Class Action Defense Cases-Howard v. Gutierrez: District Of Columbia Federal Court Denies Motion To Reconsider Ruling Striking Class Action Allegations Holding Delay In Seeking Class Action Certification Was Not Excusable

Local Rule Requiring Class Action Certification Motion be Filed Within 90 days of Class Action Complaint runs from Filing of First Class Action Complaint not from any Subsequent Amended Class Action Complaint and District of Columbia Federal Court Holds Contrary Interpretation to be “Untenable” and “Unreasonable”

Plaintiffs filed a putative class action against the Department of Commerce (DOC) and its Secretary for violations of Title VII alleging that the performance-review system resulted in systemic racial discrimination. Defense attorneys moved to dismiss the individual claims and to strike the class action allegations. The district court granted the motion in part, striking the class action claims. See Howard v. Gutierrez, 474 F.Supp.2d 41 (D.D.C. 2007). Plaintiffs sought reconsideration and certification of an interlocutory appeal. Howard v. Gutierrez, 503 F.Supp.2d 392, 393-94 (D.D.C. 2007). The district court denied the motion for reconsideration and refused to certify an interlocutory appeal.

With respect to the motion for reconsideration, the district court noted that the Federal Rules of Civil Procedure do not expressly authorize such motions and that they are “typically treat[ed]…as motions to alter or amend a judgment” under Rule 59(e). Howard, at 394. Reconsideration motions are addressed to the sound discretion of the court, are not “lightly” granted, and are not to be used to present arguments “that could have been advanced earlier.” Id. (citations omitted). With that background, the district court first rejected plaintiffs’ attempt to “rehash” arguments made previously with respect to their failure to file a motion for class action certification within 90 days of the filing of the class action complaint, and held that any new arguments in support of this old theme could have been raised earlier. Id. The district court concluded at page 394, “There has been no intervening change in controlling law, nor have plaintiffs advanced new evidence not previously available to them. Finding nothing in plaintiffs’ motion that warrants revisiting its prior holding, the Court now reaffirms that the ninety-day period in Local Rule 23.1(b) applies from the date of the filing of the first complaint to assert class claims.”

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Precertification Discovery Class Action Defense Cases-Putnam v. Eli Lilly: Prior To Certification Of Class Action California Federal Court Compels Defense To Produce Names And Addresses Of Absent Class Members In Labor Law Class Action Case

Labor Law Class Action Plaintiff’s need for Contact Information of Potential Class Members to Discover Evidence in Support of Class Action Certification Motion Outweighed Privacy Rights of Absent Class Members thus Warranting an Order Compelling Disclosure of such Information California Federal Court Holds Plaintiff, a pharmaceutical representative, filed a class action complaint against employer Eli Lilly alleging misclassification and failure to pay overtime, and failure to provide meal breaks, in violation of California’s state labor laws.

Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases—In re Wayne Farms: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation In Southern District of Mississippi

Unopposed Defense Request for Pretrial Coordination of Class Action Lawsuits Alleging Violations of Fair Labor Standards Act (FLSA) Pursuant to 28 U.S.C. § 1407 Granted by Judicial Panel A dozen class action lawsuits were filed against Wayne Farms LLC alleging violations of the federal Fair Labor Standards Act (FLSA); specifically, the various class action complaints claimed that defendant failed to pay employees compensation due under the FLSA. In re Wayne Farms LLC Fair Labor Standards Act Litig.

Class Action Court Decisions Employment Law Class Actions Multidistrict Litigation Uncategorized

Class Action Defense Cases-Murphy v. Check ‘N Go: California Appellate Court Upholds Trial Court Order That Class Action Waiver Rendered Arbitration Clause Unenforceable

Class Action Waiver Unconscionable and Contractual Provision Requiring Arbitrator to Determine Enforceability of Class Action Waiver and Arbitration Provision also Unconscionable California Court Holds

Plaintiff filed a class action lawsuit against his employer, a payday lending company, for violations of state labor laws alleging “failure to pay…overtime…, accurate itemized wage statements, adequate meal and rest periods, and wages upon termination.” Murphy v. Check ‘N Go of Cal., Inc., ___ Cal.App.4th ___, 67 Cal.Rptr.3d 120, 2007 WL 3016414, *1 (Cal.App. 2007). Defense attorneys moved to compel arbitration and dismiss the class action complaint on the grounds that plaintiff had signed a “Dispute Resolution Agreement” that included an arbitration provision and a class action waiver, _id._ The trial court refused to compel arbitration, concluding that the class action waiver rendered the arbitration agreement unconscionable, _id._ Defense attorneys appealed, contending that the class action waiver is not unconscionable and that whether the class action waiver was unconscionable should be decided by the arbitrator, not by the trial court. _Id._ The Court of Appeal rejected the defense arguments and affirmed the trial court order.

