Seyfarth Shaw Class Action Report – 2007 Edition

On January 22, 2007, Seyfarth Shaw LLP published its third Annual Workplace Class Action Litigation Report. The Report examines the leading class action and collective action decisions in 2006 involving workplace issues. 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. The Report 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.

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.

To request a copy of the 2007 Report on CD-ROM, please send your contact information to seyfarthshaw@seyfarth.com.

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