Employer Law Report

Tag Archives: employment class & collective actions

U.S. Supreme Court rules that mandatory, individual arbitration of employment disputes trumps employees’ rights to participate in class action lawsuits

On Monday, May 21, 2018, the United States Supreme Court ruled in a 5-to-4 decision that employers may require workers to accept individual arbitration for wage and hour and other workplace disputes rather than banding together to pursue their claims in class actions in federal or state courts. The Court’s decision in Lewis v. Epic Sys. Corp. overturns the position of the National Labor Relations Board (NLRB) and resolves a split among federal courts of appeals. The case is one of the most important employment law cases to be decided by the Supreme Court in the past decade and could …

The Sixth Circuit And Ohio Supreme Court Hand Two Major Class Action Wins To Defendants

On November 5, 2013, the Sixth Circuit Court of Appeals and Ohio Supreme Court handed down a pair of class action decisions that are major wins for companies and employers. The Sixth Circuit held that courts, not arbitrators, must decide whether an arbitration clause permits classwide arbitrations—and that an arbitration clause that is silent on the issue bars classwide arbitrations. The Ohio Supreme Court followed recent decisions from the United States Supreme Court and held that trial courts must conduct a rigorous analysis when ruling on class certification, including resolution of factual disputes, factual findings and an examination of the …

Court Denies Employer’s Access to Social Media Posts in FLSA Collective Action and Sends Warning: If You Want Access to Social Media, Come with Both Barrels Loaded … Leave the Water Gun at Home

A federal court has denied a defendant-employer’s request that plaintiffs sift through and turn over all their social media posts made during their work hours in an FLSA collective action in which the plaintiffs claim their employer failed to give them meal breaks. How did that happen? I thought you’d never ask.

By way of background, Jewell v. Aaron’s Inc., is a nationwide,1,700+ FLSA collective action pending in the Northern District of Georgia. In the suit (Complaint accessible here), the class plaintiffs (current and former employees of Aaron’s) claim they were not paid for their 30-minute meal periods. …

United States Supreme Court Adds Further Strength to Class-Action Waivers in Arbitration Clauses

It comes as no surprise that the United States Supreme Court’s decision in American Express Co. v. Italian Colors Restaurant, No. 12-133 (June 20, 2013) is being hailed as a victory by class action defendants. The 5-3 decision authored by Justice Scalia held that a class-action waiver contained in an arbitration clause cannot be invalidated on the ground that the cost to a given plaintiff of proceeding individually on a federal statutory claim would far outstrip the possible recovery to that plaintiff. The Italian Colors decision comes on the heels of the Court’s 2011 decision in AT&T Mobility LLC

You Choose, You Lose! Supreme Court Rules “Arbitrator’s Construction Holds, However Good, Bad, or Ugly” In Upholding Class Arbitration Proceedings

In Oxford Health Plans, LLC v. Sutter, a case addressing an arbitration clause that was silent as to whether it permitted class-wide arbitration, the United States Supreme Court held that so long as an arbitrator’s decision construes the parties’ contract, the arbitrator has not "exceeded his powers" – which would permit a court to vacate the decision under §10(a)(4) of the Federal Arbitration Act (“FAA”) – and the arbitrator’s constructions should be upheld, “however good, bad, or ugly.”

Before we dig into Sutter, we have to go back a little to 2010 when the Supreme Court issued its …

No No No…Not In Our Court. Sixth Circuit Uses Dukes v. Wal-Mart To Block Class Certification and Extends It To Bar Hiring Discrimination Class Claims

In Davis v. Cintas Corp., No. 10-1662 (6th Cir. May 30, 2013), the Sixth Circuit affirmed the denial of a class certification bid in a sexual discrimination hiring case à la Wal–Mart Stores, Inc. v. Dukes and dismissed the plaintiff’s individual disparate treatment claim where the plaintiff claimed she was at least as qualified (if not more so) than male candidates who were hired. By way of key takeaways, Davis demonstrates that the Sixth Circuit endorses Dukes, so much so that it used the United States Supreme Court’s analysis in Dukes, which covered pay and promotion in …

