ALERT- Plaintiff’s Bar Currently Targeting Online Hiring Practices: What Your Company Needs to Know

 The latest target of the plaintiff’s overly-aggressive tactics—a company’s use of recruitment ads in hiring employees.  All industries and all forms of advertising are potentially coming under attack, including social media platforms and websites dedicated to employee recruiting.  Specifically, the plaintiff’s bar has repeatedly targeted certain advertisements on social media sites that encourage individuals to apply for jobs at their company, using information obtained from user profiles.

What is the claim?

The legal argument being asserted is that the advertisements are alleged class violations of federal, state, and local laws that prohibit age discrimination in employment advertising, recruitment, sourcing, and hiring, including the federal Age Discrimination in Employment Act (ADEA).  The theory is as follows: certain social media sites have a feature that allows a user to see the reason they were identified to receive a particular advertisement.  The language under the targeted advertisement might state, for example, that the company intends for the ad to reach a certain demographic, i.e. people ages 28 to 45 who live or were recently in the United States.  The plaintiff’s bar is seizing upon this type of advertisement and language to allege that the plaintiff is in receipt of direct evidence that the company “regularly targets younger prospective job applicants on [social media sites]” and, therefore, that the Company is likely engaged in other forms of hiring discrimination.  Based on these ads and these allegations, the plaintiff’s bar is threatening legal action—including filing class and associational charges of discrimination with federal, state, and/or local agencies.

How can we help?

Our Class Actions and Complex Litigation team has been tracking this issue very closely.  Our goal in bringing these lawsuits to your attention is to provide information and advance notice around a potentially serious issue.  To respond to these threats, Jackson Lewis has put together an internal team to provide an immediate response and to efficiently handle the defense of this issue.  If you have any questions, or if you would like to discuss your Company’s recruiting and hiring practices in more detail, please reach out to Stephanie Adler-Paindiris, Paul Patten, and Eric Magnus.

 

 

Spokeo Strikes Again – Biometric Data Privacy Class Action Fails On Its Face (Scan)

On November 21, 2017, the U.S. Court of Appeals for the Second Circuit held that a plaintiff bringing a putative class action under the Illinois Biometric Information Privacy Act (“BIPA”) could not establish an injury-in-fact and therefore lacked Article III standing, further adding to the legacy of the U.S. Supreme Court’s holding in Spokeo v. Robins and providing companies with additional firepower to fight against claims of bare procedural statutory violations of privacy statutes where individuals suffer no actual harm or risk of real harm.  (Santana v. Take-Two Interactive Software, Inc.)

Take-Two, the developer of the video game series NBA 2K, has included a feature in several of its recent releases that allows players to scan their face into the video game to create a personalized avatar basketball player for use in the game.

Prior to scanning their face and creating an avatar, players are required to agree that “Your face scan will be visible to you and others you play with and may be recorded or screen captured during gameplay.” The lawsuit alleged that this disclaimer did not provide sufficient notice under the BIPA.

BIPA requires that individuals are given written notice that biometric identifying data is being collected and are informed of the organization’s purpose and length of time for which the data will be collected, stored, and used. BIPA also requires that the organization make publicly available a written policy identifying the length of time that the organization will retain biometric identifying data and its rules regarding the destruction of such data.

The plaintiff alleged that Take-Two failed to inform him of the purpose and duration for which his data would be stored, failed to make a publicly available written policy regarding its retention/destruction schedule, and, as a result, collected and disseminated his biometric identifying data without his informed consent.

The Circuit Court affirmed the District Court’s dismissal for lack of Article III standing, holding that the alleged procedural violations failed to raise a material risk of harm that plaintiff’s biometric data would be misused, disclosed, or accessed by third parties. The Court held that, under Spokeo, plaintiff failed to show a “risk of real harm sufficient to confer injury-in-fact.”  The Court also found plaintiff’s argument that he was deterred from using biometrics in the future insufficient to establish a risk of future harm.

