Workplace Class Actions Cost More

Report: Workplace suits emerged in 2006 as top legal risk.

By Matthew Brodsky

Sure, shareholder and securities class-action filings seem to be down, but another type of class action is registering on employers' radars. Workplace-related suits are becoming the No. 1 driver of corporate legal budgets, according to a report from Chicago-based law firm Seyfarth Shaw LLP.

The fastest growing workplace suits in 2006, and the ones with the highest settlements, were wage and hour collective actions, which have become "low-hanging fruit" to the plaintiffs' bar, said Gerald L. Maatman Jr., co-chair of the firm's complex discrimination litigation practice group and general editor of the report.

Shedding Light on the Blackout Problem (04/10/13)
Surety's Day In the Sun (04/12/13)
Why the New Bird Flu is So Scary (WSJ) (04/10/13)
A Law Enforcement Tequila Sunrise (05/31/11)
Florida's Sinkhole Dilemma (03/11/13)

"Companies haven't necessarily looked at their payroll practices in a while, and they're being caught in payroll problems," Maatman said.

The plaintiffs' bar, according to the Seyfarth Shaw report, also caught on to arguments made in Dukes, et al. v. Wal-Mart Stores Inc., the gender discrimination claim filed by 1.5 million female Wal-Mart employees. The 9th U.S. Circuit Court of Appeals ruled on the case Feb. 6, 2007, after the report was published, but plaintiffs' attorneys started pursuing "mega-classes" and punitive-damages-only class actions in 2006, thanks to Dukes.

"It creates the conditions where federal courts in California are very, very friendly to these expansive damage remedies and these expansive classes," Maatman said.

Another trend noted by Seyfarth Shaw: The U.S. Equal Employment Opportunity Commission became more litigious after April 2006, when it launched a new directive to aggressively pursue litigation where it detects a pattern of discrimination.

"I practice every day in the trenches, and I've noticed quite a shift in the last eight to 10 months, a huge shift in the way the EEOC investigates charges," Maatman said.

As for Employee Retirement Income Security Act workplace suits, the "hot raging issue" since the end of 2006 has been 401(k) fund fees, said Maatman. Plaintiffs are charging that their funds are not transparent or fair--in 15 suits filed in the last two months alone.

For its third annual Workplace Class Action Litigation Report for 2006, Seyfarth Shaw analyzed 407 rulings across the United States.

May 1, 2007

Newsletter Sign-up