After Wal-Mart, Illinois court & 7th Circuit uphold class certification ...

Class-action litigation returned to the spotlight with last year?s Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes (131 S. Ct. 2541, 2011).? In Wal-Mart v. Dukes, the Supreme Court refused to certify what would have been the largest-ever employment class action against a private employer.

In the wake of the Supreme Court?s decision, it was uncertain how future class-action lawsuits would be affected by the ?commonality? requirement for class-action suits. Now the 7th Circuit has weighed in.

The latest ruling

In Ross v. RBS Citizens N.A. d/b/a Charter One (No. 10-3848, 7th Cir., 2012), the 7th Circuit held that two classes of employees who claimed they were denied overtime pay met the commonality requirement clarified by Wal-Mart v. Dukes.

In Ross, employees filed a class action against Charter One Bank, claiming it violated the Illinois Mini??mum Wage Law by refusing overtime pay. The employees sought to certify two classes.

The first class comprised nonexempt employees, who claimed that Charter One had an unofficial policy of denying them overtime pay by instructing them not to record overtime hours, giving them compensatory time instead of overtime and requiring them to work during unpaid breaks. ?

The second class was comprised of assistant branch managers who claimed that Charter One misclassified their positions as exempt, resulting in denial of overtime pay. ?

Classes approved

The district court granted the plaintiffs? motion to certify the two classes, finding that the plaintiffs satisfied the class-action requirements of numerosity, commonality, typicality and adequacy of representation. ?

Charter One appealed, arguing that the district court?s certification order did not comply with class-certification rules and that the two certified classes did not satisfy the commonality requirement set forth in Wal-Mart v. Dukes. ?

The issue was Rule 23(c)(1)(B), which requires a class certification to define the class and the class claims, issues or defenses. ?

The 7th Circuit held that the certification order must include a clear and precise statement of the parameters defining the classes to be certified, as well as a complete list of the claims, issues or defenses to be treated on a class basis. The 7th Circuit held that the district court?s certification order met this standard. ?

First, the certification order left no doubt that the class members consisted of all current and former employees who have worked at an Illinois Charter One location within the last three years who were subject to an unlawful overtime policy.

In addition, the certification order clearly identified the class of non-exempt employees who claimed that they were subject to a policy that intentionally failed to pay them overtime and the class of assistant bank managers who claimed that their primary duty was to perform non?-exempt work under an unlawful policy.

Comparison to Wal-Mart

As to the Wal-Mart v. Dukes commonality requirement, the 7th Cir??cuit held that the district court properly certified both classes.

In a class action, the plaintiff must show that there are questions of law or fact common to the class. Commonality requires the plaintiffs to show that the class members have suffered the same injury. ?

In this case, the 7th Circuit acknowl??edged that while there may be variations in how Charter One enforced its overtime policy, the glue that held together the two classes was based on the common question of whether an unlawful overtime policy prevented employees from collecting lawfully earned overtime pay.? ?

The 7th Circuit addressed and distinguished Wal-Mart v. Dukes from Ross based on the class size and the required type of proof. In Wal-Mart v. Dukes, the class consisted of 1.5 million female employees from 3,400 stores suing for sex discrimination under Title VII. The plaintiffs were required to show that Walmart store managers across the country had the same discriminatory intent in favoring men for promotions and raises. ?

In contrast, the classes in Ross consisted of 1,129 nonexempt employees and substantially fewer assistant bank managers who were all working in Illinois. In addition, unlike the Title VII claim in Wal-Mart v. Dukes, the Ross plaintiffs were not required to prove individual discriminatory intent under the Illinois Minimum Wage Law.

What it means for employers

While employers applauded the Wal-Mart v. Dukes decision, the Ross case serves as a reminder that employers challenging class-action certification still have substantial hurdles in defeating class certification.

This decision also reminds em??ployers that wage-and-hour litigation is the hot area for plaintiffs? attorneys. One misstep by employers in classifying employees or structuring payment policies can easily give rise to a class-action lawsuit, with significant liability. ?

An employer?s best defense is to have proper classification and em??ploy??ment policies in place. For that, employers should consult with counsel to ensure wage-and-hour compliance.

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