Rise in Discrimination Class Action Settlements

March 04, 2011

According to the Annual Workplace Class Action Litigation Report, the value of class action employment discrimination settlements has gone up substantially over the past year. The report notes that, in 2010, the value of the top ten settlements was $346 million. By comparison, the total value of the ten largest settlements in 2009 was $84.4 million.

The settlement in Velez v. Novartis Corp., a federal case from the Southern District of New York, accounts for over half of this years' total. The case was originally filed in 2004 by Amy Velez and four female coworkers who alleged they were discriminated against on the basis of gender and pregnancy. Last May, Novartis was found liable and ordered to pay $3.4 million to twelve named plaintiffs. The jury also ordered Novartis to pay $250 million in punitive damages to the class of female employees.

The company appealed the verdict but later agreed to a $175 million settlement. Of the settlement money, $152.5 million will go directly to the class of 5,600 current and former female employees; the other $22.5 million will be used to address personnel policies at the company, according to a Bloomberg report.

Employment-Related Class Action Cases to Be Decided by The Supreme Court

This term, the United States Supreme Court will be deciding two employment-related class action cases. According to the Society for Human Resource Management (SHRM), the decisions in these cases could alter when, whether and how class actions can be brought in the future.

Dukes v. Wal-Mart Stores, Inc.

Betty Dukes, a Wal-Mart cashier and greeter, originally filed suit against the retailer under the Civil Rights Act of 1964, which prohibits discrimination on the basis of race or gender. The case evolved into a class action which, according to an AP report, could involve over one million current and former female employees of Wal-Mart. The suit, filed in the United States District Court of the Northern District of California, specifically alleged that male employees were promoted faster and to higher positions than women.

By a narrow 6-5 margin, the Ninth Circuit Court of Appeals ruled to certify the class. Wal-Mart appealed, and in December, the U.S. Supreme Court granted certiorari to hear arguments on the case.

According to Forbes Magazine, one of the crucial issues in the case surrounds Rule 23 of the Federal Rules of Civil Procedure, which governs the formation of class actions. The Supreme Court will be asked to decide whether a case with such a substantial number of plaintiffs should be allowed to proceed under Rule 23 and whether the plaintiffs in the case can seek compensatory damages.

AT&T Mobility v. Concepcion

In Concepcion, the Court will have to decide the rights of consumers to file class actions. In 2006, Vincent Concepcion and his wife signed up for wireless service with AT&T. As part of this service, according to the lawsuit, the company promised free cell phones. The phones, however, were subject to tax and other charges.

The Concepcions filed suit and AT&T subsequently asked the U.S. District Court to dismiss the suit because the contract between the Concepcions and AT&T banned class action lawsuits as a remedy. The court, however, refused and held that a ban on class actions would violate state law. The Supreme Court heard arguments in November and a decision is expected within the next few months.

Article provided by The Law Office of Richard J. Breibart, LLC
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