Class Actions Brief Blog

Courts have understandably been reluctant to certify a class consisting of “persons who are injured by the defendant” or “individuals to whom the defendant is liable,” i.e., a class definition that depends on the outcome of the case. Such a “fail-safe” class is unfair to defendants:  if defendants win the case, there is no class that is bound by the result because the class consists solely of victors.

A West Virginia judge recently denied a former Dollar General employee her bid for class certification, finding the proposed class was fail-safe and therefore improper. Stephanie N. Paulino filed a class action lawsuit against Dollar General in 2012, alleging the company violated the West Virginia Payment and Collection Act (“WPCA”) when it failed to pay her final wages within 72 hours of her termination. The putative class was defined as all former West Virginia Dollar General employees who were “involuntarily terminated” and who were “not paid their final wages within 72 hours of termination.”

According to Judge Groh, the putative class was an impermissible “fail-safe” class because membership depended on Dollar General’s ultimate liability to each employee under the WPCA. Members could either win their WPCA claims and join the class, or lose and be excluded from the class.

The Fourth Circuit hasn’t weighed in directly on the “fail-safe” class issue, but district courts, including in the District of South Carolina, have flatly prohibited such definitions. Melton v. Carolina Power & Light Co., 283 F.R.D. 280 (D.S.C. 2012)

The class also failed to meet Rule 23’s commonality, typicality, predominance, and superiority requirements. Judge Groh found that the Court would have to engage in an individualized analysis to determine whether a member could even qualify for the class. Specifically, the Court would have to determine, at minimum, three threshold questions: Did the former employee resign, or was he fired? When did Dollar General terminate the former employee (including both the time and the date)? When did Dollar General disburse the former employee’s final wages? The court held that these initial questions require a substantial, fact-intensive, individualized investigation.