Class Action Defense Issues-Ledbetter v. Goodyear: Divided Supreme Court Holds Statute Of Limitations For Title VII Pay Discrimination Claims Begins To Run When Discriminatory Act Occurs

Discriminatory Employment Practice Acts that occur Prior to EEOC Charging Period are Time-Barred even if the Discriminatory Acts had “Continuing Effects” During the EEOC Charging Period Supreme Court Holds

In a case that will have substantial impact of Title VII class action lawsuits, a divided Supreme Court held that the limitations period on a Title VII pay discrimination claim begins to run when the discriminatory act occurs. Ledbetter v. Goodyear Tire & Rubber Co., Inc., __ U.S. __, 2007 WL 1528298, *2 (May 29, 2007). Plaintiff had worked for Goodyear for almost 20 years, from 1979 to 1998, and received or was denied raises based on performance evaluations by her supervisors, id., at *3. Plaintiff filed a questionnaire with the Equal Employment Opportunity Commission (EEOC) in March 1998 alleging sex discrimination, and in July filed a formal charge with the EEOC. Id. In November 1998, after taking early retirement, plaintiff filed suit against Goodyear asserting several claims, including a Title VII pay discrimination allegation. Id. The Supreme Court summarized the district court proceedings at page *3 as follows:

The District Court granted summary judgment in favor of Goodyear on several of Ledbetter’s claims, including her Equal Pay Act claim, but allowed others, including her Title VII pay discrimination claim, to proceed to trial. In support of this latter claim, Ledbetter introduced evidence that during the course of her employment several supervisors had given her poor evaluations because of her sex, that as a result of these evaluations her pay was not increased as much as it would have been if she had been evaluated fairly, and that these past pay decisions continued to affect the amount of her pay throughout her employment. Toward the end of her time with Goodyear, she was being paid significantly less than any of her male colleagues. Goodyear maintained that the evaluations had been nondiscriminatory, but the jury found for Ledbetter and awarded her backpay and damages.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Neary v. Metropolitan Property: Connecticut Federal Court Grants Defense Motion In FLSA Class Action To Dismiss Class Action Claims Based On State Wage And Hour Laws

Federal Court Refuses to Exercise Supplemental Jurisdiction over State Law Wage and Hour Class Action Claims Because of Substantial Variance in State Laws and Conflict with FLSA (Fair Labor Standards Act) Opt-In Provision

Employees filed a putative class action in Connecticut federal court against Metropolitan Property alleging that the employer failed to pay overtime in violation of the federal Fair Labor Standards Act (FLSA) and Connecticut state labor laws. Neary v. Metropolitan Prop. & Cas. Ins. Co., 472 F.Supp.2d 247, 248 (D. Conn. 2007). The class action complaint included causes of action for a class action claim under FRCP Rule 23(b)(3) “for violation of state wage and hour laws ‘in each state in which each [p]laintiff worked’ (Count 4),” as well as “a class action claim under [FRCP Rule 23(b)(1)] for violation of state wage and hour laws ‘of the various states in which [p]laintiffs worked’ (Count 5).” Id. Defense attorneys moved to dismiss these class action claims on the grounds that the state law opt-out claims presented an irreconcilable conflict with the FLSA’s opt-in requirement. Id., at 249. The district court agreed.

Plaintiff’s class action complaint alleged that defendant insures vehicles nationwide and engaged in the practice of classifying field adjusters, field appraisers and outside adjusters as exempt from overtime in violation of the FLSA “and the wage and hour laws of the various states in which [p]laintiffs performed work for [d]efendant.” Neary, at 249. Plaintiff purported to bring the class action on behalf of a nationwide class alleging that certification was appropriate under Rule 23(b)(3). Id., at 249-50. The defense moved to dismiss Counts 4 and 5 of the class action complaint “pursuant to the Rules Enabling Act, 28 U.S.C. § 2072(b), on the basis that the class action procedures in Rule 23 irreconcilably conflict with Section 216(b) of the FLSA which expressly limits the scope of representative lawsuits seeking overtime pay to individuals who affirmative opt-in to the action.” Id., at 250. The district court granted the defense motion, but not for the reasons advanced.

