The Sixth Circuit recently affirmed a district court’s summary judgment decision finding that an employer, Plastipak Holdings, Inc., Plastipak Packaging, Inc., Plastipak Technologies, LLC, Plastipak, and William C. Young (collectively, “Plastipak”) properly had paid employees using the “fluctuating workweek” method and dismissing plaintiffs’ claims for underpayment of wages under the Fair Labor Standards Act (“FLSA”).
When a party receives an adverse order on a motion for class certification, whether the court of appeals grants permission to appeal under Rule 23(f) can be a crucial turning point in the case. If the appellate court will not hear this interlocutory appeal, the only way to obtain review of that decision is to take the case through trial, to a final judgment. But, due to the high stakes and large costs involved, few class actions are tried and cases often settle after the class certification order is issued by the trial court.
On December 21, 2017, the U.S. District Court for the Eastern District of Pennsylvania in Moore v. Rite Aid Headquarters Corp., 2:13-cv-01515, dismissed a class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”). Moore is significant in the body of criminal background check precedent because it is a post-Spokeo ruling dismissing a pre-adverse action notice claim (as opposed to a 1681b(b)(2) Disclosure claim) on standing grounds after the parties participated in discovery and developed a factual record.
The United States Supreme Court has granted consolidated review of three cases to determine whether arbitration agreements that waive employees’ rights to participate in a class action lawsuit against their employer are unlawful. The Court’s decision to address the uncertainty surrounding class action waivers of employment claims follows a circuit split last year in which the Fifth and Eighth circuits upheld such waivers and the Seventh and Ninth circuits found that such waivers violate the National Labor Relations Act. Given the increasingly widespread use of class action waivers by employers to stem costly class and collective actions, the high court’s ruling is likely to have a significant nationwide impact.
With its May 26 Lewis v. Epic-Systems Corp. decision, the Seventh Circuit became the first circuit to back the reasoning in D.R. Horton, Inc., 357 NLRB No. 184 (2012), and held that a mandatory arbitration agreement prohibiting employees from bringing class or collective actions against their employer violates the National Labor Relations Act (NLRA). This decision creates a circuit split regarding the enforceability of arbitration agreements with class action waivers in the employment context, and the issue is now ripe for potential Supreme Court review.
On January 20, 2016, the U.S. Supreme Court issued its ruling in Campbell-Ewald Co. v. Gomez, affirming the Ninth Circuit’s decision that a defendant cannot moot a putative class action by offering full relief to the individual plaintiff.
In the second half of December 2015, the National Labor Relations Board (“NLRB”) issued 16 rulings on the illegality of mandatory arbitration agreements containing class and collective action waivers, even in situations where the agreements allow employees to opt out of, or into, the waiver. The NLRB continues to hold firm that these types of waivers violate the National Labor Relations Act (“NLRA”) because they infringe upon the employees’ protected right to engage in concerted activity—despite the U.S. Supreme Court’s continued favoring of class action waivers, see, e.g., DirecTV, Inc. v. Imburgia, 577 U.S. __, 135 S. Ct. 1547 (2015), and the Fifth Circuit’s express rejection of the NLRB’s position in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013), and in Murphy Oil USA, Inc. v. NLRB, No. 14-60800, 2015 U.S. App. LEXIS 18673 (5th Cir. Oct. 26, 2015).
Retailer Big Lots Stores, Inc. is facing a putative class action in Philadelphia, wherein the plaintiff alleges that the company “systematically” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure requirement” by making prospective employees sign a document used as a background check consent form that contained extraneous information. Among other things, the plaintiff alleges that Big Lots’ form violates the FCRA because it includes the following three categories of extraneous information: (1) an “implied liability waiver” (specifically, a statement that the applicant “fully understand[s] that all employment decisions are based on legitimate nondiscriminatory reasons”); (2) state-specific notices; and (3) information on how background information will be gathered and from which sources, statements pertaining to disputing any information, and the name and contact information of the consumer reporting agency.
In a move that could significantly increase the cost and expense of defending a Fair Labor Standards Act (“FLSA”) collective action, a federal district court Judge has dispensed with the traditional method for joining putative class members in an FLSA collective action. The Judge is going to permit employees to join if they submit a notice. Such a move could lead to more protracted litigation and will certainly be appealed. In Turner, et al. v. Chipotle Mexican Grill, Inc., No. 1:14-cv-02612, Senior U.S. District Judge John L. Kane of the U.S. District Court for the District of Colorado granted the plaintiffs’ motion for conditional certification and judicial notice to the class. The case involves plaintiffs’ wage and hour claims against Chipotle under the Fair Labor Standards Act and the state laws of Arizona, California, Colorado and New Jersey. That the plaintiffs’ motion was granted is not, in and of itself, notable. But what is remarkable is the procedure applied for those who would seek to join the suit.
On August 12, 2015, the Fifth Circuit held that an unaccepted Rule 68 offer of judgment to a named plaintiff in a class action does not render the plaintiff’s claim moot. In Hooks v. Landmark Indus., Inc., No. 14-20496 (5th Cir. 2015), the Fifth Circuit joined the minority of Circuit Courts—Second, Ninth, and Eleventh Circuits—and held that an unaccepted Rule 68 offer is a legal nullity, with no operative effect. The majority of the Circuit Courts to decide this issue —Third, Fourth, Sixth, Seventh, Tenth, and Federal Circuits—have all held that a complete Rule 68 offer moots an individual’s claim.