Seyfarth Shaw's 8th Annual Workplace Class Action Litigation Report Reviews 'Transformative Year' In Employment Class Actions, Sees Ripple Effect Through 2012

Seyfarth Shaw's 8th Annual Workplace Class Action Litigation Report Reviews 'Transformative Year' In Employment Class Actions, Sees Ripple Effect Through 2012

Supreme Court rulings in Dukes and Concepcion will reverberate as plaintiffs' bar re-boots class certification strategies and employers formulate new defenses

CHICAGO - Leading employment law firm Seyfarth Shaw LLP has issued its annual Workplace Class Action Litigation Report, covering a charged national landscape of "bet the company" employment disputes fueled by an aggressive plaintiffs' bar, invigorated federal and state enforcement regimes, a sluggish economic recovery, and several groundbreaking rulings by the U.S. Supreme Court in 2011 that are certain to reverberate in the year ahead and beyond, the firm said in a press release.

Seyfarth notes that the Supreme Court's decision in Wal-Mart Stores v. Dukes, handed down last June, has already been cited more than 260 times in federal and state court opinions, and AT&T Mobility v. Concepcion 215 times - remarkable figures for rulings less than a year old. Dukes, which established a new standard for certifying class actions, and Concepcion , which held that federal arbitration law supersedes limitations imposed by individual states, opened the floodgates to a wave a new case law in class actions, which will continue to evolve in the coming year and impact litigants for years to come.

Released this week, Seyfarth's 8th annual Workplace Class Action Litigation Report examines the theoretical and strategic uncertainties stemming from the Supreme Court's employment law rulings in 2011, and the challenges they pose for companies and their defense counsel. The new report is the most comprehensive yet, examining 976 class action decisions rendered in the past 12 months by federal and state courts, including private plaintiff and government enforcement actions. The number of case rulings covered by Seyfarth climbed 15 percent over last year's total of 849 - a direct result of issues raised by Dukes and Concepcion that have loomed over workplace litigation since those landmark decisions last spring.

Seyfarth's Report remains the sole compendium dedicated exclusively to labor and employment class action litigation in the United States. Regarded as "the definitive source on employment class action litigation" (EPLiC Magazine, Spring 2011), it has become the "go-to" research and resource guide for businesses and corporate counsel facing complex litigation. Corporate counsel routinely depict the prospect of large workplace class-actions as especially worrisome for companies, as well as a significant burden for in-house legal budgets.

As it has since its first edition in 2004, the report is authored by Seyfarth Shaw partner Gerald L. Maatman Jr., co-chair of the firm's class action defense group and co-author of one of two amicus briefs submitted by Seyfarth to the Supreme Court in Dukes. Maatman also led a number of his own winning class action defense strategies in 2011, including a historic turn in a lawsuit brought by the EEOC in which he won the right to depose EEOC officials about the agency's own personnel practices.

Click here to link to the introductory chapter on trends in the 2012 edition of the Workplace Class Action Litigation Report.

The report makes clear that 2011 workplace collective filings rose on nearly every front, from Fair Labor Standards Act and ERISA claims to government enforcement actions, even as other prime litigation theaters such as shareholder and securities actions were largely static. The Equal Employment Opportunity Commission (EEOC) set a new record with nearly 100,000 new discrimination filings against private-sector employers - an expression, the report notes, of challenging economic conditions as well as the Obama Administration's emphasis on aggressive enforcement. These EEOC charges "will become ripe for initiation of lawsuits in 2012," Maatman says.

Reflecting what the report calls the EEOC's "laser focus on high-impact litigation," the agency in 2011 launched 580 systemic investigations involving large groups of alleged victims - a 24 percent spike over 2010.

Maatman notes that employers should prepare themselves for a particular irony in light of the essentially favorable Dukes ruling.

"One of the inevitable consequences of Dukes is not a decrease in the number of workplace class actions, but a likely increase - the wrinkle being that the new difficulty in achieving nationwide certification is forcing the plaintiffs' class action bar into seeking multiple state or perhaps regional class cases to improve the chances of certification. Whatever the overall dimensions of class action filings, one certainty is that plaintiffs' attorneys will be seeking a new template for certifying workplace class cases for the purpose of negotiating large settlements with defendants."