Plaintiff spent 7 years as a “salaried retail manager” for defendant; her class action complaint alleged that defendant misclassified salaried retail managers as exempt employees and thus failed to pay overtime, failed to provide accurate wage statements, failed to provide required meal and rest periods, and failed to provide wages due on termination. Murphy, at *1. The class action complaint alleged that every employee had to sign the arbitration agreement, which covered “all claims arising from or relating to plaintiff’s employment,” including any claim that the arbitration agreement was “substantively or procedurally unconscionable.” Id. As noted above, the arbitration agreement contained a class action waiver, requiring that any dispute be maintained as an individual action only, id. Defense attorneys moved to dismiss the class action complaint and compel arbitration, arguing in part that the agreement expressly vests in the arbitrator the power to decide whether the class action waiver is unconscionable. Id., at *2. The Court of Appeal summarized the trial court’s order at page *2 as follows: “the court determined that : (1) it had the power to rule on the unconscionability issues; (2) the parties’ agreement…was a contract of adhesion; (3) the agreement’s class action waiver was substantively unconscionable under Discover Bank v. Superior Court (2005) 36 Cal.4th 148…; (4) the agreement’s provisions for arbitration of unconscionability issues and pre-existing claims were also substantively unconscionable; and (5) the unconscionability terms would not be severed from the agreement.”

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

FedEx Class Action Defense Cases-In re FedEx Ground: Indiana Federal Court Certifies Kansas Class Action Under Rule 23(b)(3) And Nationwide ERISA Class Action Under Rule 23(b)(2) In Labor Law Class Action By Drivers Against FedEx

Kansas Class Representatives in Labor Law Class Action by Drivers Against FedEx Adequately Established Rule 23(b)(3) State-Wide Class Action for Misclassification of Drivers under Kansas Labor Laws and for Common Law Claims Against FedEx, and Rule 23(b)(2) Nationwide Class Action for Denial of ERISA Benefits Indiana Federal Court Holds

In 2005, the Judicial Panel on Multidistrict Litigation transferred numerous class action lawsuits to the Northern District of Indiana pursuant to 28 U.S.C. § 1407; ultimately, the MDL docket included 56 class action lawsuits filed in 30 states alleging that FedEx improperly classified drivers as independent contractors rather than employees and thus failed to pay wages due under state and federal wage statutes and failed to pay benefits due under ERISA. In re FedEx Ground Package Sys., Inc., Employment Prac. Litig., ___ F.Supp.2d ___ [Slip Opn., at 1-2] (N.D. Ind. October 15, 2007). The Kansas plaintiffs moved the federal court to certify a class action on their behalf, as well as a nationwide class action on behalf of the ERISA class, _id._, at 1. Defense attorneys opposed class action treatment, and submitted three expert reports purporting to show (1) “that FedEx Ground workers prefer to be independent contractors by a 52% to 20% margin,” _id._, at 8, (2) “that FedEx Ground delivery drivers are operating a business,” _id._, at 15, and (3) that the workers are independent contractors because there are “important variations in the contractors’ work,” _id._, at 20. Plaintiffs objected to the federal court considering these expert reports in deciding whether to certify a class action, and moved to strike the reports under Federal Rule of Evidence 702. _Id._, at 1-2. The district court denied plaintiffs’ motion to strike, but agreed that class action treatment was warranted.

