Defining Who Is Part of the FLSA Collective Action Party

It is a party that most employers don’t believe is a lot of fun: a FLSA collective action party.  In a case of first impression, the Eleventh Circuit addressed the question of whether an opt-in plaintiff is required to do anything beyond filing a written consent to become a party plaintiff in a collective action under the FLSA, 29 U.S.C. §216(b).

In Mickles, on behalf of herself and all others similarly situated v. Country Club, Inc., No. 16-17484 (11th Cir. April 18, 2018), Mickles alleged that Country Club improperly classified her and others as independent contractors and, as a result, failed to pay them proper minimum wage and overtime compensation.  After Mickles filed the Complaint, other individuals opted into the litigation by filing consents to become party plaintiffs.  Thereafter, the court denied Mickles’ motion for conditional certification on the grounds that it was untimely. 

Country Club filed a motion for clarification as to the order on conditional certification, inquiring about what individual plaintiffs remained parties in the action.  Country Club believed that the individuals who filed written consents never formally became party plaintiffs.  Country Club argued that the individuals who filed consents effectively fell out of the case when the motion for conditional certification was denied, leaving only Mickles as a party plaintiff.  The district court entered a clarification order stating that the individuals who filed written consents were never found to be similarly situated to Mickles and, therefore, were not properly added as party plaintiffs to the collective action. 

The individuals who filed consents (“Appellants”) appealed the district court’s decision.  In reviewing the district court’s opinion, the Eleventh Circuit outlined the two requirements for a FLSA collective action: 1) plaintiff must file a complaint on behalf of herself and all other similarly situated employees; and 2) an opt-in plaintiff must file her consent in writing to become a party.  Country Club argued that the first requirement was not satisfied, because the individuals who filed consents were never found to be similarly situated to Mickles.  Thus, the Eleventh Circuit had to address the status of those individuals who filed consents before conditional certification was granted.

The Eleventh Circuit held that conditional certification was unnecessary to obtain party-plaintiff status.  The only purpose of conditional certification, it found, is to disseminate court-approved written notice to others allegedly similarly situated.  Those individuals become parties once they file written consents.  The plain language of §216(b) further supports that nothing beyond filing a written consent is required to become party plaintiffs in a FLSA collective action.  Thus, the Eleventh Circuit vacated the district court’s clarification order and remanded with instructions for the district court to either: 1) dismiss the Appellants from the case without prejudice to refile; or 2) move forward with the Appellants’ individual cases since discovery had been completed.  This, the Eleventh Circuit held, ensured that the  Appellants’ claims were not precluded from pursuing their claims due to the running of the statute of limitations, which the court emphasized was a drastic remedy.

Conditional certification requires a low threshold showing and is often granted.  We have had great success, however, in defeating conditional certification in certain cases through the use of affidavits by employees and supervisors rebutting the policy or practice at issue or the contention that plaintiff is similarly situated to the proposed putative class.  After the celebration of defeating conditional certification is over,  the employer still must attend to defense of all named and opt-in plaintiffs’ claims.  The posture of the case drastically changes if conditional certification is denied.  But it is imperative to focus on successfully addressing the claims of remaining individual plaintiffs, which could dictate whether additional plaintiffs file individual claims and how they litigate their cases.

 

Class Certification Granted in Goldman Sachs Gender Discrimination Litigation

In a 49-page opinion issued last week, Judge Analisa Torres of the United States District Court for the Southern District of New York granted class certification to a group of women alleging that Goldman Sachs systemically and pervasively discriminated against female professional employees in violation of Title VII and the New York City Human Rights Law.

Plaintiffs claim they were discriminated against in pay, promotions, and performance reviews, and that Goldman Sachs: (1) employs facially neutral policies that disparately impact women; (2) knows of the policies’ disparate impact on women; and (3) maintains a “boy’s club” culture that discriminates against women. Chen-Oster v. Goldman Sachs & Co., March 30, 2018.  The class includes female associates and vice presidents who have worked in Goldman’s investment banking, investment management, and securities divisions since September 2004 (and employees in New York City since July 2002).  It is estimated that more than 2,000 plaintiffs are included in the class.

