Annual Workplace Class Action Litigation Report

Annual Workplace Class Action Litigation Report 2014 EDITION Seyfarth Shaw LLP

Important Disclaimer The material in this report is of the nature of general commentary only. It is not offered as legal advice on any specific issue or matter and should not be taken as such. The views expressed are exclusively those of the authors. The authors disclaim any and all liability to any person in respect of anything and the consequences of anything done or omitted to be done wholly or partly in reliance upon the contents of this report. Readers should refrain from acting on the basis of any discussion contained in this publication without obtaining specific legal advice on the particular facts and circumstances at issue. Any sort of comprehensive legal advice on any particular situation is beyond the scope of this report. While the authors have made every effort to provide accurate and up-to-date information on laws, cases, and regulations, these matters are continuously subject to change. Furthermore, the application of the laws depends on the particular facts and circumstances of each situation, and therefore readers should consult with an attorney before taking any action. This publication is designed to provide authoritative information relative to the subject matter covered. It is offered with the understanding that the authors are not engaged in rendering legal advice or other professional services. From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations. Seyfarth Shaw LLP

Seyfarth Shaw LLP 131 South Dearborn Street Suite 2400 Writer s direct phone (312) 460-5893 Writer s e-mail spoor@seyfarth.com Chicago, Illinois 60603 (312) 460-5000 fax (312) 460-7000 www.seyfarth.com January 2014 Dear Clients: The last few years have seen an explosion in class action and collective action litigation involving workplace issues. This came to a head in 2012 and 2013 with several major class action rulings from the U.S. Supreme Court. Likewise, the present economic climate is likely to fuel even more lawsuits. The stakes in these types of employment lawsuits can be extremely significant, as the financial risks of such cases are enormous. More often than not, class actions adversely affect the market share of a corporation and impact its reputation in the marketplace. It is a legal exposure which keeps corporate counsel and business executives awake at night. Defense of corporations in complex, high-stakes workplace litigation is one of the hallmarks of Seyfarth Shaw s practice. Through that work, our attorneys are on the forefront of the myriad of issues confronting employers in class action litigation. In order to assist our clients in understanding and avoiding such litigation, we are pleased to present the 2014 Edition of the Seyfarth Shaw Annual Workplace Class Action Litigation Report. This edition, authored by the class action attorneys in our Labor & Employment Department, contains a circuit-by-circuit and state-by-state review of significant class action rulings rendered in 2013, and analyzes the most significant settlements over the past twelve months in class actions and collective actions. We hope this Annual Report will assist our clients in understanding class action and collective action exposures and the developing case law under both federal and state law. Very truly yours, J. Stephen Poor Firm Managing Partner

Author s Note Our Annual Report analyzes the leading class action and collective action decisions of 2013 involving claims against employers brought in federal courts under Title VII of the Civil Rights Act of 1964 ( Title VII ), the Age Discrimination in Employment Act ( ADEA ), the Fair Labor Standards Act ( FLSA ), the Employee Retirement Income Security Act ( ERISA ), and a host of other federal statutes applicable to workplace issues. The Report also analyzes class action and collective action rulings involving claims brought against employers in all 50 state court systems, including decisions pertaining to employment laws, wage & hour laws, and breach of employment contract actions. The key class action and collective action settlements over the past year are also analyzed, both in terms of gross settlement dollars in private plaintiff and government-initiated lawsuits as well as injunctive relief provisions in consent decrees. Finally, the Report also discusses important federal and state court rulings in non-workplace cases which are significant in their impact on the defense of workplace class action litigation. In total, there are 1,123 decisions analyzed in the Report. The cases decided in 2013 foreshadow the direction of class action litigation in the coming year. One certain conclusion is that employment law class action and collective action litigation is becoming ever more sophisticated and will continue to be a source of significant financial exposure to employers well into the future. 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 law 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 FLSA and ADEA collective actions. This report represents the collective contributions of a significant number of our colleagues at Seyfarth Shaw LLP. We wish to thank and acknowledge those contributions by Richard L. Alfred, Lorie Almon, Raymond C. Baldwin, Brett C. Bartlett, Edward W. Bergmann, Daniel Blouin, Rebecca Bromet, William M. Brown, Michael J. Burns, Robert J. Carty, Jr., Mark A. Casciari, John L. Collins, Ariel Cudkowicz, Catherine M. Dacre, Joseph R. Damato, Christopher J. DeGroff, Pamela Devata, Ada Dolph, Alex Drummond, William F. Dugan, Noah A. Finkel, Timothy F. Haley, David D. Kadue, Lynn Kappelman, Raymond R. Kepner, Daniel B. Klein, Mary Kay Klimesh, Ronald J. Kramer, Richard B. Lapp, Richard P. McArdle, Jon Meer, Ian H. Morrison, Camille A. Olson, Andrew Paley, Katherine E. Perrelli, Thomas J. Piskorski, George E. Preonas, David Ross, Jeffrey K. Ross, David J. Rowland, Jeremy Sherman, Frederick T. Smith, Amanda Sonneborn, Diana Tabacopoulos, Joseph S. Turner, Peter A. Walker, Timothy M. Watson, Robert S. Whitman, and Kenwood C. Youmans. Our goal is for this Report to guide clients through the thicket of class action and collective action decisional law, and to enable corporate counsel to make sound and informed litigation decisions while minimizing risk. We hope that you find the Seyfarth Shaw Annual Workplace Class Action Litigation Report to be useful. Gerald L. Maatman, Jr./General Editor Co-Chair, Class Action Litigation Practice Group of Seyfarth Shaw LLP January 2014 Seyfarth Shaw LLP i