The district court explained that the Kansas plaintiffs challenged the FedEx practice “of labeling its Ground and Home Delivery division drivers as independent contractors.” FedEx, at 22. According to the class action allegations, “the FedEx Operating Agreement signed by all FedEx drivers actually reserves to FedEx the right to exercise pervasive control over the method, manner, and means of the drivers’ work,” including “the drivers’ appearance and behavior, their pay and rates charged to customers, the vehicle they use and its appearance, their route and the number of packages they deliver each day, their delivery methods and mode of customer service, their hours of work, and their opportunity to increase their earnings.” Id., at 22-23. Class action treatment is further warranted, plaintiff argued, because “FedEx has a categorical policy of classifying its drivers as independent contractors” and because putative members of the proposed class action “share the same job title, signed the same nonnegotiable Operating Agreement, are paid under the same compensation formula, wear the same uniform, drive FedEx approved trucks bearing the FedEx logo, work exclusively for FedEx, and are all similarly integrated into FedEx’s operations.” Id., at 23. The class action sought rescission of the operating agreement and a declaration that defendant’s practices violated Kansas labor laws, id., at 30. Defense attorneys argued against class action treatment by arguing that numerous individualized factual inquiries exist, id., at 23.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Clark v. First Union: California Appellate Court Affirms Trial Court Order Vacating Referral Of Certain Class Action Claims To Arbitration And Staying Other Class Action Claims

Inherent Powers of Trial Court Include Power to Reconsider Interim Rulings Long After the Statutory Time Period for Motions for Reconsideration has Lapsed California Appellate Court Holds

Plaintiffs filed a putative class action against their employer, First Union Securities, and its successor, Wachovia Securities for alleged violations of state labor laws. Clark v. First Union Securities, Inc., ___ Cal.App.4th ___, 64 Cal.Rptr.3d 313, 315 (Cal.App. 2007). Defense attorneys moved to compel arbitration before the National Association of Securities Dealers (NASD) and to stay proceedings on the class action claims for injunctive or declaratory relief, which are not subject to arbitration, _see Broughton v. Cigna Healthplans_, 21 Cal.4th 1066, 1079-80 (Cal. 1999); the trial court granted the motion. _Id._ , at 314. After the arbitrators ruled that the class action claims were “not eligible for arbitration,” the trial court _sua sponte_ reconsidered its ruling on the defense motion and ruled that the class action would proceed in state court. _Id._, at 314-15. Defense attorneys appealed, and the California court of appeal affirmed. The appellate court held that the trial court had the inherent authority to reconsider its ruling referring class action claims to arbitration, that the employment contract did not preclude state court jurisdiction over the putative class action complaint, and that the dismissal of the class action claims by the arbitrators did not constitute a class action waiver.

Plaintiff Clark was hired by First Union as an investment consultant candidate, which required that he hold a license from the NASD and to execute the SEC-approved Uniform Application for Securities Industry Registration or Transfer Form U-4 (Form U-4), which contains an arbitration clause that states “I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the [NASD] as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction.” Clark, at 315. Plaintiff executed the form in October 1998 and began working for First Union in November 1998, id. The SEC promulgated several rules directly implicated by this case, including Rule 10301(d) which addresses investor class action lawsuits filed under FRCP Rule 23. Id., at 316. As the Court of Appeal noted at page 316, “The SEC issued a public notice in connection with the approval of Rule 10301(d). In this 1992 approval order, the SEC gave notice that under the new provision class actions were excluded from arbitration.”

The class action complaint alleged numerous labor law violations based on an array of alleged misconduct ranging “from misrepresentations regarding the sale of securities, to the failure to pay wages and to reimburse for business expenses.” Clark, at 317-18. Defense attorneys moved to compel arbitration of each cause of action in the class action complaint except the claims seeking injunctive and declaratory relief; the defense argued that “because all allegations arose out of Clark’s employment or termination of employment, they must be resolved in arbitration pursuant to the arbitration provision in the Form U-4 and the NASD Code.” Id., at 318. The appellate court noted that defense attorneys did not cite Rule 10301(d) in support of the motion, id. Plaintiff countered that the NASD arbitration procedures were unconscionable – an issue the Court of Appeal found unnecessary to address – and that because the class action claim for unfair practices was asserted on behalf of all Wachovia employees it was not subject to arbitration. Id. Plaintiff’s lawyer argued, “The only forum for the unfair practice claims is a civil lawsuit. The NASD arbitration rules do not even permit putative or class claims to be arbitrated.” Id.

