The Class Action Weekly Wire – Episode Fifteen: Labor Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman, Jennifer Riley, and associate George Schaller with their analysis of key rulings and settlements in the labor class action litigation arena. We hope you enjoy the episode.

Jerry Maatman: Hello, loyal blog readers and listeners. Welcome to this week’s edition of the Class Action Weekly Wire. Today our topic is labor-related class action litigation, typically brought by private plaintiffs, union members, and advocacy groups under a smorgasbord of federal and state statutes that apply to labor-related situations. Jen, what are some of the things that corporate counsel can look to in terms of successfully defeating class certification in this space?

Jennifer Riley: Thanks, Jerry. Certainly one of the strategies corporate counsel can consider is a preemptive motions to dismiss. There is a great example that came out of a case called Jones, et al. v. Local 798 Of The United Association Of Journeymen. In that case the plaintiff was a welder helper and he sued his union claiming that the union failed to prevent white union members from discriminating against him and also prevented Black union members from advancing and succeeding in job advancement opportunities. There, the court found that the plaintiff had really failed to plead any facts to support his allegations and failed to allege a plausible cause of action, and it had ended up dismissing the case.

Jerry: In 2022 overall plaintiffs were successful in certifying cases across the board on an average of about 75%. George, what about in the labor space? What were some of the significant certification grants where plaintiffs won over the past year?

George Schaller: Thanks Jerry. In 2022, there’s been significant class action litigation relative to claims under the Victims of Trafficking and Violence Protection Act – or the TVPA. In Owino, et al. v. Corecivic, Inc., plaintiffs, who were a group of incarcerated individuals in private immigration detention facilities owned and operated by the defendant, filed a class action alleging that the defendant forced them to perform labor against their will and without adequate compensation in violation of the TVPA. There, the district court granted the plaintiffs’ motion for class certification, pursuant to Rule 23. On appeal, the Ninth Circuit affirmed the district court’s ruling. The plaintiffs asserted that the U.S. Immigration and Customs Enforcement contracted with the defendant to incarcerate detained immigrants in 24 facilities across 11 states. Plaintiffs claimed that they were detained solely due to the immigration status and not because they were charged with a crime. The Ninth Circuit reasoned that the affidavits and testimony from detainees sufficiently established that detainees were made to perform a various duties daily, and were subject to disciplinary measures if the labor was not completed. The Ninth Circuit also found that whether or not the defendant’s company-wide policies and practices violated the law and the rights of the class members was a question that predominated over any individual inquiry.

Jennifer: Another ruling I recall from 2022 where a court granted class certification on a similar theory was called Magtoles, et al. v. United Staffing Registry, Inc. In that case a group of contract nurses filed a class action alleging that the defendant healthcare staffing agency violated the TVPA. In that case, the defendant had recruited nurses and other healthcare professionals to provide healthcare services for clients in the New York City area. The majority of the recruits were from abroad, including many from the Philippines, and the defendant in that case allegedly required all of its foreign recruits to sign a standard three-year employment contract, and that employment contract mandated that the nurses work for a minimum of 6,000 hours over a three year period – or if they terminated the contract prior to meeting that threshold, to pay back $15 per hour. Contracts also contained a non-compete clause, prevailing wage provision, and immigration notification provision – all of which the plaintiff is challenged in the lawsuit. The court found that the Rule 23 requirements were met, that standard questions predominated, with respect to whether the provisions of the defendant’s standard contract violated the TVPA, and whether the defendant maintained an illegal policy or practice of failing to pay nurses a prevailing wage.

Jerry: George, were there any key defense rulings for defendants successful in opposing class certification and shutting down these labor cases?

George: Jerry, one case that demonstrated that was in Garcia, et al. v. Stemilt AG Services, LLC. There the plaintiffs tried to put forward a class certification on a theory that ended up failing. Essentially, the plaintiffs were a group of H2-A farm workers who filed a class action alleging that the defendant violated the TVPA. Plaintiff sought certification of a class consisting of all Mexican nationals employed by the defendant pursuant to the 2017 H2-A contract. The court determined that the plaintiffs offered evidence of common policy from upper management that directed disciplinary action for failure to follow supervisor instruction. However, they also found that the implementation of the discretionary policy would predominate in the litigation, due the various orchards and conflicting worker experiences.

Jerry: Well in this space it’s not a secret that class action trials tend to take place because of the emotion, the principles, and the litigants. Jen, in 2022 were there any interesting class-wide findings on the merits, in terms of trials?

Jennifer: Thanks, Jerry. The most significant one that comes to mind is a case called Novoa, et al. v. GEO Group, Inc. In that case, the plaintiffs were a group of immigrants. They filed a class action alleging that the defendant violated both the TVPA and California labor law by using detainees as contract labor in order to maximize profits. The allegation was that the defendant paid detainees only a dollar per day. The court ended up granting the motion for summary judgment with regard to claims that the defendant violated the California labor law. The court essentially found that the defendant exercised sufficient control over the detainees, so as to qualify as their employer, and then since then the defendant had only paid a dollar per day, the court found a violation of the California labor code. The case went on and it went to trial, and the jury returned a verdict in favor of the class of plaintiffs for $17.3 million dollars in damages.

Jerry: Well, Jen, that was sure a significant verdict, but there was also another development that I think is very interesting to corporate counsel and that it was in the PSC Community case involving a claim brought by a union, with respect to violations of a collective bargaining agreement insofar as pay was concerned for over 100,000 union members. The case proceeded for a class-wide trial and arbitration, and last year after winning a verdict – a judgment of $30 million dollars – the union filed an action in federal district seeking to confirm the arbitrator’s award under the Federal Arbitration Act and successfully did so. So between that $17 million dollar verdict and the $30 million dollar judgment, this was an area where there was quite a bit of success on the plaintiffs part in terms of pushing forward labor-related class action litigation. George with that in mind, what would you advise corporate counsel to be on the lookout for in the coming year?

George: Given the $17.3 million verdict and the $30 million verdict previously talked about, it’s clear that the plaintiffs’ bar will continue to use advanced tactics and try to push settlement and win class certifications.

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