Guide To Citation Formats As corporate counsel utilize the Report for research, we have attempted to cite the West bound volumes wherever possible (e.g., Scott, et al. v. Family Dollar Stores, Inc., 733 F.3d 105 (4th Cir. 2013)). If a decision is unavailable in bound format, we have utilized a LEXIS cite from its electronic database (e.g., EEOC v. Kaplan Higher Education Corp., 2013 U.S. Dist. LEXIS 11722 (N.D. Ohio Jan. 28, 2013)), and if a LEXIS cite is not available, then to a Westlaw cite from its electronic database (e.g., Odle, et al. v. Wal-Mart Stores, Inc., 2013 WL 66035 (N.D. Tex. Jan. 7, 2013)). If a ruling is not contained in an electronic database, the full docketing information is provided (e.g., Stargel, et al. v. Suntrust Banks, Inc., Case No. 12-CV-3822 (N.D. Ga. Aug. 7, 2013)). Search Functionality This Report is fully searchable. Case names, Rule 23 terms, and class action topics can be searched by selecting Edit and then Find (or Ctrl+F), and then by typing in the word or phrase to be searched, and then either selecting Next or hitting Enter. ebook Features The 2014 Workplace Class Action Litigation Report is also available as an ebook. The downloaded ebook is accessible via freely available ebook reader apps like ibook, Kobo, Aldiko, etc. The ebook provides a rich and immersive reading experience to the users. Some of the notable features include: 1. The ebook is completely searchable. 2. Users can increase or decrease the font sizes. 3. Active links are set for the table of contents to their respective sections. 4. Bookmarking is offered for notable pages. 5. Readers can drag to navigate through various pages. ii Seyfarth Shaw LLP

A Note On Class Action And Collective Action Terms And Laws References are made to Rule 23 of the Federal Rules of Civil Procedure and 29 U.S.C. 216(b) throughout this Report. These are the two main statutory sources for class action and collective action decisional law. Both are procedural devices used in federal courts for determining the rights and remedies of litigants whose cases involve common questions of law and fact. The following summary provides a brief overview of Rule 23 and 216(b). Class Action Terms The Report uses the term class action to mean any civil case in which parties indicated their intent to sue on behalf of themselves as well as others not specifically named in the suit at some point prior to the final resolution of the matter. This definition includes a case in which a class was formally approved by a judge (a certified class action), as well as a putative class action, in which a judge denied a motion for certification, in which a motion for certification had been made but a decision was still pending at the time of final resolution, or in which no formal motion had been made but other indications were present suggesting that class treatment was a distinct possibility (such as a statement in a complaint that the plaintiffs intended to bring the action on behalf of others similarly-situated). Although certified class actions may receive considerable attention if they are reported publicly, defendants also must confront putative class actions that contain the potential for class treatment as a result of filing a motion for certification or because of allegations in the original complaint that assert that the named plaintiffs seek to represent others similarly-situated. Even if such cases are never actually certified, the possibility of the litigation expanding into a formal class action raises the stakes significantly, perhaps requiring a more aggressive (and costlier) defense or resulting in a settlement on an individual basis at a premium. Rule 23 Rule 23 governs class actions in federal courts, and typically involves lawsuits that affect potential class members in different states or that have a nexus with federal law. Rule 23 requires a party seeking class certification to satisfy the four requirements of section (a) of the rule and at least one of three conditions of section (b) of the rule. Under U.S. Supreme Court precedent, a district court must undertake a rigorous analysis of Rule 23 prerequisites before certifying a class. General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982). More often than not, plaintiffs will support their motion for class certification with deposition testimony, declarations of putative class members, and expert opinions in the form of affidavits of expert witnesses. Courts often observe that the appropriate analysis in reviewing this evidence is not equivalent to an examination of the merits or a battle between the parties experts. Rather, the salient issue is whether plaintiffs legal theories and factual materials satisfy the Rule 23 requirements. The Rule 23(a) requirements include: Numerosity The individuals who would comprise the class must be so numerous that joinder of them all into the lawsuit would be impracticable. Commonality There must be questions of law and fact common to the proposed class. Typicality The claims or defenses of the representative parties must be typical of the claims and defenses of putative class members. Seyfarth Shaw LLP iii

Adequacy of Representation The representative plaintiffs and their counsel must be capable of fairly and adequately protecting the interests of the class. The standards for analyzing the commonality requirement of Rule 23(a)(2) were tightened in 2011 with the U.S. Supreme Court s decision in Wal-Mart Stores, Inc. v. Dukes, et al., 131 S. Ct. 2541 (2011). As a result, a common issue is one that is capable of class-wide resolution which means that determination of its truth or falsity will resolve an issue that is central to the validity of each of the claims in one stroke. Id. at 2551. Once a plaintiff establishes the four requirements of Rule 23(a), he or she must satisfy one of the three requirements of Rule 23(b). In practice, a plaintiff typically establishes the propriety of class certification under either Rule 23(b)(2) or Rule 23(b)(3) in an employment-related case. Because application of each rule depends on the nature of the injuries alleged and the relief sought, and imposes different certification standards on the class, the differences between Rule 23(b)(2) and (b)(3) are critical in employment-related class action litigation. In the words of the rule, a class may be certified under Rule 23(b)(2) if the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole. In other words, plaintiffs seeking to certify class actions under Rule 23(b)(2) are restricted to those cases where the primary relief sought is injunctive or declaratory in nature. Rule 23(b)(2) does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages. Rule 23(b)(2) provides for a binding litigation order as to all class members without guarantees of personal notice and the opportunity to opt-out of the suit. Rule 23(b)(3) is designed for circumstances in which class action treatment is not as clearly called for as in Rule 23(b)(1) and Rule 23(b)(2) situations, when a class action may nevertheless be convenient and desirable. A class may be certified under Rule 23(b)(3) if the court finds that questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Pertinent considerations include the interest of the members of the class in individually controlling the prosecution of separate actions; the extent and nature of any litigation concerning the controversy already commenced by members of the class; the desirability of concentrating the litigation of the claims in one particular forum; and the difficulties likely to be encountered in the management of a class action. To qualify for certification under Rule 23(b)(3), therefore, a class must meet not only the requirements of Rule 23(a), but also two additional requirements: (1) common questions must predominate over any questions affecting only individual members; and (2) class resolution must be superior to other available methods for the fair and efficient adjudication of the controversy. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 615 (1997). While the common question requirement of Rule 23(a)(2) and the predominance requirement of Rule 23(b)(3) overlap, the predominance requirement is more stringent than the common question requirement. Thus, even though a case may present common questions of law or fact, those questions may not always predominate and class certification would be inappropriate. Rule 23(b)(3) applies to cases where the primary relief sought is money damages. The Supreme Court has determined in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) that unlike in Rule 23(b)(2) class actions, each class member in a Rule 23(b)(3) class action for money damages is entitled as a matter of due process to personal notice and an opportunity to opt-out of the class action. Accordingly, Rule 23(c)(2) guarantees those rights for each member of a iv Seyfarth Shaw LLP