United States Supreme Court Delivers Major Win for Employers – Once Again Raising the Bar for Certifying Class Actions

A bitterly divided United States Supreme Court last week added even more height to the barriers facing plaintiffs who seek to certify their claims as class actions. In Comcast Corp. v. Behrend, No. 11-864, a 5-4 decision penned by Justice Antonin Scalia, the Court held that a district court improperly certified a mammoth class action covering more than two million current and former subscribers of Comcast who claimed to have paid inflated cable bills based upon Comcast’s violation of federal antitrust laws. The decision is particularly notable for its holding that plaintiffs seeking to certify class actions for money …

Employers, Protect Yourself From Class or Collective Actions: New and Developing Case Law is Giving Employers a Number of Proactive Defensive Measures

All too often it seems employers are entirely unaware of the steps they can take to proactively protect themselves from employment litigation. Instead, employers and their attorneys do not address potential issues until litigation has actually been threatened or filed, by which time preventative measures have likely become a moot point. Yet, the law is providing more and more innovative opportunities to strategically protect an employer in ways much cheaper than actual litigation. This protection can reduce an employer’s potential monetary exposure for labor and employment matters by either minimizing litigation or by placing an employer in a position of …

Big Win For Employers – Supreme Court Closes Loophole Used By Plaintiffs’ Lawyers To Defeat Federal Court Jurisdiction Over Class Actions

In a unanimous decision penned by Justice Stephen Breyer, the United States Supreme Court last week closed a loophole in the Class Action Fairness Act (“CAFA”) that had been used by plaintiffs’ lawyers to avoid removal of class actions to federal court. Specifically, the Court held that plaintiffs in class actions cannot stipulate to a recovery of less than $5 million in order to avoid meeting CAFA’s amount-in-controversy requirement.

Under CAFA, enacted in 2005, federal courts have original jurisdiction over class actions in which, among other things, the aggregated value of the claims of individual class members exceeds $5 million. …

Defending an FLSA Auto-Deduct Policy Case Starts with the Foundation — Another Smart Employer with Smart Policies Sends Another Group of Nationwide Plaintiffs Packing

The Northern District of Ohio is the latest in a long line of courts to send the following message to nationwide collective class plaintiffs: Stop seeking nationwide class certification where the plaintiffs are spread across facilities and have too many factual differences to be "similarly situated" and to have experienced a common injury under the Fair Labor Standards Act ("FLSA").

In Creely v. HCR ManorCare, Inc. (N.D. Ohio Jan. 31, 2013), a group of 318 nurses, licensed practical nurses, certified nursing assistants, and admissions coordinators opted into a collective action lawsuit alleging that their employer, HCR ManorCare, Inc. ("HCR"), …

Sixth Circuit Awards Employer Over $55,000 in Costs in FLSA Collective Action

In September, we told you about the Sixth Circuit’s decision in Frye v. Baptist Memorial Hospital, Inc., where the court handed down, not one, but two favorable rulings for employers in an FLSA collective action. First, the court held that automatic pay deduction policies for unpaid meal breaks do not per se violate the FLSA, and that a class representative plaintiff in a collective action must formally opt-in to their own case to "commence" suit and stop the running of the statute of limitations or be barred from suit. Here’s that blog.

After considering the employer’s motion for …

The Sixth Circuit Gives Employers a “Twofer”: An Employer’s Automatic Pay Deduction Policy Does Not Automatically Violate the FLSA and a Class Plaintiff Must “Commence” Suit

In Frye v. Baptist Memorial Hospital, Inc., the United States District Court for the Sixth Circuit handed down not one, but two favorable rulings for employers in an FLSA collective action. First, in considering an automatic pay deduction policy for unpaid meal breaks in a collective action for the first time, the Court held that such a policy does not automatically, or per se, violate the FLSA. Second, a class representative plaintiff must formally opt-in to their own case to "commence" suit and stop the running of the statute of limitations.