Goldman Sachs attempted to defeat class certification by arguing, among other things, that plaintiffs were required to show that its challenged policies concerning compensation and promotion were applied uniformly, but which plaintiffs could not do because the challenged processes were applied by managers in highly individualized ways.

In a fairly unusual move, Judge Torres overruled the magistrate judge’s recommendation to deny certification.

On their disparate impact claim, the court agreed that plaintiffs must show that Goldman Sachs used a “common mode of exercising discretion,” but held that this “common mode” did not mean that having flexibility in compensation and promotional decisions rendered class certification inappropriate. The court maintained that to interpret “common mode” in such a way would divest all discretion from lower-level managers, and render the meaning of “common mode of exercising discretion” self-contradictory.

The court distinguished the facts before it from that of the plaintiffs in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), where there was an absence of common job evaluation procedures.  There, the employees were subject to a wide variety of policies that differed.  In the Goldman Sachs case, however, it was undisputed that each class member was subjected to the challenged “360 review and quartiling processes,” and that all promotions from the vice president position were subject to a uniform process.

On plaintiffs’ disparate treatment claim, Goldman Sachs’ argument that class members lacked significant proof that the common modes were discriminatory also proved unsuccessful. The court concluded that plaintiffs had provided “significant proof of discriminatory disparate treatment,” relying on, among other things, plaintiffs’ expert report which asserted that female vice presidents and associates were on average paid 21 percent and 8 percent less than their male counterparts, respectively.

In one win for Goldman Sachs, the court declined to certify the claim that it maintained a “boys club” culture. Although the court found that establishing this claim could require generalized proof, certification was nevertheless inappropriate because Goldman Sachs’ rebuttal evidence would require individualized inquiries into each particular incident of sexual assault, sexual harassment, stereotyping, impunity of make misconduct, and retaliation.

Supreme Court Hears Argument on Application of American Pipe Tolling Decision to Subsequent Class Actions

As discussed on our blog late last year, the U.S. Supreme Court granted certiorari to China Agritech, Inc., a fertilizer manufacturer, from the Ninth Circuit’s decision in Resh v. China Agritech, Inc., 857 F.3d 994 (9th Cir. 2017). (See our earlier post here). In reviewing Resh, the Court will consider whether its American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974) ruling tolls statutes of limitation to allow previously absent class members to bring a subsequent class action outside of the applicable limitations period.  In other words, whether its American Pipe ruling applies only to subsequent individual claims or if it extends more broadly to successive class actions.  The Court held argument on this issue earlier this week.

Background

In American Pipe, the Supreme Court held that the filing of a class action suit tolls the running of the statute of limitations for all purported members of the class who make timely motions to intervene after the court has found the suit inappropriate for class action status.  The First, Second, Third, Fifth, Eighth and Eleventh Circuits have found the American Pipe decision to allow for tolling for individual actions only—and not serial class actions.  Three other courts of appeal—including the Ninth Circuit in the decision at issue—have rejected this notion and, instead, interpret American Pipe to mean that the limitations period is tolled not only as to individual claims, but also as to future class action claims.

Procedural History

In Resh, a group of plaintiffs first filed a class action against China Agritech in 2011, alleging violations of the Securities Exchange Act of 1934.  In 2012, the district court rejected a motion for class certification, holding that the claims were not suited for joint adjudication.  When the individual plaintiffs settled their claims, that case was dismissed.  A few weeks later, another group of plaintiffs filed a similar class action against China Agritech, raising claims under the Securities Exchange Act related to the same events as the first class action.  After the district court rejected a motion for class certification, the second group of plaintiffs voluntarily dismissed their claims.