class certified under Rule 23(b)(3). There are no comparable procedural guarantees for class members under Rule 23(b)(2). 29 U.S.C. 216(b) This statute governs multi-plaintiff lawsuits under the ADEA and the FLSA. Generally, such lawsuits are known as collective actions (as opposed to class actions). Under 29 U.S.C. 216(b), courts generally recognize that plaintiffs and other non-party individuals may not proceed collectively until they establish that that they should be permitted to do so as a class. Under 216(b), courts have held that similarly-situated individuals may proceed collectively as a class. The federal circuits have not agreed on the standard according to which such a class should be certified. Two competing standards for certification are recognized. The first approach adopts the view that the similarly-situated inquiry is coextensive with the procedure used in class actions brought pursuant to Rule 23. Using this methodology, the court analyzes the putative class for factors including numerosity, commonality, typicality, and adequacy of representation. This typically occurs after some discovery has taken place. This approach is unusual and is not favored. The second approach is a two-tiered approach involving a first stage conditioned certification process and a second stage potential decertification process. It is more commonly used and is the prevailing test in federal courts. In practice, it tends to be a plaintiff-friendly standard. In the context of the first stage of conditional certification, plaintiffs typically move for conditional certification and permission to send notices to prospective class members. This generally occurs at an early stage of the case, and often before discovery even commences. Courts have held that a plaintiff s burden at this stage is minimal. A ruling at this stage of the litigation often is based upon allegations in the complaint and any affidavits submitted in favor of or in objection to conditional certification. Courts have not clearly defined the qualitative or quantitative standards of evidence that should be applied at this stage. Courts are often reluctant to grant or deny certification on the merits of a plaintiff s case. This frustrates defendants with clearly meritorious arguments in defense of the litigation, such as those based on compelling proof that would establish the exempt status of the plaintiffs and other employees alleged to be similarly-situated. Instead, courts appear to find the most convincing proof that certification is improper based on evidence that putative class members perform different jobs in different locations or facilities, under different supervisors, and potentially pursuant to differing policies and practices. Courts also have held that certification is inappropriate when individualized inquiries into applicable defenses are required, such as when the employer asserts that the relevant employees are exempt. Where conditional certification is granted, a defendant has the opportunity to request that the class be decertified after discovery is wholly or partially completed in the subsequent, second stage of decertification. Courts engage in a more rigorous scrutiny of the similarities and differences that exist amongst members of the class at the decertification stage. The scrutiny is based upon a more developed, if not entirely complete, record of evidence. Upon an employer s motion for decertification, a court assesses the issue of similarity more critically and may revisit questions concerning the locations where employees work, the employees Seyfarth Shaw LLP v

supervisors, their employment histories, the policies and practices according to which they perform work and are paid, and the distinct defenses that may require individualized analyses. Opt-In/Opt-Out Procedures Certification procedures are different under Rule 23 and 29 U.S.C. 216(b). Under Rule 23(b)(2), a court s order binds the class; under Rule 23(b)(3), however, a class member must opt-out of the class action (after receiving a class action notice). If he or she does not do so, they are bound by the judgment. Conversely, under 216(b), a class member must opt-in to the lawsuit before he or she will be bound. While at or near 100% of class members are effectively bound by a Rule 23 order, opt-in rates in most 216(b) collective actions typically range from 10% to 30%. vi Seyfarth Shaw LLP