1.  The Sixth Circuit Holds that Automatic Pay

Supreme Court finds pharmaceutical sales reps exempt under the outside sales exemption

In a highly anticipated decision under the Fair Labor Standards Act, the United States Supreme Court handed down a big win on Tuesday for the pharmaceutical industry when the Court found pharmaceutical sales representatives are covered by the outside sales exemption in Christopher v. Smith Kline Beecham Corp. We covered in previous posts the differing interpretations of the Second Circuit, which held the reps to be non-exempt, and the Ninth Circuit, which said they were exempt. The Court agreed with the Ninth Circuit that the sales activity pharma sales reps engaged in were sufficient "outside sales" even though federal …

Verizon Consent Decree Provides Road Map For Surviving EEOC Scrutiny of No Fault Attendance and Leave of Absence Policies

On July 6, 2011, the EEOC announced a settlement with Verizon of a nationwide class action lawsuit alleging that Verizon violated the ADA by refusing to make exceptions to its “no fault” attendance plans to accommodate employees with disabilities. According to the EEOC’s press release, Verizon violated the ADA by failing to provide reasonable accommodations for people with disabilities, such as making an exception to its attendance plans for individuals whose “chargeable absences” were caused by their disabilities. Instead, the EEOC said, the company disciplined or terminated employees who needed such accommodations. In addition to requiring the payment of …

Wal-Mart v. Dukes: Supreme Court Rejects “Expansive” Gender Bias Class Action In Absence of “General Policy of Discrimination”

The much-awaited decision of the United States Supreme Court is here. Dubbed by Justice Scalia as "one of the most expansive class actions ever," the Supreme Court unanimously reversed the decision of the Ninth Circuit Court of Appeals which had affirmed the certification of a class of approximately 1.5 million current and former female employees alleging discrimination in pay and promotion. While the result was widely anticipated, the decision clarifies some key class action principles in a manner favorable to employers defending such cases.

Throughout the lengthy proceedings (the District Court certified a class in 2004), the employees claimed …

Supreme Court Time Travels with an ERISA Case

Supreme Court decisions about ERISA cases, while infrequent, typically contain some surprises, as demonstrated most recently in CIGNA Corp. v. Amara.

In 1997, CIGNA notified employees that it was freezing accruals under its traditional defined benefit plan, and converting the plan into a cash balance plan. A cash balance plan is a "hybrid" defined benefit plan with features similar to a defined contribution plan. The method for determining accruals under the cash balance plan is different from the method under the traditional defined benefit plan, and in many cases takes into consideration the benefits already accrued under the traditional …

Supreme Court’s AT&T Mobility Decision Provides Support For Use Of Employment Arbitration Agreements With Class Action Waivers

On April 27, 2011, the United States Supreme Court held that the Federal Arbitration Act (“FAA”) preempted California state contract law which courts had applied to invalidate arbitration agreements that did not permit class arbitration. Although the decision involved a consumer contract, the Supreme Court’s reasoning provides a basis for employers to seek enforcement of employment agreements that prohibit workplace class actions and require the individual arbitration of employment-related claims.…

A Skeptical U.S. Supreme Court Vigorously Questions Certification of a Mammoth Sex-Discrimination Class Action Lawsuit

On Tuesday, the U.S. Supreme Court heard oral argument on Wal-Mart’s appeal of the Ninth Circuit’s en banc decision upholding the certification of a class action gender discrimination lawsuit in Dukes v. Wal-Mart Stores, Inc. As noted by a number of commentators (among them The Wall Street Journal, Forbes, The Christian Science Monitor, and CNN), the tone of the Court’s questioning indicates that the Court is likely to rule in Wal-Mart’s favor.

