- Report Affirms that Filings are Becoming More Sophisticated and Expensive -
Chicago, IL (January 22, 2007) - - The third Annual Workplace Class Action Litigation Report by national law firm Seyfarth Shaw LLP examining leading class action and collective action decisions in 2006 involving workplace issues definitively notes that the leading trends that defined 2006 will continue in 2007: federal and state courts faced a myriad of new theories and defenses in ruling on class action and collective action litigation issues, employment class action and collective action litigation has become more sophisticated and will remain a source of significant financial exposure to employers well into the future.
The Seyfarth Shaw report is the only national report in existence analyzing workplace class action rulings. It is organized on a circuit-by-circuit and state-by-state basis of class action and collective action rulings involving claims brought against employers in all fifty state court systems, including decisions pertaining to employment discrimination laws, wage & hour laws, and Employee Retirement Income Security Act (ERISA) actions. The key class action settlements are analyzed both in terms of gross settlement dollars in private plaintiff and government-initiated lawsuits as well as injunctive relief provisions in consent decrees. In total, the report analyzes 407 rulings issued over the past 12 months. As an additional benefit, this year's report also includes important federal and state court rulings in non-workplace cases which are significant in their impact on the defense of workplace class action litigation. As in past years, Seyfarth Shaw analyzes the impact of the Class Action Fairness Act (CAFA) of 2005 on workplace litigation, and its effects on litigation strategy and the structuring of class actions filed against employers.
"This report, which has become an expected resource of analysis from Seyfarth Shaw, is a guide for corporate counsel to navigate through the increasingly litigious environment of workplace law," stated Gerald L. Maatman, Jr., general editor of the report and co-chair, Complex Discrimination Litigation Practice Group of Seyfarth Shaw. "It is a useful and comprehensive guide for corporate decision-makers to understand and apprehend the key trends and leading rulings of the past year to strategically plan ahead." The report, authored by Seyfarth Shaw’s employment attorneys, underscores and highlights the strategies of the private plaintiffs’ bar and government enforcement attorneys in their pursuit of class action and collective action litigation against employers. Maatman noted, "While shareholder and securities class action filings decreased dramatically in 2006, employment-related class action filings increased significantly. Anecdotally, surveys of corporate counsel confirmed that workplace litigation – and especially class action and multiple-plaintiff lawsuits – is the chief exposure driving corporate legal budget expenditures. The need to presciently identify, address, and remediate class action exposure must remain at or near the top of every corporate counsel’s priority list for 2007."
Conveniently organized, the report is divided into chapters that highlight the year in review ; significant federal employment discrimination class actions and Equal Employment Opportunity Commission (EEOC) pattern or practice rulings; significant class action and collective action rulings under the Age Discrimination in Employment Act (ADEA), the Fair Labor Standards Act (FLSA), the Employee Retirement Income Security Act (ERISA) of 1974; and a host of other federal statutes applicable to workplace issues.
"It is a fact of the modern American workplace that class action and collective action litigation is very attractive to the plaintiffs’ bar," stated J. Stephen Poor, managing partner of Seyfarth Shaw. "The stakes in such litigation can be extremely significant, as the financial and operational impact of such cases are enormous. Consistently, we are seeing that workplace class actions can adversely affect the market share of a major corporation and can prejudice its reputation in the marketplace."
Highlights of this year's report include:
- If trials of class actions were rare, settlements of class actions in 2006 reflected a continuing trend from past years where significant monetary payments were made in mega-class actions. Settlements in FLSA collective actions and ERISA class action outpaced employment discrimination class action settlements in terms of overall settlement values. Of particular note were a series of ERISA settlements stemming from the meltdown of Enron.
- FLSA collective action litigation increased again in 2006 and far outpaced employment discrimination class action filings. While plaintiffs continued to achieve certification of wage & hour claims, employers also secured several significant victories in defeating conditional certification and obtaining decertification of § 216 (b) collective actions. Of particular significance were a series of FLSA collective actions in the financial services industry. Big impact FLSA collective actions are expected to continue this trend in 2007.
- There were no class action rulings in 2006 quite like the certification order in Dukes, et al. v. Wal-Mart Stores, Inc., which certified a Title VII gender discrimination claim challenging pay and promotions involving 1.5 million class members. The U.S. Court of Appeals for the Ninth Circuit heard argument on the appeal of the Dukes certification order on August 8, 2005. Many expected a ruling in 2006, but none came. The Ninth Circuit’s future ruling in Dukes – and further appellate proceedings thereafter – likely will be one of the top class action developments in 2007 and beyond. At the same time, the certification order in Dukes, et al. v. Wal-Mart Stores, Inc. impacted many class action developments in 2006. The plaintiffs’ bar increasingly used the theories in the Dukes case to seek certification of "punitive damages" only classes under Rule 23(b)(2), as well as pressing for certification of mega-classes involving pay and promotion claims of employees in multiple facilities on a nationwide basis. Employers fought these theories with good success, as 2006 witnessed may pro-employer victories in class certification battles.
- The U.S. Equal Employment Opportunity Commission became increasingly activist on the litigation front in 2006. The Commission announced a new strategic enforcement and litigation plan in April of 2006; that plan centers on systemic discrimination cases with broad impact and affecting large numbers of workers, such that prosecution of pattern or practice lawsuits is now an agency-wide priority. As a result, the EEOC is focusing its investigations and resources on systemic discrimination issues, and institution of EEOC pattern or practice lawsuits increased dramatically in 2006. Employers are likely to face even more such claims in 2007.
- Congressional enactment of the Class Action Fairness Act of 2005 was a significant development for employers facing class action litigation. The CAFA was intended to address the abuses of state court judges certifying class action lawsuits involving plaintiffs from numerous states in jurisdictions with a reputation for a lack of fairness toward out-of-state defendants. As a result, the CAFA allows defendants to remove what were formerly "non-diverse" state law-based class actions if one member of the class and one defendant are citizens of different states, the class involves more than 100 people, and the aggregate amount in controversy exceeds $5 million. The statute’s impact over the past year has been significant. More class actions are being filed in federal courts, and more intrastate class actions are being heard in federal courts through the removal mechanisms under the CAFA. Because the law’s provisions are designed to prevent plaintiffs’ counsel from keeping class actions in state court that are more appropriately litigated in federal court, the CAFA forecloses the pleading tactic of requesting damages of less than $75,000 per class member (i.e., the jurisdictional limit for a federal court to hear a claim involving plaintiffs and defendants of different states) to stymie a defendant from removing the lawsuit to federal court. Over the last year, employers repeatedly and successfully invoked the statute to effectuate the removal of class actions filed in state court to federal court. In turn, federal courts issued a myriad of rulings on novel issues arising under the CAFA.
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Seyfarth Shaw has over 700 attorneys located in nine offices throughout the United States including Chicago, New York, Boston, Washington D.C., Atlanta, Houston, Los Angeles, San Francisco and Sacramento as well as Brussels, Belgium. Seyfarth Shaw provides a broad range of legal services in the areas of business transactions, labor and employment, employee benefits and litigation. The firm’s practice reflects virtually every industry and segment of the country’s business community. Clients include over 200 of the Fortune 500 companies, financial institutions, newspapers and other media, hotels, health care organizations, airlines and railroads. The firm also represents a number of federal, state, and local governmental and educational entities. For more information, please visit www.seyfarth.com.
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