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‘Halo Effect' of Dukes Seen Spurring Change in Workplace Suits

Tuesday, January 22, 2013

By Jessie Kokrda Kamens  

The U.S. Supreme Court's landmark 2011 class action decisions set the stage for a year of “significant change” in workplace class action litigation in 2012, led by the “halo effect” of the Wal-Mart Stores Inc. v. Dukes decision, a law firm report released Jan. 14 said.

The opinion in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011) (62 BTM 193, 6/21/11) “dominated the legal landscape” and was cited by lower courts an “astounding” 541 times in 2012, Seyfarth Shaw said in its 2013 Workplace Class Action Litigation Report.

“Marked by the halo effect of [Dukes], this past year created a number of lasting changes in employment law that will continue to alter the legal landscape and litigation strategies for employers in 2013,” Gerald L. Maatman Jr., co-chair of Seyfarth's class action defense group and the report's author, said in a statement.

“Meanwhile,” Maatman said, “wage and hour claims continue to rise with no sign of a crest in lawsuit filings and the EEOC's renewed focus on systemic investigations also poses high-stakes challenges for employers.”

The Dukes decision held that Federal Rule of Civil Procedure 23(b)(2) cannot be used to recover individualized monetary relief for a class, and established a heightened standard for Rule 23(a)'s commonality requirement, the report said.

'Wholesale' Certification Review

The report said the Dukes decision caused federal and state courts to conduct a “wholesale review” of class certification orders in pending cases.

The decision also prompted defendants to file new rounds of motions for decertification, it said.

The vacated class in Dukes involved an allegedly discriminatory employment policy allowing managers to exercise discretion in pay and promotion, but the report added that these types of claims are not entirely dead.

“Courts are beginning to allow discretionary elements of an identifiable policy to be attacked” in the employment discrimination context, the report said.


 

“Marked by the halo effect of [Dukes], this past year created a number of lasting changes in employment law that will continue to alter the legal landscape and litigation strategies for employers in 2013.”  

 

-- Gerald L. Maatman Jr., co-chair of the Seyfarth Shaw class action defense group

Battleground After Concepcion

The U.S. Supreme Court's opinion in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740(2011) (62 BTM 138, 5/3/11), was already producing “second generation” issues, according to the report.

That decision held that the Federal Arbitration Act preempts state law and paves the way for broad use of class action waiver clauses in arbitration agreements.

The key battleground issue going forward is whether class action bans in arbitration agreements should escape enforcement in cases where the plaintiff produces hard evidence that it would be too costly to pursue an individual action, the report said.

In such cases, plaintiffs argue that a class action is the only mechanism that allows plaintiffs to vindicate their statutory workplace rights effectively, the report said.

Settlement Strategy Affected

Settlement values in the employment discrimination class action context nose-dived following the Dukes decision, according to the report.

The top 10 settlements in 2012 totaled $48.65 million, a sharp decline from 2010, the year prior to Dukes, when the total was $346.4 million.

This trend may reverse itself in 2013 as the plaintiffs' class action bar “reboots” its approach to litigation, the report predicted.

Wage and Hour Litigation Still King

The report found that wage and hour litigation outpaced all other types of workplace class actions in 2012, with a total of 7,672 Fair Labor Standards Act suits filed last year. That represented an increase of 893 from the then-record 2011 levels.

Generally, the report said, the still-flagging U.S. economy in 2012 fueled more class action and collective action litigation.

This trend will likely continue in 2013 “as businesses retool operations in an improving economy and the Obama administration renews an emphasis on enforcing workplace laws.”

The report also said government enforcement remained “white hot” in 2012. The Equal Employment Opportunity Commission racked up a fourfold increase in recoveries against employers for its systemic discrimination investigations, it said.

Enforcement actions will accelerate even more in 2013, the report predicted.

By Jessie Kokrda Kamens  


The complete 870-page report is available as an eBook. To request a free copy, visit http://www.seyfarth.com/publications/Ninth-Annual-Workplace-Class-Action.

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