TABLE OF CONTENTS I. OVERVIEW OF THE YEAR IN WORKPLACE CLASS ACTION LITIGATION...1 A. Significant Trends In Workplace Class Action Litigation In 2013...3 B. Impact Of Changing Rule 23 Standards On Workplace Arbitration Issues...8 C. Implications Of These Developments For 2014...9 II. SIGNIFICANT CLASS ACTION SETTLEMENTS IN 2013...11 III. IV. A. Top Ten Private Plaintiff-Initiated Monetary Settlements...11 B. Top Ten Government-Initiated Monetary Settlements...15 C. Noteworthy Injunctive Relief Provisions In Class Action Settlements...17 SIGNIFICANT FEDERAL EMPLOYMENT DISCRIMINATION CLASS ACTION AND EEOC PATTERN OR PRACTICE RULINGS...23 A. Employment Discrimination Class Actions Under Title VII Of The Civil Rights Act Of 1964...23 B. EEOC Pattern Or Practice Cases...37 SIGNIFICANT COLLECTIVE ACTION RULINGS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT...139 A. Cases Certifying Or Refusing To Certify ADEA Collective Action Claims...139 B. Other Federal Rulings Affecting The Defense Of ADEA Collective Actions...141 (i) Procedural Issues In ADEA Collective Actions...141 (ii) Government Regulation Issues In ADEA Litigation...141 (iii) Adverse Impact Litigation Issues...142 (iv) Employee Benefit Plan Litigation Under The ADEA...143 (v) Arbitration Of ADEA Pattern Or Practice Claims...144 (vi) Public Employee Age Discrimination Litigation...144 (vii) Tolling In ADEA Collective Actions...146 V. SIGNIFICANT COLLECTION ACTION RULINGS UNDER THE FAIR LABOR STANDARDS ACT149 A. Cases Certifying Or Refusing To Certify FLSA Collective Action Claims...149 B. Other Federal Rulings Affecting The Defense Of FLSA Collective Actions...258 (i) Notice Issues In FLSA Collective Actions...258 (ii) Mootness In FLSA Collective Actions...263 (iii) (iv) (v) (vi) (vii) Individual Executive Liability In FLSA Collective Actions...265 Awards Of Attorneys Fees In FLSA Collective Actions...267 Application Of Twombly Pleading Standards In FLSA Collective Actions...269 FLSA Collective Actions For Donning And Doffing...271 Exemption Issues In FLSA Collective Actions...273 (viii) Discovery In FLSA Collective Actions...278 Seyfarth Shaw LLP i

VI. ii (ix) Public Employee FLSA Collective Action Litigation...281 (x) Preemption Issues In FLSA Collective Actions...287 (xi) Independent Contractor Issues In Wage & Hour Class Actions...291 (xii) Communications With Class Members In FLSA Collective Actions...294 (xiii) Venue Issues In FLSA Collective Actions...298 (xiv) Pay Policies In FLSA Collective Actions...299 (xv) (xvi) Class Arbitration Of Wage & Hour Claims...301 Settlement Of Wage & Hour Class Actions And Collective Actions...313 (xvii) DOL Wage & Hour Enforcement Actions...323 (xviii) (xix) (xx) (xxi) Application Of Statute Of Limitations In FLSA Collective Actions...325 Concurrent State Law Claims In Wage & Hour Class Actions...326 Joint Employer And Employer Status Issues In FLSA Collective Actions...328 Litigation Of Tip Pooling And Tip Credit Claims Under The FLSA...331 (xxii) Litigation Of Service Charge Claims In Wage & Hour Litigation...334 (xxiii) Sanctions In Wage & Hour Class Actions...335 (xxiv) Issues With Opt-In Rights In Wage & Hour Class Actions...336 (xxv) Trial Issues In FLSA Collective Actions...337 (xxvi) Issues With Interns Under The FLSA...338 (xxvii) Tolling Issues In Wage & Hour Class Actions...340 (xxviii) (xxix) (xxx) Interlocutory Appeals In Wage & Hour Class Actions...340 Amendments In FLSA Collective Actions...342 Travel Time Issues In Wage & Hour Class Actions...345 (xxxi) Foreign Worker Issues In Wage & Hour Class Actions...345 (xxxii) Retaliation Issues In Wage & Hour Class Actions...347 (xxxiii) Counterclaims In FLSA Collective Actions...348 (xxxiv) All Writs Act Issues In Wage & Hour Class Actions...348 SIGNIFICANT CLASS ACTION RULINGS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974...351 A. Cases Certifying Or Refusing To Certify ERISA Class Actions...351 B. Other Federal Rulings Affecting The Defense Of ERISA Class Actions...359 (i) Litigation Over Consent Decrees In ERISA Class Actions...359 (ii) Breach Of Fiduciary Duty Issues In ERISA Class Actions...360 Seyfarth Shaw LLP

VII. (iii) ERISA Class Action Litigation Over Retiree/Employee Benefits...365 (iv) Attorneys Fees In ERISA Class Actions...366 (v) Settlement Approval Issues In ERISA Class Actions...368 (vi) Discovery Issues In ERISA Class Actions...368 (vii) Standing Issues In ERISA Class Actions...369 (viii) Coverage Issues In ERISA Class Actions...370 (ix) Preemptive Motions In ERISA Class Actions...371 (x) Statute Of Limitations Issues In ERISA Class Actions...371 (xi) ERISA Stock Drop Class Actions...373 (xii) Appeals In ERISA Class Actions...377 (xiii) Arbitration Issues In ERISA Class Actions...377 (xiv) PBGC Issues In ERISA Class Actions...378 (xv) Notice Issues In ERISA Class Actions...379 (xvi) Preemption Issues In ERISA Class Actions...380 (xvii) (xviii) Jury Trials In ERISA Class Actions...380 Mootness Issues In ERISA Class Actions...380 (xix) Severance Issues In ERISA Class Actions...381 (xx) (xxi) Consolidation Issues In ERISA Class Actions...382 Summary Plan Descriptions In ERISA Class Actions...382 (xxii) ESOP Issues In ERISA Class Actions...383 (xxiii) COLA Issues In ERISA Class Actions...383 (xxiv) Anti-Cut-Back Issues In ERISA Class Actions...384 (xxv) Pleading Standards In ERISA Class Actions...384 (xxvi) (xxvii) Pension Calculation Issues In ERISA Class Actions...385 COBRA Issues In ERISA Class Actions...386 SIGNIFICANT STATE LAW CLASS ACTION RULINGS...387 A. Employment Discrimination Rulings...387 B. Wage & Hour Rulings...390 C. Rulings In Breach Of Employment Contract/Miscellaneous Workplace Claims...420 D. Other State Law Rulings Affecting The Defense Of Workplace Class Action Litigation...429 VIII. RULINGS ON THE CLASS ACTION FAIRNESS ACT...491 IX. OTHER FEDERAL RULINGS AFFECTING THE DEFENSE OF WORKPLACE CLASS ACTION LITIGATION...517 (i) (ii) Class Certification Procedural Issues And Proof Requirements...517 Preemptive Motions To Strike Or Dismiss Class Allegations...522 Seyfarth Shaw LLP iii

