Seyfarth Synopsis: As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased slightly in 2019, but as compared to the last several years, it was one of the lowest overall yields for settlements after those values plummeted to their lowest level ever in 2018. After settlement numbers were at an all-time high in 2017, those numbers fell dramatically. In sum, the ability of the plaintiffs' bar to monetize their class action filings hit a significant wall.

As measured by the top ten largest case resolutions in various workplace class action categories, overall settlement numbers increased slightly in 2019, as compared to 2018.

After settlement numbers were at an all-time high in 2017, those numbers fell dramatically in 2018, and then leveled off over the past year. In sum, the ability of the plaintiffs' bar to monetize their class action filings hit a proverbial wall over the past two years.

This trend harkened back to the U.S. Supreme Court's decision in Wal-Mart, Inc. v. Dukes in 2011. By tightening Rule 23 standards and raising the bar for class certification, Wal-Mart made it more difficult for plaintiffs to certify class actions, and to convert their class action filings into substantial settlements.

These barriers became more formidable in 2018 with the Supreme Court's ruling in Epic Systems v. Lewis, which upheld the validity of class action waivers in mandatory workplace arbitration agreements.

The "Wal-Mart/Epic Systems" phenomenon is still being played out, as well as manifesting itself in settlement dynamics. It is expected that the force of this barrier will be felt more profoundly in 2020. Considering all types of workplace class actions, settlement numbers in 2019 totaled $1.34 billion.

This compared to settlements in 2018, which totaled $1.32 billion.

These totals, however, decreased significantly from 2017 when such settlements topped $2.72 billion and in 2016 when such settlements totaled $1.75 billion.

The following graphic shows this trend:

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In terms of the story behind the numbers, the breakouts by types of workplace class action settlements are instructive.

In 2019, there was a significant downward trend for the value of settlement of government enforcement litigation, employment discrimination claims, and workplace statutory class actions. In contrast, there were significant increases across-the-board for resolutions of class actions involving wage & hour class and collective actions, as well as ERISA class actions.

This phenomenon is shown by the following chart for 2019 settlement numbers:

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By type of case, settlements values in workplace statutory class actions and government enforcement cases experienced the most significant decreases.

The top ten settlements in the private plaintiff statutory class action category (e.g., cases brought for breach of contract for employee benefits, and workplace antitrust laws and statutes such as the Fair Credit Reporting Act or the Worker Adjustment and Retraining Notification Act) totaled $319.65 million, which represented a large drop-off from 2018 when such settlements totaled $411.15 million, and still further from $487.28 million in 2017 (but an increase from $114.7 million in 2016).

The following chart tracks these figures:

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The pattern for employment discrimination class action settlements likewise followed a slight downward trend in 2019. The top ten settlements totaled $139.20 million, as compared to $216.09 million in 2018 and $293.5 million in 2017. The comparison of the settlement figures with previous settlement activity over the last decade is illustrated in the following chart:

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In 2019, the value of the top ten largest employment discrimination class action settlements of $139.2 million was the fourth lowest figure since 2010, and largely aligned with the trend that started in 2011 (after Wal-Mart was decided) that showed decreases in settlement amounts over three years of that four-year period.

This trend did not hold for wage & hour class action settlements. The value of those settlements in 2019 nearly doubled from the previous year. In 2019, the value of the top ten wage & hour settlements was $449.05 million as compared to $253.18 million in 2018. This was a slight decrease from 2017, when the value of the top ten settlements spiked at $574.49 million, which was the second highest annual total in wage & hour class actions ever.

On a comparative basis, 2019 settlements were the fourth highest annual total over the past decade.

When coupled together, the two-year period of 2016 and 2017 saw over $1.2 billion in the top wage & hour settlements. Adding 2018 and 2019 settlements, corporate America saw over $2 billion in wage & hour settlements over the past four years. Further, this is most telling in examining the last four years, for 2016 represented almost a quadrupling (after two years of declining numbers in 2013 and 2014) in the value of the top wage & hour settlements as compared to 2014. Given the ruling in Epic Systems in 2018, settlement numbers more likely to follow a downward trajectory in 2020.

This trend is illustrated by the following chart:

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Relatedly, the top ten settlements in government enforcement litigation experienced a steep downward arc, as they decreased to $57.52 million, which was a drop from $126.7 million in 2018. This compared to the figure of $485.2 million in 2017. That being said, these numbers were slightly above the three year trend from 2014 to 2016 when governmental enforcement litigation settlements trended under $100 million for three years running. This trend is illustrated by the following chart of settlements from 2011 to 2019:

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ERISA class action settlements rose slightly in 2019. The top ten settlements totaled $376.35 million, which topped the 2018 total of $313.4 million. Relatively, however, ERISA settlements in 2019 were still well below prior years, as those totals were $927 million in 2017 and $807.4 million in 2016.

Further, given that ERISA class action settlements for the two-year period of 2016 and 2018 were a combined $1.73 billion, the figure for 2019 on balance shows a lower conversion rate for the plaintiffs' bar.

This trend is illustrated by the following chart of settlements from 2011 to 2019:

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Settlement trends in workplace class action litigation are impacted by many factors.

Implications For Employers:

In the coming year, settlement activity is apt to be influenced by developing case law interpreting U.S. Supreme Court rulings such as Epic Systems, the Trump Administration's labor and employment enforcement policies, case filing trends of the plaintiffs' class action bar, and class certification rulings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.