June 2022 Legal Developments in Class Actions


Class action waivers in severance agreements are enforceable. Former employees who entered into severance agreements in which they agreed not to join class actions against the employer asserting claims under the Age Discrimination in Employment Act ( ADEA) failed to convince the Seventh Circuit that the District Court erred in rejecting their offer of an injunction restraining the employer from enforcing the class action waivers contained in the agreements. The employees, aged 56 or 57 at the time of their dismissal as part of a workforce reduction, accepted the waiver of the collective action in exchange for a lump sum, 12 months of health insurance and provident insurance, vocational guidance, and reimbursement of job-related vocational training. Relying on the United States Supreme Court’s decision in 14 Penn Plaza LLC v. Pyett, the Seventh Circuit agreed with the District Court that ADEA Section 626(f)(1) applied to “substantial rights.” Because a class action is a “procedural mechanism” and not a substantive right, a class action waiver did not trigger any “right or claim” under ADEA.

Plaintiff FCRA suffered no material harm. The United States Court of Appeals for the Eighth Circuit ruled that a job applicant lacked Article III standing to bring an alleged class action lawsuit against his prospective employer for alleged violations of the Fair Credit Reporting Act (FCRA). The plaintiff’s job offer was revoked based on the contents of a third-party background check report. She sued, claiming she should have been given the opportunity to explain the information in the report, among other claims. In 2016, the parties reached an interim settlement agreement, but four days later the U.S. Supreme Court issued Spokeo, Inc. v. Robins, who ruled that an FCRA complainant had to demonstrate more than a “simple procedural violation” of the FCRA in order to have standing to sue. The court said the plaintiff had to show that she had suffered “injury in fact”. The Spokeo decision prompted the defendant to seek dismissal for lack of standing. The district court approved the settlement without ruling on standing, and the defendant appealed. In an April 4, 2022 decision, the Eighth Circuit reversed the order approving the settlement and returned the issue of standing to the district court. When the district court found that the plaintiff had standing, the employer filed another appeal. The Court of Appeal quashed the order, finding that the plaintiff had not established concrete harm. He returned with instructions to dismiss the suit for lack of standing. Subsequently, in a decision dated May 3, 2022, the appeals court ordered the district court to return the case to state court.

Objection to the PAGA settlement dismissed, collective settlement annulled. The Ninth Circuit provided mixed results for two truckers who opposed a collective settlement agreement resolving various wage and hour claims and allegations brought under California’s PAGA for violation of the Labor Code section of California. 2802, which requires compensation for expenses and losses. The settlement provided that the employer would pay $7.25 million for the class claims, $2.4 million for attorneys’ fees and $500,000 for the PAGA claim. The appeals court held that an opponent could not object to the PAGA portion of the settlement because it was not a party to the underlying PAGA action, and therefore dismissed its appeal. With respect to the second objector, the appeals court reversed the district court’s approval of the class action settlement agreement and remanded the class action for further proceeding because the lower court abused its discretion by applying an incorrect legal standard when assessing the settlement.

CAFA minimum reached in wage and hour class action. An employer who withdrew a putative state wage and hour class action lawsuit in federal court has amply established the $5 million amount of controversy required for federal jurisdiction under the Class Action Fairness Act (CAFA ), the Ninth Circuit ruled. He found that the district court erred by (1) imposing a presumption against the jurisdiction of the CFAA and (2) assigning a value of $0 to the amount in dispute for each of the claims when it was not disagree with the employer’s calculations. The district court’s “zeroing” of several claims because it disagreed with the employer’s assessment was a “draconian” approach that required a reversal. On proper analysis, the prosecution has clearly met the $5 million requirement.

Bonuses for meals, violations of the rest period are wages. In a class action lawsuit brought under the meal period provisions of the California Labor Code, the California Supreme Court ruled that additional compensation paid to employees for missed meal and rest periods constituted “wages” and , therefore, had to be declared on the legally required wage statements in accordance with Labor Code Art. 226 and paid within the legal deadlines when an employee leaves his employment in accordance with art. 203. The ruling means that if a California employer fails to pay a bonus for missed meal and rest periods, additional penalties for failing to provide an accurate wage statement and waiting time penalties may also be recovered by the complainants.

