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Defense, plaintiff’s counsel share insights on past year’s developments in wage-hour litigation

Class waivers in arbitration agreements, the impact of Wal-Mart v Dukes on wage-hour litigation, and a rising wave of FLSA actions by unpaid interns topped the agenda at a conference session on key developments in wage-hour litigation held Monday, May 21, at Minnesota CLE’s Upper Midwest Employment Law Institute.

Michael J. Puma, a partner in the Philadelphia office of Morgan Lewis & Bockius, teamed up with Paul J. Lukas of the Minneapolis plaintiff’s firm Nichols Kaster to provide a “2012 FLSA Case Update” from both the plaintiff’s and defense counsel perspective.

“FLSA case law is absolutely overwhelming,” Lukas said at the outset. “You never feel like you’ve really seen everything on a topic. It keeps coming, and it’s coming really fast.” On the plus side, he notes, “if you want to make an argument, some judge bought it somewhere — or at least didn’t completely dismiss it out of hand.”

“There are a lot of imaginative, creative things happening,” Lukas adding, noting too that “the defense bar has really caught up.”

Wal-Mart v Dukes. Lukas downplayed the significance of last year’s landmark Dukes ruling and the ensuing doomsday predictions for plaintiffs in class litigation. “When Dukes came out, the Chamber of Commerce thought it was the end of class actions as we know it. And the plaintiffs’ bar walked around hang-dogged for a few days.” But the High Court’s opinion striking a blow against Rule 23 class actions “was actually a good thing for the plaintiff’s bar,” Lukas contends, because the behemoth Dukes class dwarfs the typical class action. “Now I’ll argue: `Your honor, this is no Dukes case — this is a tiny little 50,000 person class.’”

As for wage-hour litigation in particular, Dukes does not apply to the FLSA. “From the beginning of time it’s been very clear that FLSA is not Rule 23,” he said. “We have a laundry list of cases that say ‘FLSA is not Rule 23, don’t talk to me about Dukes.’” Of course, the High Court ruling does come into play when bringing corollary state law wage claims, but even there, Lukas remained largely unfazed. “The judges who are using Dukes to deny class certification were going to deny class certification anyway. And the judges who distinguish Dukes and grant cert were going to grant cert anyhow,” he surmised.

Class arbitration waivers. Lukas has changed up his strategy more aggressively, however, in response to AT&T Mobility v Concepcion. After the Supreme Court ruling striking down prohibitions on class action waivers, “we’ve been trying to use arbitration agreements as a sledgehammer against employers,” he explained. The plaintiffs’ firm files individual arbitrations with AAA or JAMS on behalf of a critical mass of plaintiffs — 50 or 75 employees — and, for one of the plaintiffs, files a class claim as well. “With the other 74 plaintiffs we march ahead. And it gets really expensive really fast.”

“It’s like when you have a tug of war and you let go of the rope. We’ve been letting go of the rope. And it suddenly becomes a complete nightmare for the defendant. We’ve been able to settle right out of the block.”

From the defense perspective, Puma was measured in his support for the use of arbitration agreements. He advises employers to “think about whether you really want an arbitration program.” There are numerous factors to consider. Among them: “How large is your workforce? How litigious are they?”

The wisdom of using a class action waiver can depend on jurisdiction, of course, both attorneys noted. “The one place where plaintiffs are gaining traction and getting around Concepcion (albeit outside the FLSA context) is in the Second Circuit,” Lukas said. On the other hand, employers have fared best in the Third Circuit, where courts reliably enforce Concepcion and the FAA.

Wage suits by interns. Puma has a cautious eye on several wage suits filed this past year by unpaid interns, predicting they were a harbinger of more to come. He noted the difficulty of administering an internship program that would safely pass muster under the DOL’s criteria. Implementing a formal program, providing training and oversight — coupled now with the growing risk of liability, “I ask employers, ‘do you really want this headache? Couldn’t you just pay them minimum wage?’”

“These lawsuits will be hot,” Puma cautioned. “These are kids that are just out of college, there are no jobs out there, they’re minimum wage claims — these are very sympathetic plaintiffs.”

An audience member expressed the fear that “all it takes is one intern who doesn’t get a permanent job, and you’re screwed.”

Happy to validate that fear, Lukas was quick to respond. “Every time a defense lawyer says they’re worried about something, our ears perk up.”