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases-Zhong v. August August: New York Federal Court Partially Grants Defense Motion To Dismiss Overtime/Minimum Wage Class Action Claims

Class Action Complaint Alleging Violations of Federal Fair Labor Standards Act (FLSA) and State Law Equivalent Failed to Adequately Plead Overtime Violations New York Federal Court Holds

Plaintiff filed a putative class action against his employer, August August Corp. (doing business as “River Vietnamese and Thai Restaurant”) alleging failure to pay overtime and minimum wages required by the federal Fair Labor Standards Act (FLSA) and New York’s Minimum Wage Act (NYMWA). Zhong v. August August Corp., 498 F.Supp.2d 625, 627 (S.D.N.Y. 2007). The class action complaint asserted that federal court jurisdiction exists under 28 U.S.C. § 1337 as to the FLSA §§ 206 and 207 claims (the first and second claims for relief), and under 28 U.S.C. §1367 (supplemental jurisdiction) over the third claim for relief brought under New York state law, id. Defense attorneys moved to dismiss the class action on several grounds; the district court granted the motion in part.

Preliminarily, the district court rejected defense claims that the class action complaint failed to adequately plead that defendant was plaintiff’s “employer” within the meaning of the FLSA, holding that under the liberal standards applicable to a motion to dismiss, the allegations that plaintiff was “an employee” and was “employed by” sufficiently placed defendant on notice of the claims against it. Zhong, at 628-29. The next question was whether defendant was “engaged in commerce or in the production of goods for commerce” within the meaning of the FLSA, id., at 629. Again, the federal court held that the class action complaint adequately alleged this element of an FLSA claim, id. Similarly, the allegation that plaintiff earned only $10 per day but worked 3 or 4 hours a day adequately pleaded a breach of the FLSA’s minimum wage requirement. Id., at 629. In this regard, while the district court acknowledged that plaintiff had not demanded any specific amount in damages, “he has provided enough information to give August sufficient notice from which to calculate the alleged damages” because he alleged that he worked “twenty hours per week, spread out over six days per week, at a wage of $10.00 per day, for a total of (roughly) twenty weeks.” Id., at 629-30.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Labor Law Class Action Defense Cases-Estrada v. FedEx: California State Court Upholds Class Action Judgment Against FedEx But Holds $14.4 Million Fee Award Must Be Reduced As Excessive

Trial Court Class Action Judgment Against FedEx for Labor Law Violations Generally Upheld but California State Appellate Court Reverses Attorney Fee Award as Excessive and because Multiplier Improperly Based on Same Facts that Triggered Entitlement to Fees

Plaintiffs filed a class action in California state court against FedEx Ground Package System, Inc. alleging violations of the state’s labor laws for failure to reimburse work-related expenses; the thrust of the class action complaint was that, “for the limited purpose of their entitlement to reimbursement for work-related expenses, [class members] were employees, not independent contractors.” Estrada v. FedEx Ground Package Sys., Inc., 64 Cal.Rptr.3d 327 330 (Cal.App. 2007). The trial court granted plaintiffs’ motion to certify the litigation as a class action, and a trifurcated trial followed during which (1) “the court found the drivers were employees within the meaning of Labor Code section 2802 (Phase I) , ordered FedEx to reimburse some (about $5 million, including prejudgment interest) but not all of their expenses (Phase II), granted most of the equitable relief sought by the drivers (Phase III), and ordered FedEx to pay the drivers’ costs and attorneys’ fees (about $12.3 million).” Id. Defense attorneys appealed and plaintiffs cross-appealed.

The Court of Appeal noted that this represented the third appeal in this case, and that it here considered defense challenges to the trial court order certifying the class action, the finding that the drivers were employees, the reimbursement findings, and the award of attorney fees. Estrada, at 330-31. The facts are quite detailed, and we do not repeat them here. See id., at 331-34. On the direct appeal, the Court of Appeal affirmed that the drivers were employees of FedEx, not independent contractors. Id., at 335. The appellate court noted that the California Labor Code does not define “employee” for purposes of section 2802 so the common law test applies, and explained at page 335 that under that test the question is “whether the principal has the right to control the manner and means by which the worker accomplishes the work” based on a number of factors including “(1) whether the worker is engaged in a distinct occupation or business, (2) whether, considering the kind of occupation and locality, the work is usually done under the principal’s direction or by a specialist without supervision, (3) the skill required, (4) whether the principal or worker supplies the instrumentalities, tools, and place of work, (5) the length of time for which the services are to be performed, (6) the method of payment, whether by time or by job, (7) whether the work is part of the principal’s regular business, and (8) whether the parties believe they are creating an employer-employee relationship.” (Citations omitted.) Under those factors, substantial evidence supported the finding that the drivers were “employees,” see id., at 336-37.

