18th Annual Workplace Class Action Report - 2022 Edition

24 Annual Workplace Class Action Litigation Report: 2022 Edition Multiple proposals have made their way to Congress. In 2021, Senators Kirsten Gillibrand (D-NY) and Lindsey Graham (R-SC) co-sponsored the “Ending Forced Arbitration of Sexual Assault & Sexual Harassment Act of 2021” (S. 2342). The bill has 17 other sponsors, including 10 Democrats and 7 Republicans, and a companion bill introduced in the House (H.R. 4445) has 14 Democratic and 5 Republican sponsors. The Act would amend the FAA to prohibit predispute arbitration agreements, including agreements with class or collective action waivers, for claims involving sexual assault or sexual harassment. The Resolving Sexual Assault and Harassment Disputes Act of 2021 (S. 3143) was introduced by Senator Joni Ernst (R-IA). The bill would amend the FAA to prohibit arbitration of sexual assault claims and allow for arbitration of sexual harassment claims under limited circumstances. Finally, the Build Back Better Act (H.R. 5376) contains, among many other provisions, language that would overrule the Supreme Court’s decision in Epic Systems by banning collective action waivers in arbitration agreements. This bill passed the House but currently faces unanimous Republican opposition in the Senate. Thus, its prospects are uncertain. In light of current administrative priorities, the future remains anything but clear as to whether arbitration programs will remain viable tools to counter proposed workplace class actions in the face of continued attacks on Epic Systems . These federal developments suggest that some version of an arbitration bill, particularly if tailored to sexual assault and harassment claims, has a good chance of becoming law. Lessons From 2021 There are multiple lessons to be drawn from these trends in 2021. First, while the Wal-Mart ruling undoubtedly heightened commonality standards under Rule 23(a)(2) starting in 2011, the plaintiffs’ bar has crafted theories and “work-arounds” to maintain or increase their chances of successfully securing certification orders in ERISA, wage & hour, and employment discrimination lawsuits. In 2021, their certification conversion rate for ERISA and employment discrimination cases was 57% and 72%, respectively, while wage & hour cases showed an 81% conversion rate. Second, the defense-minded decision in Wal-Mart has not taken hold in any significant respect in the context of FLSA certification decisions for wage & hour cases. Efforts by the defense bar to use the commonality standards from Wal-Mart has not impacted the ability of the plaintiffs’ bar to secure first-stage conditional certification orders under 29 U.S.C. § 216(b). If anything, certification prospects have become greater for plaintiffs in the wage & hour space insofar as conditional certification motions are concerned. The conversion rate of certification motions hit 81% in 2021, close to its all-time high of 84% in 2020. Third, certification is the “holy grail” in class action litigation, and certification of any type of class – even a narrowed or non-monetary injunctive relief class – often drives settlement decisions. This is especially true for employment discrimination and ERISA class actions, as plaintiffs’ lawyers can recover awards of attorneys’ fees under fee-shifting statutes in the employment litigation context. This reality has driven the plaintiffs’ bar toward narrowed groups and targeted certification theories ( e.g. , issue certification, certification of a regional class, or certification of a class of non-signatories to arbitration agreements) as plaintiffs seek to leverage the threat of certification to monetize their claims. Fourth, employers currently have an effective weapon to short-circuit the decision points for class action exposure through use of mandatory workplace arbitration agreements. Based on the ruling in Epic Systems , a class waiver in an arbitration agreement remains an effective first-line defense to class-based litigation. Throughout 2021, employers used arbitration defenses to fracture class actions and convert them into individual, bi-lateral arbitration proceedings. Unless halted through legislation, this defense is apt to spread, as more companies adopt mandatory workplace arbitration programs, putative class members who worked prior to their implementation dwindle, and lawsuits filed before their adoption work their way out of the judicial pipeline. In sum, notwithstanding these shifts in proof standards and the contours of judicial decision-making, the likelihood of class certification rulings favoring plaintiffs are not only “alive and well” in the post- Wal-Mart era, but