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    Wisconsin Lawyer
    August 07, 2009

    Rising Class and Collective Lawsuits in Employment

    The use of class and collective lawsuits in employment-related litigation is on the rise as employees seek proper pay and fair treatment while employers seek to defend their policies and practices. Here’s a look at the differences between the two types of group litigation, reasons for the increase, and why the trend is expected to continue.

    Thomas P. Krukowski

    Wisconsin LawyerWisconsin Lawyer
    Vol. 82, No. 8, August 2009

    Rising   Class Class and collective actions are legal procedures that permit groups of individuals to pre-sent common claims to courts. These lawsuits are generally less expensive and more efficient for litigants to maintain or defend than are multiple individual cases; they conserve judicial resources by allowing common questions to be decided once, instead of many times; they avoid inconsistent results regarding similar claims; and they provide clear expectations regarding future rights and obligations. However, merely stating that claims must share common questions of law or fact to be eligible for class- or collective-action treatment is an over-simplification of the many nuances that can make this area of the law challenging. Recently, there has been a significant increase in the number of class and collective actions filed in employment law matters, and all indications suggest that this trend will continue.1 This article outlines some of the issues specific to employment law class and collective actions and offers recommendations for employers and employees addressing these types of group claims.


    There are two separate mechanisms for litigating a group of individual employment claims in a single action. The first is called a collective action and derives its authority from 29 U.S.C. § 216(b), part of the federal Fair Labor Standards Act (FLSA).2 The second is called a class action and derives its authority from Rule 23 of the Federal Rules of Civil Procedure or its state-court procedural counterpart, Wis. Stat. section 803.08 in Wisconsin.

    Class and collective actions are representative in nature in that they permit a relatively small number of named plaintiffs to prosecute claims on behalf of an entire group. Collective actions are used for combining individual claims alleging violations of the minimum wage and overtime provisions of the FLSA or the federal Age Discrimination in Employment Act (ADEA), which incorporates the enforcement provisions of the FLSA.3 Collective actions require a showing that the individuals in question are similarly situated before their claims can proceed in a single action. Class actions, on the other hand, are available for combining virtually all other civil claims. In fact, Rule 23 can be used to combine individual claims pursuant to state wage and hour laws into a single action in federal court; to that end, courts in Wisconsin and in several other states permit plaintiffs to file lawsuits with both procedural mechanisms – a collective action regarding the FLSA claims and a class action regarding state wage and hour claims.4 For purposes of this article, however, it is assumed that class actions are the mechanism by which claims of employment discrimination are aggregated into a single lawsuit.

    To combine a group of individual claims into a class action pursuant to Rule 23, the following facts, among other things, must be established:

    1. The class is so numerous that joinder of all members is impractical.
    2. There are questions of law or fact common to the class.
    3. The claims or the defenses of the representative parties are typical.
    4. The representative party will fairly and adequately protect the interests of the class.

    Once these facts are established, and depending on the type of relief sought, the court will then direct that notice be sent to all prospective class members not named in the complaint informing them of, among other things, the nature of the lawsuit, the definition of the class, and the specific claims being alleged. At this stage, the parties may negotiate several things regarding notice, including the length of time, deadlines, and appropriate contact information to be provided. These negotiations often result in a stipulated notice, which is submitted for the court’s approval.

    Courts asked to combine claims into a collective action typically take a two-tiered approach. Although the proof ultimately required to establish that individuals are similarly situated for purposes of 29 U.S.C. § 216(b) is similar to the requirements for Rule 23, it is generally agreed that compliance with section 216(b) is easier to establish (at least at the initial stage), because section 216(b) merely requires that the named plaintiffs show similarity between their claims and the potential claims of the proposed class.5 Meeting the named plaintiffs’ burden results in conditional certification, whereby appropriate notice is given to the proposed class members. The information in such notices is similar to that required by Rule 23. Sometimes before conditional certification, but more often after, both sides commence discovery to gather evidence to establish their positions regarding the similarly situated issue for the second phase of the process, decertification. If the class remains certified after the second phase, the parties should be ready for trial.

    A key procedural difference between Rule 23 and section 216(b) typically results in class actions having more members than do collective actions. Pursuant to 29 U.S.C. § 216(b), potential class members notified of a collective action are specifically instructed that they must affirmatively opt in to join the lawsuit. Notice pursuant to Rule 23, on the other hand, specifically informs class members that they will be bound by the court’s decision regarding their potential claim unless they affirmatively opt out of the lawsuit. In short, an individual who does nothing in response to a certification notice is automatically included in a class action but automatically excluded from a collective action.