Next, the Court of Appeal affirmed that class action treatment was appropriate, holding that “it is clear that common issues – whether the drivers were employees and, if so, which expenses would be reimbursable – predominated.” Estrada, at 338. The appellate court affirmed also the trial court finding that FedEx failed to reimburse the drivers for all expenses required by law, see id., at 339.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

FLSA Class Action Defense Cases-Rubery v. Buth-Na-Bodhaige: New York Federal Court Denies Defense Motion To Dismiss Class Action Alleging Violations Of Fair Labor Standards Act (FLSA) As Premature

Motion to Dismiss Class Action Based on Rule 68 Offer of Judgment to Plaintiff Premature Because Court had not yet Ruled on Plaintiff Motion to Certify Class Action New York District Court Holds Plaintiff filed a class action against her employer, Buth-Na-Bodhaige, for violations of the federal Fair Labor Standards Act (FLSA) arising out of its alleged failure to pay managers overtime and misclassification of its managers as “exempt” employees. Rubery v.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Blackwell v. SkyWest: California Federal Court Refuses To Certify Labor Law Class Action Against Airline

Class Action Treatment of Labor Law Violation Claims not Warranted because Individual Issues Predominate over Common Issues thus Failing to Meet the Requirements of Rule 23(b)(3) California Federal Court Holds

Plaintiff filed a putative class action in California state court against her employer, SkyWest Airlines alleging violations of various state labor laws including failure to pay overtime and failure to provide and/or compensate for meal breaks. Blackwell v. SkyWest Airlines, Inc., ___ F.Supp.2d ___, Slip Opn., at 2 (S.D. Cal. August 30, 2007). Defense attorneys removed the action to federal court on the basis of the Class Action Fairness Act of 2005 (CAFA), _id._ Plaintiff filed a motion with the district court to certify the litigation as a class action, _id._, at 1, seeking to represent five classes, _id._, at 4; the district court agreed with defense attorneys that class action treatment would be inappropriate and denied the motion.

The district court readily concluded that the proposed classes, consisting of an estimated 2600 members, satisfied the numerosity requirement of Rule 23(a)(1), Blackwell, at 5-6, and that plaintiff had established the commonality requirement of Rule 23(a)(2) for each proposed class, id., at 6-9. The federal court additionally found that plaintiff would adequately represent the proposed classes within the meaning of Rule 23(a)(4), id., at 13-14. However, the typicality test of Rule 23(a)(3) proved more problematic. The district court agreed with defense attorneys that plaintiff lacked standing to pursue the class action claim alleging inaccurate wage statements under Labor Code § 226(a) because she failed to file her class action complaint within one year of her last wage statement. Id., at 10-11. The court further found that plaintiff failed to provide sufficient evidence to support her class action allegation based on voluntary shift trades, id., at 11-12.

Turning to the requirements of Rule 23(b), the district court noted that “[t]he Ninth Circuit has adopted an ‘extremely conservative view’ [with respect to Rule 23(b)(1)], requiring a finding that either ‘(1) rulings in separate actions would subject defendant to incompatible judgments requiting inconsistent conduct to comply with the judgment; or (2) a ruling in the first of a series of separate actions will “inescapably alter the substance of the rights of others having similar claims.”’” Blackwell, at 15 (citation omitted). The court agreed with defense attorneys that plaintiff failed to establish that either test had been met, id., at 15-16. The federal court next held that a Rule 23(b)(2) class action would be inappropriate because the monetary relief sought by the class action complaint was not “merely incidental to the injunctive relief sought.” Id., at 16.

Certification of Class Actions Class Action Court Decisions Employment Law Class Actions Uncategorized