as opposed to mere photocopying or collating) was a legal service.  Without ever having to address whether a class was warranted, the court concluded that the work described in the complaint was within the scope of the practice of law and dismissed the case. Continue Reading

U.S. Open Umpires and Linesmen Are Independent Contractors, Court Rules

Posted in FLSA, Independent Contractors, Overtime Claims

In an opinion that disappointingly failed to take advantage of countless pun opportunities, a federal judge in New York otherwise got it right, ruling that the United States Tennis Association properly classified U.S. Open tennis officials as independent contractors, not employees.  Meyer v. United States Tennis Ass’n, No. 1:11-cv-6268 (S.D.N.Y. Sep. 11, 2014).

The lawsuit, filed during match play in the quarterfinals of the 2011 U.S. Open tournament, alleged that the USTA violated the Fair Labor Standards Act and New York Labor Law by declining to pay chair umpires and linesmen an overtime premium for work in excess of forty hours per week.  Applying the “economic realities” test applicable to FLSA claims, and applying similar New York State standards, the District Court held that the officials retained significant discretion over how and when to perform their jobs, retained a risk of profit or loss, and retained substantial flexibility to work for other employers, including other tennis organizations.  These factors, the Court held, required a conclusion that the officials were indeed independent contractors, and that the overtime rules therefore did not apply.  Continue Reading

Minnesota District Court Rejects Nationwide Scope and Conditionally Certifies Class of One Chipotle Store

Posted in Conditional Certification, FLSA

Employees win most motions for conditional certification under the FLSA, with many courts declining to perform a probing analysis at that stage.  A recent case from the District of Minnesota, in which the court still applied a deferential standard, had the unusual result that the court granted conditional certification as to a single Chipotle store when the plaintiffs sought a nationwide class.

In Harris v. Chipotle Mexican Grill, Inc., Case No. 13-cv-1719 (SRN/SER) (D. Minn., Sept. 9, 2014), the plaintiffs worked at a Chipotle restaurant in a Minneapolis suburb.  They contended that the company, due to payroll budget restrictions, required various hourly employees to work off the clock.  All of the named plaintiffs worked at the same location, but they sought certification of a nationwide class of approximately 40,000 workers at 1500 restaurants.  They relied heavily on the fact that the company encouraged the management of payroll costs and used the same electronic timekeeping system (cleverly named “Aloha”) at all of its stores.  The magistrate judge issued a report and recommendation that, among other things, would have certified such a class.  Continue Reading