    A second key procedural difference between Rule 23 and section 216(b) involves the statute of limitation. The opt-in requirement for participation in a collective action means that the statute of limitation applicable to a potential class member’s claim continues to run until the individual joins the lawsuit.6 For class actions, however, the statute of limitation is tolled as to all putative class members when the case is filed.7

    Wage and hour issues affecting multiple individuals are well suited for treatment in one collective action, especially when liability can be determined as a matter of objective mathematical calculation. Numerous collective actions have been filed in federal courts, including those in the Eastern and Western Districts of Wisconsin.8 Class actions involving claims of employment discrimination also are becoming increasingly common. One of the most significant cases in this area is Dukes v. Wal-Mart Stores Inc.9 Dukes involves allegations on behalf of a class of approximately 1.5 million women, including some Wisconsin residents, of gender discrimination in pay and promotions in violation of Title VII of the Civil Rights Act of 1964 (Title VII).10 As employees have become more knowledgeable about their rights, and their lawyers more sophisticated, the filing of class and collective actions has increased. Employers must adapt to these developments and diligently audit and correct their policies and practices to avoid legal challenges.

    Wage and Hour Collective Actions

    The significant increase in collective actions has involved many different types of claims, including challenges to the classification of employees as exempt from the FLSA’s overtime requirements (especially pursuant to the administrative, executive, or professional exemptions), allegations of unpaid “off-the-clock” work, so-called “donning and doffing” claims (regarding prework and postwork activities), and claims for compensable “waiting time.” Why has there been a significant increase in collective actions? The primary reason is knowledge: employees (and their lawyers) are becoming better informed as to their rights, particularly when policies and practices affect groups of employees.

    An example of this trend is the subjection over the last decade of the Seattle-based coffee giant Starbucks to numerous lawsuits involving groups of employees alleging they were underpaid in a variety of ways. For example, after settling a misclassification lawsuit with assistant store managers, Starbucks reclassified them as nonexempt employees entitled to overtime.11 A few years following reclassification, however, a new lawsuit involving Starbucks’ assistant store managers was filed and subsequently settled; this time, the allegation was that the assistant store managers were being forced to work off-the-clock without proper overtime pay.12 More recently, a collective action was conditionally certified in Florida asserting that Starbucks’ store managers are misclassified.13 This progression illustrates that litigation in this area does not always end with the resolution of a single case. Often, that single case will serve as the catalyst for enhanced scrutiny of payroll practices by employees and their attorneys and for subsequent lawsuits.

    Employment Discrimination Class Actions

    With its 1.5 million members, Dukes is the largest sex-discrimination class action in U.S. history. The Ninth Circuit recently accepted en banc review, making it Wal-Mart’s third attempt to decertify this case. Regardless of who wins, the underlying issues are important and informative and will likely find their way to the U.S. Supreme Court. The Ninth Circuit will determine if it will uphold certification and, if so, whether punitive damages should be tried on a case-by-case basis rather than in the aggregate. 

    The class members in Dukes are all women who hold or have held a range of salaried and hourly positions at more than 3,400 Wal-Mart stores nationwide. The plaintiffs argue that Wal-Mart’s policy of allowing local managers to make decentralized pay and promotion decisions, coupled with the strong influence of the corporate office in employment decisions, results in the underrepresentation of women in upper management and illustrates Wal-Mart’s discriminatory failure to promote qualified women. The plaintiffs argue that, although two-thirds of Wal-Mart employees are women, only one-third of upper-level positions are held by women. Further, the plaintiffs argue that women are paid less than men and have to work longer before receiving promotions than do their male counterparts.

    Wal-Mart argues that the allegedly discriminatory actions involve thousands of independent decisions made by managers at the local level, and, therefore, the class members have not been exposed to a uniform policy or single cause for the alleged discrimination. Wal-Mart argues that the plaintiffs cannot satisfy the commonality or typicality requirements of Rule 23 by simply attaching a single label to the divergent allegations serving as the basis for their claims of being mistreated by the company without also proving a tainted, uniform policy. Wal-Mart further argues that the six named plaintiffs are dissimilar in their employment and alleged injuries and are alike only as to their gender.

