Over the past two weeks, the United States Supreme Court has repeatedly underscored the importance of having common questions that are susceptible to common answers in cases where plaintiffs are seeking class certification. Most recently, the Court clarified that this requirement, which has now been considered in both antitrust and employment cases, applies with respect to both merits and damages issues. As discussed below, this clarification presents employers with a potent new tool in the defense of class action wage-and-hour cases.
On March 27, 2013, the Court issued its decision in Comcast Corporation v. Behrend, a putative antitrust class action brought on behalf of 2 million cable subscribers in 649 franchise areas alleging overcharging through an alleged attempted monopoly. In considering whether the class should be certified, the Court held that the need for individualized inquiries with respect to damages issues precluded class certification. (Opinion available here.) Moreover, the Court stressed that lower courts must perform a probing analysis when deciding whether to certify a class in order to ensure the existence of common answers to common questions.
Following quickly on the heels of this decision, the Court’s April 1, 2013 Order List (available here) remanded a wage and hour class action brought against RBS Citizens, N.A. alleging that the bank both refused to pay earned overtime to some employees and misclassified certain others such that they could not earn overtime. The Court instructed the Seventh Circuit to reconsider its decision to affirm class certification in light of its decision in Comcast, thus calling into question whether certification in a wage and hour class action is appropriate where the determination of both merits and damages issues would require individualized inquiries. This issue is of particular significance to cases involving both allegedly misclassified employees and hourly employees who allege that they worked off the clock. The employees who allege misclassification typically do not record their hours worked and records may not be available to establish the same, while hourly employees are by definition not recording time allegedly worked while off the clock, making collective determination of damages for allegedly unpaid overtime virtually impossible in both situations.
These decisions reflect a turning point in class action certification standards which started with the Court’s landmark 2011 decision in Wal-Mart v. Dukes (Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (2011), available here), in which the Court held that, under Federal Rule of Civil Procedure 23 (available here), plaintiffs must be able to show common liability with respect to all class members without relying on individual proofs. The Comcast decision re-emphasizes the importance of Wal-Mart, and RBS makes clear that the same heightened commonality requirements apply equally in wage-and-hour cases.
While it remains to be seen how lower courts will apply Wal-Mart and Comcast, the decisions pose the prospect of a significant shift in the way courts view class certification issues in employment cases. RBS is represented by Proskauer attorneys Mark Batten, Mark Harris, Elise Bloom and Amanda Haverstick. For more information on how these decisions may impact you, contact your Proskauer relationship attorney.