Several months later, yet another group of plaintiffs filed the action at issue, raising claims under the Securities Exchange Act based on the same events as the two previous class actions. Because the filing in this case came more than two years after the events in question, outside the applicable statute of limitations, China Agritech argued that the district court should dismiss it as untimely.  The district court ruled for China Agritech, but the U.S. Court of Appeals for the Ninth Circuit overturned that ruling, reinstating the class action.  The Ninth Circuit held that the Plaintiffs’ would-be class action is not time bared, where: (1) the Plaintiffs were unnamed in the two earlier would-be class actions against many of the same Defendants based on the same underlying events; (2) class action certification was denied in both previous cases; (3) the earlier actions were timely; and (4) under American Pipe, the statute of limitations of the individual claims of the would-be class members in the earlier actions were tolled during the pendency of those claims.

Highlights of the March 26, 2018 Oral Argument

Seth Aronson argued on behalf of the Petitioner, China Agritech. Aronson argued that American Pipe gave claimants the benefit of equitable tolling because the plaintiff had shown diligence by coming to court to assert his claim when class certification was denied, and, further, because enforcing the statute of limitations would undermine Rule 23 by encouraging individual claimants to come forward while the class action was pending.

Justice Elena Kagan began by questioning how the plaintiff in the present case was different from plaintiffs in American Pipe, as both are relying on a class action in order to show diligence.

A skeptical Justice Sonia Sotomayor questioned the validity of petitioner’s argument early on, stating “your regime is now encouraging the very thing that American Pipe was trying to avoid, which is to have a multiplicity of suits being filed and encouraging every class member to come forth and file their own suit.”

Justice Kagan again pushed Aronson on his position, stating that “just as, at time one, it made more sense to have a class action than a thousand individual actions, so too, at time two, it makes more sense to have a class action than a thousand individual actions.”

Aronson responded by arguing that it is not reasonable to rely on a class action where the statute of limitations has already expired. He argued that if the statute of limitations is enforced, the interests of Rule 23 would still be served because it would mean the class members would come forward early, the best representatives would be picked, and the court would be able to decide the best way to proceed.

The newest addition to the Court, Justice Neil Gorsuch, also questioned Aronson’s argument against allowing individuals with equitably tolled claims from bringing a new class action suit, asking Aronson whether or not there were any other circumstances where courts have allowed equitable tolling, but denied access to procedural mechanisms in a subsequent suit. Aronson responded that he was not aware of any such circumstance outside of the present case, but that the absent class members’ claims are untimely and that there cannot be such a class of untimely class members.

Aronson argued that “someone who sleeps on their rights and doesn’t present her claim, those claims will expire when the statute of limitation expires.”

Aronson got to the heart of Petitioners’ argument and said that to allow an individual to bring a class claim after the limitations period had ended would be unfair because those other unnamed individuals would not be entitled to equitable tolling because they have done nothing to illustrate a showing of diligence while the statutory period ran.

David Frederick argued on behalf of the Respondents. Justice Gorsuch questioned Frederick and noted that American Pipe is the only time in which the court allows an absent class member to illustrate diligence without actually filing an action with the court.

Counsel for Respondents argued that if a plaintiff has a timely claim, which he argued was conceded in this case for the individual claims, then the Federal Rules of Civil Procedure apply automatically (which, of course, includes Rule 23).

Chief Justice John Roberts noted his concerns about allowing individuals whose claims have been tolled to file class actions, by stating “if you allow the second [class action suit], you’ve got to allow the third and then the fourth and the fifth and there’s no end in sight.”

Frederick responded by saying that the “end in sight” is that plaintiffs must have a new rationale for why the subsequent class certification motion should be granted.

Justice Stephen Breyer seemingly questioned why someone who has never done anything during the tolling period should be rewarded by being able to join a class action after the statutory period has run.

Justice Ruth Bader Ginsburg gave her thoughts on the holding in American Pipe in a question where she stated, “so the American Pipe [decision] is protecting diligent parties who will come in immediately after the class action is denied and the ones who don’t come in are still sleeping on their rights.”

