Class Action "Crescendo"

It's LITIGATION WEEK here on the Blawg, where all week we're taking a deep dive into the wonderful world of workplace lawsuits. Today's topic: CLASS ACTIONS. Few things get the heart of an HR professional or employment lawyer racing faster than the mention of those two little words. A single class action can easily be the equivalent of 100 (or more) individual suits in terms of potential liability as well as effort, resources and defense costs. So, what's the latest? According to Seyfarth Shaw's new 2011 Workplace Class Action Litigation Report, employers can expect 2011 to be a "tipping point for workplace-related class actions, with major Supreme Court decisions expected, a crescendo in wage-hour class actions, plus stepped-up enforcement litigation by the Obama Administration." Yikes. Here are the major trends identified in the report . . . 1. Record $$$. Class action settlements increased four-fold in 2010 over 2009 and the top ten settlements increased to a whopping $1.16 billion, the highest amount ever. 2. Workplace Class Actions Waaaay Up. While securities and commercial class actions remained stable, workplace class actions spiked considerably. 2010 saw one of the largest employment discrimination verdicts ever: $253 million in the Velez v. Novartis case previously described here on the Blawg (eventually settled for a mere $175 million). 3. Wage & Hour #1. Wage & hour cases continue to be most companies' #1 exposure. "We expect to see even more and bigger cases brought in 2011," said Jerry Mattman, Seyfarth's resident class action guru. Continuing effects of the downturn and layoffs continue to fuel overtime class actions under the Fair Labor Standards Act and various state laws (especially California). Seyfarth dubbed 2010 the "Year of the Misclassified Employee" in light of the government crackdown (and resulting high number of cases) claiming that employers misclassified employees under exempt/non-exempt rules. 4. Increased Enforcement. As we discussed here yesterday, the Obama Administration is stepping up enforcement actions – particularly in systemic "pattern and practice" cases – through increased budgets, hiring, investigation and employee education activity. 5. Beware Copy-cat Filings. Recent class action successes (see the Novartis case above) are likely to inspire copy-cat filings and drive up settlement demands by plaintiffs and their attorneys. Plaintiffs' attorneys continue to pursue creative new methods to expand the dimensions of classes and the scope of damages. 6. Supreme Court Busy. In March, the Supremes will hear arguments in the Dukes v. Wal-Mart action that could be the largest discrimination case in history with more than 1.5 million class members (described previously here on the Blawg). The Court will also decide whether arbitration agreements can bar class actions and the extent to which one court's refusal to certify a class is binding on another court. What should employers do? Take proactive steps to reduce litigation exposure NOW. As Maatman says, "Clearly, the dominant lesson of 2010 is that shoring up potential weaknesses in compliance and identifying class action vulnerabilities should remain a priority" for all employers. In other words, imagine what the world's toughest plaintiffs' firm would sue you for and fix it before they get a chance. Stay tuned for more.

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