The battle over whether individual arbitration agreements can prevent class actions was settled with the decision in Epic Systems v. Lewis, 138 S.Ct. 1612 (2018). That decision found that workers who signed individual arbitration agreements with his/her employer could not later file suit as a class or collective action. Employers viewed this decision favorably. But, now, maybe not so much.

See what has happened with what was intended to be a collective action against Chipotle. In 2014, Chipotle started requiring workers to sign arbitration agreements. Some 2800 Chipotle workers signed mandatory arbitration agreements. They tried to file a collective action in Denver based U.S. district court. Chipotle invoked the individual arbitration agreements. The judge agreed the claims should be heard in arbitration. But, then Chipotle tried to bar the plaintiff law firm from representing the individual plaintiffs in arbitration. The employer’s rationale was that since the workers received notices of a collective action from the law firm, that law firm should not represent them. In some way, argued the Chioptle lawyers, the plaintiff law firm had compromised the interests of the potential plaintiffs. The court quickly dispensed with that specious argument. See Reuters news report.

The defense lawyers warned the judge that there may be thousands of follow-on arbitrations. The lawyers suggested the plaintiff law firm had tried to leverage thousands of arbitrations to protect its lawsuit. But, replied, the judge, “Absent more concrete evidence of legal incompetence or evidence demonstrating a clear pattern of abuse of the judicial process, I will not interfere with the arbitration plaintiffs’ right to choice of counsel.” In other words, the judge said the employees can pick the counsel they desire.

Chipotle incurs a fee of $1100 per employee, just to file the arbitration. JAMS is providing the arbitration services and their rules require the employer to pay the fees. That ruling in Denver federal court occurred in April, 2018.

Now, in December, 2018 some 150 of those workers dropped their attempted collective action and re-filed individual arbitration claims. So far, Chipotle has refused to pay much of those fees. The plaintiff law firm notes the individual claims amount to no more than about $1,000 per worker. Ordinarily, the plaintiff lawyers would not be interested in pursuing those claims. But, since they worked up much of the evidence for what they thought would be a collective action, they have pursued these 150 claims. See Huffington post here.

And look what happened to a Florida paving contractor in 2018. There were three claimants in that arbitration. The contractor was eventually hit with a bill for $100,000 in arbitral fees. Those three former employees also tried to sue in federal court first. The employer refused to pay the fees and tried to go back to federal court. Be careful what you ask for, because you just might get it.

 

Donald Trump is involved in many lawsuits. He lost one of them. Mr. Trump purchased a golf course in 2012 ago for $5 million. That was a good price, but part of the deal was that he had to accept the liabilities then pending. Some 65 members were trying to withdraw from their membership. There was some $41 million owed to them as refundable deposits. Under the terms of their agreement, the resignation process was complicated and lengthy. It could take ten years to resign one’s membership. Mr. Trump named the golf course, Trump Golf Course. It is in Jupiter, Florida.

A couple of months after assuming control, Mr. Trump said if they wanted to resign, then they could not have access to the club. Yet, they were still required to pay dues of some $8,000 to $20,000 per year. The members then said well, if they were losing access to the course, then their resignation was final and they were entitled to a refund of their deposits. Mr. Trump’s company refused to issue refunds or to otherwise speed up the resignation process. The members filed a class action lawsuit, saying the new owners were unilaterally changing the terms of their agreement. Eric Trump was the operations person for the golf course and he admitted on the witness stand that paying dues without access to the club violated a fundamental principle of life. Donald Trump testified via videotaped deposition.

The trial was held in federal court last August. This week, the judge issued his ruling in favor of the members. He awarded the members $5.6 million for refunds of their dues and deposits. As always, Mr. Trump said he would appeal. See CBS news report.

But, Mr. Trump’s hardball business tactics did work well in one sense. During the four years of the lawsuit, about half the members changed their mind and withdrew from the resignation list. That saved him tens of millions in refunds he would have owed. See NPR news report. Whether these many lawsuits are good politics is beyond the scope of this blog. But, one must wonder.

It was a landmark ruling  a year ago when the US Supreme Court reversed class certification in WalMart v. Dukes.  See Workplace Prof.  If allowed to stand, that class action would have been the largest ever.  But, the US Supreme Court reversed.  Now, Wal-Mart got what it wanted, perhaps.  Some 2,000 individual lawsuits have now been filed all across the country as the former class members entered into individual lawsuits instead.  

The lawsuits all allege gender based discrimination at Wal-Marts.  The point of class actions is to consoildiate similar cases, so the courts will not be swamped with multiple lawsuits all alleging the same thing.  Many employers would object to similar lawsuits all appearing in many different forums all at about the same time.  But, this is what Wal-Mart said they wanted.  They worked hard for years to overturn that class certification.  As Chris McKinney says at Texas Employment Law Blog, be careful what you seek because you just might get it….