Considerations

The issue of whether under American Pipe individuals whose claims have been tolled can bring a class action after the statutory period has run is one that can have massive implications for complex litigation throughout the country.  The precedent seems to be clear that on an individual basis, the plaintiffs’ claims may be tolled.  However, on both sides of the aisle, the Court seems reluctant to extend this equitable tolling on a class-wide basis.  Throughout the argument, the Justices were focused on the diligence prong of the equitable tolling standard and appeared concerned that allowing equitable relief for plaintiffs who sat on their claims would fly in the face of the rationale behind equitable tolling in the first place.

We will continue to monitor this case and provide you with updates. For more information or to discuss the potential implications of this ruling, please contact the Jackson Lewis attorney with whom you regularly work.

Multi-Million Dollar Nationwide Class Settlement Vacated by Ninth Circuit

In a “major blow to multistate class actions,” according to the dissenting opinion in Espinosa v. Ahearn (In re Hyundai & Kia Fuel Econ. Litig.) 2018 U.S.App.LEXIS 1626 (January 23, 2018), the Ninth Circuit vacated a class action settlement after more than six years of litigation.  In reaching its decision, the majority found that the lower court failed to conduct the “rigorous analysis” required to determine whether common questions “predominated” in the action.  As a result, class certification was vacated and the action was remanded to the lower court for further proceedings. 

Background

The Ahearn case involved a nationwide multidistrict class action litigation arising from alleged misstatements by Hyundai and Kia entities regarding the fuel efficiency of their vehicles.  In essence, the plaintiffs claimed that Hyundai and Kia had made substantial marketing efforts, (e.g., the purchase of advertising during the NFL playoffs, the Super Bowl, and the Academy Awards, among other things), to persuade consumers to purchase their vehicles, and that consumers had relied on the statements regarding fuel efficiency of the vehicles to their detriment. 

After 56 actions were transferred to the multidistrict litigation panel, the parties announced a settlement had been reached for a single nationwide class that provided a variety of relief to separate members of the class.  The parties agreed that an aggregate amount of $210 million represented the total lump sum compensation that would be available to class members.  Thereafter, approximately $9 million was approved by the district court for attorneys’ fees and costs. 

At a final approval hearing more than two years after the parties initially proposed the settlement, the district court gave its final approval for the class settlement over objections by parties who challenged the settlement.  Objectors then brought five consolidated appeals challenging class certification, approval of the settlement, and approval of attorneys’ fees. 

Ruling

In a divided opinion (2-1), the Ninth Circuit vacated the district court’s order granting class certification of the settlement class.  In reaching this conclusion, the majority emphasized that before certifying a class, a trial court must conduct a “rigorous analysis” to determine whether the party seeking certification has met the prerequisites of Rule 23, including a demanding predominance inquiry.  When a district court certifies for class action settlement only, the moment of certification requires “heightened” attention.  Thus, even when reviewing certification in a settlement context, the court has a “duty” to take a close look at whether common questions predominate over individual ones, and ensure that individual questions do not overwhelm questions common to the class.

Because the Ahearn case involved claims in multiple states, the predominance inquiry required consideration of the impact of potentially varying state laws.  The majority found that the district court had committed legal error by not applying a choice of law analysis before approving the settlement.

Takeaway

The vast majority of cases settle before trial.  And in most cases, once a settlement agreement is reached between the parties, there is very little work left to be done in order for the parties to conclude the litigation.  This is not true with class action and representative litigation. 

Companies looking toward settlement of class action claims should take care to ensure the reviewing court has a proper basis for evaluating and approving any such settlement under the applicable legal standards.  If not, the parties risk being sent back to the drawing board to engage in further, potentially protracted, litigation.

Court Finds Individualized Issues Predominate and Grants Company’s Motion to Decertify Branch Administrators’ Class

The United States District Court for the Southern District of Indiana recently decided a case highlighting the importance of clear employer policies when it comes to wage payment issues. In Smith v. Professional Transportation Inc. et al., 13-cv-00221 (N.D. Ind. January 26, 2018), the named plaintiff alleged that the defendant failed to pay Branch Administrators overtime compensation and/or failed to classify Branch Administrators as exempt and pay them as prescribed by the FLSA (the Court noted the allegations were unclear).  The parties stipulated to the conditional certification of a class that was defined as “[a]ll individuals who were employed or are currently employed by [defendant] as a Branch Administrator at any time between November 10, 2011, and January 9, 2015.”  The defendant then moved to decertify the conditional class, and the District Court granted the motion.

