Class Action Litigation Analyzed in New Report

The fifth Annual Workplace Class Action Litigation Report by Seyfarth Shaw LLP analyzes the foremost class action and collective action decisions of 2008 involving claims against employers in federal and state courts.

The key class action and collective action settlements over the past year are also analyzed, both in terms of gross settlement dollars in private plaintiff and government-initiated lawsuits, as well as injunctive relief provisions in consent decrees. Seyfarth Shaw’s fifth Annual Workplace Class Action Litigation Report analyzes 650 decisions in its comprehensive examination of class action litigation.

The analysis highlights five key trends manifesting themselves in the federal and state courts in 2008:

• First, the financial meltdown of the economy during 2008 fueled more class action litigation.
  • The plaintiffs’ bar increased the pace of ERISA class action filings seeking recovery for 401(k) losses.
  • As lay-offs increased at a precipitous rate, displaced workers filed more age discrimination and Worker Adjustment and Retraining Notification lawsuits.
• Second, job displacements caused by the troubled economy brought further exposure to workplace litigation for employers.
• Third, the volume of wage and hour litigation continues to increase exponentially.
  • Collective actions pursued in federal court under the Fair Labor Standards Act (“FLSA”) outnumbered all other types of private class actions in employment-related cases.
  • The most significant growth in wage and hour litigation centered at the state court level, and especially in California, Florida, Illinois, New Jersey, New York, Massachusetts, Pennsylvania, and Texas.
• Fourth, the Class Action Fairness Act of 2005 (“CAFA”) continued to have significant effects on workplace litigation, primarily wage and hour class actions filed in state court.
• Fifth, the financial stakes in workplace class action litigation increased yet again in 2008.
  • Plaintiffs’ lawyers have continued to push the envelope in crafting damages theories to expand the size of classes and the scope of recoveries.
  • These strategies resulted in a series of massive settlements in nationwide class actions, especially in ERISA class action resolutions.

Lawsuits examined in the report were filed in federal courts under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, and a host of other federal statutes applicable to workplace issues. The Report also analyzes class action and collective action rulings involving claims brought against employers in all fifty state court systems, including decisions pertaining to employment laws, wage and hour laws, and breach of employment contract actions. The report also discusses important federal and state court rulings in non-workplace cases which are significant in their impact on the defense of workplace class action litigation.

The report also includes an analysis of the “top 10” class action and collective action settlements during 2008. Plaintiffs’ lawyers secured hefty settlements in 2008 for employment discrimination, wage and hour, and ERISA class actions. The top 10 settlements totaled over $18.184 billion. As compared to 2007, settlement totals decreased for the top 10 employment discrimination and wage and hour class action settlements, but increased for the top ten ERISA class action settlements.

• For employment discrimination class actions, the monetary value of the top ten private plaintiff settlements entered into or paid in 2008 totaled $118.36 million. By comparison, the top ten settlements in 2007 totaled $202.1 million.
• For wage and hour class actions, the monetary value of the top ten private settlements entered into or paid in 2008 totaled $252.7 million. By comparison, the top ten settlements in 2007 totaled $319.3 million.
• For ERISA class actions, the monetary value of top ten private plaintiff settlements entered into or paid in 2008 totaled $17.7 billion. By comparison, the top ten settlements in 2007 totaled $1.818 billion.

Additional trends to note from 2008

• While shareholder and securities class action filings experienced an up-tick in 2008, employment-related class action filings increased significantly. Anecdotally, surveys of corporate counsel confirmed that workplace litigation—and especially class action and multi-plaintiff lawsuits—continues as the chief exposure driving corporate legal budget expenditures.
• The plaintiffs’ bar increasingly used theories to seek certification of “punitive damages”-only classes under Rule 23(b)(2), as well as pressing for certification of mega-classes involving pay and promotion claims of employees in multiple company facilities on a nationwide basis. Outside of the Ninth Circuit, employers fought these theories with good success, as 2008 witnessed many pro-employer victories in class certification battles.

• FLSA collective action litigation increased again in 2008 and far outpaced employment discrimination class action filings. The increase in filings suggests that workers and their attorneys are bypassing the violations-reporting system at the U.S. Department of Labor and bringing private lawsuits in the pursuit of more lucrative resolutions. Given the trickle-down phenomenon of class action settlements (and the increased awareness of wage & hour issues by workers), it is expected that the pursuit of nationwide FLSA collective actions by the plaintiffs’ bar will continue in 2009.

• More than any other area of workplace litigation, ERISA class actions took center stage in 2008 as case filings surged and settlements led all other types of class actions. While the top 10 ERISA class action settlements totaled $1.818 billion in 2007, they increased exponentially in 2008 to $17.7 billion. Plaintiffs’ lawyers bringing ERISA class claims increasingly are pursuing two broad categories of cases, including “stock drop” suits in which the ERISA plan participants complain of the availability of employer stock as an investment option, and “plan administration” suits in which participants challenge excessive advisory fees and other mechanics of how the plan is run.

To request a copy of the 665-page report on CD-ROM, visit www.seyfarth.com/ClassActionReport or e-mail ClassActionReport@seyfarth.com.