    Assuming Dukes makes it to the U.S. Supreme Court, it will be interesting to see what the Court does when it revisits the issues of equity and gender and its prior decisions, such as Wards Cove Packing Co. v. Atonio,14 Watson v. Fort Worth Bank & Trust,15 and International Brotherhood of Teamsters v. United States.16 Wards Cove, adhering to Watson and Teamsters, required causation based on “the application of a specific or particular employment practice [that] … has created the disparate impact under attack.”17 Thus, the importance of Dukes is that its outcome will determine the degree of causation necessary for a class action.

    Thomas P.   Krukowski

    Thomas P. Krukowski, Marquette 1970, Krukowski & Costello S.C., practices in Milwaukee with an emphasis on representing employers in employment and labor matters. He is admitted to practice in Wisconsin, Minnesota, Missouri, and Massachusetts, and the U.S. District Courts of those states; the Northern Districts of Illinois and Indiana; the Sixth, Seventh, Eighth, Ninth, and District of Columbia Circuit Courts of Appeal; and the U.S. Supreme Court. 

    The Dukes decision illustrates that class actions are becoming an increasingly popular tool for plaintiffs’ attorneys. Now, more than ever, if groups of protected employees are aware of their rights and have been subject to a common policy, plan, or decision, it can be assumed that a class action will be their procedural mechanism of choice for addressing claims of improper treatment – whether they involve allegations of disparate treatment or of disparate impact. Examples of such common issues include hiring procedures, payroll practices, selection criteria used in reductions in work force, and any other employment decisions that involve groups of employees who have common, protected interests. The merging of the substantive and procedural issues in Dukes makes it a historic case.


    Usually, the respective goals of parties to a class or collective action are parallel – both sides want to ensure fair treatment and full and proper payment for hours worked. It is the mistreatment of employees (whether real or perceived) on one hand, and mistakes by employers (whether intentional or inadvertent) on the other, that can create controversies that lead to litigation. What often goes wrong is that an employer’s policies, plans, and decisions have not been reviewed, audited, or updated to ensure compliance with developing laws. Although statutes like Title VII and the FLSA have existed for decades, employment law is a dynamic area that requires attention to developments in all three branches of government. Specifically, attorneys must follow:

    • new legislative enactments, including amendments to existing law;
    • the regulatory activities of the executive branch, including interpretation and enforcement; and
    • the interpretations provided by courts.

    Another development is the use of statistics in both class and collective actions and the resulting early involvement of experts. Simply put, expert statistical analysis is quickly becoming a necessity in this area, as demonstrated by the U.S. Supreme Court’s recent decision in Meacham v. Knolls Atomic Power Laboratory.18 This collective action involves 31 employees who were terminated in a reduction in force (RIF). Of the 31 employees, 30 were age 40 or older and therefore were protected by the ADEA, and 29 of those individuals sued. In light of the low probability that by chance 30 of the 31 employees selected for a RIF would be age 40 or older, the case ultimately turned on the employer’s burden of proof. What the jury actually heard as evidence from the plaintiffs’ expert was not that the employer’s criteria were unreasonable or discriminatory, but that it was statistically improbable that this pattern could have existed by chance. On that basis, the jury and the trial court awarded the class of 29 plaintiffs more than $6 million.19 Further highlighting the importance of statistics, it appears that the proper regression analysis needed to challenge the plaintiffs’ statistical conclusions was not fully developed in Meacham.

    As the use of class and collective actions in employment litigation continues to evolve, employees should continue to seek clarification and a better understanding of their rights. Employers, on the other hand, should carefully audit and continue to monitor their employment policies, practices, and decisions to ensure that employees are treated fairly, consistently, and in accordance with developing legal standards. When litigation occurs, both parties must have a full understanding of the substantive and procedural issues involved, including the burdens of proof for certification, required elements of the underlying claims, and proper use of statistical analyses, as this will assist in determining whether litigation or settlement – whether on an individualized basis or a class-wide basis – is warranted. Other strategies, such as dual-filed class and collective actions to toll the statute of limitation, offers of judgment pursuant to Rule 68 to potentially dismiss the named plaintiffs from the lawsuit, and preemptive certification motions, also can be considered. Finally, as in other types of cases, both parties should be sensitive to the venue and forum of their litigation, and, once their case has been assigned, the specific expectations of their judge. Often, these issues will heavily influence the appropriate litigation strategy and tactics.


