Second Circuit Sheers Cosmetology Student’s Claims in Intern-or-Employee Case

Concluding that a student at a for-profit cosmetology academy was the “primary beneficiary” of the hours he spent training at the academy’s salon, the Second Circuit Court of Appeals has upheld the district’s court’s determination that the student was an intern, and not an not employee entitled to minimum wage or overtime under the FLSA or the New York Labor Law. Velarde v. GW GJ, Inc., 2019 U.S. App. LEXIS 3536 (2d Cir. Feb. 5, 2019). The Second Circuit has jurisdiction over New York, Connecticut and Vermont.

Please click here to access our Wage & Hour Law Update blog discussing this recent decision.

Airline Ordered to Pay Flight Attendants $77 Million in Damages

A class of flight attendants in a case involving alleged violations of California’s wage and hour laws was awarded $77 million in damages. In so doing, the judge rejected the airline’s challenges to the plaintiff’s damages model and reduced the damages requested by the workers by only $8 million. Bernstein et al. v. Virgin America Inc., No. 3:15-cv-02277 (N.D. Cal. Jan. 16, 2019).

The lawsuit, which was filed in 2015, alleged that Virgin did not pay its flight attendants for all time spent before, after, and between flights, for completing written reports, for time spent training and for undergoing required drug testing. Additionally, it alleged that Virgin did not allow the class of flight attendants to take meal or rest breaks, and that the airline failed to pay overtime and minimum wages.

The court granted class certification in November 2016 to a class of more than 1,000 flight attendants who worked for Virgin on or after March 2011. Virgin later moved for summary judgment arguing, among other things, that the California Labor Code did not apply to the class members’ claims because they all did not work principally or exclusively in California. The court rejected that argument, reasoning that Virgin made decisions about how it would pay its flight attendants and then proceeded in accordance with those decisions exclusively from its headquarters in California and, therefore, California law applied. The class later moved for, and won, summary judgment on their claims against the airline.

This decision, which likely will be appealed, highlights for employers the importance of compliance with not only federal wage and hour laws, but the various state wage and hour laws in which employers operate. Please contact Jackson Lewis with any questions about this case.

Court Decertifies Class of Female Drivers’ Hostile Work Environment Claims, Trims Retaliation Claims

Finding that the case involved “actions perpetuated by one individual against another individual in an isolated environment, not conduct in a common environment directed against several women at once,” Chief Judge Leonard Strand decertified a class of female truck drivers that alleged they were subject to a hostile work environment. Sellers v. CRST Expedited, Inc., No. C15-117-LTS (N.D. Iowa Jan. 15, 2019).

He also granted partial summary judgment to the company on the drivers’ separate claim that they suffered retaliation when they complained about harassing conduct under the company’s policies.

The court explained that, unlike in a race discrimination case that focuses on the employer’s racial animus underlying employment decisions, which can be proven by common evidence, a “pattern or practice” sexual harassment suit for damages requires individualized proof because liability focuses “on the gravity of the conduct to which the claimant was exposed.” The conduct at issue here involved “actions perpetuated by one individual against another individual in an isolated environment, not conduct in a common environment directed against several women at once.” As a result, the court held that the plaintiffs could not produce common evidence to show the class was exposed to conduct severe or pervasive enough such that a reasonable person would be offended. Accordingly, the plaintiff could not satisfy Rule 23’s commonality, predominance, or superiority requirements. The court remarked that “the allegedly offensive actions, not the employer’s alleged polices are what create difficulties in trying hostile work environment claims as a class.” It concluded the drivers could proceed individually, but not as a class.

In a separate discussion, the court granted summary judgment to the company on the plaintiff’s retaliation claim. Although the court explained there were triable issues on whether the company’s policy for handling complaints of harassment resulted in lower pay to women who used it, or whether the company’s policy of removing complainants from a truck in which an alleged harasser was assigned, could be considered adverse employment actions, the plaintiffs could not demonstrate there was a retaliatory motive behind any of the policies. The court held the company’s reasons for having the policy, including protecting a complainant’s safety and well-being and complying with licensing and other truck ownership rules, were not retaliatory or pretextual. The court reasoned the plaintiffs’ proof that the company knew the policy had an impact on pay, and was working to explore alternative policies, was inadequate to show the retaliatory intent required for the plaintiffs’ claims to prevail.

Please contact Jackson Lewis with any questions about defending class or collective actions.

 

 

Older Applicants Cannot Utilize ADEA to Challenge Neutral Hiring Criteria, Seventh Circuit Rules

The Age Discrimination in Employment Act does not permit non-employees to bring claims under a disparate impact theory, the Seventh Circuit has ruled. Kleber v. CareFusion Corp. (7th Cir. Jan. 23, 2019). Accordingly, in Illinois, Indiana, and Wisconsin, job applicants will not be able to challenge hiring decisions that are neutral, but which disproportionately exclude job applicants over 40.

