Categories: Class Actions
July 17, 2020
On July 14, Judge Alvin Hellerstein of the Southern District of New York rejected a proposed $46.8 million settlement, which likely would have resolved civil suits against Harvey Weinstein and his company for sexual misconduct. When one reviews the details of the proposed settlement, it is clear why the Court reached this decision.
Judge Hellerstein found that the proposed class action was unsuitable for class treatment and that the settlement would have treated all victims the same regardless of each person’s specific allegations of sexual assault. While the proposed settlement called for the appointment of a special master to evaluate each claim and assign a monetary value, Judge Hellerstein rejected that approach because it would abdicate the Court’s responsibility.
Part of the settlement called for $18.9 million for the class and an additional $5.4 million for individual plaintiffs. Certain plaintiffs objected because all of those proceeds were to be paid by insurance and not Weinstein. The settlement also proposed $7.3 million to be paid to the bankruptcy estate of The Weinstein Company to cover administrative and general unsecured claims of creditors in the bankruptcy proceeding. Those unsecured creditors included Weinstein himself, as well as his brother and former Weinstein Company directors. After paying legal fees, litigation and settlement costs, the plaintiffs stood to gain less than the money earmarked in the settlement to Weinstein and The Weinstein Company for legal fees.
Class actions are unique under the law because they provide for court approval of settlements. Here, the court properly exercised its discretion to protect class members.
January 20, 2020
Remember Johnny Carson’s soothsaying alter-ego Carnac the Magnificent? No? Fine. Instead, settle in for some prognostication from me, the Fearless Forecaster. Once again I will gaze (not Adam Gase who, by the way, I predict will be back next year as the Jets head coach) into my crystal ball and predict what employment laws companies need to be most concerned about in 2020.
Just as the Fearless Forecaster predicted last year, sexual harassment will continue to haunt employers in 2020. My prescient comments a few years ago also will hold true in 2020, that as long as men retain positions of power, and men and women work together in the workplace, there will be work for employment lawyers. New Jersey’s new law, S-477, which just became effective on Dec. 1, 2019, and which permits victims of sexual assault and abuse a new two-year window to bring claims that were previously time-barred, will also provide some additional work for employment lawyers in 2020. New York recently passed a similar law, the Child Victims Act, extending the time for those type of claims.
Employers have other claims to worry about as we enter 2020. New Jersey adopted one of the strongest wage theft laws in the country in 2019. The Wage Theft Act (WTA) significantly enhances penalties should employers not pay workers what they are owed. The WTA provides in appropriate cases for treble damages and there is a six year statute of limitations, exposing employers to much larger claims. It also makes it far more likely that a successor entity will have liability for the sins of the predecessor, so corporate transactional lawyers need to be cognizant of this change when handling sales of businesses.
There also is personal liability under the WTA. The Fearless Forecaster predicts a huge uptick in wage and hour litigation over the next few years as a result. This will also include wage and hour class actions. Finally, just in case the above predictions are not enough to cause lost sleep, employers need to worry about another type of litigation that could prove extremely costly. In 2018 New Jersey adopted the Diane B. Allen Equal Pay Act, requiring pay equality across all protected categories, not just gender. Therefore, if a company pays people of color, for example, less on average than white employees, beware.
Employers can defend these claims if the pay differential is based on a seniority, a merit system or other bona fide factors such as education, experience and training. However, this law lends itself to class-action treatment. A six-year statute of limitations also ups the ante.
The Fearless Forecaster is more confident than ever before concerning his predictions. Let’s see this time next year whether he had 20/20 vision in 2020.
September 30, 2019
While not a new issue, the next wave of employment claims will likely be led by state and federal departments of labor pursuing claims against employers for misclassifying as independent contractors workers who meet the test for being employees.By classifying employees as independent contractors employers are able to avoid paying various benefits to these workers, ignore the minimum wage and overtime laws, deprive them of state and federal Family Leave laws and social security, and avoid unemployment claims. Misclassification denies states and the federal government many millions of dollars in revenues each year. States and the federal government have attempted to crack down on these abuses in the past, but now, with so much revenue at stake, their efforts are likely to take hold to many employers’ financial detriment.
April 25, 2019
On April 24, 2019, the United States Supreme Court decided Lamps Plus, Inc. v. Varela, No. 17-988, in which it held (by a 5-4 vote) that, under the Federal Arbitration Act (FAA), parties have not agreed to class arbitration where the arbitration clause at issue is ambiguous about the availability of such arbitration. There, a Lamps Plus employee sued the company on behalf of a putative class of employees after a data breach exposed approximately 1,300 employees’ tax information, but the employee had signed an arbitration agreement at the outset of his employment. The agreement stated that all disputes arising out of the employment relationship would be resolved by arbitration and provided that the claims would be resolved in accordance with the rules of the arbitral forum.