The Court also took note that plaintiff was well-aware that Take-Two was collecting his biometric data. As a result, this decision may have limited application in cases where the individual may be unaware that his or her biometric data is being collected and stored.  Nonetheless, this decision further prevents individuals from asserting procedural statutory violations that are completely divorced from actual harm or risk of real harm.

For more information regarding the use of biometrics identifiers and the law related to same, please contact the Jackson Lewis attorney with whom you regularly work.

Restaurant Supply Driver’s Federal FLSA Claims Shown the Exit Ramp on MSJ Ruling

Finding not a “scintilla” of evidence to support claims of minimum wage violations, a New York federal district court in Yu Sen Chen et al v. MG Wholesale Distribution Inc. et al, 16-cv-04439 (E.D.N.Y.) dismissed a proposed collective action (and refused to exercise supplemental jurisdiction of the corresponding state law claims).  In doing so, the district court relied on simple arithmetic and the plaintiff’s own admissions. 

Basis of Complaint

After spending more than a decade working as a truck loader and driver’s helper for a restaurant supply distribution company in Queens, New York, the named plaintiff filed a putative collective action alleging minimum wage and overtime violations under federal and state law.  In doing so, he claimed he worked 12 hours per day, six days per week, for a set salary of approximately $600/week. 

Allegations Taken with a Grain of Salt

Last year, the named plaintiff voluntarily dismissed the overtime claims.  Discovery ensued on the remaining claims.  During the course of discovery, the plaintiff alleged he worked approximately 72 hours per week (although he claimed that at times he may have worked upwards of 77 hours).  He testified his salary was approximately $600/week.  While the named plaintiff claimed the times sheets utilized in the litigation were falsified (and he thus worked much more), the Court applied plaintiff’s testimony regarding hours worked. 

Applying basic arithmetic, and accepting as fact that the named plaintiff worked 72 hours per week (or even 77 hours per week), he earned more than the $7.25 federal minimum wage, the Court ruled. As a result, no federal minimum wage claim existed, making the prospective collective action ripe for dismissal.  The Court also refused to exercise supplemental jurisdiction over the state law claims (minimum wage and spread of hours claims).    

Takeaway

While the information discovered regarding hours worked may have suggested potential issues under state law, simple math proved there was no minimum wage claim under the FLSA.  This finding was enough to divest the court of subject matter jurisdiction, and the Court punted on the state law claims.  This lesson should not be lost on any employer (regardless of the industry).  Employers facing a collective action should not overlook the possibility of attacking the pleadings of the federal claims.  If a court dismisses those claims, the employer may live to fight the state law claims another day (assuming the plaintiff even re-files them).   So pay attention to simple math; it may prove to be your salvation. 

11th Circuit Allows Intervenors in Buccaneers Class Action Lawsuit

The Eleventh Circuit Court of Appeals recently considered two class action lawsuits under the Telephone Consumer Protection Act (TCPA), which involved the same class and allegations and the question of whether additional parties could intervene in a pending case. In Technology Training Associates, Inc., et al. v. Buccaneers Limited Partnership, Cin-Q Automobiles, Inc. filed a complaint on behalf of a putative class, alleging that Buccaneers Limited Partnership was responsible for unsolicited faxes that violated the TCPA.  The case was litigated for approximately three years, with Medical & Chiropractic Clinic, Inc. joining in as a second named plaintiff.  In 2016, Technology Training Associates, Inc. et al. filed a complaint on behalf of the same putative class based on the same allegedly unlawful acts by Buccaneers, which subsequently settled.  After the settlement was announced, Cin-Q and Medical & Chiropractic Clinic (the “movants”) moved to intervene in the case.  The district court denied the movants (named plaintiffs in the first class action case) the opportunity to intervene in the second class action, but on October 26, 2017, a three judge panel of the Eleventh Circuit remanded the case to the district court with instructions to grant the movants’ motion to intervene, holding that the movants had satisfied Federal Rule of Civil Procedure 24(a)(2)’s requirements for intervention.

