Class Action Defense

August 21, 2025August 21, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 115: Ninth Circuit Strikes Arbitration Clause In Employee Health Plan

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates Jesse Stavis and Caitlin Capriotti with their discussion of a major Ninth Circuit decision addressing a district court’s denial of a motion to compel arbitration in a proposed ERISA class action.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Samsung Podcasts, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, and YouTube.

Episode Transcript

Jerry Maatman: Thank you to our listeners for being here again for our next episode of the Class Action Weekly Wire, our podcast series that examines class action issues. I’m Jerry Maatman, a partner at Duane Morris, and today we have Jesse Stavis of our Philadelphia office and from California, our newest team member, Caitlin Capriotti. Thank you both for being here to join the podcast.

Jesse Stavis: Great to be here, Jerry. Thanks so much for having me on again.

Caitlin Capriotti: Thanks, Jerry. I’m really happy to be here for my first episode.

Jerry: So, the Ninth Circuit just issued a very significant opinion involving Sodexo and its employee health care plan, and specifically how arbitration clauses interact with ERISA class action claims. Caitlin, can you give our listeners a synopsis of the decision?

Caitlin: Yeah, of course. So, the plaintiff in this case, Robert Platt, alleged that a monthly tobacco surcharge imposed on his employee health insurance premiums violated the ERISA. The plaintiff brought claims on behalf of himself and other plan participants under ERISA Sections 502(a)(1)(B) and 502(a)(3) and a fiduciary breach claim under 502(a)(2) on behalf of the health plan itself. Sodexo sought to compel arbitration based on the provision it unilaterally added to the Plan after Platt had already enrolled. The district court denied the motion, holding that there was no enforceable arbitration agreement because Sodexo could not unilaterally modify the Plan to impose arbitration without Platt’s consent, and then the company had appealed to the Ninth Circuit.

Jerry: Thanks for that cogent summary. Jesse, how did the Ninth Circuit react after reviewing the district court’s opinion?

Jesse: The Ninth Circuit agreed. It held that an employer cannot create a valid arbitration agreement simply by unilaterally amending an ERISA-governed plan. Instead, valid consent from the appropriate party is required. Now, for Platt’s individual claims under Sections 502(a)(1)(B) and (a)(3), the Ninth Circuit found that Platt himself was the relevant consenting party – and that he had not consented to arbitration, so he received insufficient notice, and was never informed that continued participation would signal his agreement.

However, the Ninth Circuit held that for the fiduciary breach claim under Section 502(a)(2), the Plan, and not Platt, was the relevant consenting party. Because the Plan’s terms grant Sodexo broad authority to amend its provisions, the court found that the Plan consented to arbitration. Nonetheless, the panel also agreed with Platt’s argument that even if the Plan had consented, the arbitration clause’s ban on representative actions violated the effective vindication doctrine, which protects statutory rights from being waived through arbitration. Since representative actions are integral to ERISA enforcement under Sections 502(a)(2) and 409(a), the court held that the representative action waiver was unenforceable.

Jerry: So, what’s the essential big takeaway here? Is this just another quirky, fact-specific Ninth Circuit opinion, or are we starting to see a trend in ERISA class actions where arbitration clauses are at issue?

Caitlin: We’re definitely starting to see a trend. This decision aligns with what we’ve seen from several other circuits, specifically the Second, Third, Sixth, Seventh, and Tenth. Courts are increasingly skeptical of arbitration provisions in ERISA plans that try to block representative or class-wide claims.

Jesse: And if we take a step back and look at the big picture, we really see that employers are losing ground in trying to force individualized arbitration when plan-wide relief is at stake. That’s a pretty huge shift in ERISA litigation strategy, and employers need to take note.

Jerry: Let’s unpack this a little more. Obviously, the case is now going back down to the district court because the Ninth Circuit affirmed in part and reversed in part. What exactly got compelled to arbitration or stayed, and what got tossed?

Jesse: So, the Ninth Circuit said that Sodexo could not compel individual arbitration for benefits and equitable relief because they didn’t get proper consent from plan participants when they added the arbitration clause unilaterally. That part stuck.

Caitlin: But for the fiduciary breach claim, the court actually said Sodexo did get valid consent – from the Plan itself, which is a distinct legal entity. So, technically, that claim could be arbitrated.

Jerry: But that being said, the way I read the Ninth Circuit’s opinion, there seems to be a catch. What’s that all about?