Reversing both the district court’s order compelling class arbitration and the Ninth Circuit’s affirmance, the Supreme Court, relying on one of its prior decisions in 2010, reasoned that ambiguity—like silence—in an arbitration agreement regarding class arbitration is insufficient to infer that the parties affirmatively agreed to such arbitration. The Court also rested heavily on what it deemed the fundamental differences between class and individual arbitrations, only the latter of which the Court claimed was envisioned by the FAA. Class arbitration, the Court proffered, does not allow for “lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes.” The Court also eschewed the lower courts’ reliance on the contra proferentem doctrine (ambiguity in a contract construed against the drafter), which it called a “doctrine of last resort,” reasoning that its use by the lower courts was inconsistent with the fundamental rule that arbitration is a matter of consent.
In dissent, Justice Ginsburg pilloried the majority for “how treacherously the Court has strayed from the principle that arbitration is a matter of consent, not coercion.” Observing the current state of arbitration and its present uses, her dissent called for urgent action by Congress to “correct the Court’s elevation of the FAA over the rights of employees and consumers to act in concert. In a separate dissent, Justice Kagan believed that resort to the neutral state contract law principle of contra preferendum—a neutral interpretive principle utilized by all 50 states—was appropriate and required if the arbitration agreement was ambiguous. Justice Kagan chided the majority for disregarding the parties’ actual arbitration agreement.
The Lamps Plus decision is important because it signals that arbitration agreements that are ambiguous as to the availability of class arbitration will be construed as prohibiting the same. Indeed, Lamps Plus (and the Court’s prior decision in Stolt-Nielsen regarding an arbitration clause completely “silent” as to class arbitration) raises an interesting question: is there even a need for an affirmative class arbitration waiver? While in the abstract, perhaps the answer is “no,” the safer and less expensive answer for employers and other companies seeking to preclude class arbitration (and class actions) is “yes.” Dissents notwithstanding, Lamps Plus is yet another win for companies in the Roberts’ Court.
July 6, 2018
In January 2018, the federal government conformed its website accessibility requirements to the Web Content Accessibility Guidelines (WCAG), an international set of standards intended to make web content more accessible to users with perceptual or physical challenges. The WCAG addresses low vision, color perception, cognition, manual dexterity, screen reading technology, and other issues related to user abilities. The Department of Justice (DOJ) promised to do the same in the private sector by mid-year, but that initiative has been deferred.
As a consequence, there has been a surge of class action lawsuits alleging Americans with Disabilities Act (ADA) violations based on access to website information that the Courts have been addressing individually. The first federal court decision that a website violated the ADA was in early 2017. The decision was followed by 800 federal lawsuits that year alone, alleging ADA as well as state law civil rights violations. (New York led the way with more cases than any other state). Until a clear standard is set by Congress or the appropriate regulatory agency, web site ADA lawsuits will continue to increase.
The ADA prohibits discrimination on the basis of a disability “in places of public accommodations”. As such, any business is potentially an ADA class action target. Class actions require only one named plaintiff (who brings suit individually and on behalf of those “similarly situated”), and one defendant (potentially, you). Whether you are a large or small business, brick and mortar, or web-based only, defending an ADA/Human Rights Law class action promises to be costly in two ways. Not only is there the risk of a potential damage award, the ADA is a “fee shifting statute.” As a result, a defendant must pay its own legal costs to defend the action and may be required to pay those of a successful plaintiff as well. These costs alone may run into the tens or hundreds of thousands of dollars.
Now, with the website accessibility lawsuit floodgate open, it imperative for businesses to ensure ADA compliance. The easiest and most economical approach is a website compliance audit and action-item checklist conducted by legal counsel experienced in ADA website accessibility issues. For instance, does your website include:
Many of these features are easy (and inexpensive) to implement once you (and your website consultant) know what is required. Please contact the firm’s cybersecurity practice attorneys Steven Teppler or Lauren Topelsohn to discuss our fixed fee consultation details.
May 29, 2018
On May 21, 2018 the United States Supreme Court delivered another blow to employee rights. In Epic Systems v. Lewis, the Court issued a monumental decision protecting employers from class action lawsuits.In Epic Systems, the Court upheld the right of employers, as a condition of employment, to require employees to arbitrate claims individually on a one-on-one basis rather than collectively or as a class. According to the Court, this can be accomplished simply by sending an e-mail to employees informing them if they don’t note their objection, they will be considered to have consented to arbitration on an individual basis. This decision effectively precludes workers from suing in court or filing for arbitration when their claims are small, such as when suing for an employer’s failure to pay minimum wages or overtime pay. According to Justice Ruth Bader Ginsburg in her dissent, “[t]he inevitable result of today’s decision will be the underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.” Tip to Employers: Consider requiring employees to sign arbitration agreements or send an e-mail informing employees that, if they don’t object, they will be bound to arbitrate their dispute on an individual basis.