A California Appeals Court ruling earlier this month sends a reminder to employers that class action settlements aren’t always the end of a matter. The lawsuit began as a class action against U.S. Bancorp for wage-and-hour violations including missed meal and rest breaks, and unpaid overtime wages. Scott Williams joined U.S. Bancorp after the lawsuit had been filed and immediately became a member of the class action lawsuit. With the lawsuit still ongoing, Williams filed a second copycat lawsuit against U.S. Bancorp for the same wage-and-hour violations plus unpaid business expenses. The Court reasonably put Williams’ second lawsuit on hold until the first lawsuit was completed. U.S. Bancorp successfully beat back the first lawsuit winning decertification of the class and eventually settled.
Unfortunately, the employer U.S. Bancorp’s victory in decertifying the class action and settlement was short-lived. The California Appeals Court found that Williams could bring a second almost identical lawsuit because the first lawsuit class was decertified. Simply put- because U.S. Bankcorp beat back the class certification and had the class decertified, its employee could immediately continue a second lawsuit for those same claims. Generally, a legal shield called “collateral estoppel” or issue preclusion bars relitigation of legal issues in a prior proceeding. Unfortunately, the California Supreme Court had previously weighed in and found that where a court refuses to certify a class then those alleged “class members” (i.e. disgruntled employees) are not bound by the decision and can relitigate the same issues in a subsequent case. The California Appeals Court took this reasoning and ran with it to find that a “rejected class” that had not died at the decertification stage, was not a final decision such that issue preclusion would kick in.
COUNSEL TO MANAGEMENT:
This decision is a reminder to employers that even a settlement is not a complete shield against a copycat lawsuit. Internal investigation, regular auditing, and compliance adjustments with experienced legal counsel are still the best tools against copycat litigation. As California wage-and-hour litigation continues to rise in the wake of COVID-19, employers can contact the experts at the Saqui Law Group, a division of Dowling Aaron Incorporated, for compliance and policy review before litigation strikes.