Employers and their general counsel saw good news and bad in workplace class action legal trends in 2018, according to a new report from Seyfarth Shaw. The good news: After reaching an all-time high of $2.7 billion in 2017, the value of top workplace class action settlements decreased by more than 50 percent in 2018, sinking to a five-year low of $1.3 billion.
The bad news for employers is for the first time in the report’s 15-year history, plaintiffs posted a record-high certification success rate in 2018 of 79 percent in wage-and-hour litigation, which is the largest category of workplace lawsuits.
The law firm said its 2019 Workplace Class Action Litigation Report is its largest edition ever, with attorneys analyzing a record 1,453 class action rulings in state and federal courts.
Seyfarth partner Gerald Maatman said the most significant event last year was the U.S. Supreme Court’s decision in a case involving software giant Epic Systems Corp. The court ruled that corporations can enforce employee arbitration agreements, thereby prohibiting employees from bringing class action suits in disputes over pay and workplace conditions.
Maatman said the ruling “will be with us for years to come, and will change the dynamics of class litigation. It is already having an impact, with plaintiffs’ lawyers sending demand letters trying to negotiate settlements on behalf of people [employees] who are susceptible to a motion for arbitration.”
Plaintiffs lawyers typically start with one or two complaining clients, he explained, and then file a motion for class certification and a class list to enlarge the group. But if those clients have signed arbitration agreements, “then they [plaintiffs lawyers] can’t get a big enough group to pursue a claim,” Maatman said.
He added, “It’s going to be interesting in 2019 to see the impact on the number of class action cases filed, the number certified, and their level of value. The Epic ruling should cut down on the number of lawsuits and certifications, and make the cases worth less money.”
But Maatman suggested companies might see a stronger pro-worker push in Congress in the next two years, as well as in the next presidential election, in an effort to overturn the Epic decision.
“The #MeToo movement has placed the arbitration issue in the spotlight,” the attorney added. It was reported that many women involved in high-profile sexual harassment cases at corporations had signed agreements that kept details of their situations confidential and often prohibited class actions.
“Is it good policy or bad policy for a company to use these agreements?” Maatman asked. “It is not a one-size-fits-all decision. Each company must weigh the factors.”
Earlier this week the law firm issued a report that noted the significant impact of the #MeToo movement on litigation in 2018.
In the more recent class action report, the law firm noted a surprisingly sharp drop in settlement values this year. Maatman said several factors contributed to the dip, including the impact of the Epic case, and employers doing a more thorough job of following workplace laws.
“We are on the downside of a bell jar curve on settlement value,” he explained. “I think in 2019 we’ll see lower values again. I don’t know for how long the values will keep dropping. That could depend on whether there is a legislative response to the Epic Systems ruling.”
In other findings, the report said:
• Despite the transition to a more business-friendly Trump administration, government enforcement litigation rose again to a new three-year high in 2018. The Equal Employment Opportunity Commission filed 199 lawsuits last year, up from 184 in 2017.
• The value of the top government settlements also plunged, dropping from $485 million in 2017 to $126.7 million in 2018.
• The success of employer efforts to decertify class action cases dropped by 11 percentage points, as employers won only 52 percent, down from a 63 percent success rate in 2017.