The movants originally filed a lawsuit in 2013 on behalf of a putative class against the defendant alleging violations of the TCPA. In 2016, the named plaintiffs in the second case filed a second complaint on behalf of the same putative class based on the same allegations against the same defendant.  One of the attorneys from the firm representing the plaintiffs in the first action changed firms, and his new firm represented the plaintiffs in the second action.  Soon after the second lawsuit was filed in 2016, the parties in the second lawsuit announced that they had reached a settlement, part of which involved the defendant agreeing to waive its statute of limitations defense against the plaintiffs in the second lawsuit.

After the settlement was announced in the second lawsuit, the movants moved to intervene in the second lawsuit, and the district court denied that motion and preliminarily approved the settlement agreement. The movants appealed the denial of their motion to intervene.

The Eleventh Circuit ultimately held that the movants satisfied Rule 24(a)(2)’s requirements for intervention, and in doing so found significance in a series of emails exchanged within the law firm representing the plaintiffs in the second case.  The emails appeared to show that the law firm in the second case not only knew how much the law firm from the first case wanted to settle their class action for, but also that the second law firm filed the second action with the intent to underbid the law firm in the first action.  In addition, the Court of Appeals found the fact that the plaintiffs’ claims in the second lawsuit might be time barred allowed the movants to meet the “minimal” burden of showing the plaintiffs’ representation in the second action might be inadequate, because the plaintiffs in the second action had a greater incentive to settle as their claims may have been time barred.

The Eleventh Circuit concluded its opinion by observing that the record suggested that plaintiffs’ counsel in the second action deliberately underbid the movants in an effort to collect fees, while at the same time doing a fraction of the work that movant’s counsel had done in the first lawsuit, together with a brief discussion of the American Bar Association’s Ethical Guidelines for Settlement Negotiations.

This case is a reminder of the complex procedural issues at stake in class action litigation.  For more information regarding this case or to discuss recent trends in TCPA class action litigation, please contact the Jackson Lewis attorney with whom you regularly work.

Jackson Lewis Class Action Trends Report Fall 2017 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.

Fall 2017 Class Action Trends Report

General Awareness Is Not Enough for Willfulness Under the FLSA

A recent decision from the Third Circuit Court of Appeals involving the nature of the evidence sufficient to create a jury question on willfulness has carved out additional guidance for employers defending against Fair Labor Standards Act (FLSA) lawsuits. Though the FLSA generally applies a two-year statute of limitations, the limitations period can be extended to three-years for willful violations of the Act. That extra year means more dollars in a plaintiff’s pockets.

On September 20, 2017, a three-judge panel upheld the ruling of a district judge from the Middle District of Pennsylvania who granted the County’s motion for a directed verdict on the question of willfulness. In Souryavong v. Lackawanna County, two employees brought suit under the FLSA, arguing that although each of their part-time positions did not result in overtime hours, their combined hours well exceeded 40 hours per workweek. The only issue at the November 2015 trial was whether the violations were willful.

To support their argument, the employees’ evidence at trial was limited to testimony from two witnesses that the County was “generally aware” of its obligations, and an internal email that was circulated with the subject line “County wage and hour issues” discussing certain employees who were working second-jobs in excess of 40 hours per week. In granting the County’s motion for a directed verdict at trial, the Judge stated that the “employees’ evidence did not ‘measure up.’” The Third Circuit agreed.

“Willfulness” as defined by the Supreme Court includes situations where the employer knew its conduct was prohibited at the time of the FLSA violation or where the employer demonstrates a “reckless disregard” for the matter.

Despite there being evidence that the County was “generally aware” of its obligations under the FLSA, that alone was insufficient to create a genuine issue of fact for the jury. For the jury to rule on the issue of willfulness, the evidence must have established that the County was specifically aware of the two-job overtime issue as it related to the employees – prior to the dates of the violations.

In contrast, the Third Circuit referred to instances where its sister circuits allowed the question of willfulness to reach a jury: Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016) (finding a jury question of “willfulness” where a city is aware of the FLSA requirements and has a system in place to classify pay and benefits, yet continues to allow a misclassification of a monthly payment for nine years); Davila v. Menendez, 717 F.3d 1179 (11th Cir. 2013) (finding a jury question of willfulness where a family fails to pay a nanny minimum wage, admits to knowing about the minimum wage laws, and where the family instructed the nanny to lie about her employment and the hours worked). Here, the Third Circuit could find no such level of egregiousness so as to send the issue to the jury.