In decertifying the class, the Court found that the named plaintiff did not demonstrate that she was similarly situated to all opt-in Branch Administrators who were subject to a common policy in violation of the FLSA.

In reaching this conclusion, the Court noted that it was unclear whether the named plaintiff was alleging that the Branch Administrators were misclassified as non-exempt and not paid $455.00 per week (the FLSA minimum weekly salary to qualify for exempt status), or that they were properly classified as non-exempt but not paid overtime. The Court declined to certify the collective action on the former ground, observing that the named plaintiff had not cited to any authority standing for the proposition that an employer must classify employees as exempt if they perform some amount of managerial work.

As for the named plaintiff’s allegations that the defendant required the Branch Administrators to work more than their authorized hours without pay, the Court held that individualized issues predominated over common ones. The Court noted that, even though the named plaintiff and one of the opt-in plaintiffs each claimed that they worked more than their agreements with the defendant authorized, those statements alone did not constitute a “policy” on the part of the defendant.  On the contrary, the evidence showed that defendant’s policy was to pay all excess time for which payment was sought, even if it was not pre-approved.  The Court also concluded that individualized issues predominated over any common policy or practice because determining the truth of whether or not there was any off-the-clock work would turn on the credibility of the witnesses.  In addition, the agreements with each Branch Administrator varied from employee to employee.  Finally, the named plaintiff’s suggestion on how opt-in damages could be proven at trial itself supported denial of the class, as plaintiff suggested that each opt-in should submit a declaration identifying the total number of hours worked in an average week.  The Court concluded that such a method established liability for each opt-in without requiring the plaintiff to prove that liability.

Smith underscores the importance of employers having up-to-date and lawful written wage payment policies, and lends support for future arguments relating to the predominance of individualized issues in a collective.

Sexual Harassment Class Investigations on the Rise with EEOC

Since September, stories of sexual harassment have dominated the headlines. In what USA Today dubbed the “Weinstein Effect,” workplaces of all types and size have been seeing employees step forward to take part in the #MeToo movement by shining light on abuses of power by companies’ leadership. The increased focus on sexual harassment has created a surge in discrimination lawsuits and government investigations, with almost no industry being immune.

The Equal Employment Opportunity Commission responded quickly to the recent increase in charges of sexual harassment in the workplace, which is unlawful under Title VII of the Civil Rights Act. In October, the Agency launched a new training and outreach program for employers centered around respect in the workplace. Since then, EEOC has announced a string of successes in class-based sexual harassment investigations, including:

  • $340,000 settlement in January 2018 with restaurant chain Indi’s Fast Food Restaurant, Inc. concerning claims to 15 former female employees, some of whom were teenagers at the time of the alleged harassment.
  • $75,000 settlement in November 2017 with Trans Ocean Seafoods, Inc. on behalf of three female employees who complained of persistent, sexually explicit comments by a male colleague.
  • $100,000 settlement in October 2017 with Clougherty Packing, LLC on behalf of a class of female employees alleging sexual harassment by supervisors and other employees.

This trend appears likely to continue as EEOC ramps up its efforts to crack down on sexual harassment. In an effort to reach more victims who may be afraid to step forward or too busy to go to an EEOC office during business hours, EEOC recently opened a new online portal for employees to file charges of harassment and other discrimination online from the convenience and privacy of their homes. This will make it easier than ever for employees to get EEOC involved if they feel their employer is not doing enough to prevent abusive behavior in the workplace.

So what can employers do to prepare for their #MeToo moment? Employers need to evaluate their policies, training programs and complaint response procedures to ensure they are doing all they can to prevent or mitigate the potential for sexual harassment in the workplace.

