Economy and High Court Decisions Fuel Workplace Class-Action Litigations

January 9, 2012 ( - Seyfarth Shaw’s annual Workplace Class Action Litigation Report indicates a sluggish economic recovery and several groundbreaking rulings by the U.S. Supreme Court in 2011 are certain to reverberate in the year ahead and beyond.

The report makes clear that 2011 workplace collective filings rose on nearly every front, from Fair Labor Standards Act and Employee Retirement Income Security Act (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.  

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.  

Seyfarth notes the Supreme Court’s decision in Wal-Mart Stores v. Dukes, handed down last June (see Dukes v. Wal-Mart Plaintiffs Refile Bias Case), has already been cited more than 260 times in federal and state court opinions, and AT&T Mobility v. Concepcion 215 times. 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, Seyfarth said.  

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.

Other trends noted in the report include: 

  • Wage and hour filings continue to outnumber all other workplace class actions, with FLSA actions brought in federal court leading the way. Wage and hour filings also rose at the state-court level, particularly in states such as New York, California, Illinois, Massachusetts, Pennsylvania and New Jersey. This trend is expected to continue in 2012. 
  • 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% since 2008.  
  • 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 childcare, 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," said Seyfarth Shaw partner Gerald L. Maatman, Jr., author of the report. "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."  

The introductory chapter on trends in the 2012 edition of the Workplace Class Action Litigation Report is available at