A plan to identify and address class action vulnerabilities deserves a place at the top of any general counsel's priorities list for 2012, according to a leading workplace litigation lawyer.

Sue Reisinger
Corporate Counsel

A plan to identify and address class action vulnerabilities deserves a place at the top of any general counsel’s priorities list for 2012, according to a leading workplace litigation lawyer.

And to those who think the U.S. Supreme Court’s decision in the Dukes/Wal-Mart Stores, Inc., gender discrimination case resolved every GC’s class action problems, think again, says Gerald Maatman, Jr. He co-chairs the class action litigation group at Seyfarth Shaw, splitting his time between New York and Chicago offices.

Last June, the Supreme Court ruled in Wal-Mart’s favor and threw out the employees’ case. It was the largest civil rights class action suit in history.

“Some folks read the headlines in the spring when Dukes came out of the Supreme Court and assumed that class actions are now dead,” Maatman said. “That was proved wrong in the second half of 2011. A cascading number of rulings show that businesses are in a much better defensive position, but courts are still examining ways that employees can band together in class actions against employers.”

He added that many “second-generation issues” are now being litigated. And he sees 2012 as a “shakeout period where plaintiffs attorneys will be rebooting strategies, defense lawyers will raise novel defenses, and courts will struggle to find a way forward.” The court struggles will come, in part, because Maatman expects a lot more contradictory rulings around the country as all the changes percolate through the legal system.

Such insights are also part of Seyfarth Shaw’s 731-page annual report on workplace class action litigation. Maatman co-authored and edited the massive report, which was released this week. An overview of the report isavailable online [PDF], and the complete document, for anyone who can lift it, is available to interested corporate counsel by contacting Maatman at 312-460-5965 or emailing ClassActionReport@seyfarth.com.

The data is important because surveys of in-house counsel confirm that workplace litigation—and especially class action and multi-plaintiff lawsuits—remains one of the top exposures driving corporate legal budget expenditures, the report states.

In 2011, employee benefits cases led all other types of workplace class actions, according to the report. It attributed this trend to the financial crisis that battered employees’ retirement savings. Pension plan sponsors sought to recoup investment losses by initiating class actions against investment managers and trustees for engaging in imprudent behavior, according to Maatman’s report.

Another trend Maatman sees is that government enforcement, litigation, and regulation are at “white-hot levels, especially where the EEOC [Equal Employment Opportunity Commission] is concerned.”

One of the fastest growing areas of class action cases is discrimination enforcement. And employers can expect a significant jump in the coming year, the report says. 

That’s because the number of discrimination charges at the EEOC in 2010 and 2011 were the highest in the 57-year history of the Commission. Due to the time lag between filing a charge and filing a subsequent lawsuit, the charges will become ripe for initiation of lawsuits in 2012.

Maatman said the EEOC has been looking at “big-impact, high-level cases brought against industry leaders or involving cutting-edge issues.” So the statistics and court rulings of 2011 reflected government enforcement at a very aggressive level. 

But the aggression also sparked some judicial hostility, Maatman noted. Several federal judges entered significant sanctions against the EEOC in 2011—some in excess of seven figures—for its pursuit of so-called “pattern or practice cases” that were deemed to be without a good faith basis in fact or law. 

“I don’t think that will put a damper on enforcement efforts in 2012,” Maatman said, noting that the EEOC has showed no signs of adjusting its litigation strategy.

Indeed, the EEOC’s annual report said it expects to continue the dramatic shift in 2012 from small individual cases to pattern or practice lawsuits on behalf of larger groups of workers.

Another hotspot of government enforcement in 2011 was wage and hour cases. “They have been increasing over last 5 to 10 years, and many people are waiting for the wave to crest,” Maatman said. 

But Maatman sees that trend growing. In 2011 the number of Department of Labor cases was up from 2010, which had itself been a record year. And that’s just in the federal system. 

Maatman said worker-friendly states like California, New Jersey, New York, and Illinois keep passing new legislation to create more remedies for workers and higher damages against companies. “The wave of wage and hour cases continues to rise, with no end in site,” he concluded.