Jesse: Yes, Jerry, there is indeed a catch. Because the arbitration clause had a representative action waiver, the court said enforcing that would violate the effective vindication doctrine. That means Platt couldn’t be blocked from pursuing a fiduciary breach claim on a representative basis, which is exactly what ERISA allows.

Jerry: Well, this is probably music to the plaintiffs’ bar, because their business model is to find a case, file the case, certify the case, and then monetize the case – and avoid being compelled to arbitration. Are the plaintiffs’ attorneys going to have a broader array of tools to try and frustrate motions to compel arbitration and keep their cases in court?

Jesse: Oh, yes, they certainly are. And beyond that, the court also opened the door for unconscionability defenses, even though Sodexo had a valid agreement with the Plan. The Ninth Circuit said those defenses arise under federal law, not state law, which means they’re not preempted by ERISA. So, Platt gets another shot at challenging the clause.

Jerry: So, is this settled law in your opinion, or are we seeing a little bit of the Wild, Wild West and a lot of innovative, creative attacks on arbitration clauses in the coming months?

Caitlin: It’s still a bit of the Wild West. While the circuits are mostly moving in the same direction, there are differences on questions like plan-wide monetary relief versus equitable relief, and how far effective vindication goes.

Jerry: My sense is this lack of clarity, or that the legal principles are in flux, may well put this on the Supreme Court’s radar, especially as more circuit splits emerge on the arbitration issue in ERISA class actions. Before we wrap up, what are your big takeaways from the Ninth Circuit’s opinion in Sodexo?

Caitlin: For me, it’s the reaffirmation that ERISA’s representative structure matters. Courts won’t let arbitration clauses rewrite that.

Jesse: And I’d just add to that by saying that employers need to be very careful with how they draft arbitration clauses in ERISA plans. Unilateral amendments and representative waivers are definitely more risky territory.

Jerry: Well said. That’s cogent advice. We’ll be watching to see if the Supreme Court of the United States takes this up, but for now, loyal blog readers and listeners, be sure to keep checking the Duane Morris Class Action Blog for our updates on all things class actions and arbitration issues. Well, thanks for being here, Jesse and Caitlin, and thanks for tuning in, listeners.

Jesse: Thanks so much for having me on the podcast, Jerry, and thanks, as always, to the listeners for being here.

Caitlin: Thanks, everyone, and thank you for the warm welcome. I’m happy to be here.

August 20, 2025August 20, 2025 by Alex W. Karasik

Second Circuit Rules That The NFL Arbitration Of Race Discrimination Claims Because Arbitration Process Provides Arbitration “In Name Only”

By Alex W. Karasik and Gregory S. Slotnick

Duane Morris Takeaways: On August 14, 2025, in Flores v. N.Y. Football Giants, Inc., No. 23-1185, 2025 U.S. App. LEXIS 20688 (2d Cir. Aug. 14, 2025), the U.S. Court of Appeals for the Second Circuit affirmed a decision from the Southern District of New York denying a motion to compel arbitration of claims of plaintiff Brian Flores (“Flores”) asserting race discrimination filed by the National Football League (“NFL”) and six of its member clubs. In closely examining the arbitration provision at issue (and agreed upon by the parties), the Second Circuit found that the NFL’s internal arbitration framework, which provided the NFL Commissioner with unilateral control over arbitrator selection, substantive process of proceedings, and other discretionary decision-making powers, provided for arbitration “in name only” and fell short of requirements set forth in the Federal Arbitration Act (“FAA”).

According to the Second Circuit, the NFL Commissioner’s complete control over the NFL’s internal arbitrations pursuant to the NFL Constitution makes the process, “inherently biased” and leaves it outside the protections of the FAA. The Second Circuit sternly concluded that, “[u]ltimately, the NFL’s arbitration provision is fundamentally unlike any traditional arbitration provision protected by the FAA,” and the agreement between Flores and the NFL to arbitrate his claims, “is plainly unenforceable under the most basic principles of the effective vindication doctrine,” requiring arbitration guarantee that Flores can “vindicate [his] statutory cause of action in [an] arbitral forum.” Id. at *5. As a result, Flores’s racial discrimination lawsuit will proceed in federal court and the NFL will likely need to go back to the drawing board to update its internal arbitration provisions so they comply with arbitration mandates under the FAA and prior court decisions. All employers seeking to prepare and enforce arbitration provisions should heed the Second Circuit’s concerns with the NFL’s arbitration language and process to ensure their agreements comply with the FAA.

