Articles Discussing General Issues In Employment Law Class Actions

The U.S. Supreme Court heard oral argument in Campbell-Ewald Company v. Gomez, No. 14-857, a case that could significantly affect the viability of class action litigation, particularly wage and hour class actions, though the case pending before the Court arises under the Telephone Consumer Protection Act (TCPA).

Below is a link to the latest issue of the Jackson Lewis Class Action Trends Report.

ERISA neither expressly nor impliedly prohibits mandatory arbitration of claims. Numerous courts that have analyzed the purpose of both ERISA and the Federal Arbitration Act (“FAA”) have held that ERISA claims are arbitrable. And while the Supreme Court has not spoken directly to the issue, the Court’s pro-arbitration jurisprudence under the FAA – culminating with several decisions approving the inclusion of class action waivers in arbitration agreements – strongly suggests that it would approve of the inclusion of ERISA claims in an arbitration agreement. Moreover, courts applying the recent Supreme Court decisions involving mandatory arbitration agreements have affirmed the use of class waivers in a variety of federal statutory contexts, including ERISA. As a result, more and more employers are implementing broad arbitration clauses with class action waivers.

The United States Supreme Court unfortunately denied review in Bridgestone Retail Operations v. Milton Brown (Docket No. 14-790) – thereby declining a second opportunity to review the California Supreme Court’s determination that PAGA representative action waivers in employment arbitration agreements are not enforceable. Earlier this year, the U.S. Supreme Court denied review in Iskanian v. CLS Transportation, which first presented the issue for review before the high Court. In Iskanian, the California Supreme Court of course held that class action waivers in arbitration agreements are enforceable, but that PAGA representative action waivers are not. The Iskanian Court’s reasoning is difficult to square with U.S. Supreme Court precedent in Concepcion v. AT&T Mobility. As such, many employers were hoping the Court would grant review if not in Iskanian then at least in Bridgestone — with the issue being presented for a second time in that case. No such luck.

Last week, the U.S. Court of Appeals for the Ninth Circuit issued two opinions attempting to clarify what proof a defendant seeking removal must produce to establish the $5 million amount-in-controversy requirement for removing a class action lawsuit under the Class Action Fairness Act (CAFA).

A recent class action alleging discriminatory hiring practices against beneficiaries of the Department of Homeland Security’s Deferred Action for Childhood Arrivals (“DACA”) deserves attention in light of President Obama’s recent directive to defer action for as many as five million individuals. The suit was filed this past July in the Southern District of New York and is currently pending before Judge Katherine Forrest. The named plaintiff alleges the company’s hiring policies constitute unlawful discrimination based on alienage under 42 U.S.C. § 1981. Courts have long been resistant to allowing alienage claims under Title VII, which does however allow closely related national origin discrimination claims, and that is likely why the plaintiff has sued under Section 1981, which prohibits discrimination based on alienage.

In Chapman v. BOK Financial Corp., a federal court in Oklahoma found that the plaintiff loan officers failed, as a matter of law, to establish a willful violation of the Fair Labor Standards Act (FLSA) and dismissed those claims that were time-barred by the FLSA’s standard two-year limitations period. This is a welcome decision for employers, as some federal courts hesitate to resolve the issue of willfulness at the summary judgment stage despite the plaintiff’s failure to produce evidence of a willful violation.

The swelling tide of class action litigation against employers under the Fair Credit Reporting Act (FCRA) is unmistakable. It cuts across all industries, including retailers, restaurant chains, theatre chains, manufacturers, financial institutions and transportation companies. To illustrate how the threat to employers is concrete, not merely hypothetical, close to a dozen nationwide class actions were filed in plaintiff-friendly venues during just June and July 2014. Three suits were filed by one firm on the same day in July.

A judge of the U.S. District Court for the Central District of California recently issued a pro-employer ruling with regard to the jurisdictional minimum amount in controversy required by the Class Action Fairness Act (CAFA) of 2005—an issue that has not been resolved by the Ninth Circuit Court of Appeals and on which the district courts are split. According to this federal court, the amount in controversy in a case brought under the California Labor Code Private Attorneys General Act of 2004 (PAGA) includes the entire amount of potentially recoverable statutory damages regardless of how much of it is recoverable by the state or by individual employees. Stafford v. Brink’s Incorporated, U.S. District Court for the Central District of California, No. CV-14-1352-MWF-PLA (May 28, 2014).

The United States Court of Appeals for the Eleventh Circuit became the latest federal appellate court to enforce an arbitration agreement with a class action waiver in a collective action under the Fair Labor Standards Act. In Walthour v. Chipio Windshield Repair, LLC, the court affirmed the district court’s order granting the employers’ motion to compel plaintiffs to arbitrate their FLSA claims on an individual basis.

Executive Summary: The Eleventh Circuit recently held that an arbitration agreement that waives an employee’s ability to bring a collective action under the Fair Labor Standards Act (FLSA) is enforceable under the Federal Arbitration Act (FAA). See Walthour v. Chipio Windshield Repair, LLC (11th Cir. March 21, 2014). The court rejected the plaintiffs’ argument that the right to file a collective action under the FLSA is a non-waivable substantive right and that the agreement was invalid because it purported to waive that right. The court found no contrary congressional command in the FLSA that would override the FAA’s strong policy in favor of arbitration.

In Rea v. Michaels Stores, a recent per curiam decision by the Ninth Circuit Court of Appeals, the court held that the employer had timely and properly removed a class action to the U.S. District Court for the Central District of California under the Class Action Fairness Act (“CAFA”).

The Class Action Fairness Act (CAFA) was enacted in 2005 to make it easier for out-of-state defendants to remove interstate class actions to federal court. As the Senate Judiciary Committee’s Report noted at the time, plaintiffs’ attorneys were filing nationwide class actions and “carefully crafting language to avoid federal courts,” in order to “easily ‘game the system’ and avoid removal of large interstate class actions to federal court.” But even after CAFA’s enactment, out-of-state employers in the Ninth Circuit struggled to remove class actions because under the standard set forth in Lowdermilk v. U.S. National Bank Association, defendants needed to establish to a “legal certainty” the $5 million amount in controversy required for CAFA removal.

A recent Second Circuit decision has resulted in a major victory for employers who seek to eliminate class actions and resolve employment disputes through arbitration. In Southerland v. Ernst & Young LLP, Case No. 12-304 (August 9, 2013), the court held that nothing in the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201, et seq. prohibits an employer from including a class action waiver provision in an arbitration agreement. Under this holding, an employee cannot avoid a class-action waiver provision in an arbitration agreement by claiming that the waiver removes the financial incentive for her to pursue a claim under the FLSA. However, the Second Circuit did note that such a provision can be invalidated if it seeks to waive or prohibit the employee’s legal rights.