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Babies and Bath Water: Class Actions and Employment Law - Part Two

Posted by David P. Martin | Jun 14, 2024 | 0 Comments

Last time, we discussed the need to utilize the class-action in the employment context, and we went over the four basic prerequisites. This time, we will look at the three paths to success for class-action in the employment law context.


The first path has two parts – an A and B part. Both options under this first path are considered “mandatory” classes.  There is no opt-out for class members. Either part works for this path.


Part A under Rule 23(b)(1)(A), is applicable in cases where a defendant, “is obliged by law to treat the members of the class alike.” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 614 (1997).  This requires proof that prosecuting separate actions would create a risk of inconsistent adjudications, “with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class”. This requires more than just proof that there is a risk that separate judgments for each class member could result in recovery of damages for some but not others.


In the employment context an example is Lyell v. Farmers Group Inc. Employees' Pension Plan, No. CV 07-1576-PHX-JAT, 2008 WL 5111113, at *4-5 (D. Ariz. Dec.3, 2008) (holding, in case where participants sought a recalculation of vested pension benefits upon a second term of employment, that the action would be certified as a class action under Rule 23(b)(1)(A)). The committee comments at the end of the rule also help understand Part A. They describe an action against a municipality, “to declare a bond issue invalid” in an effort “ … to prevent or limit the making of a particular appropriation or to compel or invalidate an assessment …”.  Clearly, an action by one individual requiring a court to take action against an entire municipality as to a bond issue, could result in inconsistent adjudications, impacting others in the municipality.


There is also Part B of this first path which is the rarer option of proving (b)(1)(B). This requires a showing that individual adjudications would be dispositive or substantially affect the rights of others who are not parties to the adjudication. In the employment context a WARN (Worker Adjustment and Retraining Notification) Act case (advance notice of plant closing and mass layoff) may be amenable to a class action under this section. See, Washington v. Aircap Indus. Corp., 831 F. Supp. 1292, 1294 (D.S.C. 1993) certifying a WARN Act class action under Rule 23(b)(1)(B) out of concerns of issue preclusion. The committee comments for the rule also describe an example of shareholders joining to compel the declaration of the dividend, or insurance policy holders in a fraternal benefit association seeking a financial reorganization of the society.  Clearly those are matters impacting the entire class of people.


The second path, under Rule 23(b)(2), requires that the defendant has either acted or refused to act on grounds that apply to all of the individuals in the class generally. Thus, injunctive or declaratory relief is appropriate for the class as a whole.  This, too, is a mandatory class.  Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 360 (2011) found a (b)(2) claim was improperly certified, where the monetary relief that was at stake was not merely incidental to injunctive or declaratory relief.  Further there cannot be individual injunctive relief, but rather, one order that applies to all members in the class. An example, in the employment context, may be the failure of an employer to provide a pension benefits statement to all participants in a pension plan. Another example is a discriminatory practice against a race or religious group of employees.


The third path, under Rule 23(b)(3), requires that the “questions of law or fact common to the class predominate over any questions affecting only individual members, and that a class action is superior to other methods of adjudication”.  This section permits an opt out for class members. There are four findings that a court must make as noted in the rule (but not noted here for some brevity).  


Generally, this section encompasses cases where the time, effort, and expense of just one plaintiff seeking relief is likely not economically feasible.  An example in the employment context is discrimination when two different job positions one of which is predominantly male and the other is predominantly female are treated differently despite performing nearly identical job duties. See,  Abbananto v. Cnty. of Nassau, 19-CV-01102 (GRB) (JMW), at *1 (E.D.N.Y. Feb. 3, 2022). WARN Act cases also have been certified under this section. Cashman v. Dolce International/Hartford, Inc., 225 F.R.D. 73 (D. Conn. 2004).


The class action is a tool that may be beneficial both for plaintiff and defendants alike, especially in the employment context. It may curtail litigation and give more certainty on litigation costs for the defendant, and a recovery on a smaller claim for the plaintiff. Before you pass on a smaller employment claim look to see if a class may exist.

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David P. Martin

Senior & Managing Attorney


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