[PPT] - Defending Wage and Hour Class Actions: Defeating Certification and PowerPoint Presentation

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Defending Wage and Hour Class Actions: Defeating Certification and Winning Decertification

Leveraging Lessons From Dukes, Comcast and Duran to Challenge Evidence on Liability and Damages Today’s faculty features:

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WEDNESDAY, APRIL 22, 2015

Presenting a live 90-minute webinar with interactive Q&A

A. Craig Cleland, Shareholder, Ogletree Deakins Nash Smoak & Stewart, Atlanta

William C. Martucci, Partner, Shook Hardy & Bacon, Washington, D.C. Alexander Cox, Esq., Gibson Dunn & Crutcher, Washington, D.C.

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Defending Wage & Hour Class Actions:

Defeating Certification and Winning Decertification

A. Craig Cleland, Craig.Cleland@ogletreedeakins.com

Alexander K. Cox, ACox@gibsondunn.com William C. Martucci, WMartucci@shb.com

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Overview

Wal-mart v. Dukes Overview
Comcast Corp. v. Behrend Overview
Recent Developments and Trends After Dukes and Comcast

– Do individualized damages defeat predominance? – Is Daubert applicable at the class certification state? – Fewer classes being certified, and those that are certified are smaller and narrower – Fights over the proper forum—state or federal court?

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Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011)

Ninth Circuit affirmed certification of largest employment

class action ever certified: 1.6 million Wal-Mart employees, nationwide

Supreme Court reversed, holding that class could not satisfy

Rule 23:

– Commonality: Common question “must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” – A corporate policy “allowing discretion by local supervisors” is “just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices.”

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Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) (cont.)

Plaintiffs must “affirmatively demonstrate” compliance with

Rule 23, which requires a “rigorous analysis” that “will entail some overlap with the merits of the plaintiff’s underlying claim”

Rejected Plaintiffs proposed “Trial by Formula,” as contrary to

the Rules Enabling Act, because Wal-Mart would “not be entitled to litigate its statutory defenses to individual claims”

Claims for backpay cannot be certified under Rule 23(b)(2)

because not “incidental” to injunctive relief

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Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013)

Third Circuit affirmed certification of a class of more than two

million current and former cable subscribers in antitrust suit

Supreme Court reversed, holding that class could not satisfy

Rule 23(b)(3)’s predominance requirement:

– Reiterated its statement in Dukes that a Court must probe behind the pleading and examine the merits, and thus the district court erred in declining to review plaintiffs’ damages model – Damages model must “tie each theory of antitrust impact to a calculation of damages” – Without a satisfactory class-wide damages methodology, individualized damages questions “will inevitably overwhelm questions common to the class,” eliminating any possibility of certification under Rule 23(b)(3)

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Recent Developments After Dukes and Comcast:

Do individualized damages defeat predominance?
Is Daubert applicable at the class certification state?
Fewer classes being certified, and those that are certified are

smaller and narrower

Fights over the proper forum for class actions—state or federal

court?

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Recent Developments After Dukes and Comcast: Do Individualized Damages Defeat Predominance?

Yes: D.C. Circuit and Tenth Circuit

– “No damages model, no predominance, no class certification.” In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244 (D.C. Cir. 2013) – Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213 (10th

Cir. 2013)
No: Ninth, Sixth, Seventh, Fifth, and now Second Circuit

– Levya v. Medline Indus. Inc., 716 F.3d 510 (9th Cir. 2013)

In CA wage and hour case, Court held that certification still appropriate where “the amount of pay
wed” is the only individualized issue.
Computerized payroll and timekeeping records could easily determine damages

– Butler v. Sears Roebuck and Co, 727 F. 3d 796 (7th Cir. 2013) – In re Whirlpool Corp. Front-Loading Washer Products Liability Litig., 722 F.3d 838 (6th

Cir. 2013)

– In re Deepwater Horizon, 739 F.3d 790 (5th Cir. 2014) – Roach v. T.L. Cannon Corp., No. 13-3070-cv, 2015 WL 528125 (2d Cir. Feb. 10, 2015).

District courts had been split on the issue. Court vacated denial of class cert. Individualization of

damages is just one factor to be considered and Comcast did not disturb this precedent.

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Recent Developments After Dukes and Comcast: Daubert at Class Certification?