Case Background

Since 2008, Flores – the current defensive coordinator of the NFL’s Minnesota Vikings – has been employed as a football coach by a variety of NFL teams, including the New England Patriots (2008-2018), Miami Dolphins (2019-21), Pittsburgh Steelers (2022), and the Minnesota Vikings (2023-Present). Id. at *5. The operation and structure of the NFL and the relationship between the NFL, its member clubs, and the clubs’ employees (including NFL coaches), are governed by the NFL Constitution and Bylaws (the “NFL Constitution”). Id. at *6. The NFL Constitution “broadly empowers” the NFL Commissioner to manage the league’s affairs, including, but not limited to, the ability to interpret and establish league policy and procedure, discipline relevant parties, hire legal counsel to respond to conduct detrimental to the league, its member clubs or employees, or to professional football, and the full, complete, and final jurisdiction and authority to arbitrate disputes between relevant parties, including between employees and member clubs. Id. Flores’s employment agreement with the Patriots included a club-specific arbitration provision, incorporating by reference arbitration language in the NFL Constitution. Id. at *9-10.

In January 2019, while still under contract as a coach with the Patriots, Flores interviewed to be the head coach of the Denver Broncos. Id. at *9. Flores claims the Broncos discriminated against him because of his race in failing to hire him and that the Broncos only offered him an interview as a “sham” to satisfy the Rooney Rule – a long-standing requirement by the NFL that two opportunities to interview for each open coaching position be allotted to prospective candidates who are members of a racial minority group and/or a woman. Id.

One month later, in February 2019, Flores was hired as the head coach of the Dolphins. Id. In January 2022, Flores was fired following three seasons as head coach of the Dolphins. Id. at *10. After the Dolphins fired him, Flores interviewed for head coach positions with both the New York Giants and the Houston Texans, though he was not hired for either position due to what he alleges to be racial discrimination and retaliation. Id. at *10-11. In February 2022, Flores was hired as a senior defensive assistant and linebackers coach with the Steelers, signing an employment agreement that, like his agreement with the Patriots, included a club-specific arbitration agreement and incorporated by reference the NFL Constitution. Id. at *11. The same month, Flores filed a putative class action against the NFL, the Denver Broncos, New York Giants, and Miami Dolphins alleging claims of race discrimination under 42 U.S.C. § 1981, as well as state and local statutes. Id. at *6. In June 2022, the NFL and its relevant member clubs sought to compel Flores to arbitrate his claims pursuant to the employment agreements Flores signed with the Patriots and Steelers, respectfully. Id. at *7-8.

The District Court found that Flores’s claims against the Broncos and the NFL clearly fell outside his club-specific arbitration agreement with the Patriots. Id. at *10. Although the District Court found that the NFL Constitution’s arbitration provision applied to Flores’s claims, the Court refused to enforce it, reasoning that it was illusory and unenforceable under Massachusetts state law because “the NFL and its member clubs have the unilateral ability to modify the terms of the NFL Constitution.” Id. As such, the District Court ordered that Flores’s claims against the Broncos and related claims against the NFL be litigated in federal court. Id. The NFL’s appeal to the Second Circuit followed.

The Second Circuit’s Decision

The Second Circuit affirmed the District Court’s decision denying the motion to compel Flores to arbitrate his claims against the NFL, the Broncos, the Giants, and the Texans. Id. at *25-26. Specifically, the Second Circuit concluded that Flores’s agreement under the NFL Constitution to submit his claims against the Broncos and the NFL to the unilateral substantive and procedural discretion of the NFL Commissioner (the principal executive of one of Flores’s adverse parties) provides for arbitration “in name only” and lacks the protection of the FAA. Id. at *18. It also held that Flores’s agreement to submit his claims against the Broncos and the NFL to the unilateral discretion of the NFL Commissioner is unenforceable because the agreement fails to guarantee Flores can “vindicate [his] statutory cause of action in [an] arbitral forum.” Id. The decision further confirmed that the District Court did not err or abuse its discretion in denying Defendants’ motion to compel arbitration or in denying Defendants’ motion for reconsideration. Id. at *2.

