Retail Employment Law Blog : U.S. Lawyers & Attorneys for Labor Law

The nationwide spate of class action lawsuits against retailers continues. These lawsuits typically allege management-level employees are misclassified as exempt from overtime laws and non-exempt employees are not provided all required meal and rest breaks. Employers have developed strategies to try to defend against this wave of litigation. One common strategy against wage and hour class actions, particularly at the pre-certification stage, is “declaration blitzes” of putative class members.

In order to meet the requirements for class certification under Rule 23 of the Federal Rules of Civil Procedure, plaintiffs must prove to the court that:

1. Each class is so numerous that joinder of all members as separate litigants is impracticable;
2. There are questions of law and fact common to the classes (“commonality”);
3. The claims or defenses of the representative parties are typical of the claims or defenses of the classes (“typicality”); and
4. The representative parties will fairly and adequately protect the interests of the classes.

Where individual issues predominate, the court likely will not certify the class.

Declaration Blitzes

Effective declaration blitzes can convince a court that individual issues predominate. For example, in a class action alleging failure to provide meal and rest breaks, declarations from putative class members stating that their breaks are scheduled in a manner different from the representative plaintiff, and different from other putative class members, can establish lack of commonality and typicality. Similarly, in a class action alleging misclassification, declarations can go directly to issues of the individual’s duties and responsibilities to establish lack of commonality or typicality for class treatment. Showing a wide variation in duties, discretion and judgment among class members may establish insufficient commonality or typicality for class action treatment.

The law, however, is surprisingly unclear as to whether such declarations are open to pretrial discovery. Are such statements taken from potential class members or non-party witnesses protected from disclosure during discovery as “attorney work product”?

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With the growth of on-line retailing come issues of accessibility for the disabled. For example, must a brick and mortar retailer that also sells products on a website make its website accessible to blind customers? If that retailer fields on-line help calls via its website, must it nevertheless use a Telecommunications Device for the Deaf (“TDD”) to enable deaf customers to communicate via type? A number of cases and regulations have begun to define retailers’ responsibilities in this challenging area.

Title III of the Americans with Disabilities Act (“ADA”) provides, “No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation….” 42 U.S.C. § 12182(a). Title III defines discrimination to include “a failure to take such steps as may be necessary to ensure that no individual with a disability is excluded, denied services, segregated or otherwise treated differently than other individuals because of the absence of auxiliary aids and services, unless the entity can demonstrate that taking such steps would fundamentally alter the nature of the goods, service, facility, privilege, advantage, or accommodation being offered or would result in an undue burden.” 42 U.S.C. § 12182(b)(2)(A)(iii).

In implementing regulations, the Department of Justice has stated explicitly that public accommodations “shall” furnish appropriate auxiliary aids and services where necessary to ensure “effective communication” with individuals with disabilities. 28 C.F.R. § 36.303(c). Appropriate auxiliary aids and services may include effective methods of making visually delivered materials available to individuals with visual impairments, and TDD’s for individuals with hearing impairments. § 36.303(b). Those regulations state further that an “undue burden” generally means “significant difficulty or expense.” § 36.303(a).

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Retailers are all too familiar with the continued onslaught of wage and hour class action litigation. Such litigation has the bane of retailers both in California as well as increasingly throughout the Nation. The California Supreme Court’s decision in Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal.4th 319 (2004) greatly facilitated the certification of class actions by ceding tremendous latitude to the trial courts in deciding certification issues. Although Sav-On said that such determinations are fact specific, because the opinion affirmed the trial court’s certification of a wage and hour class, the result has been the continued and unabated deluge of these cases.

But now recent decisions emphasize that a retailer can defeat certification of a wage and hour class if it can demonstrate key operational differences between its various locations, requiring a fact-intensive inquiry that makes the class action device inappropriate.

Affirming the decertification of a class action by store managers who alleged that they were misclassified as exempt and were owed overtime, the California Court of Appeal held that individual issues of liability and damages predominated over class issues. Keller v. Tuesday Morning, Inc., No. B210787 (Cal. Ct. App. Dec. 4, 2009). Specifically, the court found that the evidence established a wide disparity in store location, size, and configuration, as well as differences in the managers’ duties. The evidence also showed that the managers routinely exercise independent judgment. Because the managers’ claims primarily involved individual questions of fact, the trial court correctly decertified the class.

The plaintiff, Edythe Keller (“Keller”), worked as a manager for Tuesday Morning, a discount retailer. Tuesday Morning operates its stores during periodic “sales events” lasting from three to eight weeks and closes for the remainder of the year. However, its employees work year-round preparing for the sales. Tuesday Morning has 80 stores in California that vary in size and are located in diverse communities. Keller, as class representative, sued Tuesday Morning alleging that it violated California wage and hour laws by misclassifying its managers and failing to pay them overtime. The trial court initially denied class certification. The Supreme Court then issued Sav-On, 34 Cal. 4th 319. In light of Sav-On, the trial court reconsidered its decision and granted certification, but retained authority to decertify the class if it subsequently appeared that the class certification was no longer appropriate.

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Two recent cases demonstrate why retailers and other employers need to be aware of a tension inherent in our nation’s disability laws. On the one hand, employers need to know whether a potential employee, or an employee returning from disability leave, can perform the job satisfactorily without endangering themself or others. On the other, an employee or potential employee has rights to medical privacy and freedom from disability discrimination. Sheer numbers make this tension especially acute for retailers. According to a recent survey conducted by the Bureau of Labor Statistics of the U.S. Department of Labor, during the month of December 2009, retailers’ new hire rate was nearly twice that of manufacturing and nearly three times that of government employers. During the same period, retailers’ rates of involuntary terminations were nearly three times that of the education and health services industry and over twice that of the financial services industry. With such high rates of hiring and turnover, retailers are burdened with more than their share of opportunities to run afoul of the law when examining current or potential employees. This article discusses two recent cases helping to clarify the lines between lawful and unlawful actions regarding new hires and employees returning from leave.

In Harrison v. Benchmark Elecs. Huntsville Inc., No. 08-16656 (11th Cir. 2010), the court held an applicant who was not hired after testing positive for drugs used to control his epilepsy stated a claim under the Americans with Disabilities Act on the ground the employer made an improper medical inquiry and denied employment on that basis.

John Harrison was assigned by a temporary agency to work for Benchmark Elecs. Huntsville Inc. (“BEHI”) in November 2005. In May 2006, Harrison submitted an application for permanent employment to BEHI, at the request of his supervisor, Don Anthony. Anthony advised Human Resources that he was interested in hiring Harrison. Harrison was instructed to submit to a pre-employment drug test. He testified that prior to the drug test, he never was advised that his performance was deficient.

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