Employers Eschew Settlement in Class Actions

justice-scale-761665_1Employers are settling fewer class action employment discrimination cases than at any time in recent history.

This is a finding  of the employer defense  law firm,  Seyfarth and Shaw, LLP, in its Annual Workplace Class Action Litigation Report: 2014 Edition.

The tone of the report is almost gleeful as it chronicles pro-employer rulings by the  U.S. Supreme Court in the past five years that make it  much more difficult for employees to prevail in  class action lawsuits against employers.

According to the  report, the total amount  for the top ten largest employment discrimination class action settlements in 2012 was $48.6 million, compared to $282.1 million in 2007 and  $91 million in 2006. The number was higher in 2013 ($234.1 million) because of a single $160 million settlement. However, when that settlement is deducted, the 2013 represents the second smallest settlement figure in the past decade.

The firm  attributes the reduction in class action settlements to two decisions by the  U.S. Supreme Court, Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) and Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), which  “influenced settlement strategies in workplace class actions in a profound way.”

The report states Comcast and Walmart decisions have “impaired the ability of the plaintiffs’ bar to convert their case filings into blockbuster settlements”  and improved the “ability of defendants to dismantle large class cases, or to devalue them for settlement purposes.”

“ Simply stated, Wal-Mart and Comcast Corp. aided employers to defeat, fracture, and/or devalue employment discrimination class actions, and resulted in fewer settlements at lower amounts.”

The   Comcast decision, decided by a slim 5 to 4 majority, added a new weapon to employers’ arsenals in challenging class certification. The  majority held that individual issues of damages may preclude class certification under Rule 23(b)(3) of the Federal Rules of Civil Procedure.  This means the plaintiffs may have to conduct hundreds or perhaps thousands of mini-hearings on the issue of damages, raising the cost of the litigation to prohibitive levels.

The Comcast decision  has “sharply curtailed” the ability of plaintiffs to obtain certification on the damages and “provides companies with a significant and rational defense to class certification in class actions,” according to the report

 The  2011  Walmart decision  held that a small group of female employees of the world’s largest retail chain  did not have enough in common with other Walmart female employees to constitute a class in a sex discrimination lawsuit.  The Court unanimously ruled in Walmart’s favor, although Justice Ruth Bader Ginsburg concurred in part and dissented in part, joined by Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan.

The consistent conservative majority on the Court includes Chief Justice John Roberts and Justices Antonin Scalia, Clarence Thomas, Anthony  Kennedy and Samuel Alito.

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