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

Class Action Defense Cases-Davis v. O’Melveny & Myers: Ninth Circuit Reverses Order Dismissing Labor Law Class Action And Compelling Arbitration Holding Arbitration Clause Unconscionable

District Court Erred in Dismissing Employment Class Action and Compelling Arbitration Because “Take it or Leave it” Option was Procedurally Unconscionable Despite 3-Months’ Notice of Arbitration Clause and Limitations Period for Asserting Claims Against Employer was Substantively Unconscionable Ninth Circuit Holds

In February 2004, plaintiff, a paralegal at O’Melveny & Myers until July 2003, filed a class action against her former employer alleging violations of the federal Fair Labor Standards Act (FLSA) and California state laws for failing to pay overtime and failing to provide meal and rest periods. Davis v. O’Melveny & Myers, ___ F.3d ___ (9th Cir. May 14, 2007) [Slip Opn., at 5605-07]. The district court granted the defense motion to dismiss the class action and compel arbitration based on a Dispute Resolution Program that had been distributed to employees via interoffice mail and via the office intranet site. _Id._, at 5606. The class action alleged, in part, that the DRP was unconscionable and enforceable, _id._, at 5607. On appeal, the Ninth Circuit stated that whether the class action claims fell within the scope of the DRP was not in dispute; the issue, rather, was whether the arbitration provision was enforceable. _Id._, at 5608.

Preliminarily, the Ninth Circuit held that “the question of whether O’Melveny’s arbitration agreement is unconscionable is for a court to decide” rather than an arbitrator. Davis, at 5610 (citations omitted). It then addressed whether the arbitration clause was procedurally and substantively unconscionable, as required under California law, id., at 5611 (citations omitted). The Court of Appeals had little difficulty finding the provision procedurally unconscionable, holding that it was prepared by a “sophisticated employer – a national and international law firm, no less” and that, even though the arbitration clause was not hidden and employees were not taken by surprise, “in a very real sense the DRP was ‘take it or leave it.’” Id., at 5611-12. The only way for an employee to “opt out” of the arbitration provision was to leave the company, and California and Ninth Circuit decisional law disapproves of such provisions in employment agreements. Id., at 5612-13 (citations omitted).

Arbitration Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Cases-Bishop v. Heartland Services: Kansas Federal Court Rejects Defense Opposition To Conditional Certification Of FLSA (Fair Labor Standards Act) Class Action

Plaintiffs in Class Action Alleging Failure to Pay Overtime in Violation of Federal Fair Labor Standards Act (FLSA) Demonstrated that they were “Similarly Situated” to Putative Class Members thus Supporting Court Order Granting Motion to Conditionally Certify Lawsuit as a Class Action and to Provide Notice to Class Members Kansas Federal Court Holds Plaintiffs filed a class action complaint in Kansas federal court against their employer, Heartland Services, alleging failure to pay overtime in violation of the federal Fair Labor Standards Act (FLSA).

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

FLSA Class Action Defense Cases-Yi v. Sterling Collision: Seventh Circuit Affirms Summary Judgment In Favor Of Defense In FLSA (Fair Labor Standards Act) Class Action Case Based On Commission Exemption To Overtime Pay

Commission Exemption to Overtime Pay Under Federal Fair Labor Standards Act (FLSA) need only be Established by Preponderance of the Evidence Seventh Circuit Holds

Plaintiffs filed a labor law class action against their employer for violations of the federal Fair Labor Standards Act (FLSA) alleging that they were wrongly denied overtime pay. Defense attorneys moved for summary judgment on the ground that members of the putative class action were exempt from overtime pay under FLSA; the district court agreed and entered judgment in favor of the employer and against the class action plaintiffs. Yi v. Sterling Collision Centers, Inc., 480 F.3d 505, 506 (7th Cir. 2007). The Seventh Circuit affirmed.

This case involves “whether a system of compensation common in the auto repair industry is a commission system within the meaning of the [FLSA].” Yi, at 506. While the FLSA requires overtime pay for hours worked in excess of 40 hours per week, see 29 U.S.C. § 207(a)(1), the Circuit Court noted that “there is an exemption for workers in retail stores or other service establishments (including the automobile repair service that is the defendant in this case) who (1) are paid a wage that exceeds one and a half times the minimum wage and (2) receive more than half their compensation in the form of “commissions on goods or services,” Yi, at 506 (citing § 207(i)).

Preliminarily, the Circuit Court flatly rejected the argument that the defense must establish the exemption by “clear and affirmative evidence.” Yi, at 506. While it recognized that some sister circuits have used this or similar language, id., at 506-07, the Seventh Circuit’s analysis of the statute and the case law led it to a different conclusion: the burden of proof is no greater than in other federal civil cases – preponderance of the evidence. Id., at 507. In the Court’s opinion, the narrow interpretation of exemptions referenced in decisional law is properly viewed as “a tie breaker,” id., at 508.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Issues-Murphy v. Kenneth Cole: California Supreme Court Holds Three-Year Limitations Period Applies To Labor Code § 226.7 Additional Pay Awards

In Case that will have Direct and Substantial Impact on Labor California Law Class Action Cases, California Supreme Court Rejects Defense Argument that Additional Pay Awards under Labor Code § 226.7 Constitute “Penalties” Subject to One-Year Statute of Limitations and Holds that such Awards Constitute “Wages” Subject to Three-Year Statute of Limitations

