FLSA Class Actions Beat out Workplace Discrimination Claims in '07

January 15, 2008 (PLANSPONSOR.com) - The fourth Annual Workplace Class Action Litigation Report by national law firm Seyfarth Shaw LLP indicates the volume of wage and hour litigation continues to increase exponentially.

A news release on the report said the firm found collective actions pursued in federal court under the Fair Labor Standards Act (FLSA) produced more rulings in 2007 than did class actions for employment discrimination or under ERISA. The most significant growth in wage and hour litigation centered at the state court level, especially in California, Florida, Illinois, New Jersey, New York, Pennsylvania, and Texas. This trend is likely to continue in 2008, the news release said.

More wage and hour filings were made in the U.S. District Courts for the Southern and Middle Districts of Florida than any other federal jurisdiction.

The financial stakes in workplace class action litigation also increased in 2007. Strategies by plaintiffs’ lawyers in crafting damages theories to expand the size of classes and the scope of recoveries resulted in a series of massive settlements in nationwide class actions – another trend likely to continue in 2008.

Plaintiffs’ lawyers resorted to state court forums to pursue employment-related class action litigation on a more frequent basis because some states and certain counties within those states are viewed by litigants as safe havens for opportunistic class action lawsuits.

“Through a variety of factors – including forum shopping, liberal discovery, consolidation and joinder practices, evidentiary standards for experts, the absence of limitations on damages, and class certification precedents – those jurisdictions tend to spawn more class action litigation,” the news release said. Those jurisdictions in 2007 were clustered in California, Florida, Illinois, New Jersey, New York, and Texas.

Employment-related class action filings increased significantly in 2007, compared to a slight uptick in shareholder and securities class action filings (See Subprime-related Litigations Spur Spike in Shareholder Suits ). The law firm said surveys of corporate counsel confirmed that workplace litigation – and especially class action and multi-plaintiff lawsuits – continues as the chief exposure driving corporate legal budget expenditures.

Seyfarth Shaw pointed out there was no class action ruling in 2007 quite like Dukes, et al. v. Wal-Mart Stores, Inc., a Title VII gender discrimination case challenging pay and promotions involving 1.5 million class members. A three-member panel of the 9 th U.S. Court of Appeals agreed to hear a discretionary appeal from the class certification and affirmed the certification order by a 2-to-1 vote (See 9th Circuit Clears Road for Wal-Mart Gender Discrimination Class Action ).

Wal-Mart subsequently filed a petition for rehearing en banc by the entire 9th Circuit, which reached the same result (See 9th Circuit Again Approves Wal-Mart Gender Discrim Class Action ). A future ruling by the 9th Circuit on a subsequent rehearing en banc - and further appellate proceedings thereafter, including a possible appeal to the U.S. Supreme Court - likely will be one of the top class action developments in 2008 and later, the law firm predicted.

The key event and driver of risk and exposure in class actions continues to be the court's decision on whether to certify a class.

"The class action cases decided in 2007 foreshadow the direction of complex litigation against employers in the coming year. The lesson to draw from workplace class action litigation in the modern American workplace is that the private plaintiffs' bar and government enforcement attorneys are apt to be equally if not more aggressive in 2008 in bringing class action and collective action litigation against employers. Therefore, identifying, addressing, and remediating class action vulnerabilities, therefore, deserve a place at the top of corporate counsel's priorities list for 2008," said Gerald L. Maatman, Jr., General Editor of the report and Co-Chair of the Complex Discrimination Litigation Practice Group at Seyfarth Shaw, in the news release.

The report analyzes the leading class action and collective action decisions of 2007 involving claims against employers and also discusses important federal and state court rulings in non-workplace cases. There are 508 decisions analyzed in the 468-page report.

To request a free copy of the report on CD-ROM, please send your contact information to seyfarthshaw@seyfarth.com .