Agreement that at least some sort of Daubert analysis is required of expert evidence

Seventh Circuit: “full Daubert” – Am. Honda Motor Co. v. Allen, 600

F.3d 813 (7th Cir. 2010)

Third Circuit: expert testimony “critical to class certification” under Rule

23 must satisfy Daubert – In re Blood Reagents Antitrust Litig., No. 12 – 4067 (3d Cir. May 8, 2015)

Eighth Circuit: only a “limited” Daubert – In re Zurn Pex Plumbing
Prods. Liab. Litig., 644 F.3d 604 (8th Cir. 2011)
Ninth Circuit: “rigorous analysis” of not just admissibility, but also

“persuasiveness” – Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011)

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Recent Developments After Dukes and Comcast: Trend towards fewer class certifications

For example, FLSA executive exemption cases:

– Rea v. Michaels Stores, Inc., 2014 WL 1921754 (C.D. Cal. May 8, 2014)

District court refused to certify class of store managers. Because “[a]

uniform, consistent performance practice for store managers simply does not exist,” “any class proceeding . . . would almost necessarily devolve into individual mini-trials regarding whether each particular class member actually met the requirements for exempt status.” – Pedroza v. PetSmart, Inc., 2013 WL 1490667 (C.D. Cal. January 28, 2013)

District court refused to certify class of store managers because

determining whether over 50% of time was spent on non-exempt tasks must be done on individual basis; uniform scheduling system, staffing reports, and other business records did not provide sufficient information as to how much time managers spent on non-exempt tasks

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Recent Developments After Dukes and Comcast: Trend towards fewer class certifications, cont.

Fewer class certifications in other wage and hour areas:

– Meal and rest breaks – Off-the-clock – Misclassification

When certified, classes are typically smaller

– Instead of nationwide, classes are regional, statewide, or even

ne specific location

– Classes limited to specific job positions – Narrower time periods, based on specific policies, practices, or supervisors

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Recent Developments After Dukes and Comcast: Where to litigate: state or federal court?

Given difficulty certifying classes under Rule 23, Plaintiffs have

tried to avoid federal court at all costs

Try to stipulate to damages below the CAFA $5 million threshold?

– Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013)

Claim damages are below $5 million in complaint?

– Rodriguez v. AT&T Mobility Servs., LLC, 728 F.3d 975 (9th Cir. 2013) – Plaintiffs’ description of damages in complaint as less than CAFA threshold is not entitled to deference

Result is more motions to remand to state court

– Dart Cherokee Basin Operating Co. v. Owens, No. 13-719 (Dec. 15, 2014) – Notice of removal need include only a plausible allegation that the amount in controversy exceeds CAFA’s threshold, not evidentiary submissions.

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DEFENDING WAGE & HOUR CLASS ACTIONS:

Defeating Certification and Winning Decertification

William C. Martucci

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Refuting Statistical Sampling

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011),

rejected “trial-by-formula”—extrapolating back-pay for sample set of plaintiffs to entire class

Impermissible under Rules Enabling Act
The proposed method of analyzing class claims rejected by

the Supreme Court:

A sample set of the class members would be selected, as to whom

liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master. The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery— without further individualized proceedings.

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Refuting Statistical Sampling

Duran v. U.S. Bank National Assn., 59 Cal.4th 1 (Cal. Sup. Ct.

May 29, 2014)

In wage and hour case, attempts by class action plaintiffs to use statistical

sampling and other procedural shortcuts to avoid individualized defense argument rejected as inconsistent with due process and California law.

The California trial court permitted the plaintiffs to prove liability and

damages on behalf of the entire 260-member class using a small sample of nineteen class members and two named class representatives.

California Supreme Court reversed and ordered the class decertified. The

statistical analysis employed was deemed a “manifest” injustice to U.S. Bank and was “profoundly flawed.”

1. Sample size of nineteen class members and two named representatives was too small relative to the variability of the class members 2. Nonresponse and selection bias 3. High margin of error, as is common with small sample sizes

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Refuting Statistical Sampling

Application of Duran:
Cochran v. Schwan’s Home Serv., Inc., 228 Cal. App. 4th

1137 (2014)

Remanded denial of class certification to trial court to apply

principles set forth in Duran to analyze whether the class representative could use statistical sampling evidence to establish liability or damages.

Plaintiff had proposed to use statistical evidence (based on a

22-question survey) to establish his employer’s liability for failing to reimburse employees for expenses pertaining to the work-related use of their personal cell phones.

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Refuting Statistical Sampling

Application of Duran:
Jimenez v. Allstate, 765 F.3d 1161 (9th Cir. 2014)
Differentiated Duran, noting that “[w]hile [Duran] reversed the

result of a trial that had used statistical sampling… it did not place a wholesale bar on the use of such tactics.”

In off-the-clock claim, “[s]tatistical sampling and representative

testimony are acceptable ways to determine liability.”

Court found the statistical analysis proposed by the plaintiff was

capable of leading to a fair determination of Allstate’s liability.

District court had rejected the plaintiffs’ motion to use representative testimony

and sampling at the damages phase, and bifurcated the proceedings, which preserved Allstate’s due process right to present individualized defenses to damages claims and the plaintiffs’ ability to pursue class certification on liability issues based on common questions.

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Refuting Statistical Sampling

Espenscheid v. DirectSat USA, L.L.C., 705 F.3d 770 (7th
Cir. 2013)
Affirmed decertification of class where plaintiffs proposed sampling

42 members and extrapolating that to the 2,341 employed satellite technicians.

