Another Class Action Bites the Dust. The Good and Bad News for Employers

Every day in California new class action lawsuits are filed against employers. Most are based on alleged violations of wage and hour laws. These cases can take years to resolve and are very costly to the employers and the economy in general. The good news: Some courts are vocalizing an annoyance at having to deal with meritless cases that are accompanied by massive volumes of paper for the court to review.

In the recent case of Morgan v. Wet Seal (CA1/2 A133590 10/12/12, certified for publication 11/7/12), the appellate court affirmed the trial judge’s order denying class certification. The plaintiffs had tried to make a class action out of the allegation that Wet Seal (a clothing retailer) required employees to purchase and wear Wet Seal clothes and that the company did not reimburse employees for the use of personal vehicles in driving between stores. Wet Seal’s written policies were less than ideal. There were multiple versions of the same policy, policy statements which appeared to conflict and less than crystal clear treatment of the applicable law. This was the hook for plaintiffs. Had these problems been corrected before the suit, it likely would never have been filed. Despite the flaws in the written policies, they did not appear to require employees to purchase clothes or drive without reimbursement, and the trial court ruled that the alleged violation of law could not be based solely upon the written policies. Accordingly, the plaintiffs attempted to use the testimony of over 50 employees and former employees. This testimony, however, did not show a commonality between the employees. Rather, it showed that whether or not employees felt compelled to purchase and wear the company’s clothing or drive without reimbursement would require an individualized inquiry of each employee/class member. The bad news: These types of cases and the determination on class action status often takes years and hundreds of thousands of dollars in defense costs, even before considering the employer’s potential cost if the plaintiffs are successful. For example, the Morgan v. Wet Seal case was filed over four years ago, and although it is now dead as a class action, it does continue as a lawsuit between the three named plaintiffs and the company.