Federal Circuit Affirms Dismissal of Independent Contractor Misclassification Claims

By Greg Mersol on July 18, 2018 Posted in Class Action Litigation

My father grew up in Nazi-occupied Europe during World War II and would tell the story of how an official would come to his family’s home to modify their radio so they could not receive BBC broadcasts. Shortly after the official left, the family would open the radio box and fix the clumsy modifications that had been made so they could continue to receive outside news from a source not controlled by a fascist government.

In like fashion, during the Cold War, America broadcast its own messages behind the Iron Curtain through Voice of America. In response, some then-Communist countries tried to counter these broadcasts with jamming technologies. I hadn’t heard much about Voice of America since the fall of the Soviet Union, but it still exists as an independent federal agency. It has roughly a thousand employees and currently broadcasts the news in scores of languages around the world, drawing criticism from countries such as Russia and North Korea.

Eighth Circuit Quashes Subpoena for Related Entities in FLSA Case

By Greg Mersol on July 9, 2018 Posted in Wage and Hour

It’s fairly uncommon to see discovery issues make their way to courts of appeal, particularly in class action or wage and hour cases. Last week, however, the Eighth Circuit issued a decision regarding the scope of discovery in a wage and hour action that may be useful in both kinds of cases in the future.

The decision in Acosta v. La Piedad Corporation, Case No. 17-1845 (8th Cir. July 3, 2018), concerned a wage and hour investigation by the United States Department of Labor (DOL) of a chain of Mexican restaurants. The DOL subpoenaed information regarding related entities also affiliated with the company’s owners, in an obvious attempt to broaden the scope of its inquiries and to tie in additional related locations. The requests included basic information about the company’s owners that was not at issue. More importantly, they sought “all documents showing the names and addresses of all other businesses that are partially and/or fully owned by any of the owners … and the percentage of ownership.” The employer refused to produce anything on that subject, prompting the DOL to petition the district court for the enforcement of the subpoena, a petition that was granted.

New York District Court Rejects Putative Class Settlement Involving Interns

By Greg Mersol on July 5, 2018 Posted in FLSA

An improper class still isn’t a class even if you settle

Here’s something you don’t see every day. A district court has rejected the settlement of a proposed class and collective action – not due to the usual reasons such as excessive attorney fees or other terms, but because the plaintiffs have not shown that there is any class in the first place.

Fraticelli v. MSG Holdings, L.P., Case No. 13 Civ. 6518 (S.D.N.Y. July 2, 2018), involved claims by unpaid interns working at Madison Square Garden since 2007. They contended that they were actually employees and should have received the minimum wage and overtime for the time that they worked. They filed their claims in 2013, when many such suits were being filed, but the district court denied conditional certification in 2014. We blogged about that initial decision here. The court’s decision was rooted in common sense – the test under the FLSA involves multiple factors, and the specific work and circumstances for each intern were likely to differ. The court concluded that conditional certification was pointless because even under the relaxed standard for conditional certification, there was no basis to conclude that there was any viable class. The parties then reached a settlement of the matter on a classwide basis.

Illinois District Court Rejects Bid to Hold Jimmy John’s Liable for Franchisees’ Employees

By Greg Mersol on July 3, 2018 Posted in FLSA

Fast food enterprises are frequent targets for claimed wage and hour violations. Because in many instances the places where the plaintiff worked is actually a franchise, the scope of a claim or proposed class may be limited to a few locations, rather than the entire chain. It is therefore not uncommon to see efforts made to hold the large brand-name franchisor liable for what might happen in an individual franchisee’s store. In 2016, the Subway chain addressed that issue by adopting the novel approach of providing training to its thousands of franchisees, to help them comply with the FLSA. We blogged about that program here.

Like Subway, the competing Jimmy John’s sandwich chain has grown explosively through franchising. It has over 2,500 stores, over 95 percent of which are franchises. There are at least 700 franchisees, ranging in size from a single store to one owning over 50. Its marketing to potential franchises touts the earning potential of owning a store, but also emphasizes the need for hard work, long hours and adherence to brand standards.

6th Circuit Rejects Crude Statistics Based on Small Sample

By Greg Mersol on June 29, 2018 Posted in EEOC

Case addresses scope of EEOC charge, too

The Sixth Circuit has issued an opinion involving a number of class action and employment issues in a case arising out of an unusual fact pattern and convoluted procedural history. The most important of these involve the use of small statistical samples and potential defects in the EEOC charges, but despite the odd history, there are other worthwhile holdings as well. We’ll skip over the contorted history and focus on just the parts of interest.

The decision in Peeples v. City of Detroit, Case No. 17-1222/1250 (6th Cir. June 1, 2018), arose out of the city of Detroit’s 2012 bankruptcy and its resulting layoffs of firefighters. On the eve of the city’s bankruptcy, it announced the need to lay off more than 2,000 workers in various departments. Pursuant to the terms of its labor agreement with the firefighters’ union, the city sent a notice containing a list of 22 firefighters to be laid off. Although the list was ranked by seniority – a seemingly objective basis – a dispute arose with the union over how that seniority should be calculated, resulting in a class action grievance filed by the union. The city capitulated and eventually laid off 27 firefighters based on the list the union advocated, which contained a higher number of minority firefighters than the city’s did. Less than three months later, the union changed its mind and agreed that the city’s initial list was correct. The city and union settled, or at least it seemed they had settled, the claims of those individuals for back pay. Approximately 10 of the affected individuals, however, contended that they were selected based on their race or national origin and filed suit against both the union and the city. The district court ultimately granted summary judgment against the plaintiffs on both procedural and merits grounds.