The Second Circuit provided background on the FAA and its principles mandating that although the FAA establishes a “liberal federal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract,” not every self-described “arbitration agreement” falls within the FAA’s ambit. Id. at *14. Under the facts at issue here, the Second Circuit found that while Flores agreed to arbitrate his statutory claims by way of arbitration provisions in the employment agreement he entered with the Patriots, the relevant language granted the NFL Commissioner unilateral discretion over the arbitration process itself. Id. The Second Circuit held that such one-sided control undermines the fairness required for a valid arbitration agreement under the FAA because the NFL Constitution’s arbitration provision fails to provide: (i) an independent arbitral forum for bilateral dispute resolution, resulting instead in compelling one party (Flores) to submit disputes to the substantive and procedural authority of the principal executive officer of one of their adverse parties (the NFL); and (ii) the procedure to be used in resolving the dispute, instead allowing the NFL Commissioner to unilaterally dictate arbitral procedure. Id. at *19-22. The Second Circuit concluded that “the NFL’s arbitration provision is fundamentally unlike any traditional arbitration provision protected by the FAA,” is not afforded any special deference under the FAA, and that this served as an independent reason to affirm the District Court’s order denying the motion to compel Flores to arbitrate his claims. Id. at *22.

Moreover, the Second Circuit found Flores’s agreement was “plainly unenforceable” under exceptions to the FAA since the arbitration provision “fails to provide Flores access to an arbitral forum” and in fact waives Flores’s right to pursue statutory remedies. Id. at *22-24. It reasoned that requiring Flores to submit statutory claims to the unilateral discretion of the executive of one of his adverse parties (the NFL Commissioner), without an independent arbitral forum, denied Flores arbitration in any meaningful sense of the word, rendering the agreement unenforceable. Id. at *24.

Relying on the foregoing reasoning, the Second Circuit affirmed the District Court’s order, finding: (i) Flores’s agreement under the NFL Constitution to submit his claims against the Broncos and the NFL to the unilateral substantive and procedural discretion of the NFL Commissioner provides for arbitration “in name only,” thus lacking the protection of the FAA; (ii) Flores’s agreement to submit his claims against the Broncos and the NFL to the unilateral discretion of the NFL Commissioner is unenforceable because the agreement fails to guarantee Flores can “vindicate his statutory cause of action in an arbitral forum,”; and (iii) the same unprotected and unenforceable agreement also cannot be used to compel Flores to arbitrate his claims against the Giants, Texans or related claims against the NFL. Id. at *25-26.

Implications For Employers

The Second Circuit’s decision means Flores can continue litigating his race discrimination claims against the NFL and its member clubs in the public eye of federal court, despite the NFL’s attempts to force Flores into its internal private arbitration framework. While the attention-grabbing headline provides Flores a major victory in keeping his race discrimination lawsuit alive, perhaps the most important takeaways are for companies or businesses with an arbitration clause or agreement in effect, as well as employers considering implementing same for employees. Employers must ensure that any arbitration procedures, including arbitral forum and substantive process, comply with the FAA’s mandates to ensure bilateral and objective arbitration for all involved parties.

The Second Circuit repeatedly held that although there was no dispute that both Flores and the NFL member teams signed the employment agreement and agreed to the referenced NFL Constitution’s arbitration provision, a process providing one party with unilateral discretionary control over arbitrator selection and substantive procedure amounts to arbitration “in name only,” and lacks the protection of the FAA. As evidenced by the Second Circuit’s description of the relevant arbitration provision’s shortcomings, businesses seeking to ensure their arbitration agreements are enforceable should have counsel regularly review their existing arbitration language to confirm it is bilateral and objective, thus falling under the FAA’s protection.

August 14, 2025August 14, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 114: Seventh Circuit Adopts Higher Standard For Certifying Collective Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates George Schaller and Ryan Garippo with their discussion of a significant ruling handed down by the Seventh Circuit in Richards v. Eli Lilly & Co setting a new standard for the conditional certification of collective actions.

Episode Transcript

Jerry Maatman: Thank you, loyal blog readers for joining us for our next episode of our weekly wire podcast called the Class Action Weekly Wire. I’m Jerry Mammon, of Duane Morris, and joining me today are my associates and colleagues, Ryan, Garippo, and George. Thanks so much, gentlemen, for being on this week’s Podcast.

Ryan Garippo: Great to be here. Thanks for having me, Jerry.

George Schaller: Thanks, Jerry, always good to be on the podcast.

Jerry: Today we’re unpacking a bombshell of a decision by the Seventh Circuit earlier this week, entitled Richards v. Eli Lilly. Ryan, can you give us a high-level overview of what this case is all about, and the ruling and holding of the Seventh Circuit?