Divergence of ADEA from Title VII

Title VII was enacted in 1964 and the ADEA was enacted in 1967. For approximately 25 years, courts generally treated standards of proof under the ADEA and Title VII as interchangeable. Thus, the Supreme Court’s 1971 Title VII ruling in Griggs v. Duke Power Co. also applied to ADEA claims. The Court found a cause of action in Title VII for non-intentional disparate impact where neutral “practices that are fair in form, but discriminatory in operation.”

That began to change for ADEA plaintiffs in 1993, when the Supreme Court, in Hazen Paper Co. v. Biggins, cast doubt on whether the ADEA permitted any disparate impact claims. Finally, in 2009, the Supreme Court, in Gross v. FBL Financial Services, Inc., ruled that unlike Title VII, ADEA disparate treatment plaintiffs face a “but-for” standard to establish discrimination.

Facts and Procedural History

After Dale Kleber, then 58, was not hired for a senior in-house position at CareFusion’s law department, he filed an ADEA lawsuit. The job description required applicants to have three to seven years’ legal experience. Kleber had more than seven years’ of relevant experience. One of Kleber’s claims was that CareFusion’s maximum experience requirement had a disparate impact on him, an older attorney. The district court dismissed Kleber’s disparate impact claim. On appeal, a three-judge panel reversed the dismissal. The Seventh Circuit then granted en banc review.

Opinion

The eight-judge majority focused on the plain language of Section 4(a)(2) of the ADEA, which makes it unlawful for an employer “to limit, segregate or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” In light of “any individual” being surrounded by “employees,” the Court said the essential meaning of Section 4(a)(2) was that it protected employees only. The Court also drew distinctions between the text of the ADEA and that of Title VII (which does permit applicants to bring disparate impact claims).

There were two separate dissenting opinions among four dissenting judges.

Implications

The Seventh Circuit joins the Eleventh Circuit in ruling that the ADEA does not provide disparate impact protections for job applicants.

ADEA disparate impact plaintiffs already face other challenges in such claims. Unlike race and gender, employers are less likely to collect age information from applicants. Without readily available age information about an employer’s applicant pool, ADEA plaintiffs are forced to use alternative sources of information about the availability of workers over 40.

Actual Harm Not Required to Sue Under Illinois Biometric Information Privacy Law

Earlier today, the Illinois Supreme Court handed down a significant decision concerning the ability of individuals to bring suit under the Illinois Biometric Information Privacy Act (BIPA). In short, individuals need not allege actual injury or adverse effect, beyond a violation of his/her rights under BIPA, in order to qualify as an “aggrieved” person and be entitled to seek liquidated damages ($1000 per negligent violation/$5,000 per intentional or reckless violation) and injunctive relief under the Act.

Please click here to access our Workplace Privacy, Data Management & Security Report blog discussing this recent decision.

Supreme Court: Interstate Transport Companies’ Independent Contractor-Drivers are Exempt from FAA

In New Prime, Inc. v. Oliveira, the U.S. Supreme Court held that the Federal Arbitration Act’s (FAA) Section 1 exemption applies to transportation workers, regardless of whether they are classified as independent contractors or employees. No. 17-340 (Jan. 15, 2018). Please click here to access our article discussing this recent decision.

New Guidance from the Northern District of California for Class Action Settlements

The U.S. District Court for the Northern District of California has published procedural guidance for parties submitting class action settlements for preliminary and final approval in the Northern District. Details of the Northern District’s procedural guidance for Class Action Settlements may be accessed here.

The new guidance may be a response to the Ninth Circuit’s ruling in Espinosa v. Ahearn (In re Hyundai & Kia Fuel Econ. Litig.) 2018 U.S. App. LEXIS 1626 (Jan. 23, 2018) regarding the “rigorous analysis” required by district courts in reviewing class certification, and the “heightened” attention needed for reviewing class action settlements in particular.

The Northern District’s detailed procedural guidance provides a roadmap of topics and issues for parties to consider during class action settlement negotiations, when drafting class notices, and in preparing and submitting preliminary and final approval documents. While many of these issues are generally known and discussed amongst experienced class action counsel, some of the more granular considerations include requests to provide information about “lead counsel’s firms’ history of engagements with the settlement administrator over the last two years,” consulting “relevant prior orders by the judge” related to incentive awards, and submitting information about lead counsel’s “past comparable class settlements.”

Parties attempting to avoid unnecessary delay or denial of approval in the Northern District would be well-served by carefully reviewing and following the Court’s new guidelines when appropriate, in addition to the specific orders of their presiding judge.

Please contact Jackson Lewis with any questions about the guidance.

 

 

Criticizing Lower Court, Third Circuit Reverses Class Certification in Suit Alleging Pay Violations

A three-judge panel of the Third Circuit has struck down U.S. District Judge Arthur J. Schwab’s decision granting class certification in a suit brought by mortgage loan officers claiming they were denied overtime pay by their employer. Reinig v. RBS Citizens, NA, No. 17-3464 (3d Cir. Dec. 31, 2018).