    1In a 2008 Report, the Federal Judiciary Center (the research agency for the federal courts) outlined the increase in employment class actions, in terms of actual numbers and as a proportion of all class action activity in the federal courts. See “The Impact of the Class Action Fairness Act of 2005 on the Federal Courts: Fourth Interim Report to the Judicial Conference Advisory Committee on Civil Rules,” Federal Judicial Center, April 2008. Its findings are noteworthy. The report cited an increase of 228 percent in the five-year study period (from 337 cases in the period July-December 2001 to 1,104 in the period July-December 2006). Further, from January 2007 to June 2007, the number of employment class actions increased significantly – by 36 percent. Employment class actions also represented a much larger proportion of all class action activity in the federal courts from January 2007 to June 2007 than they did at the beginning of the study period, nearly doubling, from 24.6 percent in December 2001 to 46.9 percent in June 2007.

    2Codified at 29 U.S.C. §§ 201-219.

    329 U.S.C. § 626(b); see also, e.g., King v. General Elec. Co., 960 F.2d 617, 621 (7th Cir. 1992) (discussing 29 U.S.C. § 216(b) in the context of an age-discrimination claim and stating that “[t]his procedure preempts the class action procedure under Federal Rule of Procedure 23”).

    4See, e.g., Spoerle v. Kraft Foods Global Inc., 253 F.R.D. 434 (W.D. Wis. 2008) (certifying plaintiffs’ “donning and doffing” claims pursuant to state and federal law) (“I adhere to the position I adopted in Sjoblom that plaintiffs may maintain federal and state law wage claims in the same lawsuit.”).

    5See, e.g., Flavel v. Svedala Indus. Inc., 875 F. Supp. 550, 553 (E.D. Wis. 1994) (“The ‘similarly situated’ requirement, in turn, ‘is considerably less stringent than the requirement of [Rule 23(b)(3)] that common questions ‘predominate’ ….”) (citation omitted).

    629 U.S.C. § 256 (collective action is commenced as to an individual claimant when his or her “written consent is filed in the court in which the action was commenced”); see also, e.g., Harkins v. Riverboat Servs. Inc., 385 F.3d 1099, 1101 (7th Cir. 2004) (“The statute is unambiguous: if you haven’t given your written consent to join the suit, or if you have but it hasn’t been filed with the court, you’re not a party.”)

    7See, e.g., Culver v. City of Milwaukee, 277 F.3d 908, 914 (7th Cir. 2002).

    8See, e.g., Sjoblom v. Charter Communications LLC, 571 F. Supp. 2d 961 (W.D. Wis. 2008) (granting conditional certification of plaintiffs’ claims of unpaid work time and improper commission calculations); Spoerle, 253 F.R.D. 434 (W.D. Wis. 2008) (certifying plaintiffs’ donning and doffing claims pursuant to state and federal law); DeKeyser v. Thyssenkrupp of Waupaca, 2008 WL 5263750 (E.D. Wis. 2008) (granting conditional certification of plaintiffs’ claim for compensation for time spent donning and doffing, showering, and walking).

    9222 F.R.D. 137 (N.D. Cal. 2007), aff’d, 509 F.3d 1168 (9th Cir. 2007), rehearing en banc granted, 556 F.3d 919 (9th Cir. 2009).

    1042 U.S.C. §§ 2000e et. seq.

    11Shields v. Starbucks, No. 01-06446 (C.D. Cal. Dec. 17, 2002) (order granting final approval of stipulation of settlement of class action and payment to class members and class counsel).

    12Falcon v. Starbucks, No. 05-00792 (S.D. Tex. Mar. 4, 2008) (memorandum and order granting parties’ joint motion for approval of settlement). 

    13Reed v. Starbucks, No. 09-60073 (S.D. Fla. April 23, 2009) (order granting plaintiff’s motion for conditional certification and to permit court-supervised notification).

    14490 U.S. 642 (1989).

    15487 U.S. 977 (1988).

    16431 U.S. 325 (1977).

    17Wards Cove, 490 U.S. at 657.

    18__ U.S. __, 128 S. Ct. 2395 (2008).

    19See Meacham v. Knolls Atomic Power Lab., 185 F. Supp. 2d 193 (N.D.N.Y. 2002) (court also awarded $873,868 to plaintiffs’ attorney as fees).  

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