Co-authored by Gerald L. Maatman, Jr.Tiffany Tran, and Julie Yap

Seyfarth Synopsis: Seyfarth Shaw submitted comments and oral testimony to the Federal Advisory Committee on Civil Rules regarding needed reform and guidance to Rule 23, the rule that governs class action litigation in federal courts. While the proposed amendments address important issues, our workplace class action group proposed four additional areas for consideration that are not currently addressed by the pending proposed rule amendments.

Rule 23 Changes

As some employers may be aware, changes are coming to Rule 23 class action requirements. What exactly those changes will be, and when those changes will go into effect, however, are still to be determined.

The Advisory Committee on Civil Rules (the “Committee”) for the Federal Courts, which is responsible for recommending amendments to Rule 23, has been contemplating possible changes for years now — we previously blogged about the potential changes here. The Committee recently proposed specific rule changes that address important issues such as settlement class procedures and electronic notice to class members.

Various parties and groups submitted written comments to the Committee, including academics, worker and consumer advocacy groups, and corporate groups.

Seyfarth’s written submission is here. Seyfarth’s comments were prepared by the team of Thomas Ahlering, Kate Birenbaum, Matthew Gagnon, Gerald L. Maatman, Jr., Hilary Massey, Jennifer Riley, Tiffany Tran, Julie Yap, and Kevin Young.

Seyfarth’s submission identified four additional areas that remain in need of reform and guidance to address the practical difficulties regularly encountered in class action litigation

Testimony To The Committee

The Committee also selected 11 individuals to testify before the Committee.

The Committee selected Gerald L. Maatman, Jr. (“Jerry”) co-chair of our class action defense group, to testify. Jerry gave testimony to the Committee on February 16. Seyfath was the only law firm representing employers to be selected to testify.

Other individuals who testified included Theodore Frank of the Competitive Enterprise Institute; Eric Issacson, of the Issacson Law Office; Peter Martin of State Farm Mutual Insurance Co.; Patrick Paul of Snell & Wilmer; Timothy Pratt of Boston Scientific Corp.; Michael Pennington of Bradley, Arant, Boult & Cummings; Professor Judith Resnik of Yale Law School; Richard Simmons of Analytics LLC; Ariana Tadler of Milberg LLP; and Steven Weisbrot of Angeion Group.

Consistent with Seyfarth’s written submission, Jerry testified that class action litigation would be aided by an express requirement that a party seeking class certification must submit a viable trial plan. This change makes sense from both a legal and practical perspective as it would help prevent unmanageable class actions from proceeding past the class certification stage to trial. Indeed, this amendment conforms to the California Supreme Court’s decision in Duran v. U.S. Bank National Association, 59 Cal. 4th 1 (2014), which requires adequately developed trial plans at the class certification stage.

Jerry also advocated for a revision to Rule 23(f) to allow for an immediate right to appeal orders to certify, modify, or decertify a class. Jerry testified that an amendment to the current approach would ensure meaningful review of and guidance regarding class certification.

In addition, Jerry suggested that the Committee revisit the standards relating to class certification in the context of a settlement. This would amend Rule 23 to acknowledge and address the unique and practical considerations and impacts of certification in the two very different contexts of actual litigation versus settlement.

Finally, Jerry recommended that the Committee provide additional, specific guidance regarding Rule 26’s “proportionality” requirement and its application to pre-certification class discovery. Jerry shared Seyfarth’s collective experience in representing employers who face requests for discovery on class lists, contact information, and other information about potential class members. Rule 26 requires that discovery be “proportional to the needs of the case,” which directly affects pre-certification class discovery. Nonetheless, federal courts have taken varying approaches to resolving these discovery disputes. Jerry advocated the position that the Committee’s further guidance is needed to ensure a standard approach that fully considers the burden class discovery places on employers.

Implications For Employers

The Rule 23 amendments will have a significant impact on class action litigation and far-reaching consequences for employers.

Stay tuned for more updates regarding the proposed Rule 23 amendments as we continue to monitor developments on this important issue.

Authored by Eric Lloyd

Seyfarth Synopsis: Minor league baseball players took a swing at class certification, and they missed—badly.

In Senne v. Kansas City Royals Baseball Corp., et al., minor league baseball players across the country asserted wage and hour claims under the Fair Labor Standards Act (“FLSA”) and various state laws against Major League Baseball (“MLB”), the Commissioner of MLB, and a number of MLB franchises. The players sought allegedly unpaid minimum wages and overtime for “work” performed during the baseball season (such as travel to and from games and pre-game activities) and during the offseason (such as participating in spring training and offseason conditioning). The U.S. District Court for the Northern District of California conditionally certified the Plaintiffs’ proposed collective under the FLSA in October 2015.

Plaintiffs moved to certify their state law wage and hour claims in April 2016. In support of their class certification motion, Plaintiffs submitted declarations and testimony from two experts. Plaintiffs proposed that one of their experts would offer a damages model at trial based on estimates of the number of hours worked by each player during each work week in the class period. They further posited that these estimates would be based upon players’ responses to a survey devised by another expert, which asked players to provide information concerning the amounts of time they spent performing purportedly work-related activities. The Defendants asked the court to exclude the experts’ declarations and testimony on the ground that the proposed survey was flawed and would collect unreliable data.

The court denied Plaintiffs’ motion to certify their state law claims, and, decertified the FLSA collective. While this was obviously a welcome development for class action-weary employers, Chief Magistrate Judge Joseph C. Spero’s opinion stands out from other recent certification decisions given its extensive discussion regarding the use of representative evidence in class actions.

Judge Spero granted the Defendants’ motion to exclude Plaintiffs’ experts’ declarations and testimony, finding the proffered survey evidence to be “fundamentally flawed.” The court was troubled that the players’ survey responses would be unreliable insofar as the survey asked players to provide information concerning “mundane events” that may have happened years in the past, such as when they arrived and departed from a baseball stadium on a given day, whether their baseball-related activities were “rained out,” or whether they missed a practice due to injury or illness. The fact that no time records which could verify the players’ responses existed cemented the court’s conclusion that the survey data would be unsound. In addition, the court expressed concern that the survey responses would be tainted by self-interest bias given that “virtually all minor league players have a vested interest in the outcome of this litigation.”

The court also rejected the Plaintiffs’ argument that the U.S. Supreme Court’s recent decision in Tyson Foods, Inc. v. Bouaphakeo permitted the use of survey evidence given the absence of time records for the players. As Judge Spero noted, the players who comprised the putative class were not at all similarly situated—for instance, they played for different organizations, with different work requirements, in different states, with different laws—making it inappropriate to “paper over significant material variations [among the plaintiffs] that make application of the survey results to the class as a whole improper.” In other words, Tyson Foods was inapplicable because the players’ working conditions were simply too different to draw any reliable conclusions about class members’ claims based on purportedly representative survey evidence.

Senne is the latest case showing that courts are reviewing trial plans based on representative evidence with increased scrutiny, as discussed previously here. Judge Spero’s thorough 104 page opinion exposes a number holes in the use of survey evidence to support a trial plan—for instance, that it may be unverifiable and contaminated by the respondents’ self-interest—and it therefore provides employers with strong arguments to present in opposition to class certification.