“Would require that all 2,341 have done roughly the same amount of

work, including the same amount of overtime work, and had been paid the same wage. No one thinks there is such uniformity.”

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Exploiting Distinctions Among Class Members Affecting Liability & Damages

Zivali v. AT&T Mobility, LLC, 784 F. Supp. 2d 456 (S.D.N.Y. 2011):
Southern District of New York granted employer’s motion for

decertification where statistical evidence showed varying experiences, proving purported class members were not similarly situated as required for collective action.

Plaintiff claimed AT&T’s timekeeping system failed to capture all hours

worked due to off-site work activities and opening/closing tasks performed in-store.

AT&T effectively used statistics and surveying to oppose class

certification:

1. AT&T introduced statistics of timekeeping data, which indicated the distribution of management edits varied significantly across the stores. 2. Phone record statistics analyzed the use of phone calls for both business and personal purposes to establish that potential off-the-clock activity ranged from de minimus values (mere minutes) to over two hours.

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Exploiting Distinctions Among Class Members Affecting Liability & Damages

Tracy v. NVR, Inc., 293 F.R.D. 395 (W.D.N.Y. 2013):
Western District of New York decertified FLSA collective action

alleging NVR violated the FLSA and New York Labor Law in failing to properly compensate employees for overtime.

The statistics helped establish employees retained discretion in

connection with out-of-work activities, and therefore, NVR’s defense would necessarily be highly individualized:

1. NVR’s employees performed work outside the office with varying frequencies and for varying time periods. 2. The performance of work activities outside the office by even the same employee varied widely.

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Presented by:

A. Craig Cleland

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Merits at Class Certification

Parameters of Judicial Inquiry
Eisen Rule and Falcon
Supreme Court on Eisen in Dukes
Manual of Complex Litigation (Fourth)

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Merits at Class Certification

Hydrogen Peroxide (3d Cir. 2008)

– Rigorous analysis may require “preliminary inquiry into merits”—especially substantive elements of claims/defenses – Court must …

Carefully evaluate all relevant evidence
And make definitive determination if Rule 23

requirements are met

– Court errs as matter of law if fails to resolve “genuine legal or factual disputes” – Preponderance standard and Wachtel

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Merits at Class Certification

“Nothing in Hydrogen Peroxide requires plaintiffs to prove their case at the class certification stage; to the contrary, they must establish by a preponderance of the evidence that their case is

ne that meets the requirements of Rule 23. To

require more contravenes Eisen and runs dangerously close to stepping on the toes of the Seventh Amendment by preempting the jury’s factual findings with our own.”

Behrend v. Comcast Corp. (3d Cir. 2011), rev‘d on other grounds, 113 S. Ct. 1426 (2013).

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Experts at Class Certification

Daubert Hearings at Certification?
Dukes on Experts and Daubert
Comcast Corp. v. Behrend’s Silence
American Honda, In re Zurn, and

Others

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Experts at Class Certification

Hydrogen Peroxide on experts

– If expert opinions are relevant to Rule 23 requirements, court must rigorously analyze

pposing opinions

– Court must …

Weigh conflicting expert opinions if “integral”

to Rule 23 requirements

And resolve expert disputes—even if

“credibility” determinations are involved

– Caveat—certification hearing as mini-trial

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Experts at Class Certification

“[A]t the class certification stage, we evaluate expert models to determine whether the theory of proof is plausible.”

Behrend v. Comcast Corp. (3d Cir. 2011), rev’d on other grounds, 133 S. Ct. 1426 (2013).

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Using Merits and Experts to Defeat Certification in Wage/Hour Cases

Fact Investigation and Damages

Analysis

Preliminary Certification Analysis
Early Strategic Decisions

– Seeking another venue – Challenge Complaint or certification early – Challenge certification before discovery

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Using Merits and Experts to Defeat Certification in Wage/Hour Cases

Discovery Strategy

– Certification without discovery – Conducting discovery before certification – Bifurcation and merits/damages discovery – Scope and kinds of class discovery – Expert discovery and judge-gatekeepers – Handling merits evidence – Obtaining information early – Getting damaging admissions

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Using Merits and Experts to Defeat Certification in Wage/Hour Cases

Attacking Certification

– Points of attack and strategy – Developing facts and evidence – Raising the certification issue – New commonality and predominance – Injunctive class actions under (b)(2) – Using merits evidence at certification – Subclassing – Issue certification

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EMPLOYMENT LA BRIEFING ▪ DATE ▪ LOCATION

Using Merits and Experts to Defeat Certification in Wage/Hour Cases

Attacking Certification

– Refuting common proof – Expert testimony and Daubert motions – Ascertainability, standing, mootness – Fail-safe classes – Certification hearing and order – Conditional certification – Bifurcated trials – Competing cases/coordination

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