Ryan: Yeah, of course, Jerry. So, this case started back in 2022, when Monica Richards, a former employee of Eli Lilly, sued the company for age discrimination under the ADEA, the Age Discrimination in Employment Act. The plaintiff brought the case as a collective action, which means that she wanted to send notice to potentially affected employees and give them a chance to join the lawsuit. The ADEA incorporates the FLSA’s enforcement provision, which allows for employees to band together in collective actions when suing an employer for either age discrimination or wage and hour violations. Richards, as a result, alleged that Eli Lilly promoted younger employees in violation of the Act.

Jerry: So, although this is about the Age Discrimination in Employment Act, it has application to wage and hour collective actions, and I’d say, for every one age discrimination lawsuit, there are probably 100 wage and hour cases being brought. So, what’s at issue is 29 U.S.C. § 216(b) – In other words, in what circumstances should a court conditionally certify a collective action and send notice to those who are at issue in the lawsuit. So, in terms of conditional certification, I think that’s where the rubber meets the road in this decision. George, how do you view that issue?

George: Well, here, Jerry, after the plaintiff moved for conditional certification of the collective action, the district court followed the widely-used approach called the Lusardi two-step process, which is from a district court of New Jersey opinion in 1987, called Lusardi v. Xerox Corp. Under this framework the courts hold that the employee has a light burden at the first stage, and thus may rely solely on the plaintiff’s allegations and courts do not consider competing evidence submitted by the employer. In recent years, the Fifth and Sixth Circuit Courts of Appeals have found that the Lusardi two-step approach is inconsistent with the text of the FLSA. But in contrast, the Second, Ninth, Tenth, and Eleventh Circuits continue to either follow or allow the district court to adopt the two-step framework outlined in Lusardi. Here, the district court followed the two-step framework, granting conditional certification of the collective action and allowing notice to be sent to all potential collective action members.

Jerry: I know to get up to the Seventh Circuit there was an interesting route, unlike a class action under Rule 23(f) where one may file a petition with a court of appeal to examine a class certification order. There’s no such right of appeal under the rules or under the statute under 216(b). And yet Eli Lilly filed a motion for interlocutory appeal, and the Seventh Circuit accepted it, hence its realization of how important this issue is. What exactly did the Seventh Circuit decide in construing the parameters of 216(b)?

Ryan: Well, Jerry, the Seventh Circuit agreed that Lusardi was too permissive, and reformed the approach under 216(b). As a result, it held that the standard allowed for abuse, mainly by encouraging settlements based on the pressure of having a massive case brought against an employer rather than their merit. But, interestingly, the Seventh Circuit also stopped short of adopting the stricter frameworks adopted by both the Fifth and Sixth Circuits, and adopted a standard that’s primarily focused on flexibility. The idea is that instead of a hard rule, the Seventh Circuit gave district courts more discretion. It observed that the notice process should be facilitated by three guiding principles, namely, the timing and accuracy of notice; judicial neutrality; and the prevention of abuses of joinder. And now, plaintiffs have to show that there’s a material factual dispute as to whether employers are similarly situated, and actually bring forward some evidence of a common unlawful policy, as opposed to just relying on the allegations in their complaint. Of course, employers can introduce rebuttal evidence in response to that, and the employee has to engage with it, and the court can consider it as a whole.

Jerry: Sure sounds like a big win, to me, for employers. Given that the devil is in the details when it comes to allowing district courts to exercise their discretion, how do you think this is going to work in practice in the future in the Seventh Circuit at the district court level?

George: All that’s the details, Jerry. It’s definitely a win for employers, because in Illinois, Indiana, and Wisconsin employers can now challenge collective actions earlier and more effectively. But the Seventh Circuit left a lot of questions unanswered, including the level of scrutiny courts should apply when plaintiffs should get limited discovery to meet this new standard. What happens if plaintiffs want to submit supplemental evidence, all that’s left to the court’s discretion? It does remove the automatic green light plaintiffs used to get at the first step, but now it opens the door to new fights about process. How much is enough evidence? When is the case strong enough to notify other employees? Nobody really knows yet.