(iii) The Numerosity Requirement For Class Certification...530 (iv) The Commonality Requirement For Class Certification...532 (v) The Typicality Requirement For Class Certification...535 (vi) The Adequacy Of Representation Requirement For Class Certification...537 (vii) The Predominance Requirement For Class Certification...541 (viii) The Superiority Requirement For Class Certification...550 (ix) (x) (xi) Workplace Class Action Arbitration Issues...551 Non-Workplace Class Action Arbitration Issues...560 Litigation Over Class Action Consent Decrees...568 (xii) Ascertainability Under Rule 23...570 (xiii) Class Actions Involving Unions...573 (xiv) Attorneys Fee Awards In Class Actions...576 (xv) Intervention Rights In Class Actions...588 (xvi) (xvii) (xviii) Collateral Estoppel, Res Judicata, And Settlement Bar Concepts Under Rule 23...589 Notice Issues In Class Actions...592 Multi-Party Litigation Over Modification Of Employee Benefits...595 (xix) Civil Rights Class Actions...604 (xx) Class Action Discovery Issues...609 (xxi) Class-Wide Proof In Class Actions...617 (xxii) Multi-Party Litigation Under The WARN Act...624 (xxiii) Class Definition Issues...628 (xxiv) (xxv) (xxvi) Claim Preclusion Issues In Class Action Litigation...632 Settlement Approval Issues In Class Actions...634 Mootness Issues In Class Action Litigation...646 (xxvii) Experts In Class Certification Proceedings...649 (xxviii) Sanctions In Class Action Litigation...653 (xxix) Class Communications In Class Action Litigation...658 (xxx) (xxxi) Issues With The Judicial Panel On Multi-District Litigation In Class Actions...659 Standing Issues In Class Actions...661 (xxxii) Employee Testing Issues In Class Actions...665 (xxxiii) Application Of Tolling Principles In Class Actions...665 (xxxiv) Exhaustion Principles In Class Actions...668 (xxxv) Appointment Of Class Counsel And Lead Plaintiffs...669 iv Seyfarth Shaw LLP

(xxxvi) Workplace RICO Class Actions...672 (xxxvii) Public Employee Class Actions...673 (xxxviii) Injunctions In Class Actions...675 (xxxix) Class Actions In Bankruptcy...675 (xl) FACTA And FDCPA Class Actions...677 (xli) TCPA Class Actions...680 (xlii) The Cy Pres Doctrine In Class Actions...689 (xliii) Absentation In Class Actions...694 (xliv) Objectors In Class Actions...694 (xlv) Privacy Class Actions...696 (xlvi) Choice-Of-Law Issues In Class Actions...699 (xlvii) (xlviii) Insurance-Related Class Actions...702 Disparate Impact Issues In Class Actions...704 (xlix) ADA Class Actions...705 (l) Government Enforcement Litigation...706 (li) Alien Tort Statute Class Actions...708 (lii) Workplace Antitrust Class Actions...709 (liii) Stays In Class Action Litigation...710 (liv) FCRA Class Actions...714 (lv) Appeals In Class Action Litigation...716 (lvi) Foreign Worker Class Action Litigation...720 (lvii) Ethical Issues In Class Action Litigation...722 (lviii) Venue Issues In Class Actions...724 (lix) (lx) (lxi) (lxii) (lxiii) (lxiv) Bifurcation Issues In Class Actions...725 Joinder And Severance Issues In Class Actions...726 Special Masters In Class Actions...727 Sealing Issues In Class Actions...728 Breach Of Contract Class Actions...729 Amendments In Class Action Litigation...732 (lxv) Issues With Class Conflicts In Class Actions...733 (lxvi) Punitive Damages In Class Actions...733 (lxvii) State Law Procedural Requirements In Class Actions...734 (lxviii) Mandamus Issues In Class Actions...734 (lxix) Disqualification Of Counsel In Class Actions...735 (lxx) Statute Of Limitations Issues In Class Actions...738 (lxxi) Medical Monitoring Class Actions...738 Seyfarth Shaw LLP v

(lxxii) Opt-Outs In Class Actions...740 (lxxiii) Certification Of Defendant Classes...741 (lxxiv) Consumer Fraud Class Actions...742 (lxxv) Recusal Issues In Class Actions...744 (lxxvi) Settlement Administration Issues In Class Actions...745 APPENDIX I TABLE OF 2013 WORKPLACE CLASS ACTION AND COLLECTIVE ACTION LITIGATION RULINGS...751 vi Seyfarth Shaw LLP