In reversing the lower court’s Rule 23 certification, the panel criticized Judge Schwab for doing a substandard job of outlining the classes and claims at issue, forcing the appeals court “to comb through and cross-reference multiple documents in an attempt to cobble together the parameters defining the class and a complete list of the claims, issues, and defenses to be treated on a class basis.” Even “wading through” all of those documents still did not provide the Court a clear picture of the suit’s classes and claims. The Third Circuit noted that, while it does not impose a “strict format” for compliance with Rule 23, it has explicitly rejected orders that force it to “cobble together various statements” and “comb the entirety of its text” in search of “isolated statements that may add up to a partial list of class claims, issues, or defenses.”

The Third Circuit found the District Court’s ruling wanting in other aspects, as well. The panel concluded that there was not enough evidence to determine whether the loan officers had sufficiently shown the employer had an unofficial policy that contradicted its official policy on off-the-clock work to satisfy the commonality and predominance prongs of Rule 23. It found the District Court’s “barebones analysis” did not permit it to conclude that the lower court undertook the “rigorous review” required for Rule 23 certification. For example, the panel said it was unclear how Judge Schwab reconciled contradictory testimony and other evidence cited by the defendant that undermined the plaintiffs’ claim of a companywide “policy to violate the policy.” These and other concerns left the Third Circuit with serious doubts about the lower court’s conclusions, forcing it to vacate the District Court’s order and remand the case with instructions to conduct a “rigorous” examination of the factual and legal allegations underpinning the plaintiffs’ claims before deciding if class certification was warranted.

Despite that, though, the Third Circuit declined to review Judge Schwab’s decision to grant Fair Labor Standards Act (FLSA) collective action certification. The panel reasoned that it could not exercise pendent appellate jurisdiction over the issue because, while related, the Rule 23 class certification and FLSA collective action certification issue were still “fundamentally different creatures.” Thus, it reasoned that it did not have jurisdiction to disturb the lower court’s ruling on that separate issue.

Please contact Jackson Lewis with any questions about this case or class and collective actions.

Counting Down the Top 5 Employment Class Action Developments of 2018

On the last day of the year, we take a look back at some highlights and our most-read employment class action articles of 2018.

#5-Department of Labor Nullifies “80/20” Tip Credit Rule

In November, the Wage and Hour Division of the Department of Labor (DOL) rescinded Obama-era enforcement guidance that had made the tip credit unavailable to tipped employees who spend more than 20% of their time performing allegedly non-tip generating duties. The so-called 80/20 Rule had spawned a number of lawsuits, many of them collective actions, claiming that servers spent too much time performing allegedly non-tipped work. Reissuing an opinion letter first promulgated at the end of the George W. Bush administration in 2009, the DOL  clarifies that it “do[es] not intend to place a limitation on the amount of duties related to a tip-producing occupation that may be performed, so long as they are performed contemporaneously with direct customer-service duties and all other requirements of the Act are met.”

#4-Ninth Circuit Permits Use of “Inadmissible” Expert Testimony for Certification Purposes

The U.S. Court of Appeals for the Ninth Circuit denied a request to review en banc a panel ruling that authorizes trial courts to consider evidence that would be inadmissible at trial when deciding whether a class may be certified. Sali v. Corona Regional Medical Ctr., No. 15-56460 (9th Cir. Nov. 1, 2018). The decision was filed over a sharply critical dissenting opinion authored by Judge Carlos Bea. Bea, who was joined by four of his colleagues, wrote that the majority’s decision “involves a question of exceptional importance and is plainly wrong.”

#3- Sexual Harassment Class Investigations on the Rise with EEOC

Since Fall of 2017, stories of sexual harassment have dominated the headlines. In what USA Today dubbed the “Weinstein Effect,” workplaces of all types and sizes 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.

#2- Class Action Stacking Is Not Permitted, U.S. Supreme Court Rules

Once class action certification has been denied, a putative class member may not start a new class action beyond the applicable statute of limitations, the U.S. Supreme Court has ruled, 9-0, in an opinion by Justice Ruth Bader Ginsburg. China Agritech, Inc. v. Resh, No. 17-432 (June 11, 2018). Justice Sonia Sotomayor filed an opinion concurring in the judgment.

#1- Supreme Court: Class Action Waivers in Employment Arbitration Agreements Do Not Violate Federal Labor Law

Class action waivers in employment arbitration agreements are enforceable under the Federal Arbitration Act (FAA), the U.S. Supreme Court held in a much-anticipated decision in three critical cases. Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP et al. v. Morris et al., No. 16-300; National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307 (May 21, 2018).

The Supreme Court’s decision resolves the circuit split on whether class or collective action waivers contained in employment arbitration agreements violate the National Labor Relations Act (NLRA). In a 5-4 decision authored by Justice Neil Gorsuch, the Court held that the FAA states that arbitration agreements providing for individualized proceedings are enforceable and neither the FAA nor the NLRA require otherwise. Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito joined in that decision. You can read our analysis of the decision here.

Wishing all of you and your families a very happy New Year!

 

Jackson Lewis Class Action Trends Report Fall 2018

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. We hope you enjoy!

https://www.jacksonlewis.com/publication/class-action-trends-report-fall-2018

 

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