Ryan: That’s right, and the federal courts are deeply divided, and this is a hot debate amongst the courts of appeal. You’ve got the Fifth and Sixth Circuits rejecting this already, and the Seventh join that group, albeit taking a middle road. Meanwhile, the Second, Ninth, Tenth, and Eleventh Circuits still allow it. Add to that about a second disagreement about whether or not Bristol Myers Squibb, a seminal U.S. Supreme Court case from a few years ago, applies to collective actions, and you’ve got a lot of uncertainty.

Jerry: You know, it’s remarkable that this is a piece of new deal legislation passed in 1938, and yet here we are, 85 years or more later, in 2025, and there are now four different standards to determine when to conditionally certify a collective action under 216(b). And if you’re an employer operating throughout the United States, you could be litigating the same case in one of those jurisdictions in a completely different manner than another one, because the standards are different. So, it does seem to scream out for Supreme Court review eventually, so that there’s one national, unified standard. In the interim, what can employers do?

George: Well, first, if you’re facing a collective action in the Seventh Circuit, this ruling does give you a stronger basis to oppose conditional certification early, and employers should use that opportunity to gather rebuttal evidence and be prepared to challenge the similarly situated claims head on. Second, consult outside counsel early – this area is in flux and procedural missteps can have real consequences.

Jerry: Well, thanks for those insights, and I would commend our listeners and readers to the blog post you gentlemen did earlier this week in elucidating the Seventh Circuit’s opinion. And we’ll be following these issues throughout the year, culminating in publication of the 2026 Duane Morris Class Action Review. So, thanks so much for joining our podcast this week.

Ryan: Thanks for having me on the podcast and thanks to the listeners for being here.

George: Thanks everyone. Great to be here.

August 14, 2025 by Gerald L. Maatman, Jr.

You’ve Got Mail But Not Class Certification

By Gerald L. Maatman, Jr., Shannon Noelle, and Ryan Garippo

Duane Morris Takeaways: In a recent opinion in Fischbein v. IQVIA Inc., Case No. 19-CV-5365 (E.D. Pa. June 5, 2025), Judge Nitza I. Quiñones of the U.S. District Court for the Eastern District of Pennsylvania denied class certification of a proposed class of healthcare professionals that allegedly received unsolicited fax advertisements in violation of the Telephone Consumer Protect Act (“TCPA”). The Court determined that the TCPA only prohibits receipt of unsolicited ads on a “a traditional stand-alone fax machine” (as opposed to modern online faxing) and plaintiffs did not demonstrate that common evidence existed showing all class members received the alleged ads at issue through a traditional fax machine as opposed to through an online transmission. As a result, the Court found that plaintiffs did not satisfy the required ascertainability and predominance elements of class certification.

Background

The proposed class in Fischbein v. IQVIA Inc. consisted of more than 25,000 healthcare providers that allegedly received unsolicited fax advertisements from Defendant IQVIA Inc., a company that provides advanced analytics, technology solutions, and clinical research services to the life sciences industry. The class complaint contended that certain faxes for surveys administered by IQVIA were allegedly sent in violation of the TCPA which makes it “unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone or facsimile machine, an unsolicited advertisement.” Id. at 3.

The Court’s Decision

Parsing the plain language of the statute and interpretive case law in the Fourth Circuit, the District Court agreed with the Fourth Circuit finding that the statute was designed to only protect plaintiffs that received advertisements on stand-alone fax machines, rather than through online fax services. The statute states in relevant part that it is unlawful to “use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” See 47 U.S.C. § 227(b)(1)(C) (emphasis added). The statute further defines “telephone facsimile machine” as “equipment which has the capacity (A) to transcribe text or images, or both, from paper into an electronic signal and to transmit that signal over a regular telephone line, or (B) to transcribe text or images (or both) from an electronic signal received over a regular telephone line onto paper.” See ECF No. 119, at 8 (citing § 227(a)(3) (emphasis added)). Plaintiffs submitted the testimony of an expert who opined that the phrase “regular telephone line” would include transmissions made by online services so long as it was regulated by the North American Numbering Plan Administrator. Id. at 8-9. But the Court found that this interpretation would “render superfluous” the word “regular” used as a modifier of “telephone line” in the statute. Id. at 9. In fact, the expert’s testimony contradicted his expert opinion as he conceded that “regular telephone line” means an “analog telephone line.” Id. The Court also noted that plaintiffs presented no evidence nor did they make any arguments that an online fax service has the ability on its own to either transcribe text or images “from paper” or “onto paper” as stated in the statute, further undermining plaintiffs’ argument that the statute was meant to include online fax transmissions. Id. at 10. Indeed, Plaintiffs’ expert conceded that such online fax services have the “capacity” to do this type of transcription only when connected to other devices like scanners or printers. Id. at 10. The Court acknowledged that its statutory interpretation was also supported by the Federal Communications Commission’s (“FCC”) declaratory ruling in In the Matter of Amerifactors Fin. Grp., LLC, 34 F.C.C. Rcd. 11950 (2019).

