The prosecution of workplace class-action litigation by plaintiffs’ attorneys — often posing unique “bet-the-company” risks for employers — continues to escalate, as it has over the past decade.
As has become readily apparent in the #MeToo era, an adverse judgment in a class action can eviscerate a company’s market share and even has the potential to bankrupt a business. Further, the ongoing defense of a class action can drain corporate resources long before the case even reaches a decision point.
Companies that do business in multiple states are also susceptible to “copy-cat” class actions, whereby plaintiffs’ lawyers create a domino effect of litigation filings that challenge corporate policies and practices in numerous jurisdictions at the same time.
Hence, workplace class actions can impair a company’s business operations, jeopardize or cut short the careers of senior management, and cost millions of dollars to defend.
Skilled plaintiffs’ class-action lawyers and governmental enforcement litigators are not making this challenge any easier for companies. They are continuing to develop new theories and approaches to the successful prosecution of complex employment litigation and government-backed lawsuits.
In turn, the events of the past year in the workplace class action world demonstrate that the array of litigation issues facing businesses continues to accelerate at a rapid pace while also undergoing significant change.
Notwithstanding the transition to new leadership in the White House with the Trump Administration, the U.S. Equal Employment Opportunity Commission (EEOC) and other federal agencies continue their aggressive enforcement litigation. Regulatory oversight of workplace issues remains a high priority.
Conversely, litigation issues stemming from the U.S. Department of Labor reflect a slight pullback from previous efforts to push a pronounced pro-worker/anti-business agenda.
Furthermore, changes to government priorities are being carried out by new leaders at the agency level who were appointed over the past year. Many of the changes represent stark reversals in policy that are sure to have a cascading impact on private class-action litigation.
Key 2018 Trends
An overview of workplace litigation in 2018 reveals five key trends:
First, the U.S. Supreme Court continued its recent trend of accepting more cases for review, and therefore issuing more rulings, than it had previously.
Some key decisions on complex employment litigation and class-action issues were arguably more pro-business than those in the past. Among them, the ruling in Epic Systems Corp. v. Lewis — which confirmed that companies can legally bar employees from collective arbitration and require individual arbitration in employee-employer disputes — was one of the most important workplace class-action rulings in the last two decades.
The decision, coupled with President Trump’s Supreme Court appointees, may well reshape the playbook for prosecuting and defending class actions.
Second, the plaintiffs’ bar was successful in getting classes certified at the highest rates ever in the areas of ERISA and wage-and-hour hour litigation. The lawyers continued to craft refined class certification theories to counter the stringent requirements established in Wal-Mart Stores, Inc. v. Dukes (2011).
Plaintiffs won 196 of 248 conditional certification rulings (79%) and lost only 13 of 25 decertification rulings (52%). By comparison, in 2017 plaintiffs won 170 of 233 conditional certification rulings (73%) and lost 15 of 24 decertification rulings (63%).
Third, filings and settlements of government enforcement litigation did not reflect a head-snapping pivot from the ideological pro-worker outlook of the Obama Administration.
Instead, compared with 2016 (Obama’s last year in office), government enforcement litigation actually increased in 2018. The EEOC alone brought 199 lawsuits last year, compared with 184 in 2017 and just 86 in 2016.
However, the value of the top 10 settlements in government enforcement cases decreased dramatically, from $485.25 million in 2017 to $126.7 million in 2018.
Explanations for the increased government enforcement cases compared with expectations are varied. They include:
- The time lag between Obama-appointed enforcement personnel vacating their offices and Trump-appointed personnel taking charge of agency decision-making power
- The number of lawsuits “in the pipeline” that were filed during the Obama Administration that came to conclusion in the past year
- The “hold-over” effect whereby Obama-appointed policy-makers remained in their positions long enough to continue their enforcement efforts before being replaced in the last half of 2018.
These factors are crucial to employers, as both the DOL and the EEOC have focused on big-impact lawsuits against companies, thereby “leading by example” in terms of areas that the private plaintiffs’ bar aims to pursue.
As 2019 opens, it appears that the content and scope of enforcement litigation undertaken by the DOL and the EEOC in the Trump Administration will tilt away from the previous pro-employee/anti-big business mindset. Trump appointees at both agencies are slowly but surely peeling back positions previously advocated under the Obama Administration.
As a result, it appears inevitable that both the volume of government enforcement litigation and value of settlement numbers from those cases will decrease in 2019.
Fourth, there was a sharp decrease in the monetary value of the top workplace class-action settlements. These numbers had been increasing annually over the past decade and reached all-time highs in 2017.
While the plaintiffs’ employment class-action bar and governmental enforcement litigators were exceedingly successful in monetizing their case filings into large class-wide settlements this past year, they did so at decidedly lower values in 2018 than in previous years.
The top 10 settlements in various employment-related class-action categories totaled $1.32 billion in 2018, down from more than $2.72 billion in 2017 and 1.75 billion in 2016. Whether this was the beginning of a long-range trend or a short-term aberration remains to be seen as 2019 unfolds.
Fifth, as the #MeToo movement continues to gain momentum worldwide, it’s fueling employment litigation issues in general and workplace class-action litigation in particular.
On account of new reports and social media, it has raised the level of awareness of workplace rights and emboldened many to utilize the judicial system to vindicate those rights.
Several large sexual harassment class-based settlements were effectuated in 2018 that stemmed at least in part from #MeToo initiatives. Likewise, the EEOC’s enforcement litigation activity in 2018 focused on the filing of #MeToo lawsuits while riding the wave of social media attention to such workplace issues.
In fact, three-quarters (74%) of EEOC Title VII filings last year targeted sex-based discrimination, compared with 65% in 2017). And 41 of the filings included claims of sexual harassment, up from 33 the prior year. Employers can expect more of the same in the coming year.
Gerald Maatman is a partner with law firm Seyfarth Shaw LLP. This article is excerpted from the firm’s “Annual Workplace Class Action Litigation Report: 2019 Edition.”