The EEOC has been hit with another sanction of attorney’s fees.  A court assessed $2.6 million in attorney’s fees against the EEOC due to a lawsuit they filed which they lost.  See Workplace Prof blog post.  The EEOC had sought class action status in EEOC v. Cintas and lost.  Because the EEOC did not attempt conciliation prior to suit, the federal court dismissed the action.  See the court decision.  The court found that conciliation was required as part of the requirement to exhaust administrative remedies.  

Title VII of the Civil Rights Act of 1964 has requires that when the EEOC finds "reasonable cause" to believe that discrimination has occurred, then the EEOC must attempt conciliation or settlement.  This requirement was an early attempt at lawsuit reform.  It requires that individuals bringing suit first attempt all non-lawsuit remedies first.  

In EEOC v. Cintas, the EEOC had been denied class action status.  It then sought a "pattern and practice" type allegation on behalf of thirteen individual women and was again re-buffed.  Responding to the employer’s claim that it had not attempted conciliation, the EEOC argued that it did attempt conciliation against Cintas previously as part of its class action suit – which later failed. But, that conciliation apparently did not include these thirteen individual women.  So, yes, the EEOC attempted conciliation on behalf of a class of women, but apparently did not attempt conciliation on behalf of these thirteen ultimate plaintiffs.  This is an important distinction.  But, does this distinction make a difference?  Would Cintas have been any more receptive to conciliation if the plaintiffs were thirteen individual women, instead of a class of women?

As Workplace Prof points out, this decision and others like it are tying the EEOC’s hands in regard to pursuing class actions or multiple plaintiff lawsuits.  The EEOC lacks the resources to represent individual plaintiffs.  They simply do not have enough lawyers.  So, they have been trying to focus on larger lawsuits, such as class action lawsuits and "pattern and practice" lawsuits.  This federal court decision will make it more difficult for the EEOC to focus on systemic cases.  We taxpayers will get less bang for our buck from this important federal agency.  And, Cintas skates after having been found reasonably likely to have discriminated against some women. 

 Employment class actions have been dealt a blow by the recent decision in Dukes v. Wal-Mart.  You can look at the decision here.  The decision, as I understand it, finds a lack of "commonality" among the female plaintiffs because there is no one company policy that caused their discrimination.  The "policy" the plaintiffs were relying on was actually a lack of policy.  Wal-Mart lacked protections in place to keep local store managers from discriminating against women.  I have previosuly discussed this case here and here and here.  

Bu, as several lawyers have pointed out, the facts and evidence from Dukes v. Wal-Mart will surely continue in localized class actions.  Class actions can be any size from a handful of potential employees to thousands.  So, the Dukes v. Wal-Mart case will likely become several state and region class action lawsuits.  

Commentators talk about how this is the biggest employment decision in the last ten years.  Not to say it is not an important decision, but, really few of us plaintiff employment lawyers do class actions anyway.  

 The very large Wal-Mart class action lawsuit is going to the US Supreme Court for review this week.  See CBS news report. The class involves 500,000 to 1.6 million potential plaintiffs. The suit alleges discrimination against women. The suit was initially filed ten years ago in California.  It was most recently the subject of an appeal at the federal Ninth Circuit Court of Appeals in California.  Wal-Mart claims the class involves too many women in too many different positions at Wal-Mart.  If the members of the class are too different, then the class action fails.  The case is said to be the largest employment discrimination case ever.   Betty Dukes, Et Al v. Wal-Mart Stores, Inc.

I have written about this class action here and here.  It was a close 6-5 decision at the Ninth Circuit. In the midst of the appeals, a report was leaked showing Wal-Mart knew it had anti-female practices in place. A major law firm had prepared a report for Wal-Mart noting disparities in how women are hired and paid.  

Of course, to be a class action, the plaintiffs must show their claims are similar. Does the discrimination apply to all women? All female managers? Or, just female clerical employees? The plaintiffs are apparently trying to show the evidence applies to all female employees. If each individual claim is too small, then the employees would never obtain a lawyer willing to accept their case. 

The plaintiffs have several actual, named plaintiffs who include one female manager and one female greeter. In 2001, when the lawsuit was filed,  job openings were rarely posted.  In 2001, only 14% of store managers were women, while 80% of lower ranking employees were women. These numbers are strong, but statistical evidence in itself is rarely enough.  

The major issue appears to be does the plaintiff’s evidence support such a broad class? Twenty other large corporations have filed friends of the court briefs, arguing against class certification.  If the best the plaintiffs could do at the relatively friendly Ninth Circuit is 6-5, then one must wonder about their chances at the relatively employer friendly US Supreme Court. 

One would think that law firms would follow the law.  Well, sometimes, its is more the opposite.  A medium sized Ohio law firm is sued for wage violations in its office.  The firm pays salary to secretaries and never pays overtime.  Lazzaro Law Firm in Cleveland represents some 40 secretaries in a class action law suit filed in US district court.  The secretaries were classified as executive, even though none of them supervised other employees or performed any managerial work.  

Anthony Lazzaro, the plaintiffs’ lawyer, said he doubted this particular firm is the only firm to commit this violation.  Lazzaro specializes in wage and hour cases.   As one lawyer commented, this is probably a failry common mistake in many businesses and law firms.