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Workplace Class Action Litigation Spiked in 2010

Source: Seyfarth Shaw’s

Posted on 06 Jan 2011

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The year just ended was a seismic one for employment-related class action litigation, paving the way for more far-reaching judgments, court rulings, and changes to class action law in 2011. The value of employment discrimination class action settlements also increased four-fold in 2010 over 2009 and the top ten settlements of wage & hour, ERISA, and governmental enforcement class actions increased to $1.16 billion, the highest amount ever.

The “tipping point” aspect of these changes is well captured in the 2011 edition of Seyfarth Shaw’s Workplace Class Action Litigation Report. The 664-page Report, the seventh annual edition, is the most comprehensive analysis of workplace-related class actions in the U.S. It examines over 848 decisions rendered in 2010 against employers in state and federal courts, including private plaintiff and government enforcement actions.

As it has since its launch in 2004, the Report is authored and edited by Seyfarth Shaw partner Gerald L. Maatman, Jr., co-chair of the firm’s class action defense group. Maatman, who represents companies facing labor and employment-related class actions, won several key workplace class action decisions in 2010, including a gender discrimination class action that was the first case testing the U.S. Supreme Court’s ruling regarding arbitration clauses in Stolt-Nielsen v. Animalfeeds. The Report is the sole compendium in the U.S. dedicated exclusively to workplace class action litigation, and has become to "go to" research and resource guide for businesses and corporate counsel facing complex litigation.

The new Report makes clear that while securities, shareholder and commercial class actions remained stable in 2010, workplace class actions – especially those brought under the Fair Labor Standards Act – spiked considerably. Employment litigation costs represent a substantial portion of corporate legal budgets, and constitute a significant reputational issue for companies. While the financial stakes often force class actions to settle before trial, 2010 witnessed a landmark exception: Velez v. Novartis not only went before a jury, but ended in a $253 million plaintiffs’ verdict; the subsequent $175 million settlement is one of the largest employment discrimination class action settlements ever.

In its current term, the U.S. Supreme Court has three cases that may effectuate substantial changes to class action law. In March the Supreme Court will hear oral arguments in the Title VII gender discrimination case Dukes v. Wal-Mart, covering more than 1.5 million class members. In AT&T Mobility v. Concepcion, argued in November of 2010, the Supreme Court must resolve whether service agreements favoring non-class-wide arbitration abrogate consumers’ right to bring a class arbitration – the outcome could well impact workplace arbitration agreements. And in Smith v. Bayer, scheduled for argument later this month, the Justices must determine how far one court’s rejection of class certification can go in determining another court’s capacity to certify a class on the same issue.

“The past several years have placed several important issues governing class action law on the table and 2011 looks like the year many of these questions will be answered by the Supreme Court,” said Maatman. He noted that the Supreme Court’s rulings in all three cases could have profound effects on the way class actions are brought against companies, including wage & hour class actions and collective actions.  ??“Wage & hour cases in particular have yet to slow down, even as the economy is starting to improve,” Maatman noted. “For most companies that is their Number 1 exposure – and we expect to see even more and bigger cases brought in 2011.”