Plaintiff, a store manager at a Kenneth Cole Productions clothing store, filed an individual (not class action) lawsuit against his former employer seeking unpaid overtime and waiting penalties, and for meal and rest period and itemized pay statement violations, because he regularly worked 9-10 hours days and rarely took meal or rest breaks. Murphy v. Kenneth Cole Productions, Inc., ___ Cal.4th ___ (Cal. April 16, 2007) [Slip Opn., at 2-3]. The trial court ruled against the employer and, in part, awarded “an additional hour of pay” under California Labor Code section 226.7, and applied to three-year statute of limitations to this award. _Id._, at 4. Defense attorneys appealed, and the appellate court reversed in part, holding that awards under § 226.7 constituted “penalties” rather than “wages,” and were therefore subject to a one-year limitations period. _Id._ at 4-5.

Plaintiff initially filed a wage claim with the state’s Labor Commissioner seeking overtime and waiting time penalties; the Commissioner ruled in plaintiff’s favor, and KCP filed for a trial de novo, thereby vesting jurisdiction in the Superior Court. Murphy, at 3. Plaintiff sought additional relief in this civil action, adding claims for failure to provide meal and rest periods and for itemized pay statement violations. Id., at 3-4. The trial court allowed plaintiff to add the additional claims to his action, and ultimately entered judgment in favor of plaintiff. Id., at 4. Of critical importance, the trial court concluded that the “additional hour of pay” awardable under § 226.7 for failing to provide meal or rest periods constituted “wages” rather than “penalties” and so awarded damages for meal and rest period violations dating back to October 2000, id. This issue had been unsettled in California, with the majority of appellate court holding that these damages constituted penalties. The Supreme Court, however agreed with the trial court.

Class Action Court Decisions Employment Law Class Actions Uncategorized

Class Action Defense Issues–California Supreme Court Holds That Additional Hour Of Pay Under Labor Code Is Subject To 3-Year Statute Of Limitations

“On Additional Hour of Pay” under California Labor Code Section 226.7 Constitutes Wage or Premium Pay Subject to Three-Year Statute of Limitations Period, not a Penalty Subject to One-Year Limitations Period, California Supreme Court Holds In a case that will have a substantial and immediate impact on labor law class action cases, the California Supreme Court today issued its long-awaited decision in Murphy v. Kenneth Cole Productions, Inc., which addressed two issues: “first, whether the ‘one additional hour of pay’ provided for in Labor Code section 226.

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Class Action Defense Cases-Hall v. County of Los Angeles: Defense Properly Granted Summary Judgment In Sex Discrimination Labor Law Class Action Against County California Court Holds

California Appellate Court Affirms Summary Judgment in Favor of Defense Because no Evidence Supported Class Action Allegations that County Program Discriminated Against Women or Affected Women Disproportionately to Men

Plaintiff filed a putative class action against the County of Los Angeles alleging that it violated the federal Equal Pay Act because it paid female lawyers employed under the County’s “Auxiliary Legal Services” program (ALS) less than it paid male lawyers serving as County Counsel. Hall v. County of Los Angeles, ___ Cal.App..4th ___, 2007 WL 529963, *1 (Cal.App. February 22, 2007). Defense attorneys moved for summary judgment; the trial court granted the defense motion and the California Court of Appeal affirmed. The appellate court held that “the wage disparity between ALS and County Counsel was based on an acceptable business reason, which is a recognized ‘factor other than sex.’” _Id._, at *4 (citation omitted).

In 1984, in order to address a dramatic increase in juvenile court cases, the County formed ALS to supplement the legal services provided by County Counsel. The ALS attorneys were independent contractors, and by the express terms of their contracts they were employees of ALS, not the County. Hall, at *1. ALS was intended to allow the County to realize cost savings by hiring additional attorneys on “as needed” basis “without increasing the number of permanent classified County employees.” Id. “Similarly situated male and female lawyers at ALS were treated the same in terms of salary and benefits, and similarly situated male and female lawyers at County Counsel were treated the same in terms of salary and benefits.” Id., at *2. The class action complaint alleged, however, that there were more female lawyers at ALS than at County Counsel, and that female lawyers at ALS were not paid comparably with male lawyers at County Counsel. Id.

