Class Action

Put up your Dukes! Supreme Court Clarifies that Damages Must be Capable of Class Wide Resolution in Rule 23(b)(3) Class Actions the United States Supreme Court’s Recent Ruling in Comcast Corp. v. Behrend

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The United States Supreme Court’s recent ruling in Comcast Corp. v. Behrend, Case No. 11-864 (March 27, 2013) reinforces class certification requirements as spelled out in Wal-Mart v. Dukes. However, the closely divided court (5-4) and a strong dissent underscore that the battle over class certification standards may be far from over. While Comcast involved antitrust claims, the Court’s decision has implications for all Rule 23 cases, including employment class actions. READ MORE →

Supreme Court Eliminates Jurisdictional Escape Hatch To The Class Action Fairness Act

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The U.S. Supreme Court’s decision in Standard Fire Insurance Co. v. Knowles confirms that a plaintiff cannot avoid federal jurisdiction under the Class Action Fairness Act (“CAFA”) by stipulating that the class will seek less than CAFA’s $5 million amount in controversy threshold. READ MORE →

California Court of Appeal Denies Wage-and-Hour Class Claims and Enforces Arbitration Agreement under Concepcion

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Gavel and Hundred-Dollar Bill

Employers in California have been watching closely to see how courts will apply the United States Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), which held that the Federal Arbitration Act (FAA) preempted state law concerning the enforceability of class action waiver provisions, in which a party waives his or her right to arbitrate claims on a class basis. READ MORE →

Class Certification Denied: California Court of Appeal Holds That Reliance Upon Legal, Companywide Policies Is Insufficient to Support Class Certification

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Coins and Hourglass

On October 10, 2012, a California Court of Appeal held that a wage and hour class action could not be certified where the common company-wide policy at issue did not answer the “central liability” question of the case.

The case, Morgan v.  Wet Seal, Inc., was brought by former Wet Seal employees against the clothing store alleging that the company violated California law by requiring employees to 1) purchase Wet Seal clothing and merchandise as a condition of employment; and 2) travel between Wet Seal business locations without reimbursing them for mileage. The plaintiffs moved for class certification, pointing to written company policies as evidence of the common issues of fact and law that predominated over individual issues. Wet Seal opposed the plaintiff’s motion for class certification arguing, among other things, that their written policies actually undermined the plaintiff’s claims. The policies at issue specifically state that employees are not required to wear Wet Seal clothing and that employees may be eligible for reimbursement for mileage.

The Court of Appeal affirmed the trial court’s holding that the facially legal policies made it impossible to use a class-wide method of proving liability. For example, the Court explained that the plaintiffs’ dress code claims raised issues of 1) whether Wet Seal requires employees to wear the merchandise as a condition of employment; 2) whether the allegedly required attire constitutes a uniform; and 3) whether any given purchase by an employee constituted a “necessary expenditure.” Here, the Court found that the policy explicitly did not require wear and the policy’s description of the dress code as “consistent with the current fashion style that is reflected in the stores” was too broad and vague to constitute a “uniform” under the definition provided by the DLSE. Therefore, any question of liability would inevitably turn on what each Plaintiff was told, who told it to them, how they interpreted that information, whether the interpretation was reasonable and whether the employee then purchased merchandise pursuant to that conversation.

The Court of Appeal emphasized that the allegation of a companywide policy is not sufficient in and of itself to establish that common issues predominated because “there was no class wide method of proof for resolving this key liability question.” The anecdotal evidence provided in Plaintiffs’ declarations attempting to show a practice of requiring employees to purchase Wet Seal clothing as a uniform only reinforced the Court’s conclusion that liability would have to be decided on an individualized basis.

Narrowed Dukes v. Wal-Mart Class Survives Motion to Dismiss

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The ongoing saga of the more than decade-old sex discrimination class action against Wal-Mart (Dukes v. Wal-Mart) will continue after the federal district court handling the case allowed plaintiffs’ fourth amended complaint to survive a motion to dismiss in a ruling on September 21, 2012. In June of last year, the Supreme Court rejected the plaintiffs’ attempt to bring a nationwide class action against Wal-Mart, holding that the plaintiffs failed to satisfy Federal Rule of Civil Procedure 23(a) because they could not show sufficient commonality between the almost 1.5 million members of the class and reversing class certification. In response, the plaintiffs filed a fourth amended complaint in district court, narrowing their proposed class to several hundred thousand female Wal-Mart employees in four regions of California. Wal-Mart subsequently filed a motion to dismiss the new complaint, arguing (among other things) that it suffered from the same commonality problems as the class rejected by the Supreme Court.