I. Overview Of The Year In Workplace Class Action Litigation Workplace class action litigation is in a state of flux. The events of the past year in the workplace class action world demonstrate that the array of bet-the-company litigation issues that businesses face are evolving on a landscape that is continuing to undergo significant change. At the same time, governmental enforcement litigation remains white hot and regulatory oversight of workplace issues continues to be a priority, thereby challenging businesses to integrate their litigation and risk mitigation strategies to navigate these exposures. By almost any measure, 2013 was a year of evolving changes for workplace class action litigation. The U.S. Supreme Court issued several class action rulings in 2013 in Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), American Express Co. v. Italian Restaurant, 133 S. Ct. 2304 (2013), and Standard Fire Insurance Co. v. Knowles, 133 S. Ct. 1345 (2013) that impacted all varieties of complex litigation in a profound manner this past year. More than any other development in 2013, the decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), continued to have a wide-ranging impact on virtually all types of class actions pending in both federal and state courts throughout the country. In many respects, Wal-Mart was the 800 pound gorilla in courtrooms in 2013 as litigants argued and judges analyzed class certification issues. Rule 23 decisions in 2013 in large part pivoted off of Wal-Mart, and leverage points in class action litigation increased or decreased depending on the manner in which judges interpreted and applied Wal-Mart. Furthermore, Comcast Corp. fueled defense arguments by undermining attacks on class certification in a wide range of contexts, which were met with mixed success for employers. As is well-known by now, the Supreme Court s decision in Wal-Mart elucidated whether Rule 23(b)(2) could be used to recover individualized monetary relief for a class (and held it may not), established a heightened standard for the Rule 23(a)(2) commonality requirement (and determined that common questions for a class must have common answers), and rejected previous lower court interpretations of Supreme Court precedent on Rule 23 burdens of proof (and found that to the extent factual determinations that go to the merits also overlap with the Rule 23 requirements, those factual issues must be analyzed to determine the propriety of class certification). As a result, Wal-Mart continued to foster a tidal wave of decisions in 2013, as litigants and courts grappled with the ruling s implications in a wide variety of class action litigation contexts. As of the close of the year, Wal-Mart had been cited a total of 561 times in lower federal and state court rulings. This year s ruling in Comcast Corp. also added a new weapon to employers arsenals in challenging class certification. The Supreme Court interpreted Rule 23(b)(3) which requires questions of law or fact common to class members predominate over any questions affecting only individual members to mandate that a class proposed damages model show damages on a class-wide basis. In so determining, the Supreme Court reaffirmed that district courts must undertake a "rigorous analysis" of whether a putative class satisfies the predominance criterion set forth in Rule 23(b)(3), even if that analysis overlaps with the merits of the underlying claims, and held that individual issues of damages may preclude class certification. This decision provides companies with a significant and rational defense to class certification in class actions. Much like Wal-Mart, the decision in Comcast Corp. reverberated throughout the lower federal and state courts, and was cited a total of 178 times by the close of the year, a rather remarkable figure for a decision rendered in March of 2013. Against this backdrop, the plaintiffs class action employment bar filed and prosecuted significant class action and collective action lawsuits against employers in 2013. In turn, employers litigated an increasing number of novel defenses to these class action theories, fueled, in part, by the new standards enunciated in Wal-Mart and Comcast Corp. As this Report reflects, federal and state courts addressed a myriad of new theories and defenses in ruling on class action and collective action litigation issues. The impact and Seyfarth Shaw LLP 1

meaning of Wal-Mart issues and Comcast Corp. issues were at the forefront of these case law developments. An overview of workplace class action developments in 2013 reveals seven key trends. First, the Supreme Court s opinions in Wal-Mart and Comcast Corp. had a profound influence in shaping the course of class action litigation rulings throughout 2013. Wal-Mart and Comcast Corp. prompted defendants to mount challenges to class certification based on all sorts of theories (and not just those modeled after the nationwide class claims rejected in Wal-Mart and the antitrust damages issues discussed in Comcast Corp.). This resulted in new types of case law rulings on a myriad of Rule 23-related issues. The result was a year of decisions on class action issues the likes of which have never been seen before. This wave of new case law is still in its infancy. As many class action issues are in a state of flux post-wal- Mart and post-comcast Corp., these evolving precedents are expected to continue to develop in the coming year. Second, government enforcement litigation in 2013 increased over levels in 2012. This was especially evident in terms of the systemic investigation program of the U.S. Equal Employment Opportunity Commission ( EEOC ). As an inevitable by-product of the economy s unemployment rates, more discrimination charges were filed with the EEOC in 2013 than in all but three previous years since the founding of the Commission in 1964 a total of 93,727 discrimination charges against private sector employers (by comparison, the EEOC last year reported receiving a then record high of 99,412 discrimination charges). The Obama Administration s emphasis on administrative enforcement also spawned more government-initiated investigations over workplace issues. The EEOC s systemic investigation program in which the Commission emphasizes the identification, investigation, and litigation of discrimination claims affecting large groups of alleged victims expanded yet again over prior years. EEOC systemic suits comprised 16% of all merits filings in 2013, and by the end of the year, represented 23.4% of the Commission s active litigation docket. This development is of critical importance to employers, for it evidences an agency with a laser-focus on high-impact, big stakes litigation. Third, Wal-Mart and Comcast Corp. influenced settlement strategies in workplace class actions in a profound way. Employers settled fewer employment discrimination class actions than at any time over the past decade and at a fraction of the levels of 2006 to 2012. 1 The same was true with wage & hour and ERISA class actions, as well as governmental enforcement litigation; settlement numbers and aggregate totals were down in each category. 2 This reflected the impact of Wal-Mart and Comcast Corp., and the notion that difficulties in certifying nationwide, massive class actions impaired the ability of the plaintiffs bar to convert their case filings into blockbuster settlements. It also manifested the ability of defendants to dismantle large class cases, or to devalue them for settlement purposes. Simply stated, Wal-Mart and Comcast Corp. aided employers to defeat, fracture, and/or devalue employment discrimination class actions, and resulted in fewer settlements at lower amounts. 1 The total of $234.1 million for the top ten largest employment discrimination class action settlements in 2013 is the second lowest total since 2010; the figures for each year were as follows: 2012 $48.6 million; 2011 $123.2 million; 2010 $346.4 million; 2009 $86.2 million; 2008 $118.36 million; 2007 $282.1 million; and 2006 $91 million. The figure for 2013 is a result of one large settlement of $160 million; when that settlement is factored out, the 2013 total is the second lowest since 2006. 2 The total for the top ten wage & hour class actions settlements in 2013 was $248.45 million compared to $292 million in 2012. The total for the top ten ERISA class action settlements in 2013 was $155.6 million compared to $237 million in 2012. The total for the top ten government enforcement litigation settlements was $171.6 million compared to $262.78 million in 2012. The aggregate totals make 2013 the lowest year overall since 2006. An analysis of 2013 settlement activity is set forth in Chapter II. 2 Seyfarth Shaw LLP

