Largest overtime-pay lawsuit of all time? IBM

Despite IBM having some products, such as Lenovo and being a standard in computing, they sure don't know how to treat its employees very well. They faced legal action and litigation in 2006 in a class action lawsuit against them for failure to pay for overtime work. Everything stated is taken from here http://overtimepaylawsuitagainstibm.com/websys94.pl?wsi=0&websys_screen=public_press_060124 which is from 2006.

IBM was sued for failing to pay overtime wages as regulated by federal and state laws. It was a class action lawsuit comprised of tens of thousands of workers at IBM, during the year which netted 90 billion in sales. IBM had around 250,000 employees. One of the plaintiffs, Exaldo Topacio and almost his entire team of workers installing network components put in more than 40 hours a week in order to meet deadlines; however, the defendant, IBM claims that these people were involved in the production of software, which under law does not require overtime pay.

IBM, with all its lawyers to back it up, still couldn't do anything against the 32,000 plaintiffs in this class action lawsuit. IBM in November, 2006 settled the lawsuit by paying out $65 million in damages. The case never went to court. IBM claims that it would have been too expensive to fight the case (obviously because they are wrong).


Taken from Wikipedia:

Federal class actions
In the United States federal courts, class actions are governed by Rule 23 of the Federal Rules of Civil Procedure.
Class action lawsuits may be brought in federal court if the claim arises under federal law, or if all named representative members of the potential plaintiff class are from a different state than the defendant. Nationwide plaintiff classes are possible, but such suits must have a commonality of issues across state lines. This may be difficult as the civil law in the various states has significant differences and thus each state's set of claims may have to be handled separately or through the device of multi-district litigation (MDL). It is also possible to bring class action lawsuits under state law, and in some cases the court may extend its jurisdiction to all the members of the class, including out of state (or even internationally) as the key element is the jurisdiction that the court has over the defendant.
Typically, federal courts are thought to be more favorable for defendants, and state courts more favorable for plaintiffs. Most class action cases are filed initially in state court. The defendant will frequently try to remove the case to federal court. The Class Action Fairness Act of 2005 increases defendants' ability to remove cases to federal court. It should be noted, however, that the Class Action Fairness Act contains carve-outs for, inter alia, shareholder class action lawsuits covered by the PSLRA and those concerning internal corporate governance issues (the latter typically being brought as shareholder derivative actions in the state courts of Delaware, the state of incorporation of most large corporations).[2]
The procedure for filing a class action is to file suit with one or several named plaintiffs on behalf of a putative class. The putative class must consist of a group of individuals or business entities that have suffered a common wrong. Usually, these kinds of cases are connected to some standard action on the part of a business, or some particular product defect or policy that was applied to all potential class members in a uniform manner. After the summons and complaint is filed, the plaintiff usually has to bring a motion (sometimes at the same time as filing the summons and complaint) to have the class certified. In some jurisdictions class certification may require additional discovery in order to determine if the proposed class is sufficiently cohesive.
Upon the motion to certify the class, the defendants may object to whether the issues are appropriately handled as class litigation, to whether the named plaintiffs are sufficiently representative of the class, and to their relationship with the law firm or firms handling the case. The court will also examine the ability of the firm to prosecute the claim for the plaintiffs, and their resources for dealing with class actions; the court may, as due process requires, have complex notices sent, published, or broadcast to the public, in any place where the class members can be found.
As part of this notice procedure, there may have to be several notices, first a notice giving class members the opportunity to opt out of the class, i.e. if individuals wish to proceed with their own litigation they are entitled to do so, only to the extent that they give timely notice to the class counsel or the court that they are opting out. Second, if there is a settlement proposal, the court will usually direct the class counsel to send a settlement notice to all the members of the certified class and all the members of any subclasses (that might have slightly different but uniform claims), informing them of the settlement offer being made by the defendants, and the fact that the named plaintiffs have agreed to accept the settlement. Usually, the court will also state the legal fees being paid to the class counsel as part of the settlement, which may be considerable, making class actions appealing to many plaintiff law firms.
In federal civil procedure law, which has generally been accepted by most states (through adoption of rules paralleling the FRCP), the class action must have certain definite characteristics: (1) the class must be so large as to make individual suits impractical, (2) there must be legal or factual claims in common (3) the claims or defenses must be typical of the plaintiffs or defendants, and (4) the representative parties must adequately protect the interests of the class. In many cases, the party seeking certification must also show (5) that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and (6) that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand.