New York District Court Denies Conditional Certification of Class of Café Managers

By Greg Mersol on June 27, 2018 Posted in Class Certification, FLSA

The United States District Court has rendered a decision that is interesting in at least two respects. First, it is a lengthy and thoughtful opinion denying certification of a putative class of 1,100 café managers under the Fair Labor Standards Act (FLSA). Second, the court based the decision, at least in part, on the recent United States Supreme Court decision in Encino Motor Cars, LLC v. Navarro, 138 S. Ct. 1134 (2018), which more than arguably altered prior case law requiring FLSA exemptions to be construed narrowly. We previously blogged that decision here.

In Brown v. Barnes and Noble, Inc., Case No. 1:16-cv-07333 (RA) (KHP) (June 25, 2018), the plaintiffs brought a putative collective action against the Barnes & Noble book chain purportedly on behalf of its café managers. The plaintiffs moved for conditional certification early in the case, which the court denied without prejudice, in part because the plaintiffs had not provided the claimed improper company policies. Following a period of discovery, the plaintiffs then moved again for conditional certification.

The Supreme Court Confirms That Class Plaintiffs Must Take Their Bite of the Apple Sooner Rather Than Later

By Jeffrey Vlasek on June 12, 2018 Posted in Class Action Litigation, Rule 23

Although he is remembered as a Los Angeles Laker, Hall of Famer Kareem Abdul-Jabbar, as basketball trivia buffs know, actually began his NBA career on the Milwaukee Bucks. After turning down an offer to play for the Harlem Globetrotters, Abdul-Jabbar was drafted by the Bucks in 1969, where he won the MVP in his second season while leading the Bucks to their sole NBA championship in 1970. In October 1974, Abdul-Jabbar requested a trade to Los Angeles, and the rest (including his role as Roger Murdock in Airplane!) is history.

1974 was also a monumental year with regard to class-action tolling. In American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court held that the timely filing of a class-action tolls the applicable statute of limitations for all persons encompassed by the class complaint. Where class action status is denied, the Court ruled that members of the failed class could timely intervene as individual plaintiffs in the still-pending, non-class action, even though it had been divested of its class character. The question before the Court in China Agritech, Inc. v. Resh, Case No. 17-432 (June 11, 2018), was the natural extension of that decision: When class certification is denied, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew, beyond the time allowed by the applicable statute of limitations? Justice Ginsburg delivered the unanimous opinion: “Our answer is no.”

Experts Must Satisfy Daubert Standards at Certification Stage

By Greg Mersol on June 5, 2018 Posted in Class Certification

D.C. District Court Follows Dukes Admonition

Nearly seven years ago, in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), the Supreme Court addressed, at least in significant respect, the question of whether experts must satisfy Daubert standards at the class certification stage. In that case, the plaintiffs sought to use expert testimony about claimed gender bias in “corporate culture,” testimony the defendant sought to exclude. In relying on the testimony, the Dukes district court held that “Daubert did not apply to expert testimony at the certification stage.” In response to this pronouncement, the majority of the Supreme Court simply stated, “We doubt that is so.” We blogged this issue and the state of the law in 2011. Even prior to Dukes, it appeared that the majority of courts did find Daubert standards to apply.

Texas District Court Denies Certification of Claims Involving Claimed Racial Preferences in Requests to Staffing Agency

By Greg Mersol on May 31, 2018 Posted in Class Action Litigation

Class not reasonably ascertainable

In the wake of major wage and hour decisions such as last week’s opinion in Epic Systems Corp. v. Lewis, it’s easy to forget that employers continue to face class-action claims in other contexts, particularly with respect to claimed discrimination based on race or gender, and that such claims may be very difficult both to mount and to defend.

In White Glove Staffing, Inc. v. Methodist Hospitals of Dallas, Civil Action No. 3:17-CV-1158K (May 29, 2018), the court considered an interesting fact pattern involving a staffing agency that supplied food service workers in a hospital environment. The crux of the claim was that the hospital allegedly insisted that the staffing agent only sent Hispanic employees, and rejected at least one African-American prep cook on the grounds that she was “not working out.” When faced with the claimed demand only for Hispanic workers, the staffing agency terminated the contract.

The Legality of Class Action Waivers in Arbitration Agreements – SCOTUS Finally Speaks

By John Lewis and Dustin Dow on May 21, 2018 Posted in Class Action Litigation

The controversy surrounding the validity of employment arbitration agreements with class action waivers has been simmering since at least 2012. Now, with the Supreme Court’s decision in Epic Systems Corp. v. Lewis, we have an answer: They “must be enforced as written” despite any debatable policy within the National Labor Relations Act that suggests otherwise. Before we analyze the majority and dissenting opinions, let’s take a quick look backward.