Fourth, the continued dislocations in the economy during 2013 fueled more class action and collective action litigation over wage & hour laws. In particular, the plaintiffs class action bar eclipsed the pace of filings of FLSA collective actions and wage & hour class actions as compared to previous years. Furthermore, these conditions spawned more employment-related case filings, both by laid-off workers and government enforcement attorneys. As of the close of the year, filings held steady or were slightly down in the distinct categories of employment discrimination and ERISA class actions, and increased on an aggregate basis in wage & hour cases as well as government enforcement litigation. In turn, this resulted in more judicial rulings on wage & hour issues and EEOC lawsuits than any other area of workplace class action litigation. Even more wage & hour and EEOC litigation is expected in 2014. Indeed, the crest of the wave of wage & hour litigation is still not in sight, and this trend is likely to continue in 2014. Fifth, case law developments under the Class Action Fairness Act of 2005 ( CAFA ) continued to mature and the U.S. Supreme Court decided its first case under the CAFA in 2013 in Standard Fire Insurance Co. v. Knowles. It rejected the increasingly frequent tactic of the plaintiffs bar to stipulate to damages of less than $5 million, the CAFA s amount-in-controversy requirement, in an effort to prevent removal of class actions from state court to federal court. Case law under the CAFA turned the corner in this regard for employers in 2013, solidifying another defense strategy to secure removal of class actions to federal court. Sixth, the Supreme Court s ruling in 2013 on class arbitration issues in American Express Co. v. Italian Restaurant ( AMEX ) informed the ever-growing body of case law that allows employers to utilize carefully crafted workplace arbitration agreements to manage their class action litigation risks. While ill-conceived arbitration programs can create significant litigation problems, the AMEX decision rejected attempts by the plaintiffs bar to challenge arbitration as a violation of the public policies of federal statutory rights. This ought to help defendants avoid wage & hour class action litigation more easily for those employers that choose to institute workplace arbitration agreements. Seventh, and finally, the plaintiffs class action bar is a tight-knit community, and developments in Rule 23 and 216(b) case law in 2013 saw rapid strategic changes based on evolving decisions and developments. This fostered quick evolution in case theories, which in turn impacted defense litigation strategies. In reaction to the Supreme Court s rulings in Wal-Mart and Comcast Corp., the plaintiffs class action bar continued the process of re-booting class-wide theories of certification, as well as new methods for establishing liability and damages on a class-wide basis. As a result, new certification approaches and cutting-edge strategies are rapidly evolving throughout the substantive areas encompassed by workplace class action law. More than any other trend, the on-going changes to strategy considerations in crafting class claims and litigating Rule 23 certification motions in the wake of Wal-Mart and Comcast Corp. drove case law developments in 2013. As a result, workplace class action case law is in flux, and more change is inevitable in 2014. A. Significant Trends In Workplace Class Action Litigation In 2013 While shareholder and securities class action filings and settlements witnessed a sharp downtick to record lows in 2013, employment-related class action filings remained relatively flat, but with a pronounced increase in certain categories, especially wage & hour cases. Anecdotally, surveys of corporate counsel confirm that workplace litigation and especially class action and multi-plaintiff lawsuits remains one of the chief exposures driving corporate legal budget expenditures, as well as the type of legal dispute that causes the most concern for their companies. The prime concern in that array of risks is now wage & hour litigation exposure. By the numbers, workplace litigation filings stayed constant over the past year, while wage & hour cases increased. By the close of the year, ERISA lawsuits totaled 7,279 (down slightly as compared to 7,908 in 2012), FLSA lawsuits totaled 7,882 (up significantly as compared to 7,672 in 2012), and employment discrimination filings totaled 12,311 lawsuits (a decrease from 14,260 in 2012). In terms of employment discrimination cases, employers can expect a significant jump in the coming year, as the charge number totals at the EEOC in 2011 and 2012 were the highest in the 48-year history of the Commission; due to the Seyfarth Shaw LLP 3

