Class Action

Fool’s Gold: Second Circuit Vacates Order Affirming Arbitrator’s Certification of Class of Jewelry Store Workers Including Absent Class Members

On July 24, 2017, the Second Circuit Court of Appeals rejected a federal district court’s approval for a class of roughly 69,000 women claiming that Sterling Jewelers, Inc. (“Sterling”) discriminated against them based on sex. The decision overturned a district court ruling that affirmed an arbitrator’s decision to let the women proceed to trial as a class in an arbitration.

Plaintiffs initially filed a class action lawsuit in March 2008, alleging that Sterling’s practices and policies led to women being deliberately passed over for promotions and paid them less than their male cohorts. The case was sent to arbitration several months later under Sterling’s arbitration clause.

In 2009, an arbitrator ruled that Sterling’s dispute resolution program did not specifically bar class actions and allowed claimants to seek class status. From there, the case took a number of twists and turns, which we reported on more fully at the time here.

In June 2013, the employees moved for class certification. In February 2015, the arbitrator ruled that that the employees could proceed as a class in the arbitration.  In November 2015, the district court affirmed the arbitrator’s decision concluding that the arbitrator did not exceed her authority by certifying a class that included absent class members i.e., employees other than the named plaintiffs and those who have opted into the class.  Sterling appealed. READ MORE

Allegations of Misclassification Are Insufficient to Demonstrate Commonality and Typicality According to California Court of Appeal Decision

The California Court of Appeal for the Fourth District held that misclassification alone does not establish liability for overtime violations, and, thus, the fact that members of a putative class were classified as exempt was not sufficient to demonstrate the required commonality and typicality for a misclassification class action to proceed. The court in Kizer v. Tristar Risk Management held that in addition to alleging misclassification, the plaintiffs needed to prove that the misclassification caused harm. The standard announced by the Kizer Court augments the burden on plaintiffs in misclassification wage and hour class actions to establish commonality and typicality. On July 26, the decision was certified for publication. READ MORE

Supreme Court to Hear Oral Argument in October on Enforceability of Employment Class Action Waivers in Arbitration Agreements

In January, we reported that the Supreme Court granted review of three conflicting Court of Appeal decisions to settle the question of whether an agreement requiring that employees resolve employment-related disputes through individual arbitration violates the National Labor Relations Act (“NLRA”).

Last week, the Supreme Court set oral argument for October 2, 2017 to resolve the circuit split on whether mandatory class action waivers violate the NLRA. The Fifth, Second and Eight Circuits rejected the National Labor Relations Board’s (“NLRB”) position that class action waivers unlawfully interfere with employees’ NLRA rights to engage in concerted activity. See Murphy Oil USA, Inc. v. NLRB, 808 F.3d. 1013 (5th Cir. 2015); Cellular Sales of Missouri, LLC v. NLRB, 824 F.3d 772 (8th Cir. 2016); Patterson v. Raymours Furniture Co., Inc., 2016 WL 4598542 (2d Cir. Sept. 2, 2016).  The Ninth and Seventh Circuits however, held that an arbitration agreement precluding class actions violates the NLRA and is not preempted by the Federal Arbitration Act (“FAA”). See Morris v. Ernst & Young, 834 F. 3d 975 (9th Cit. 2016) Epic Systems Corp. v. Lewis, 823 F.3d 1147 (7th Cir. 2016).  The Ninth Circuit’s opinion distinguishes mandatory class action waivers from those agreements that permit employees to opt-out.

In June, Ernst & Young, Murphy Oil and Epic Systems filed their opening briefs with the Supreme Court, requesting that the Court affirm the Fifth Circuit’s decision and reject the Seventh Circuit’s decision. The companies argued that the FAA requires enforcement of class action waivers because it requires enforcement of agreements to arbitrate according to their terms and the NLRA’s provisions protecting employees’ right to act in concert do not override the FAA. The U.S. Department of Justice filed one of 17 amicus curiae briefs last month in support of the enforceability of class action waivers.  The Department of Justice’s argument that the NLRB’s position contradicts the FAA is especially significant given its previous contrary position under the Obama administration.