The question of willfulness is a hot-button issue in the context of FLSA claims. The decision in Souryavong serves to further limit the kinds of factual scenarios when the statute of limitations for FLSA claims is extended to three years.

 

Step Right Up: Tentative Ruling Shows Amusement Park Beats Back Bulk of Class Bid

In a mixed ruling, a California state court judge in Villegas v. Six Flags Entertainment Corp., Case No. BC505344, issued a decision last week denying certification of eight subclasses of amusement park workers, but indicating she would consider certification of several others pending further briefing. 

Basis of Complaint

In 2013, a group of four plaintiffs filed suit in Los Angeles Superior Court seeking to represent a class of current and former Six Flags Magic Mountain and Hurricane Harbor employees who worked at the parks. The complaint accused Six Flags of a series of state labor law violations, including the failure to pay employees overtime wages, provide mandatory meal and rest breaks or proper seating.  The named plaintiffs held positions such as ride mechanics, ride operators, and game attendants.

Certification Bid

Last year, the plaintiffs moved for class certification.  Magic Mountain opposed the motion, arguing there was a complete lack of evidence of common issues requiring certification.  In doing so, it argued, in part, that during the relevant time period, it employed more than 25,000 employees in 255 positions within 25 separate departments (and thus, common proof was missing). 

During oral argument last week, the judge issued a tentative decision denying certification of the bulk of the subclasses, drawing protests from plaintiffs’ counsel.  A particular point of contention concerned a “shaved time” subclass (a class consisting of workers whose wages were not fully paid) and a “walking time” subclass (a class consisting of workers who were not compensated for time spent walking to break areas).  Based upon the preliminary ruling, the judge rejected these arguments citing the individualized nature of the issues, but took the matter under submission. 

Not So Fast:  Certification of Additional Classes Will Be Considered

Perhaps thinking that everyone deserves a chance to walk away a winner, the judge ordered additional briefing on three subclasses: a rounding subclass (where employees’ hours were manually reduced) and two regular rate subclasses (where employees’ overtime rates were based on their hourly rates, and not on their “regular rate of pay”).  In doing so, the judge did not indicate which way she was leaning. 

Takeaway

While drawing comparisons between an amusement park and any other employer may be difficult, one key takeaway is clear:  arguing the practical application of an employer’s business practices to the proposed subclass should lay at the forefront of any certification opposition.  Indeed, showing a lack of commonality across a proposed subclass through representative examples can make or break an opposition to certification.  So keep your eye on the brass ring.

 

Class Action Filed Against NCAA and 20 Universities Alleging Student-Athletes with Scholarships Are Employees

In the latest effort to argue that student athletes qualify as employees under the Fair Labor Standards Act (“FLSA”), a class action lawsuit was filed last week in a federal court in Pennsylvania against the National Collegiate Athletic Association (“NCAA”) and 20 universities.

Last year, the U.S. Court of Appeals for the Seventh Circuit affirmed U.S. District Judge William T. Lawrence’s dismissal of a student-athlete litigation against the NCAA and over 120 NCAA Division I member schools alleging that student-athletes are employees who are entitled to a minimum wage under the FLSA.  Berger v. NCAA, No. 16-1558 (7th Cir. Dec. 5, 2016).   Jackson Lewis had the privilege of representing 30 of the Universities named in that lawsuit.  You can read more about the Berger case here.

Now, Plaintiff Lawrence “Poppy” Livers has filed a lawsuit on behalf of himself and others alleged to be similarly situated, claiming that college student athletes who receive scholarships are employees who are entitled to compensation.  Plaintiff argues the “crux” of the Complaint is that recipients of athletic scholarships, which require them to participate in NCAA athletics under daily supervision of full-time coaching and training staff, are employees of NCAA member schools as much as, “and arguably more than, fellow students employed in work study programs, e.g., student ticket takers, seating attendants and food concession workers at NCAA contests.”