time-lag in the period from the filing of a charge to the filing of a subsequent lawsuit, the charges in the EEOC s inventory will become ripe for initiation of lawsuits in 2014. FLSA collective action litigation increased yet again in 2013 and far outpaced employment discrimination class action filings. Wage & hour class actions filed in state court also represented an increasingly important part of this trend. Most pronounced in this respect were filings in California, Florida, Massachusetts, New Jersey, New York, and Pennsylvania state courts. California, in particular, continued to be a breeding ground for wage & hour class action litigation, as a result of laxer class certification standards under state law and more plaintiff-friendly approaches to wage & hour issues under the California Labor Cade. For the second year in a row, the American Tort Reform Association selected California as the number one judicial hellhole as measured by the systematic application of laws and court procedures in an unfair and unbalanced manner. 3 While plaintiffs continued to achieve initial conditional certification of wage & hour collective actions in 2013, employers also secured significant victories in defeating conditional certification motions and obtaining decertification of 216(b) collective actions. 4 It is expected that the vigorous pursuit of nationwide FLSA collective actions by the plaintiffs bar will continue in 2014 and that the pace of wage & hour filings will increase yet again over the next year. A key FLSA litigation issue that percolated in the courts in 2013 is how Wal-Mart to the extent it held that trial by formula via representative or statistical proof as to damages is inappropriate on a class-wide basis and Comcast Corp. to the extent it held that a viable class certification theory must present a damages model to adjudicate damages on a class-wide basis impact conditional certification under 29 U.S.C. 216(b) and/or Rule 23 class certification in wage & hour litigation. An emerging trend suggests that employers can more readily block certification or secure decertification in misclassification cases by targeting and challenging plaintiffs representative evidence, although use of Wal-Mart and Comcast Corp. has not yet gained significant traction in blocking certification 216(b) contexts. Employers can expect this issue to continue to heat up with rulings throughout 2014. At the same time, the Wal-Mart ruling also fueled more critical thinking and crafting of case theories in employment discrimination class action filings in 2013. The Supreme Court s decision had the effect of forcing the plaintiffs bar to re-boot the architecture of their class action theories. 5 While the playbook on Rule 23 strategies is undergoing an overhaul, the result on remand of the Wal-Mart case is a prime example of the morphing of plaintiffs certification and class structuring theories. Plaintiffs counsel narrowed their fourth amended complaint upon remand from the U.S. Supreme Court to assert gender discrimination claims on behalf of current and former female Wal-Mart employees in California only. While the fourth amended complaint continued to challenge Wal-Mart s allegedly discriminatory pay and promotion practices against women, Plaintiffs sought to certify an injunctive relief class under Rule 23(b)(2) and a Rule 23(b)(3) monetary relief class for back pay, front pay, and punitive damages. The new complaint scaled back the proposed class size from a nationwide class to one that encompasses California-based workers only. The new proposed class had an estimated 45,000 members, about 3% of the total class size proposed and certified and then decertified previously. These new theories failed, as plaintiffs certification efforts were rejected in their entirety in Dukes, et al. v. Wal-Mart Stores, Inc., 2013 3 The ATR Foundation s 2013 Report is available at http://www.judicialhellholes.org/wpcontent/uploads/2013/12/judicialhellholes-2013.pdf 4 An analysis of rulings in ADEA collective actions in 2013 is set forth in Chapter IV. An analysis of FLSA collective actions in 2013 is set forth in Chapter V, and analysis of state law wage & hour class action rulings in 2013 is set forth in Chapter VII. 5 An analysis of rulings in employment discrimination class actions in 2013 is set forth in Chapter III. 4 Seyfarth Shaw LLP

U.S. Dist. LEXIS 109106, at *33 (N.D. Cal. Aug. 2, 2013), on the grounds that this theory was right back where they started: challenging Wal-Mart s practice of delegating discretion to local managers, which the Supreme Court specifically held was not a specific employment practice supplying a common question sufficient to certify a class. In contrast, Plaintiffs have started to prune class definitions by size, geography, unit, and policy, and have also relied on a little-used provision of Rule 23 Rule 23(c)(4) which provides that [w]hen appropriate, an action may be brought or maintained as a class action with respect to particular issues. Prior to Wal- Mart, views of Rule 23(c)(4) fell into two opposing camps it was either (1) a housekeeping rule that could not be used to manufacture predominance, 6 or (2) an acceptable way to certify a claim that would not ordinarily meet Rule 23(b)(3) s stringent predominance requirement. 7 This rule is now experiencing a renaissance after Wal-Mart. In particular, plaintiffs counsel have relied on McReynolds v. Merrill Lynch & Co., 672 F.3d 482 (7th Cir. 2012), perhaps the leading post-wal-mart ruling certifying an employment discrimination disparate impact class claim for injunctive relief under Rule 23(c)(4). In McReynolds, the Seventh Circuit reversed the decision to deny certification of a race discrimination class challenging the impact of two Merrill Lynch policies one that allowed brokers to decide to work in teams, and one that suggested success-based criteria for distribution of departing brokers accounts even though managers had discretion regarding implementation of both policies. In permitting such a class certification theory, the Seventh Circuit distinguished Wal-Mart from the facts before it in McReynolds, and concluded that the only company-wide policies at issue in Wal-Mart forbade discrimination and delegated employment decisions to local managers. In contrast, McReynolds involved company-wide policies that permitted individuals to exercise discretion in a manner that allegedly disparately impact African-American employees. Therefore, the Seventh Circuit reversed the denial of class certification and permitted the class to proceed under Rule 23(c)(4) notwithstanding its recognition that separate trials could be necessary if plaintiffs prevailed to determine which class members were actually impacted by one or both of the challenged policies, and the extent and nature of their individualized damages. The Seventh Circuit concluded, however, that the individualized nature of such damage calculations were insufficient to defeat class certification for claims brought under Rule 23(c)(4) and Rule 23(b)(2). The McReynolds certification ruling necessarily impacted the trajectory of that case it settled in 2013 for $160 million, making it the largest employment discrimination class action settlement of this past year (and indeed the largest settlement since the Supreme Court s ruling in Wal-Mart). McReynolds demonstrates how certification of any aspect of the litigation even a narrow issue unrelated to damages drives litigation dynamics and settlement decision-making by litigants. The ability of plaintiffs to obtain Rule 23(b)(3) certification on damages, however, is sharply curtailed by Comcast Corp., which holds that plaintiffs must adequately explain how a class-wide determination of damages is possible. If there is no certification of a class as to damages, it is likely that plaintiffs will bootstrap the initial liability finding to any later hearing on damages, arguing under Teamsters v. United States, 431 U.S. 324 (1977), that they are entitled to a presumption that they were discriminated against and their individual damages should be heard in mini-trials per Teamsters. Defendants will be forced to consider the transaction costs of hundreds or perhaps thousands of mini-hearings, but it is unclear how many class members would actually take the time to participate in such mini-trials, and it may be worth the gamble. In sum, as the plaintiffs bar re-boots to take account of the Supreme Court s ruling in Wal-Mart, and adapts through strategies based on McReynolds, future employment discrimination class action filings are 6 Castano v. American Tobacco, 84 F.3d 734, 745 n.21 (5th Cir. 1996). 7 In Re Nassau County Strip Search Cases, 461 F.3d 219 (2d Cir. 2006). Seyfarth Shaw LLP 5