San Francisco, CA On October 16, the District Court for the Northern District of California denied plaintiff Mark Schobinger’s petition for class certification in Schobinger v. Twitter. The California labor employment lawsuit centers on allegations that, during Elon Musk’s protracted takeover over the social media company in October 2022, Twitter, now X, misled users about the security of their data.
The denial of class action status deals a significant blow to the lawsuit. Nonetheless, California labor and employment claims remain to be litigated on an individualized basis.
No annual bonus
Schobinger was the Senior Director of Compensation for Twitter during the 2022–23 time period, when Twitter was being acquired by Elon Musk. He was a member of a pool of employees who were eligible for an annual bonus payable in early 2023. It is undisputed that, under the terms of the bonus plan, the company was not required to pay the bonus; it was a matter of discretion for the company. But Schobinger alleges that in April, May, and August 2022, the company promised employees that they would, in fact, get the bonus as long as they stayed through the acquisition. Schobinger alleges that he stayed through the acquisition in reliance on this promise, but that he and his fellow employees never got the bonus.
Schobinger, however, in his corporate role, had argued to Twitter executives that the bonus was strictly discretionary and should not be paid. The Northern District reasoned that it would be impossible for him to get on the witness stand and adequately represent the interests of Twitter employees who claim that the company wrongfully withheld the bonus. Further, there were awkward implications that he had perjured himself during a sworn deposition.
Factors considered in determining class representatives
This decision highlights the complexities and nuances involved in determining class certification, particularly when it comes to identifying appropriate class representatives. Under Federal Rule 23, courts consider several factors to determine whether a proposed class representative is suitable to adequately represent the interests of the entire class. These factors typically include:
Typicality: The representative's claims must be typical of the class. This means their claims must arise from the same common course of conduct, be based on the same legal theory, and involve similar facts.
Commonality: There must be questions of law or fact common to the class. This ensures that the claims of the class members are sufficiently similar to warrant a single proceeding.
Adequacy of representation: The representative must fairly and adequately protect the interests of the class. This involves considering factors such as the representative's ability to prosecute the case, their willingness to do so, and the absence of any conflicts of interest; and
Numerosity: The class must be so numerous that it is impractical to prosecute individual actions. This typically means a class of at least 40 or 50 members.
The Schobinger decision
In Schobinger, the court found that the proposed class representative, Mark Schobinger, failed to meet the typicality and adequacy of representation requirements. The court noted that Schobinger's claims were not typical of the class because he had unique experiences and interactions with Twitter that were not representative of the broader class. Additionally, the court expressed concerns about Schobinger's ability to adequately represent the class, citing his lack of experience with class actions and his potential conflicts of interest.
Implications for future class actions
Workers, especially those like former Twitter employees, face daunting challenges in pursuing labor and employment claims against deep-pocketed employers. They can simply be priced out of court by a defendant who can pursue nearly infinite (and possibly meritless) motion practice and counterclaims.
Class action lawsuits are an important tool in streamlining the legal process and leveling the playing field between individual employees and powerful corporate entities. In some circumstances, losing this tool can simply end workers’ opportunities to pursue legal redress. The Northern District’s denial is a big setback for the Twitter executives who never got their promised bonuses.
The Schobinger decision is an important reminder of the stringent requirements that must be met for class certification. Courts are increasingly scrutinizing the qualifications of proposed class representatives to ensure that they are capable of adequately representing the interests of the entire class. This trend may have a chilling effect on class action litigation, as plaintiffs may find it more difficult to identify suitable representatives.
What remains
In December, the Northern District determined that Schobinger’s claims against Twitter were plausible, allowing the lawsuit to proceed. The judge ruled that Twitter’s offer to pay bonuses to its employees, although made orally, became a binding contract under California law. The Twitter executives who were promised bonuses may not be entirely typical of workers laid off as a consequence of a corporate acquisition and may choose to pursue their claims individually.
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