Employment Class Action Blog

Employment Class Action Blog

Information and Commentary on Class Action Cases Affecting Employers

U.S. Supreme Court Eases CAFA Removals

Posted in Class Action Fairness Act

Congress passed the Class Action Fairness Act (CAFA) in 2005, in response to perceived (in fact real) concerns regarding potential abuses of the class action process. Among CAFA’s important provisions was the right to remove a case to federal court.

Despite the clear congressional intent, some federal courts have treated CAFA removal with hostility. The Ninth Circuit, for example, held in 2007 that a defendant seeking to remove must prove CAFA jurisdiction by a “legal certainty,” a standard that appears nowhere in the statute. Lowdermilk v. U.S. Bank Nat’l Ass’n, 479 F.3d 994 (9th Cir. 2007). Plaintiffs, too, sought to avoid CAFA removal by various pleading tricks, such as limiting the damages they sought in their complaint – at least until the time for removal passed. Continue Reading

Unanimous Supreme Court Finds Security Screening Time NOT Compensable

Posted in FLSA, Wage and Hour

Security screening has become more common over the past decade, both to promote security for some employers and to deter employee theft for others. A growing issue in wage and hour law, at least until this morning, was whether the time spent in that screening was compensable under the Fair Labor Standards Act. In Integrity Staffing Solutions, Inc. v. Busk, Case No. 13-433 (U.S. S. Ct. December 9, 2014), a unanimous United States Supreme Court held that it was not.

We’ve blogged about some of the prior litigation in this arena, including lawsuits against clothing retailer Urban Outfitters and Apple, which you can read about here. These suits were fueled, at least in part, by the Ninth Circuit’s 2013 decision in Busk v. Integrity Staffing Solutions, Inc., Case No. 11-16882 (9th Cir. 2013), in which the court addressed claims by a putative class of workers employed at a warehouse used to ship products for Amazon.com. The crux of their claim was that they had to undergo a security screening as they left work as part of an effort to prevent employee theft. According to the plaintiffs, those security screenings could take upward of 25 minutes, as employees had to wait to remove their keys, belts, and wallets and then go through metal detectors before leaving the facility. They also asserted that the employer could have reduced the time spent waiting, even to de minimus levels, by adding more screeners or staggering quitting times. Interestingly, the district court dismissed the case without discovery under Rule 12(b)(6), finding that the complaint failed to state a claim upon which relief could be granted. It also held that, in any case, the plaintiffs could not simultaneously proceed with a Rule 23 class action under Nevada law and an FLSA section 16(b) (29 U.S.C. § 216(b)) collective action.

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Nevada Supreme Court Finds Class of Strippers Were Employees

Posted in FLSA, Independent Contractors, Wage and Hour

Given the extensive use of euphemisms in the exotic dancing trade, we’ll apologize in advance for any unintended puns.

We’ve written on the issue of the classification of exotic dancers or strippers in the past [April 8, 2011, October 19, 2011, November 21, 2012], but the question continues to ripple through the courts.  While the industry practice has been to classify the performers as independent contractors, the trend is strongly in favor of their being treated as employees.

Most recently, in Zuri-Kinshasa v. Sapphire, Case No. 59214 (Nevada Oct. 30, 2014), the plaintiffs sought to represent a class of over 6,000 semi-nude performers working at the Sapphire Las Vegas Club claiming entitlement to the minimum wage under Nevada law.  According to the court, the performers received no wages but worked solely for tips and dancing fees paid by patrons.  They had generally flexible schedules subject to the requirement that they work at least 6 hours on any given day.  The club’s rules established minimum prices for private performances (presumably lap dances), required a certain number of stage performances, and governed a minimum heel height, and the music was selected by the club DJ.  The club charged a daily house fee to the performers under a written “entertainer” agreement. The performers largely controlled the “artistic” aspects of their performances and were free to work for other establishments.

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Sixth Circuit Remands Memphis Title VII Disparate Impact Case, Yet Again

Posted in Discrimination, Title VII

It’s hard not to feel sorry for the residents of Memphis, Tennessee.  Depending on which source you consult, its violent crime rate hovers between three and four times the national average, and various publications describe it as one of the top 10 most violent cities in the United States.  As we’ve commented previously, its fire department has been embroiled in Title VII litigation regarding promotion practices for over 30 years.  And now its police department, whose primary task should be reducing that crime rate, is still fighting over its promotion practices after 40 years of litigation. This dispute, if a person, would now be old enough to qualify for protection under the ADEA.

All of these cases stem from the tests and procedures used to make decisions as to promotions.

In the most recent case,  Johnson v. City of Memphis, Case Nos. 13-5452/5454 (6th Cir. Oct. 27, 2014), the city created a promotion process for police officers in 1996 that was itself in response to what was then roughly 20 years of litigation over its promotion practices.  With the assistance of an expert, it relied heavily on a video “high-fidelity” law enforcement role-play exercise (50 percent), with consideration of a written test (20 percent), performance evaluations (20 percent), and seniority (10 percent).  Continue Reading

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