Employment class actions continue to raise firms' financial exposures: Analysis

Employment law class action and collective action litigation will continue to be a source of significant financial exposure for employers, Chicago-based law firm Seyfarth Shaw L.L.P. said in its annual report.

Seyfarth's 790-page “Annual Workplace Class Action Litigation Report: 2012 Edition” says: “Employers also can expect that class action and collective action lawsuits increasingly will combine claims under multiple statutes, thereby requiring the defense bar to have a cross-disciplinary understanding of substantive employment laws as well as the procedural peculiarities of opt-out classes under Rule 23 of the Federal Rules of Civil Procedure and the opt-in procedures” in the Fair Labor Standards Act and the Age Discrimination in Employment Act.

Rule 23 governs class actions in federal courts.

Two key Supreme Court decisions

Seyfarth partner Gerald L. Maatman Jr., the report's general editor, said two key decisions last year were the U.S. Supreme Court's ruling in Wal-Mart Stores vs. Betty Dukes et al., in which the court ruled against a class of some 1.5 million members; and its decision on arbitration agreements in AT&T Mobility L.L.C. vs. Vincent and Liza Concepcion.

As a result of these rulings, class actions are “not dead or blocked, rather they're reforming and morphing into different iterations,” said Mr. Maatman, who is co-chair of Seyfarth's class action litigation practice group. Beginning in the second half of last year, “you're seeing novel issues being decided by the courts,” he said. “I think you're going to see that throughout 2012.”

In addition, said Mr. Maatman, as a result of the Dukes decision, there will be smaller but more numerous class action lawsuits filed, “so instead of one big one, you might see three, four, five smaller” lawsuits. “There probably is a tipping point where the smaller cases end up costing more than one large case to handle,” he said.

Other key trends

According to the report, other key trends in workplace class action developments in 2011 included:

• “White hot” levels of government enforcement litigation.

• “Continued dislocations” in the economy, which fueled more class action and collective action litigation.

• Wage-and-hour litigation, which continued to outpace all other types of workplace class actions.

• Case law developments in the “tight-knit” plaintiffs class action bar that gave rise to “rapid strategic changes based on evolving decisions and developments.”

• Increased financial stakes for class action litigation as the plaintiffs bar “continued to push the envelope crafting damages theories to expand the size of classes and the scope of recoveries.”

To register an order for a free copy of the report, email ClassActionReport@seyfarth.com.