This appeal stemmed from a federal court’s certification of a nationwide class of female employees of Wal-Mart who were allegedly subjected to discriminatory pay …

U.S. Supreme Court To Decide Significant Class Action Issues in Dukes v. Wal-Mart

On Monday, the U.S. Supreme Court announced that it would hear Wal-Mart’s appeal of the Ninth Circuit’s en banc decision upholding the certification of a class action gender discrimination lawsuit in Dukes v. Wal-Mart Stores, Inc. 

As previously noted here and here,  the plaintiffs in Dukes sought to obtain certification of a nationwide class of women who allegedly have been subjected to discriminatory pay and promotion policies. The proposed class consists of women employed since December 26, 1998, in a range of Wal-Mart positions, from part-time, entry-level hourly employees to salaried managers. 

Plaintiffs contend that Wal-Mart’s strong, centralized structure fosters …

Explosion of FLSA Litigation Should Prompt Employers to Review Their Practices

Recent reports have indicated that the number of FLSA collective actions rose sharply in 2009. Many believe this trend will continue in 2010 as employees gain increased awareness of their rights under wage and hour laws and the plaintiffs’ bar recognizes the potential value of FLSA collective actions.

Indeed, there has been a recent flurry of activity across the country in the area of wage and hour class actions. Assistant managers at Foot Locker Retail Inc. filed a nationwide collective action in the Southern District of California, alleging that the company misclassified them as exempt and failed to pay them overtime wages. Similarly, …

Ninth Circuit to Hear Argument on Class Certification Decision in Wal-Mart Class Case

On February 13, 2009, the U.S. Court of Appeals for the Ninth Circuit announced it will review the February 2007 decision to certify a class that potentially includes 1.5 million current and former female employees allegedly underpaid and denied promotion opportunities on the basis of their sex. As reported in our earlier post, this class has the potential to be the largest sexual discrimination suit in U.S. history and could be awarded potential damages into the billions of dollars. This class action was originally filed in 2001. Wal-Mart argued at the district court level and to the panel that the class …

What Do Reality Television Shows and Employment Law Have In Common?

Class actions, of course. California courts have preliminarily approved class-action settlements in two wage-and-hour lawsuits against the television networks and production companies responsible for such entertainment gems as “The Bachelor,” “The Bachelorette,” “Trading Spouses,” “Joe Millionaire,” and “My Big Fat Obnoxious Fiancee.” 

The lawsuits accused the companies of failing to pay overtime wages, denying meal and rest periods, falsifying pay stubs, and forcing employees to falsify time records. The companies will pay more than $4 million to settle the claims. A hearing for final approval of both settlements should take place in May 2009. …

Ninth Circuit Panel Again Upholds Granting of Class Action Status to Wal-Mart Female Workers; Wal-Mart Again Petitions For En Banc Review

In an unusual procedural move, a Ninth Circuit panel issued a revised opinion and rejected—for the second time—Wal-Mart’s request to overrule a lower court decision granting class action status to a lawsuit by six women representing a class of more than 1.5 million female workers. Dukes v. Wal-Mart, Inc., Case Nos. 04-16688 and 04-16720, 2007 U.S. App. LEXIS 28551 (9th Cir. Dec. 11, 2007). The class includes all female workers—from part-time, entry-level hourly employees to full-time, salaried managers—at Wal-Mart stores from December 1998 to the present “who have been or may be subjected to Wal-Mart’s challenged pay and management …

IRS Targets FedEx’s Treatment of Drivers as Independent Contractors

 From FedEx Corporation’s most recent 10Q filing comes the following:

“On December 20, 2007, the Internal Revenue Service (“IRS”) informed us that its audit team had concluded an audit for the 2002 calendar year regarding the classification of owner-operators at FedEx Ground. The IRS has tentatively concluded, subject to further discussion with us, that FedEx Ground’s pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes. The IRS has indicated that it anticipates assessing tax and penalties of $319 million plus interest for 2002. Similar issues are under audit by the IRS for calendar years 2004 through 2006.

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