Supreme Court To Decide Key Employee Class Action Cases In 2011
The US Supreme Court is set to issue opinions in three cases with important implications for future employment class action suits this year. Depending on how the Court rules in these cases, employees seeking to enforce their workplace rights as a class may find it easier to do so.
Class action lawsuits provide a vital means for employees to protect their rights to fair wages, overtime compensation, discrimination-free workplaces and other important rights. Without the availability of the option of joining a class, employees would have to bring individual claims against their employers.
While class actions have been most widely used in wage and hour claims, over the past several years they have become more common vehicles to bring other types of employment law claims, including discrimination suits. For example, last year a jury awarded more than 5600 female employees $250 million in punitive damages in a sex discrimination suit against Novartis ( Velez v. Novartis Corp.). The jury verdict was the largest one to date in an employment class action suit.
The three cases before the Supreme Court this term will help define how class actions suits can be brought in the employment law arena and other areas of the law.
- AT&T Mobility v. Concepcion (No. 09-893)
In this case, the Supreme Court has been asked to decide whether the Federal Arbitration Act (FAA) pre-empts a state law ruling finding a portion of a mandatory arbitration clause unconscionable. In its consumer contracts, AT&T Mobility has a clause prohibiting its customers from participating in class action lawsuits and class arbitration. Instead, similarly situated customers who want to bring a legal claim against the company must each file a separate claim or participate in a separate arbitration proceeding.
The California Superior Court ruled in favor of the customers, finding that the language in the mandatory arbitration clause prohibiting class action lawsuits or class arbitrations was unconscionable. The federal district court and Ninth Circuit Court of Appeals upheld the state court’s ruling. AT&T then filed a petition for cert with the Supreme Court, which granted it. Oral arguments were heard in November 2010 and a decision is expected later in 2011.
The US Supreme Court’s decision in this case has the potential to have major repercussions on the future of employment class actions. Should the Court decide in favor of AT&T Mobility, employers may be able to include similar anti-class clauses in their employment contracts, effectively killing most types of employment class actions. However, if the Court upholds the Ninth Circuit’s decision, then the ruling could preserve employees’ rights to bring class action claims against their employers.
- Dukes v. Wal-Mart (No.10-277)
The Dukes case involves the biggest employment discrimination class action ever filed in the US. With up to 1.5 million potential class members, Dukes tests the bounds of what similarities must be shared by class members in order to certify a class – although it is unclear if the Supreme Court will rule on this question.
The lawsuit alleges that Wal-Mart discriminated against its female employees in its promotion and pay practices. Class members represent every level of employee in the company, from hourly store clerks to salaried managers, as well as employees from more than 3400 stores across the country. Wal-Mart challenged the certification of the class, claiming among other things that the class size is unmanageable and coercive – unmanageable because it would be virtually impossible for the company to defend itself against that many claims and coercive because a class that big forces the company into settling the claims rather than spend the money to litigate the action.
The Ninth Circuit Court of Appeals ruled en banc to uphold the certification of the class. The US Supreme Court granted cert in December and oral arguments are expected in March 2011. The Court, however, granted cert on a narrow procedural question concerning whether the class was properly certified under Rule 23 of the Federal Rules of Civil Procedure. Legal commentators speculate that the Court will use the Dukes case to clarify the standards for certifying class actions, which may include a discussion of the requisite commonality required among the class members.
Should the Court uphold the class certification in Dukes, it could signal a new era in class action litigation, particularly for large, national employers who have violated employee rights on a wide scale.
- Smith v. Bayer (No. 09-1205)
The broader issue in the Smith case is whether a federal court has the authority to stop a state court from certifying a class action. In Smith, a group of consumers who had been harmed by a drug manufactured by the pharmaceutical company sought certification as a class from a federal court. The federal court ruled in favor of Bayer and denied certification, holding that the plaintiffs each had to prove how they had been injured by the drug.
Other consumers who had been harmed by the drug, but who were not involved in the first attempt to have the class certified, then filed a class certification request in a West Virginia state court. Once the certification request was filed in state court, Bayer sought an injunction from the federal court to prevent the state action from proceeding. The federal court granted the injunction on the grounds that the class seeking certification from the state court was identical to the class in the case the federal court had already ruled on. The Eighth Circuit Court of Appeals upheld the federal district court’s ruling.
Oral arguments before the US Supreme Court in Smith were held in January 2011. The Court is expected to announce its decision later in the year. During oral arguments, Chief Justice Roberts and Justice Scalia questioned the fairness of precluding a new party from bringing a class action based on another party’s unsuccessful attempt to do so. While much of the Court’s ultimate decision will likely be based on the principles of federalism and separation of powers, a ruling in favor of allowing the state court to certify the class would be a big win for employee class action suits.
Either way the Supreme Court decides these cases, 2011 has the potential to be a year of great significance in defining the future direction and shape of employment class action lawsuits.