DOJ Flips the Switch on Class Waivers in Arbitration Agreements, Signaling Possible Changes to Come

Arbitration agreement form on an office table DOJ Flips the Switch on Class Waivers in Arbitration Agreements, Signaling Possible Changes to Come

On Friday, June 16, 2017, the United States Department of Justice (DOJ) filed an amicus brief reflecting a change of heart when it comes to the enforceability of class waivers in arbitration agreements.  In an unprecedented move, President Trump’s acting solicitor general, Jeffrey B. Wall, said his office had “reconsidered the issue and has reached the opposite conclusion” as the Obama administration in a set of consolidated cases currently before the U.S. Supreme Court, NLRB v. Murphy Oil USA Inc. (Docket Nos. 16-285, 16-300, and 16-307).

READ MORE

In Nationwide Conditional Certification, Evidence Still Matters

As employers well know, the Fair Labor Standards Act (“FLSA”) permits employees to file suits on behalf of themselves and others who are “similarly situated.” 29 U.S.C. 216(b).  In practice, this often means large employers find themselves defending against a single or handful of employees attempting to certify a collective action that includes hundreds or thousands of employees nationwide.  Many times, the collective group includes employees in states where the plaintiffs have never worked.  However, as a NY federal court recently reminded us, while plaintiffs’ evidentiary burden is not onerous at this stage, lack of knowledge about the employees in other states continues to be an obstacle for plaintiffs in obtaining conditional certification.  On the opposite side of the coin, this failure of evidence can be utilized by defendant employers to narrow the proposed collective group or altogether prevent the conditional certification of a collective action.  READ MORE

Flagged Down: Second Circuit Finds NYC “Black Car” Drivers Are Independent Contractors

The Second Circuit has affirmed the dismissal of a class action of New York City “black car” drivers who alleged they were misclassified as independent contractors by their dispatchers. In reaching its ruling, the Court found that multiple factors of the economic realities test weighed against employee status for the drivers.

Black car drivers provide rides to high-end clientele, such as business executives, celebrities, and dignitaries. In 2012, a class of drivers sued Corporate Transportation Group Ltd. and a number of its affiliates (collectively, the “dispatchers”) alleging they were misclassified as independent contractors in violation of the FLSA and New York Labor Law.  After originally granting conditional class certification, the U.S. District Court for the Southern District of New York granted the dispatchers’ motion for summary judgment, concluding the drivers were properly classified as independent contractors under both statutes. READ MORE

Back To The Drawing Board: Tenth Circuit Denies EEOC Subpoena Request Seeking To Expand Individual Charge Into Pattern-or-Practice Investigation

“[A] single discriminatory act does not, by itself, warrant a broader patter-or-practice investigation.” That was the conclusion the Tenth Circuit reached recently when it affirmed a federal district court’s denial of an EEOC subpoena request.  Although the Tenth Circuit disagreed with part of the lower court’s reasoning, it ultimately determined the EEOC’s request was flawed on several grounds. READ MORE

I’ll Defer To You: Supreme Court Rules Appellate Courts Should Apply Abuse Of Discretion Standard When Reviewing EEOC Subpoena Efforts

Recently, in McLane Co., Inc. v. EEOC, case number 15-1248 , the United States Supreme Court clarified the standard for when an appellate court reviews a trial court’s order to enforce or quash a subpoena from the EEOC. Vacating a Ninth Circuit decision applying a de novo standard of review, the Court ruled that appellate courts should review based on the abuse of discretion standard. READ MORE

It’s Smooth Sailing for a Shipping Company After Ninth Circuit Arbitration Victory

Last month, the Ninth Circuit issued a notable opinion addressing the enforceability of arbitration agreements in Poublon v. C.H. Robinson Co., 846 F.3d 1251 (9th Cir. 2017), mandate issued (Feb. 24, 2017).  In Poublon, the employee filed a class action even though she signed a dispute resolution agreement that prohibited representative actions and required her to mediate and arbitrate all other claims.  The court evaluated the agreement to determine if it was unconscionable under California law, which looks at both procedural and substantive unconscionability on a sliding scale.  Although the court held that a few provisions were substantively unconscionable, the court severed and reformed the offending provisions and largely upheld the dispute resolution agreement. READ MORE

New FCRA Class Action Against UPS Shows Traditional FCRA Claims Alive and Well

The federal Fair Credit Reporting Act (FCRA) has created a flurry of class action complaints in recent years aimed at employers who fail to comply with the FCRA’s hyper-technical disclosure and consent requirements. However, a new class action against UPS reminds us that traditional FCRA claims have not faded away and employers should remain mindful of the Act’s requirements. READ MORE