91,000-member au pair class action alleging wage-suppression scheme certified
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Thursday, February 8, 2018

91,000-member au pair class action alleging wage-suppression scheme certified

By Ronald Miller, J.D.

Au pairs were granted certification of a Rule 23 class action alleging that multiple sponsor agencies engaged in an illegal agreement to suppress wages and inflate their own fees, in violation of federal and state wage laws. According to the plaintiffs, the agencies maintained a uniform policy and had a “collective agreement” to “artificially suppress au pair wages at an unlawfully low level.” A federal district court in Colorado was satisfied that the au pairs’ proposed classes satisfied the prerequisites of Rule 23(a), with the exception of one proposed nationwide state-law claim class. Further, agreeing with the plaintiffs that the agencies’ alleged agreement to suppress wages was the “foundational liability issue” in the antitrust claim, the court found that the common issue predominated over any individual issues (Beltran v. InterExchange, Inc., February 2, 2018, Arguello, C.).

Exchange program. Au pairs are participants in a “cultural exchange” program. They work 45 hours per week and provide child care services to their host families. The defendants in this actions are agencies authorized by the State Department to recruit and place foreign-national au pairs with host families in the United States under the J-1 visa program. According to the au pairs, in spite of federal regulations requiring that they receive “not less than” the applicable minimum wage, the sponsoring agencies conspired and agreed to set all of the au pairs’ weekly wages at the purported minimum amount: $195.75 per week plus room and board. They alleged that the sponsors falsely informed au pairs and host families that this weekly salary was the maximum wage au pairs were permitted to receive.

The au pairs filed suit claiming that the agencies violated the Sherman Antitrust Act, RICO, the FLSA, and the laws of several states. They filed a motion to certify a Rule 23 class action seeking certification of national classes for the alleged antitrust violations and RICO violations. They also proposed national classes against those defendant agencies that required au pairs to attend unpaid training in a specific state, regardless of where the au pairs were ultimately placed, among other claims.

With the exception of one proposed class, the court was satisfied that each of the au pairs’ proposed classes satisfied the four prerequisites of Rule 23(a).

Numerosity. It was indisputable that the proposed classes were sufficiently numerous to satisfy Rule 23(a)(1). At the time the motion for class certification was filed, the proposed national classes had more than 91,201 members. The court concluded that it would be impracticable for the class members to pursue individual actions since they reside internationally, and English was a second language for many of them. Further, it was economically unreasonable to expect the au pairs to pursue their own claims given the high cost of litigation. Thus, the proposed classes easily satisfied the numerosity requirement.

Commonality. In antitrust class actions, the court observed, “the claimed existence of a conspiracy to fix prices in violation of antitrust laws has been found to present common questions in actions brought by plaintiffs who asserted that they had been harmed by those activities.” Here, the court found a multitude of common issues of law and fact exist. The au pairs adequately alleged an antitrust conspiracy that “represents a single decision, policy or plan.” The same was true of their RICO and state-law claims because those arose from the same alleged conduct that furthered the overall conspiracy. Accordingly, the proposed classes satisfied the commonality requirement.

Typicality. The named plaintiffs and members of the proposed antitrust class all alleged a common agreement among the sponsoring agencies to fix wages at an unlawfully low level. The court concluded that the RICO class claims arose out of the same course of events and the same purported overall fraud. The court also was satisfied that the named plaintiffs’ state-law claims were typical of potential class members’ claims, as the named plaintiffs and members of each subclass will invoke the same state statues and common-law doctrines. Therefore, the plaintiffs’ proposed antitrust class, RICO class, training classes, and state-specific subclasses met the typicality requirement of Rule 23(a)(3).

However, one proposed nationwide state-claim class failed to meet the typicality requirement. This class asserted state-law claims for breach of fiduciary duty, negligent misrepresentation, fraudulent concealment, violation of consumer protection statutes, and violation of minimum wage statutes. Because no named plaintiffs resided in 40 states or the District of Columbia during their employment, they were without standing with regard to the state-claim class.

Adequacy. The named plaintiffs have alleged facts demonstrating that they will fairly and adequately represent the proposed classes and subclasses, the court held. First, they stated there were no conflicts of interest among the proposed class representatives, counsel, and potential members. Second, plaintiffs’ counsel had sufficient experience and expertise to vigorously prosecute the action on behalf of all classes and subclasses. Thus, the plaintiffs satisfied the adequacy element of Rule 23(a)(4).

Predominance. Questions of law or fact common to the class members predominated over any questions affecting only individual members, the court found, concluding the plaintiffs satisfied the predominance requirement. With regard to the antitrust class, there was evidence the alleged conspiracy artificially deflated the baseline for au pairs’ wages.

Further, the court concluded that certification of the RICO class was appropriate under Rule 23(b)(3) because common questions predominate over any individual issues. Moreover, the court observed, class certification “is proper when ‘causation can be established through an inference of reliance where the behavior of plaintiffs and the members of the case cannot be explained in any way other than reliance upon the defendant’s conduct.’” And an inference of reliance was warranted here. Thus, the court was satisfied that common issues would predominate in adjudicating the various classes and subclasses.

Superiority. Finally, the court concluded that class treatment of the plaintiffs’ claims “will achieve economies of time, effort, and expense, and promote uniformity of decisions as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results.” The court also agreed with the plaintiffs that it was equipped to address any manageability challenges that may arise. Accordingly, it determined that a class action was superior to other methods of adjudication.

Thus, the plaintiffs’ proposed classes and subclasses satisfied both elements of Rule 23(b)(3), and were certified accordingly.

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