On the Horizon Employment Litigation for Insurers to Watch Out For

Transcription

1 On the Horizon Employment Litigation for Insurers to Watch Out For ACLI 2010 Litigation & Compliance Conference July 15, 2010 Lisa Tate ACLI Vice President, Litigation & Associate General Counsel

2 Overview Financial services industry has been the focus of employment law class actions Insurance industry is no exception Why? Possible reasons: --Increase wage pressures --Complexities of compensation --Non-traditional work settings Result: Litigation that seeks to push the envelope of federal employment law litigation at the expense of insurers and consumers

3 Insurers & Employment Law Litigation Potential Class Action Issues Fair Labor Standards Act Federal Employment Discrimination Laws

4 Fair Labor Standards Act Enforced by the Wage and Hour Division of the US Department of Labor Sets basic minimum wage and overtime standards Class action efforts targeted at financial services industry focus on applicability of FLSA overtime standards: -- After 40-hour workweek, overtime pay = one & one-half times regular rate of pay -- Certain exemptions apply

5 Bouder, et al. v. Prudential Financial, et al. (Civil Action No : D.NJ)(DMC) Primarily a case for overtime pay under FLSA Plaintiffs are current and former registered representatives ACLI has filed amicus curiae in support of Prudential s pending motion for summary judgment to dismiss because of FLSA outside sales exemption and, if claims survive, to decertify the class action

6 ACLI Amicus Brief in Bouder: Applicable FLSA standard is the outside sales exemption, not plaintiffs claim that their duties are administrative under FLSA and thus eligible for overtime pay Bouder plaintiffs meet all criteria for outside sales status US DOL and other courts confirm that agents as those in Bouder are exempt under outside sales exemption In any event, fundamental differences in business practices among agents renders class certification inappropriate

7 Federal Employment Discrimination Laws US Equal Employment Opportunity Commission enforces federal laws that make it illegal to discriminate against a job applicant or employee because of: -- Race, Color, Religion, Sex (including pregnancy), National Origin, Age (40 or older), Disability, Genetic Information Most employers with at least 15 employees are covered by EEOC laws (20 employees for age discrimination cases), as are most labor unions and employment agencies

8 Recent Changes at the EEOC: EEOC is governed by 5 Commissioners, one of whom is serves as Chair In 2010, 3 new Commissioners have been appointed as well as a new General Counsel Commissioners and EEOC staff investigate and settle/litigate claims of discrimination They also engage in preventive measures through outreach, education, and technical assistance

9 Dukes, et al. v. Wal-Mart Stores, Inc., U.S. Court of Appeals for the 9 th Circuit, 603 F.#d 109 (2010) Did 6 women who worked at 13 of Wal-Mart s 3,400 retail stores bridge the commonality and typicality gap under federal civil procedures rules sufficient to certify a class action based on gender discrimination for a class representing every woman who has worked at Wal-Mart retail stores for over a decade, a class estimated to include between 500,000 and 1, 500,000 members? Both the US District Court and the 9 th Circuit said yes.

10 Commonality & Typicality: Importance in Dukes Among the requirements to certify a class action, federal rules require that: -- there are questions of law or fact common to the class, and -- the claims or defenses of the representative parties are typical of the claims or defenses of the class Importance? -- A decision one way or the other on this issue at the certification stage may cause the case to be settled or withdrawn

11 Bridging the Gap: From 6 Putative Class Representatives to a Class of Over 500, 000 Court found that district courts must conduct an analysis to see that each aspect of the procedural certification rules are satisfied, even if the analysis overlaps with an issues associated with the merits of the underlying claims However, court is not bound by this initial analysis as trial on the merits proceeds District court did not err in accepting social framework analysis of sociologist, indicating that Wal-Mart may have had a strong corporate culture that include gender stereotyping Acceptance of analysis was correct as to determining whether common/typical issues were present, but analysis was correctly not found to be proof of the claims (since the latter was a fact-finding issue for trial.)

12 Social Frameworking Analysis: How Far is Too Far at the Class Certification Stage? Social Frameworking Analysis is not new: Used for over 20 years, especially in gender discrimination cases, to identify subtle, but often potent, discrimination policies and practices Dukes Variation: Analysis included not a general assessment, but an extensive review of this particular employer s policies and practices, including 120 anecdotal depositions from employees across the country

13 Dukes: One Case, Many Opinions The Concurring Opinion: What the length of [the majority and dissenting] opinions mask is the simplicity of the majority s unremarkable holding If the employer had 500 employees, I doubt that any of my colleagues would question the certification of such a class.

14 Dukes: One Case, Many Opinions (Con t) A Dissenting Opinion: No court has ever certified a class like this one. And with good reason. [S]ix women who have worked in thirteen of Wal-Mart s 3,400 stores seek to represent every woman who has worked in those stores over the course of the last decade. Never before has such a low bar been set for certifying such a gargantuan class based on nothing more than general and conclusory allegations, a handful of anecdotes, and statistical disparities that bear little relation to the alleged discriminatory decisions.

15 Questions from Dukes Will the US Supreme Court grant certiorari if the appellate decision is appealed? What are the lessons learned for employers, EEOC, etc. if the Dukes class certification stands? How much subjectivity in hiring and promotions can be granted to low- or mid-level managers? Does a strong corporate culture against discrimination need to be expressly adopted, communicated, and monitored? Will an employer need to anticipate extensive review at the class certification stage i.e., mini-trials into the company s operational practices and personnel decisions?