Recently, there have been a number of reports indicating that federal wage-hour lawsuits under the Fair Labor Standards Act increased by 10% in 2012, after smaller increases in the preceding years.
What about California, though?
While I am not aware of anyone who has compiled the figures to determine whether the number of California wage-hour cases has risen or fallen in the past year or so, from where I sit it certainly seems like there has been some decline in the number of wage-hour cases filed in California. And, if not, we can probably expect that in the years to come.
There are a number of reasons for that.
First, the California Supreme Court’s decision in Brinker v. Superior Court will generally make it more difficult for plaintiffs to prevail on meal and rest period class actions unless and employer has a policy that is facially unlawful. For the better part of a decade, plaintiffs’ counsel were filing meal period class actions and arguing that employers had an obligation to “ensure” that their employees actually took those meal periods. As the California Supreme Court had not spoken on the issue yet, plaintiffs’ counsel invariably used that argument to negotiate classwide settlements – and sometimes very large ones at that. But now that the Supreme Court has clarified that employers are not obligated to police their workforces to “ensure” that employees actually take meal periods, that leverage is gone. That will make meal and rest period class actions less attractive to plaintiffs’ counsel. And if they are less attractive, the number of filings will decline.
Second, if Brinker did not already do it, the California Supreme Court’s decision in Kirby v. Immoos Fire Protection will make meal and rest period claims even less popular with plaintiffs’ counsel in California. Simply put, that case holds that neither side can recover its attorney’s fees on meal and rest period claims. We have already heard from plaintiffs’ counsel that they are no longer interested in pursuing those claims for that reason.
Third, ever since Dukes v. Wal-Mart was published by the U.S. Supreme Court, we heard from plaintiffs’ counsel that it somehow did not apply to wage-hour cases or was limited to cases involving large geographic areas. The fact that the Supreme Court vacated the decision in Wang v. Chinese Daily News and ordered the Ninth Circuit to review it under Dukes — and the fact that the Ninth Circuit has now sent Chinese Daily News back to the district court with instructions to apply Dukes — would seem to make very clear that Dukes in fact is applicable to wage-hour class actions. And it would seem to make very clear that Dukes is not limited to cases involving large geographic areas because Chinese Daily News involves a single facility. Without providing a complete analysis of Dukes, which you can find anywhere and everywhere on the Internet, it is safe to say that Dukes makes it more difficult than ever for plaintiffs to obtain class certification in federal court. And, logically, that would result in a decrease in the number of cases filed, at least in federal court.
Fourth, we should not forget the U.S. Supreme Court’s decision in Comcast v. Behrend. To oversimplify more than a bit, Comcast essentially holds that a class should not be certified if individualized damage analyses must be conducted. While it is not a wage-hour case, the Comcast decision is being applied already in wage-hour cases. And except in very unusual cases, employers in federal courts should have excellent arguments that wage-hour cases require individualized damage analyses. Even if one were to assume a large group of persons was misclassified as exempt, did they all work the same hours? Probably not. Even if one were to assume that a large group of employees worked off-the-clock, did they do so for the same amounts of time? Probably not. Was some of the off-the-clock time de minimus, just a minute or two? Probably. Like Dukes, Comcast should lead to fewer wage-hour classes being certified. And, logically, that would result in a decrease in the number of cases being filed, at least in federal court.
Those are just a few of the developments that should make wage-hour class actions less appealing to plaintiffs’ lawyers in California and result in fewer of those cases being filed. Before employers celebrate the end of wage-hour class actions in California or the in terrorem effect that often led them to agree to large settlements, they should be mindful that the plaintiffs’ bar has a tremendous self-preservation instinct. They aren’t going to walk away from what has long been a cash cow for them. What employers and their counsel are going to start hearing is this: “If I don’t get a class certified, I’ll just file a couple hundred individual lawsuits. Now, how about we talk about that big classwide settlement again?”