Class Action Court Decisions Employment Law Class Actions Uncategorized

CAFA Class Action Defense Cases-Mattera v. Clear Channel: New York Federal Court Grants Defense Motion To Dismiss Labor Law Class Action For Failure To Join Indispensable Party

Entity that Employed Significant Number of Putative Class Members was an Indispensable Party under Rule 19 of the Federal Rules of Civil Procedure and could not be Joined in Class Action Without Destroying Federal Court Diversity Jurisdiction thus Necessitating Dismissal of Class Action Complaint New York Court Holds

Plaintiff filed a putative class action against Clear Channel Communications and Clear Channel Broadcasting for violations of New York’s labor laws, alleging that defendants “made and continue to make unauthorized deductions from the wages of sales representatives for the New York radio stations that Defendants own and operate.” Mattera v. Clear Channel Communications, Inc., 239 F.R.D. 70, 71-72 (S.D.N.Y. 2006). Plaintiff invoked federal court jurisdiction solely on the basis of diversity, id., at 72. Defense attorneys moved to dismiss the class action complaint for failure to join an indispensable party, id.; the thrust of the defense motion was that the class action failed to name Capstar Radio Operating Company (the owner of the two radio stations where plaintiff worked) as a defendant, and that joinder of Capstar would eliminate diversity jurisdiction thereby compelling dismissal of the action, id., at 73. The district court agreed with the defense and dismissed the class action.

Plaintiff was a sales representative, selling advertising spots or on-air time for two of the 1200+ radio stations defendants own and operate. Mattera, at 72. Sales representatives were received biweekly draws against commissions earned on each sale. The commissions were to be “paid one month after the contract for a sale is executed and the advertising spot purchased is aired,.” But if the customer failed to pay for the service within 120 days then there would be a “charge back,” with the entire amount of the commission deducted from the employee’s next paycheck. According to the allegations in the class action complaint, the customer, “typically an advertising agency or corporation with a longstanding relationship with Defendants,” would pay the bill more than 120 days after service, but in such instances defendants would not reverse the charge back. Id.

Class Action Court Decisions Class Action Fairness Act (CAFA) Employment Law Class Actions Uncategorized

Dukes v. Wal-Mart Class Action Defense Case: Ninth Circuit Upholds Certification Of Nationwide Sex Discrimination Class Action Creating Largest Class Ever Agreeing With District Court That Class Action Was Nonetheless Manageable

District Court did not Abuse its “Broad Discretion” in Certifying Nationwide Sex Discrimination Class Action Against Wal-Mart Creating “the Largest Certified Class in History” Ninth Circuit Holds

In June 2001, plaintiffs filed a putative class action against Wal-Mart in the San Francisco federal court alleging sex discrimination in the payment of wages and in promotions. In April 2003, plaintiffs moved to certify a nationwide class action on behalf of 1.5 million former and present female employees “employed in a range of Wal-Mart positions – from part-time, entry-level, hourly employees to salaried managers.” Dukes v. Wal-Mart, Inc., 474 F.3d 1214 (9th Cir. February 06, 2007) [Slip Opn., at 1340]. Defense attorneys argued that the requirements of Rule 23 had not been satisfied, stressing in particular several problems inherent in litigating a class of record size. More than a year later, in an 84-page decision handed down in June 2004, the district court rejected all but one of the defense arguments and, save for that one point, certified the class action as requested by plaintiffs. Both sides appealed, but the Ninth Circuit affirmed the district court order in all respects.

Plaintiffs’ motion sought certification of a nationwide class action on behalf of “All women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart’s challenged pay and management track promotions policies and practices.” Dukes, at 1340. Wal-Mart stressed the “‘historic’ nature of Plaintiffs’ motion, inasmuch as it concerns a class of approximately 1.5 million women who work or worked in one or more of Wal-Mart’s 3,400 stores in 41 regions at any time since 1998.” Id. The district court recognized Wal-Mart’s concerns but concluded that “while the class size was large, the issues were not unusual.” Id. The Ninth Circuit summarized the district court’s order at page 1341 as follows:

On June 21, 2004, the district court issued an eighty-four-page order granting in part and denying in part Plaintiffs’ motion for class certification. [Citation.] With respect to Plaintiffs’ claims for equal pay, the district court granted Plaintiffs’ motion as to issues of alleged discrimination and all forms of requested relief. With respect to Plaintiffs’ promotion claim, the court’s finding was mixed. The court certified the proposed class as it related to issues of alleged discrimination (including liability for punitive damages) as well as injunctive and declaratory relief. However, the court denied Plaintiffs’ request for certification with respect to backpay because data relating to challenged promotions were not available for all class members.

On appeal, Wal-Mart focused its attack on three points: (1) that the commonality and typicality requirements of Rule 23(a) had not been satisfied, (2) that the class action complaint primarily sought monetary relief thus barring certification under Rule 23(b)(2), and (3) that the district court order prejudiced its ability to respond to individual claims. Dukes, at 1341. Plaintiffs, in turn, argued that the district court erred in limiting backpay relief. Id. The Ninth Circuit held that the district court did not abuse its discretion in certifying the nationwide class.

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