Employment Class Action Blog

Employment Class Action Blog

Information and Commentary on Class Action Cases Affecting Employers

California Appellate Court Rejects Class Action Settlement Due to Excessive Attorney Fees

Posted in Wage and Hour

Pigs get fat and hogs get slaughtered, so the saying goes. As we’ve noted before on Oct. 7, June 5, and Dec. 18, courts are starting to examine attorney fee awards in class action settlements much more closely, and the results often aren’t exactly pretty.

The most recent example is the case of Lofton v. Wells Fargo Home Mortgage, Case No. A136626 (Cal. App. Oct. 22, 2014). The Lofton case really involved two cases with a convoluted procedural history, but bear with us and we’ll try to skip any unnecessary details.

The underlying matter was a garden-variety wage and hour dispute over whether California home mortgage consultants were properly classified as exempt. The Lofton case was brought in state court in San Francisco, and purported to cover the entire state of California. A second similar action was brought in Los Angeles Superior Court by a different set of attorneys. The second case, of course, should have been consolidated with the first or stayed—a matter the court noted but for which there was no explanation. Continue Reading

California District Court Rejects Yet Another Class Settlement

Posted in Wage and Hour

“Another one bites the dust…”

In yet another decision rejecting a settlement of an employment class action, the Northern District of California refused to approve a settlement of a wage and hour suit due to numerous problems with the resolution reached between the parties. In Myles v. AlliedBarton Security Services, LLC, Case No. 12-cv-05661-JD (N.D. Cal. Nov. 12, 2014), the plaintiffs sought to represent a class of 11,500 security officers who contended that they were improperly denied accrued vacation pay under California law. Four months before trial, they settled the case for a total of $1,750,000, including an attorney fee award of 30 percent (or $525,000). We’ll discuss the rest of the terms in a minute, but even if all the money had gone to the class, the amount per class member would have been a hair over $150.

The district court refused to approve the settlement for several reasons. We’re listing these reasons below, but they all share two features: (1) the parties failed to make a record as to why they were necessary; and (2) while many might have survived individually, collectively they would have been difficult to defend absent compelling circumstances. What were the problematic terms? Continue Reading

Ohio District Judges Puts an End to Nationwide FLSA Collective Action Brought Against Lowe’s

Posted in Collective Action, FLSA

While we have occasionally bemoaned the lenient conditional certification standard in FLSA collective actions, as the recent case of Triggs v. Lowe’s Home Centers, Inc., No. 1:13-cv-1897 (N.D. Ohio Aug. 19, 2014) shows, not all courts are willing to rubberstamp collective actions onto the second stage of litigation.

The six plaintiffs in Triggs were former non-exempt sales specialists for Lowe’s home improvement chain.  The plaintiffs claimed that Lowe’s violated the FLSA and the Ohio Minimum Wage Fair Standards Law because they were not paid for pre- and post- shift activities involving the “donning and doffing” of their Lowe’s uniforms.  Or, in plain English, they alleged that they had to take their blue Lowe’s vests or aprons on and off at work without being paid for that time.  And, of course, despite working in just 4 of Lowe’s 83 Ohio stores, the plaintiffs sought a nationwide FLSA collective action that would include approximately 200,000 non-exempt hourly employees in some 1,700 stores across the entire country.  Plaintiffs argued this was appropriate because all Lowe’s non-exempt employees are subject to the same policies of storing and wearing their uniforms. Continue Reading

High-Court Showdown Looming? NLRB Defends D.R. Horton Section 7 Decision with Full-Throated Rebuttal in Murphy Oil

Posted in Arbitration, NLRB

In the wake of federal circuit courts rejecting its position on the issue of class action waivers, the National Labor Relations Board is digging in its heels, perhaps preparing itself for a Supreme Court battle.  Employers must continue to beware that their employment arbitration agreements barring class claims may still be found unenforceable by the Board despite volumes of federal case law holding otherwise.  The Supreme Court has not yet weighed in, because the Board—always on the losing side, thus far—hasn’t asked it to.

The Board’s aggressive stance was reflected in Tuesday’s Murphy Oil, USA, Inc. and Sheila M. Hobson, 361 NLRB No. 72, 2014 WL 5465454 (N.L.R.B. Oct. 28, 2014) in which the Board vociferously said it is refusing to yield from the position it staked out in its 2012 D.R. Horton decision.  In D.R. Horton, the Board held a class-action waiver to be unenforceable, despite a Federal Arbitration Act policy favoring arbitration, because Section 7 of the National Labor Relations Act protects employees’ rights to act concertedly, including pursuing class claims.  Since then, rejection has been harsh and unanimous. The Fifth Circuit directly overturned the D.R. Horton decision, and other circuits, including the Second, Eight, and Ninth, held it to be unpersuasive considering the U.S. Supreme Court’s edict that as a matter of FAA policy, arbitration agreements are to be enforced according to their terms.  (We previously blogged on the trend of circuit court rejecting the Board’s D.R. Horton stance on August 23, 2013 and December 4, 2013.) Continue Reading

Publix to Pay $6.8 Million Settlement over Noncompliant Background Check Forms

Posted in FCRA

If your company’s background check disclosure form includes a release of liability, take it out.

Less than a year after a federal district court in Pennsylvania ruled that Closetmaid violated the Fair Credit Reporting Act (FCRA) by including release language in its background check disclosure form, the Publix supermarket chain agreed to pay nearly $6.8 million to settle a similar lawsuit.

In both lawsuits, the employers used background check disclosure forms that not only disclosed to applicants that a background check would be performed, but also asked the applicant to release the company from any liability in connection with the background check process.  The FCRA, which is the federal law that governs pre-employment background checks, requires that employers provide a disclosure to applicants before conducting a background check.  Simple enough, but the FCRA also requires that this disclosure be made in writing and “in a document that consists solely of the disclosure.” 15 U.S.C. § 1681b(b)(2). Continue Reading

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