The certification of the collective obtains an interlocutory appeal. In an alleged FLSA class action brought by call center operators, a federal district court in Virginia upheld an employer’s request for certification of an interlocutory appeal to determine whether a two-step or one-step process was to be used for collective FLSA certifications in light of the Fifth Circuit’s recent adoption of the new one-step process. As part of this process, the District Courts strictly consider whether the putative Collective Members are truly in a similar position at the outset of the case and, if necessary, will allow preliminary discovery to assist in that determination. In addition to noting the split in the circuits created by the Fifth Circuit decision and the lack of a clear Fourth Circuit precedent, the district court agreed with the employer that certification of an interlocutory appeal would materially advance the outcome of the dispute because resolving the issue would have a significant impact on the size of the collective.

The court did not have jurisdiction over out-of-state opt-ins. In the latest court ruling regarding personal jurisdiction over out-of-state opt-in plaintiffs in the FLSA class actions, a federal district court in North Carolina ruled that it lacked jurisdiction over persons who did not work for the defendant employer in the state, were not hired in the state, or whose employment with the defendant was not otherwise connected with the state. In this decision, the court determined that the decision of the United States Supreme Court in Bristol-Myers Squibb Co. v Superior Ct. of Cal. applies to FLSA class actions.

Court approves $23 million settlement for bakery distributors. A federal district court in Maine has granted final approval to a $23 million settlement of three related cases, ending a six-year battle over the employment status of bakery distributors for a national bakery company. bakery and two of its subsidiaries. Distributors will receive job offers and monetary compensation from the $9 million settlement fund to address unpaid overtime wage claims and to compensate class members for business expenses and administrative costs they paid while classified as independent contractors. Additionally, the distribution agreements will be terminated and the bakery will repurchase the distribution rights for an estimated $6.6 million. The settlement also requires the company to pay $7.5 million in class attorney fees and expenses.

The collective action on start-up time is moving forward. A federal district court in Pennsylvania ruled that pre-shift time spent by employees logging on to company computers and work programs was compensable under the FLSA because the employees’ work depended on and focused on their computer access. Denying a motion for summary judgment brought by the defendants’ candidate screening firm in the putative FLSA class action, the court found that employees booting up their computers was akin to preparing a tool to be used throughout throughout the working day. Moreover, whether the time spent by employees was de minimis was a factual inquiry for a jury to decide. However, the court upheld the employer’s bid for summary judgment over allegations that it had a policy of allowing supervisors to cut employee time sheets.

Preliminary approval of $2 million settlement for wage statement claims. A federal district court in California has granted preliminary approval to a proposed $2 million settlement in a case involving allegations that a fast-food chain’s pay slips failed to correctly identify and account for overtime. The proposed settlement class included approximately 5,500 class members and would result in an average recovery of $35 per pay statement. The court found that the requirements of Rules 23(a), 23(b) and 23(e) were met, with the only potential shortcoming being the provision on attorneys’ fees and the apparently excessive service fee of 10,000 $ to the named requester. However, the court granted preliminary approval and indicated that these issues will be resolved as part of the final approval.

Court approves $1.6 million settlement for pizza delivery drivers. A federal district court in Colorado has approved the settlement of a $1.6 million class action lawsuit for claims brought by delivery drivers employed by the franchisee of a national pizza chain. The drivers alleged that the employer violated FLSA and Colorado wage and hour laws when it paid the drivers minimum wage while requiring them to pay their delivery charges and failing to reimburse the drivers. costs. The settlement fund will be shared with 2,227 class members employed by the franchisee.

Scott Jang, Samia Kirmani, Linda O’Brien and Marjorie Johnson also contributed to this article.

© 2022 Jackson LewisNational Law Review, Volume XII, Number 182


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