Jackson Lewis Resources Available to Help:

“Ticket-gate”- Revisiting the Intersection of Professional Football and Class Actions

First, Deflategate. Now, “Ticket-gate?”  Stirring in the United States District Court, Northern District of Ohio, a putative class action takes aim at an unsafe football field, a cancelled preseason game, and over a million dollars in alleged consumer class damages.  The case is Herrick v. National Football League, et al. (N.D. Ohio, Case No. 5:17-cv-00472-CAB).

The Allegations

The 2016 Pro Football Hall of Fame preseason game between the Green Bay Packers and Indianapolis Colts was scheduled to take place on August 7, 2016. But due to compromised painting of logos and other markings on the turf, the field was deemed unsafe and unplayable.  That call, and the related call to scrap the game entirely, was made, according to filings in the case, at 5:00 p.m. on the day of the game.  Fans attending the game, however, were allegedly intentionally kept in the dark and were not informed of the game’s cancellation until three hours later.  In the meantime, fans purportedly were ushered into the stadium and encouraged to buy food, drinks, and merchandise.  Plaintiff, on behalf of himself and “thousands” of putative class members, now seeks to recover not only the cost of the tickets, but also related out-of-pocket incidentals, such as travel and lodging expenses.

Class Certification

On January 15, 2018, Plaintiff moved for class certification. As framed in the motion, the question of liability on the sole claim for breach of contract might not be the main hurdle; rather, the central issue will be whether the class can proceed as a damages class under Federal Rule of Civil Procedure 23(b)(3).  Under the U.S. Supreme Court’s decision in Comcast Corp. v. Behrend, 569 U.S. 27 (2013), to proceed as a damages class under Rule 23(b)(3), while a plaintiff’s class damages model may be an approximation, it still must be firmly tethered to the theory of injury. Id. at 35.

So how does Plaintiff’s damages model purport to do so? According to Plaintiff’s expert, Dr. Justine Hastings, it’s all in available records.  Ticket damages?  According to Dr. Hastings, Defendant’s revenue data and secondary market statistics can approximate ticket costs.  Traveling expenses?  According to Dr. Hastings, ticket holders’ zip codes can predict the likely mode of travel and associated travel costs for individuals.  And lodging expenses?  According to Dr. Hastings, ticket holders’ zip codes and the average hotel rate in the area ($289/night) can be used to quantify lodging expenses.

Will this suffice to secure certification of a damages class under Rule 23(b)(3)? Stay tuned.  Opposition papers are due February 16, and oral argument is set for March 26.  In the meantime, here’s to hoping for a class action-free Super Bowl LII.

Jackson Lewis Class Action Trends Report Winter 2018 Now Available

Below is a link to the latest issue of the Jackson Lewis Class Action Trends Report.  This report is published on a quarterly basis by our firm’s class action practice group in conjunction with Wolters Kluwer.  We hope you will find this issue to be informative and insightful.  Using our considerable experience in defending hundreds of class actions over the last few years alone, we have generated another comprehensive, informative and timely piece with practice insights and tactical tips to consider concerning employment law class actions.

Jackson Lewis Class Action Trends Report (Winter 2018)

A PAGA Case Cannot Stand Without Standing: Court of Appeal Affirms Trial Court’s Dismissal of PAGA Action After the Plaintiff Settles His Individual Labor Code Claims In Arbitration

In Kim v. Reins International California, Inc. (B278642, Cal. Ct. App., December 29, 2017), the State of California Court of Appeal for the Second Appellate District addressed for the first time the question of whether an employee-plaintiff, who had settled and dismissed his individual claims under the Labor Code against his employer, was able to maintain a representative action under the Labor Code Private Attorneys General Act (the “PAGA”) on behalf of other “aggrieved employees”. The Court held that because of the settlement and dismissal of his individual claims, the employee-plaintiff was no longer an “aggrieved employee” and therefore did not have standing to represent other “aggrieved employees” under the law.

