Background Check Disclosures with State Law Information Are Illegal, Ninth Circuit Declares in Class Action Case

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Check your background check disclosure forms. Now.

The Ninth Circuit has now declared that background check disclosure forms that include state law disclosures are illegal. Gilberg v. California Check Cashing Stores, LLC, Case No. 17-16263 (9th Cir. Jan. 29, 2019).

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Texas District Court Refuses to Certify Class of Nurses in Wage Antitrust Case

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Expert’s Report Didn’t Adequately Explain Causation

While antitrust cases are often good candidates for class action treatment, it is still important for the plaintiffs to demonstrate a connection between the alleged anti-competitive conduct and the alleged harm, as a recent case from the Western District of Texas found. In Maderazo v. VHS San Antonio Partners, L.P., Case No. SA-06-CA-535-OG (W.D. Tex. Jan. 22, 2019), the plaintiffs were registered nurses working for hospitals in the San Antonio area. They contended that between 2002 and 2007, the hospitals conspired to hold down the wages paid to their nursing staffs. This was accomplished, they contended, through a combination of participation in salary surveys and in-person, email and telephone communications between human resources employees of different hospitals. The proposed class had between roughly 5,000 and 11,000 members. Following what appears from the docket to have been nearly 10 years of litigation, the plaintiffs filed an amended motion to certify the class.

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District Court Decertifies Hostile Environment Sexual Harassment Suit Against Trucking Company

A beautiful, pensive woman in a broken down truck. Rifles in the back window.Most employment class actions today are wage and hour matters, but class actions for alleged discrimination are still brought and can present their own unique challenges for both plaintiffs and the defense. Apart from the procedural differences between Fair Labor Standards Act collective actions and Rule 23 class actions, one key difference between wage and hour cases and those for discrimination is the need to determine the employer’s intent. In sexual harassment cases, there is an additional element regarding how the plaintiff subjectively viewed the claimed conduct, adding another layer of determinations the court must make, one that may not be susceptible to class action treatment.

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New Prime Decision Adds Uncertainty to Arbitration in the Transportation Industry

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The U.S. Supreme Court’s decision in New Prime v. Oliveira, No. 17-340 (Jan. 15, 2019), has added uncertainty to arbitration agreements in the transportation industry by holding that the Federal Arbitration Act (FAA) § 1 exception covers both employees and independent contractors of a trucking company.

In a unanimous opinion written by Justice Neil Gorsuch, the Court found that the 1925 vintage language of § 1 of the FAA excluding “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” applied beyond the formal employee or master-servant relationship to “agreements to perform work.”

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Supreme Court Decides First Arbitration Case on Its Docket – Henry Schein, Inc. v. Archer & White Sales, Inc.

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As we noted in our Dec. 19, 2018, blog article, there were three arbitration cases involving the Federal Arbitration Act (FAA), all argued in October 2018, pending on the Court’s docket. Now, in a unanimous opinion written by Justice Brett Kavanaugh, Henry Schein, Inc. v. Archer & White Sales, Inc., No. 17-1272 (Jan. 8, 2019), has been decided. And as we sensed based on the oral argument, there was not much sympathy for the “wholly groundless” exception to the contractual delegation of arbitrability questions to an arbitrator.

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Courts Remain Skeptical of Certifying Data Privacy Class Actions

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In this era where there appears to be a new data security incident announced each month, there is surprisingly little class certification jurisprudence for data security class actions. Indeed, to date we know of only four decisions that have addressed class certification of data privacy actions, excluding settlement certification, and only one of those addresses the release of employee data: Dolmage v. Combined Ins. Co. of Am., No. 14 C 3809, 2017 WL 1754772, at *7 (N.D. Ill., May 3, 2017); In re Target Corp. Customer Data Sec. Breach Litig., 309 F.R.D. 482, 484 (D. Minn., 2015); In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 293 F.R.D. 21, 33 (D. Me., 2013); and In re TJX Companies Retail Sec. Breach Litig., 246 F.R.D. 389, 397-98 (D. Mass., 2007). With only one exception (Target), courts have refused to certify contested data privacy classes.

The theme of decisions denying class certification is that causation and damages in data security actions are individualized questions that defeat the commonality or predominance tests of Rule 23(a) and Rule 23(b)(3). For example, in Dolmage, the defendant insurance company’s vendor posted Social Security numbers and other personal information of thousands of the defendant’s employees online. Dolmage, 2017 WL 1754772 at *1-2. The court, however, refused to certify a class of the employees and explained why data security cases may be unsuitable for class resolution. Id. at *6-10.

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California Off-the-Clock Case Involving Independent Contractors Crumbles

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Extensive expert report still fails to establish fairness and manageability for trial.

A growing number of courts are questioning classwide proof in off-the-clock cases, and those examining expert testimony in such matters are increasingly coming to the conclusion that they cannot be fairly managed for trial.

We’ve blogged this issue several times (see, for example, January 8, 2019 and April 9, 2018). Another interesting recent example is the decision of the California Court of Appeal in McCleery v. Allstate Insurance Co., Case No. B282851 (Cal. App. Dec. 14, 2018). The McCleery plaintiffs were property inspectors working for various insurers who had been classified as independent contractors. They alleged that they were, in fact, employees and that they had been deprived of the minimum wage, overtime, and meal and rest periods under California law.

The case looked like hundreds of others brought in California, but it did have the interesting combination of independent contractor and off-the-clock (actually timekeeping) issues. It was also unusual in that the trial court initially refused to certify the class but was reversed by the court of appeal to more carefully review the plaintiffs’ proposed trial plan.

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Third Circuit Reverses Rule 23 Certification in ‘Off the Clock’ Case

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Ruling also touches upon FLSA conditional certification order

Many wage and hour cases filed today try to name popular targets and to rely upon tried and true allegations. Unfortunately for employers, this is at times a successful playbook, particularly when settlement is the primary goal. That approach, however, doesn’t always work, particularly if the district court doesn’t employ the appropriate rigorous analysis under Rule 23, as a case decided on New Year’s Eve demonstrates. That case also addresses conditional certification under the Fair Labor Standards Act (FLSA) and the interplay between Rule 23 standards and those under FLSA Section 16(b), reflecting or possibly casting doubt on the ambivalent approach taken by many courts.

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What’s Ahead at the Supreme Court?

There are at least four cases now before the U.S. Supreme Court that may be of significant interest to employers. Three were argued in October 2018, and certiorari was granted in the last case on Dec. 10.

The Three Cases Already Argued

The three cases argued all involve arbitration. The first, New Prime Inc. v. Oliveira, No. 17-340, was argued on Oct. 3, 2018. The issues presented were:

Whether a dispute over applicability of the Federal Arbitration Act’s (FAA’s) Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and (2) whether the FAA’s Section 1 exemption, which applies on its face only to “contracts of employment,” is inapplicable to independent contractor agreements.

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Southern District of New York Denies Certification of Nationwide Case Alleging Sex Discrimination

A claim is brought against a large employer contending that, although personnel decisions are made locally, it discriminates in pay and promotions on the basis of sex nationwide. Sound familiar? That was, essentially, the claim in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), that the Supreme Court held should not have been certified. And seven years later, it was the claim the Southern District of New York has now refused to certify in Kassman v. KPMG LLP, Case No. 11-cv-3743 (Nov. 30, 2018).

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