[edit] State class actions
Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have homegrown civil procedure codes which they have been reluctant to abandon. The law of class actions in California developed in a rather chaotic fashion through judicial glosses on vaguely worded statutes (there are four key ones), and has never been cleaned up (in the way that the FRCP cleaned up the thicket of federal procedural law). As a result, there are entire treatises dedicated to the topic. Not every state permits class actions. Virginia, for example, does not provide for any class action vehicle.

Advantages of class actions
Class action lawsuits may offer a number of advantages because they aggregate a large number of individualized claims into one representational lawsuit.
First, aggregation may increase the efficiency of the legal process, and lower the costs of litigation.[7] In cases with common questions of law and fact, aggregation of claims into a class action may avoid the necessity of repeating "days of the same witnesses, exhibits and issues from trial to trial." Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 473 (5th Cir. 1986) (granting certification of a class action involving asbestos).
Second, a class action overcomes "the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights." Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 388, 344 (7th Cir. 1997)). "A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor." Amchem Prods., Inc., 521 U.S. at 617 (quoting Mace, 109 F.3d at 344). In other words, a class action ensures that a defendant who engages in widespread harm -- but does so minimally against each individual plaintiff -- must compensate those individuals for their injuries. For example, thousands of shareholders of a public company may have losses too small to justify separate lawsuits, but a class action can be brought efficiently on behalf of all shareholders. Perhaps even more important than compensation is that class treatment of claims may be the only way to impose the costs of wrongdoing on the wrongdoer, thereby deterring future wrongdoing.
Third, in "limited fund" cases, a class action ensures that all plaintiffs receive relief and that early-filing plaintiffs do not raid the fund (i.e., the defendant) of all its assets before other plaintiffs may be compensated. See Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999). A class action in such a situation centralizes all claims into one venue where a court can equitably divide the assets amongst all the plaintiffs if they win the case.
Finally, a class action avoids the situation where different court rulings could create "incompatible standards" of conduct for the defendant to follow. For example, a court might certify a case for class treatment where a number of individual bond-holders sue to determine whether they may convert their bonds to common stock. Refusing to litigate the case in one trial could result in different outcomes and inconsistent standards of conduct for the defendant corporation. Thus, courts will generally allow a class action in such a situation. See, e.g., Van Gemert v. Boeing Co., 259 F. Supp. 125 (S.D.N.Y. 1966).
Whether a class action is superior to individual litigation depends on the case. The Advisory Committee Note to Rule 23, for example, states that mass torts are ordinarily "not appropriate" for class treatment. Class treatment generally does little to improve the efficiency of a mass tort because the claims almost always involve individualized issues of law and fact that will have to be re-tried on an individual basis. See Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996) (rejecting nationwide class action against tobacco companies). Mass torts also involve high individual damage awards; thus, the absence of class treatment will not impede the ability of individual claimants to seek justice. See id. Other cases, however, may be more conducive to class treatment.
The preamble to the Class Action Fairness Act of 2005, passed by the United States Congress, found:
Class-action lawsuits are an important and valuable part of the legal system when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.

[edit] Criticisms of class actions
There are several criticisms of class action lawsuits. The preamble to the Class Action Fairness Act stated that class actions harmed class members with legitimate claims and defendants that have acted responsibly; adversely affected interstate commerce; and undermined public respect for the country's judicial system.
Class members often receive little or no benefit from class actions. Examples cited for this include large fees for the attorneys, while leaving class members with coupons or other awards of little or no value; unjustified awards are made to certain plaintiffs at the expense of other class members; and confusing notices are published that prevent class members from being able to fully understand and effectively exercise their rights.
For example, in the United States, class lawsuits sometimes bind all class members with a low settlement. These "coupon settlements" (which usually allow the plaintiffs to receive minimal benefit such as a small check or a coupon for future services or products with the defendant company) are a way for a defendant to forestall major liability by precluding a large number of people from litigating their claims separately, to recover reasonable compensation for the damages. However, existing law requires judicial approval of settlement and class members may opt out of settlements.