Under the PAGA, an “aggrieved employee” may bring a representative action on behalf of him or herself and other “aggrieved employees” for any violation of the California Labor Code. Cal. Labor Code §§ 2698, et seq. Since the law was first enacted in 2004, many employers around the state have been on the receiving end of PAGA actions, in which employees can seek substantial civil penalties that were previously only recoverable by the State of California. PAGA cases have become increasingly favored by plaintiffs’ attorneys for a number of reasons, including the fact that PAGA-claims cannot be compelled into arbitration.

This case involves many common elements familiar to experienced class and representative action litigants in California: Kim, a former employee of Reins International, brought a wage and hour class action alleging various violations of the Labor Code as well as a claim for civil penalties under PAGA for the same underlying violations. Kim had also signed an arbitration agreement when he began working for the company. Reins International responded to the lawsuit with a common countermeasure: it moved to compel arbitration of Kim’s individual claims, dismiss the class claims, and stay the PAGA cause of action until the arbitration was complete. The trial court granted the motion to compel arbitration, reserved the issue of class arbitrability for the arbitrator, and stayed the cause of action under PAGA.

While the case proceeded in arbitration, the parties reached a settlement of Kim’s individual claims. Pursuant to the settlement, Kim dismissed his individual claims with prejudice and the class claims without prejudice, leaving only the PAGA cause of action. As a result, the trial court lifted the stay and the parties proceeded to litigate the PAGA claim back in Superior Court.

Following the lifting of the stay, Reins International filed a motion for summary adjudication of the PAGA cause of action in its favor on the grounds that following the settlement and dismissal of all of his individual claims against his employer, Kim was no longer an “aggrieved employee” and therefore could not maintain the PAGA cause of action. The trial court agreed and dismissed the PAGA cause of action.

The Court of Appeal upheld the trial court’s decision, holding that “where an employee has brought both individuals claims and a PAGA claim in a single lawsuit, and then settles and dismisses the individual employment causes of action with prejudice, the employee is no longer an ‘aggrieved employee’ as that term is defined in the PAGA, and therefore that particular plaintiff no longer maintains standing under PAGA.”

The Court was not swayed by Kim’s arguments that the PAGA claim should have been unaffected by his individual settlement in that it did not release the rights and potential claims of other individual employees nor the State of California, in whose stead Kim was seeking civil penalties. In fact, the Court noted that it agreed with Kim’s arguments that his individual settlement did not impair the ability of the State of California nor another employee from pursuing the same claims individually or in a representative capacity under PAGA; nonetheless, his ability to do so ended the moment he settled and dismissed all his individual claims against Reins International.

The Court stated that its holding is confined to the specific circumstances in the case – involving the voluntary settlement and dismissal of individual claims in arbitration – and declined to opine on what effect an adverse determination in arbitration would have on PAGA standing generally. Nonetheless, the Court’s in-depth application of the standing doctrine to PAGA actions – where previously the California Supreme Court has only made surface-level references – has potentially far reaching implications in cases where employees are seeking PAGA penalties for alleged Labor Code violations that they cannot establish they have suffered individually, in cases where the employee litigates and loses in arbitration, and in cases where they have resolved their individual disputes in private settlements. These issues and others will undoubtedly be tackled by the Courts of Appeal and the California Supreme Court as they continue to interpret and mold the PAGA.

Illinois Court of Appeals Holds BIPA Plaintiffs Must Allege Some Actual Harm

In a ruling that may have significant impact on the recent wave of biometric privacy suits, an Illinois state appeals court held that plaintiffs must claim actual harm to be considered an “aggrieved person” covered by Illinois’ Biometric Information Privacy Act (BIPA), in a dispute arising from the alleged unlawful collection of fingerprints from a Six Flags season pass holder. Rosenbach v. Six Flags Entertainment Corp., 2017 IL App (2d) 170317 (Ill. App. Ct. Dec. 21, 2017).

Click here for an article on our Workplace Privacy, Data Management & Security Report blog which discusses the impact of this case and provides additional resources to help navigate biometric information protection laws.

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