The district court handling the case rejected Wal-Mart’s argument, finding that the Supreme Court took issue with plaintiffs’ evidence, not necessarily their theories and that plaintiffs should therefore have the opportunity to present evidence to demonstrate commonality among the new class members at the class certification stage. In particular, the district court noted that plaintiffs’ new complaint alleged that they could provide class-wide proof of a “culture and philosophy of gender bias shared by the relevant decision-makers,” citing to allegedly gender-biased comments made at management training meetings. The district court found that this allegation allowed the complaint to survive a motion to dismiss, while noting that the plaintiffs “still must prove that every decision-maker in the group—perhaps four hundred or so…operated under a common policy or mode of decision-making” to obtain class certification. So, although the district court found that plaintiffs’ theories do not fail as a matter of law, whether or not they will actually be successful in a renewed attempt at class certification is a different question entirely. For now, we will all have to wait to find out if the nation’s once largest sex discrimination class action can survive under the Supreme Court’s latest class certification ruling.

U.S. Supreme Court To Decide Whether Class Action Plaintiffs Can Use Stipulations To Avoid Jurisdiction Under The Class Action Fairness Act

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The United States Supreme Court recently granted certiorari to review whether class action plaintiffs can avoid federal court jurisdiction under the Class Action Fairness Act (“CAFA”) by stipulating that their damages do not exceed the federal jurisdictional prerequisite.  This issue is particularly significant to employers because they frequently rely on the CAFA to remove cases to federal court when hit with wage-and-hour and other employment class action lawsuits.  The CAFA generally permits class action defendants to remove cases with minimal diversity to federal court where the amount in controversy exceeds $5 million. READ MORE →

California Court of Appeal Says No to Class Certification of Independent Contractors

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3 Minutes to 12:00

The California Court of Appeal has affirmed a trial court’s order denying class certification on the alleged misclassification of independent contractors. The Court of Appeal provides a lengthy analysis of ascertainability and predominance of common issues of law and fact under California’s class action laws.  READ MORE →

CA Court Holds Employment Arbitration Agreement Waiving Class and Representative Actions Enforceable

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Gavel and Hundred-Dollar Bill

In Iskanian v. CLS Transportation Los Angeles, LLC, (Cal. Ct. App. June 4, 2012), the California Court of Appeal for the Second Appellate District affirmed a decision to compel individual arbitration of wage-and-hour claims pursuant to an employment agreement that contained class and representative action waivers, holding that the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion was controlling. READ MORE →

The Price of Peace – Consulting Group Identifies Average Cost of Wage-and-Hour Class Settlements

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It is no secret that the vast majority of wage-and-hour class actions are settled.  What is less clear is the going settlement rate.  Researchers from NERA, an economic consulting group, recently answered this question:  approximately $1,100 per plaintiff per class year.  READ MORE →

Brinker‘s Effect on California Meal and Rest Periods

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Coins and Hourglass

In a highly anticipated decision largely hailed as a victory for employers, the California Supreme Court, in Brinker v. Superior Court, No. S166350 (Cal. April 12, 2012), clarified employers’ obligations to provide meal and rest periods under California law and provided guidance regarding class certification issues in wage-and-hour litigation. On the most contentious of the issues raised in Brinker—the nature of an employer’s duty to provide meal periods under California law—the court held that an employer’s obligation is simply to relieve the employee of all duty for the designated period, with the employee free to use the time for whatever purpose he or she desires, but the employer need not ensure that no work is done. Thus, if an employer relieves an employee of all duty, but the employee continues to work, the court held that the employer will not be liable for premium pay. The court cautioned, however, that an employer may not undermine a formal policy of providing meal periods by coercing employees to skip breaks, creating incentives for employees to forego breaks, or otherwise encouraging employees not to take legally protected breaks. READ MORE →