He continues, "As for the EEOC, we expect it to continue pursuing its priority of bringing widespread, high-stakes pattern or practice lawsuits, and pursuing novel litigation issues and industry leaders for maximum impact. Despite a number of judicial sanctions levied by federal courts against the EEOC in 2011 for exceeding the bounds of good faith in prosecuting some of its lawsuits, the EEOC does not seem to have been deterred at all from maintaining a white-hot level of enforcement."

The 2012 Workplace Class Action Litigation Report highlights several significant developments and emerging trends whose effects are likely to be felt throughout the new year:

  • As a result of Dukes and Concepcion in particular, a skilled and tight-knit plaintiffs' class action bar is retooling litigation strategies, while equally innovative defense litigators have broken new ground with novel tactics to thwart or dismantle class actions and block class certification. Concurrently, federal and state courts are revisiting class certification rulings in pending cases, based on the new parameters Dukes and Concepcion created for Rule 23 cases and workplace class arbitration.
  • Wage & hour filings continue to outnumber all other workplace class actions, with FLSA actions brought in federal court leading the way. Wage & hour filings also rose at the state-court level, particularly in key influential states such as New York, California, Illinois, Massachusetts, Pennsylvania, and New Jersey. This trend is expected to continue in 2012. (FLSA collective actions are covered in chapter 5 of the Report, while state court workplace class actions are analyzed in chapter 7.)
  • The uncertain economic climate continues to spur ERISA class actions seeking recovery of 401(k) losses. As ERISA cases grow in size and complexity, they are driving a trend toward substantially higher settlement figures. At the same time, the plaintiffs' bar in ERISA cases is also bumping up against questions over whether and how they can meet class certification requirements, which could make certification of ERISA claims more difficult in the year ahead. (The Report analyzes ERISA class actions in chapter 6.)
  • The EEOC is in the midst of a transition from bringing one-off cases and representing smaller groups of workers to initiating and litigating larger pattern or practice cases, abetted by increased funding from the Obama Administration that has expanded EEOC employee ranks by 15 percent since 2008. (Chapter 3, section B of the Report covers 2011 rulings in EEOC cases.)
  • Similarly, the Labor Department is aggressively expanding oversight of industries known for high rates of workplace regulation violations - such as construction, hospitality, and janitorial services - and of so-called "fissured" industries, which feature multiple organizational structures such as franchising, independent contractors, sub-contractors, and the like. Fissured industries include child-care, home healthcare, warehousing, meat processing, transportation, and others. Larger corporate-wide investigations are also expected to be part of an intensified level of DOL enforcement.
  • While the Concepcion decision from April 2011 secured companies' use of bilateral arbitration clauses in consumer contracts without risking class arbitration, subsequent case law developments from the second half of 2011 suggest that the principles outlined in Concepcion are increasingly being applied to workplace contracts.
  • A Supreme Court decision expected in 2012 in Christopher et al v. SmithKlineBeecham will determine whether pharmaceutical sales reps qualify for the outside sales exemption - potentially impacting a wide range of FLSA collective action filings and settlements. Additionally, the Supreme Court might rule on the deference to be accorded Labor Department amicus briefs, part of the DOL's active policy of weighing in on workplace-related cases.

"In terms of workplace litigation, the continuing trend is greater aggressiveness by plaintiffs' lawyers and government attorneys in bringing large, complex cases against employers," Maatman says. "There has been a significant re-shuffling of the deck as a result of landmark Supreme Court rulings in 2011; the plaintiffs' bar has quickly adopted new strategies, which calls for equal agility and innovation on the part of companies and defense counsel. Given the pervasiveness of collective and class actions in corporate America, and thus the enormous financial stakes, employers are best served by pro-active planning to determine their potential class action vulnerabilities and prepare strategies to avert full-blown class action litigation."

Seyfarth Shaw has more than 750 attorneys in 10 offices throughout the United States, including Atlanta, Boston, Chicago, Houston, Los Angeles, New York, Sacramento, San Francisco and Washington, D.C., as well as internationally in London. Seyfarth Shaw provides a broad range of legal services in the areas of labor and employment, employee benefits, litigation, corporate and real estate. The firm's clients include more than 300 of the Fortune 500 companies, and the practice reflects virtually every industry and segment of the economy. For more information, visit www.seyfarth.com.

Click here to request a copy of the report.