Further, Plaintiff argues that this Complaint differs from Berger in that the putative collective in this case “only includes Scholarship Athletes, and does not address the status of ‘walk-ons,’ i.e., student athletes who are not obligated to, and controlled by, NCAA member schools pursuant to Athletic Financial Aid Agreements.”  The Plaintiffs in Berger attended the University of Pennsylvania which does not enter into Athletic Financial Aid Agreements.  A copy of the Complaint in Livers can be accessed here.

We will continue to carefully monitor developments in this case and draft updates as appropriate.  For more information regarding this case or the Berger case, please contact the Jackson Lewis attorney with whom you regularly work.

Supreme Court Hears Argument on Validity of Class Action Waivers in Employment Arbitration Agreements

Yesterday the U.S. Supreme Court held a one-hour oral argument in three consolidated cases concerning the enforceability of arbitration agreements requiring employees to waive their right to bring or participate in a class or collective actions. Click here for a summary of yesterday’s argument.

“12 Inches” is Much Ado About Nothing – Seventh Circuit Serves Subway and Practicality a Win in Footlong Class Action

“A class action that ‘seeks only worthless benefits for the class’ and ‘yields [only] fees for class counsel’ is ‘no better than a racket’ and ‘should be dismissed out of hand.’” In re Subway Footlong Sandwich Mktg. & Sales Practices Litig., 2017 U.S. App. LEXIS 16260, at *3 (7th Cir. Aug. 25, 2017) (quoting In re Walgreen Co. Stockholder Litig., 832 F.3d 718, 724 (7th Cir. 2016)).  With those words, the Seventh Circuit put an end to a putative class action spawned by a Subway sandwich, a measuring tape, and a Facebook post that went viral.

BACKGROUND

In 2013, an Australian teenager discovered that his “footlong” Subway sandwich measured only 11 inches, not 12.  The teenager posted a picture of his sandwich and a tape measure on Facebook, and the post went viral.  It also spawned a putative class action.

However, early discovery confirmed that the natural baking process for Subway’s bread created minor variations in the sizes of the “footlong” sandwiches, even if the same amount of dough was used.  Thus, in the absence of any damages, the plaintiff’s attorneys shifted focus and sought certification for injunctive relief under Federal Rule of Civil Procedure 23(b)(2).  Ultimately, the case settled, with Subway agreeing to take steps that might help further ensure that its “footlong” sandwiches would bake-out to the full 12 inches.  In return, class counsel received $520,000 in attorney’s fees and each class representative received $500.  But Theodore Frank, a well-known class action objector, believed the settlement was worthless, and appealed the settlement to the Seventh Circuit.

THE DECISION

The Seventh Circuit agreed with Mr. Frank and held that the putative class action should not have been certified and the settlement should not have been approved because the putative class action and settlement offered “zero benefits for the class.” Id. at *14.  Before the settlement, Subway customers could be fairly (but not entirely) certain that their “footlong” sandwiches would be 12 inches long: Subway used uniform quantities of dough that were meant to bake to 12 inches.  After the settlement, nothing really changed.     Assuming implementation of the proposed injunctive relief, Subway customers still could only be fairly (but not entirely) certain that their “footlong” sandwiches would be 12 inches long.  As both parties acknowledged, “because of the inherent variability in food production and the bread baking process, [Subway] will never be able to guarantee that each loaf of bread will always be exactly 12 inches or greater in length after baking.” Id. at *13.  Finding this all “utterly worthless,” the Seventh Circuit concluded that the settlement only served to enrich class counsel and, to a lesser extent, the class representatives, and the settlement should not have been approved and the class action decertified.  Id.

CONCLUSION

The impact of this decision may be curtailed by the fact that this case involved an injunctive class action under Rule 23(b)(2).  Still, it is a win for practicality and commonsense, and it may give pause to the next overly zealous attorney who tries to make a quick fortune off a Facebook post gone viral.

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