class action

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When a class action is filed, often times there are issues (for the plaintiff and their counsel) as to who should be in the class. Often, the named plaintiff will seek to reach out to other putative class members, but it is not every day when a Judge orders that the plaintiff may telephone or email these other class members, despite a claim that this would unfairly facilitate the plaintiff’s case. That is what a New Jersey federal judge has just ordered. The case is entitled Sanchez v. Santander Bank NA et al., and was filed in federal court in the District of New Jersey.

computer-email

The theory of the case is that the employer coerced employees into not filing for overtime; the named plaintiff claims the information will help her figure out if the workers are class members. The Judge denied Santander’s bid to limit contact and now the plaintiff can contact Branch Operations Managers at more than 600 banks spread across nine states. The Judge allowed this unrestricted access to facilitate the plaintiff’s discovery efforts. There are more than 1100 other possible class members.

The Judge observed that the plaintiff “is already in possession of the contact information for potential opt-ins, and the court sees no basis to prevent plaintiff from investigating whether or not these employees are similarly situated to plaintiff by limiting the scope or means of communication.”

The theory of the suit was that the Bank prohibited these employees from reporting extra hours worked or ostensible overtime. There were also allegations that the Bank punished/disciplined employees who did attempt to report the extra time worked. The named plaintiff asserted that she implored upper management to hire more employees or dispatch help from other branches, but these initiatives went nowhere. The named plaintiff claimed she had to work 10-12 extra hours per week, without pay.

The Bank had argued that Sanchez’ contact with potential plaintiffs should be limited to those Branch Managers she worked with or who were in the immediate geographical area. The Bank also opposed Sanchez calling or emailing other workers, contending that any communications should be confined to the letter that the Judge had approved.

The Takeaway

I don’t like this. It seems that the courts often make it easier for plaintiffs to do the “best” job that they can in securing the biggest class they can. The plaintiff already had the addresses so these people could have easily been contacted in the more traditional manner.

Seems the pendulum swings a little far to the left on this one…

businessman with boxing gloves ready to fightI have always approached litigation as seeking to maintain a cordial, civil relationship with my adversary, especially if it is (as happens a lot) my goal to settle the case early on.  There are times, however, I love when it gets nasty.  Especially when I am not involved.  In a recent FLSA class case, a federal magistrate judge was angry at both attorneys.  The court actually granted a motion for sanctions against the employer but observing that both sets of lawyers persistently ignored the court’s warnings to act like professionals and both had rendered the normal conduct of discovery almost “impossible.” The case is entitled Piccolo v. Top Shelf Productions et al., and was filed in federal court in the Eastern District of New York.

Magistrate Judge Gary R. Brown said that Joseph M. Labuda and Saul D. Zabell were constantly unprofessional and the attorneys were unable “to act with a modicum of courtesy toward each other.”  The Judge stated that “both [attorneys] have handled this matter in a needlessly contentious fashion.  Such tactics will no longer be tolerated.”

Mr. Piccolo filed suit, claiming he was not paid proper overtime, amongst other violations.  He sought to represent a class of all other nonexempt employees.  The case began discovery in July 2017 and, as the Judge wryly put it, it went “off the rails.”  The judge would not recite the list of “seeming[ly] endless complaints and accusations, and what can only be characterized as a cavalcade of name-calling by counsel.”  There were eight time he had to tell them to be civil to each other. But, they did not stop.

For example, the latest tiff involved a deposition and the antics that went on there.  The Judge ordered that the deposition be allowed to continue but he did not trust the lawyers enough that they would act civilly.  He therefore ordered that it would be held in the courtroom.  The Judge told both lawyers that “any improper conduct will result in significant sanctions.”  The Judge also did not spare the lawyer who was not sanctioned.  He scolded him for suggesting that the court was biased against him.  The Judge said that was “transparently manipulative.”

The Takeaway

Can’t we just get along?

U.S. Supreme Court Building, Washington, D.C.The legal world is abuzz with the ripples created by a recent US Supreme Court decision on the statute of limitations in class actions.  A recent post in the Epstein Becker Wage & Hour Defense Blog makes some interesting observations on the case and the issue of its application to wage-hour/overtime class actions.  The case is entitled China Agritech, Inc. v. Resh  and issued from the US Supreme Court a few days ago.

Under the FLSA, each week in which an employee was not properly paid is a separate violation.  There are situations when a plaintiff seeks to bring a class action, but loses on the class certification motion and then, lo and behold, a different plaintiff tries to assert a new class action based on the same theory.

This case followed the holding in American Pipe & Construction Co. v. Utah, where the Court held that a timely-filed complaint seeking relief for a class stayed the running of the statute of limitations for other class members and that if class certification was denied, other people could enter the case without their own statute of limitations being eroded away.  As the post notes, the Court subsequently ruled that this tolling principle also applied when individual members of the class later filed their own individual actions.  That left the question of whether the tolling rules enunciated in these cases applied to future class actions.

In China Agritech, the plaintiff filed a putative class action under the Securities Exchange Act of 1934, with a two-year statute of limitations. The court denied class certification in May 2012; the initial case settled in September 2012 and was dismissed.  The next month, a second plaintiff filed a class action alleging the same claims and seeking the same class as in the first case.  Certification was again denied and that case also settled.

Then, in June 2014, a new plaintiff filed a third class action; the district court dismissed it as untimely but the Ninth Circuit reversed.  The case went to the Supreme Court where the Court decided that “American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.”

The Court distinguished individual claims from class actions.  If certification was denied, only then would individual claims be allowed to proceed so there was a rationale for preserving the original statute of limitations.  However, if the next case concerned class claims, the Court held that for sake of efficiency, it was important to determine the best class representative (if there were competing representatives) and then class certification, if appropriate, would be determined, essentially, once and for all in the case.   The Court rejected the implicit argument of a rolling statute of limitations, as that would allow the statute “to be extended time and again; as each class is denied certification…”   Thus, subsequent time-barred class actions were not permitted.

The Takeaway

The China Agritech, holding gives employers a new and powerful weapon to defeat class actions.  The American Pipe doctrine of allowing tolling for future plaintiffs in FLSA class is not viable anymore although courts will probably permit individual lawsuits seeking recovery for weeks which would have been barred under the American Pipe rationale.  It is possible that subsequent class actions will be allowed if filed by people who were in a putative class that did not receive certification but there will be no tolling.  As the Epstein post notes, and with which I totally agree, employers should look, first, when defending a FLSA class action, if there is a statute of limitations defense.  That would get rid of the entire case!

Simply put, June 11, 2018 was a good day for us on the management side…