Applying this statutory interpretation, the Court found that the proposed class was not adequately ascertainable as plaintiffs could not point to common evidence to show that proposed class members received unsolicited ads through a stand-alone fax machine as opposed to an online service provider. Plaintiffs suggested that they could submit declarations from class members to ascertain that they fell under the scope of the class of plaintiffs the statute was designed to protect, but the Court found that declarations from potential class members “standing alone, without records to identify class members or a method to weed out unreliable affidavits” would not constitute a reliable or feasible means of determining class membership. See ECF No. 119, at 15 (internal citation and quotations omitted).

For similar reasons, the Court also found that the predominance element of class certification was not met as individual questions of whether the faxes at issue were received on a stand-alone fax machine or by way of an online fax service would predominate over questions common to the proposed class.

On June 20, 2025, plaintiffs filed a motion for reconsideration of the order denying class certification or, in the alternative, to certify a more narrowly-defined class (i.e. asking the Court to narrow the class definition to exclude people who used online fax services). This motion is pending before the Court.

Implications for TCPA Defendants

The Fischbein decision provides important points of attack for the defense bar on ascertainability and predominance grounds for TCPA classes by underscoring the importance of parsing class definitions in the TCPA context to ensure the modality of transmission of the alleged unsolicited advertisement can be determined on a class-wide basis and is limited to traditional fax machine communications.

August 7, 2025August 7, 2025 by Gerald L. Maatman, Jr.

New York Federal Court Rules EEOC Early Right to Sue Regulation Is Incompatible With Title VII In Post-Loper Bright Decision

By Gerald L. Maatman, Jr. and Christian J. Palacios

Duane Morris Takeaways: On July 30, 2025, Judge Eric Komitee of the U.S. District Court for the Eastern District of New York dismissed a plaintiff’s ADA discrimination lawsuit against her employer after finding that the plaintiff failed to satisfy the statutory 180-day waiting period before receiving a right-to-sue (“RTS”) letter from the EEOC. The case, Prichard v. Long Island University, Case No. 23-CV-09269 (E.D.N.Y. July 30, 2025), is significant because it represents one of the first applications of Loper Bright Enters. v. Raimondo, 603 U.S. 369, 401 (2024) (“Loper Bright”), where a court has held that an EEOC regulation is incompatible with the text of an employment discrimination statute. This ruling is a critical development for employers seeking to control the timing of when a plaintiff can bring a discrimination claim and marks the first of many challenges to the longstanding deference the Commission has enjoyed when interpreting employment discrimination statutes in a post-Loper Bright world.

Background and The EEOC’s Early RTS Regulation

Cecilia Prichard, a financial aid counselor at Long Island University (“LIU”), was terminated in 2022 after exhausting her FMLA leave following a kidney transplant. Id. at 1. Prichard filed a charge with the EEOC on July 24, 2023, alleging disability discrimination under the Americans with Disabilities Act (“ADA”). At her request, the EEOC issued an early RTS letter only 57 days later — well before the 180-day statutory waiting period elapsed.

With her early RTS letter in-hand, Prichard commenced her suit in New York federal court against her employer, alleging it violated the ADA, as well as other state-specific human rights laws. Id. at 3. LIU moved to dismiss, arguing that the early RTS letter was invalid and thus, Prichard had not satisfied the precondition to filing suit under Title VII. See 42 U.S.C. § 2000e-5(f)(1)

By way of context, the EEOC regularly issues “early” RTS letters upon a charging party’s request prior to the expiration of Title VII’s 180-day statutory waiting period if the Commission determines that it is probable it will “be unable to complete its administrative processing of the charge within 180 days from the filing of the charge.” See 29 C.F.R. § 1601.28(a)(2). This regulation, as well as other regulations promulgated by the Commission, have previously enjoyed longstanding “Chevron deference,” which required judicial deference for agency interpretations of vague laws. In the Supreme Court’s 2024 ruling in Loper-Bright, it eliminated “Chevron deference,” holding it was the courts, not agencies, that determined statutory meaning. Loper Bright at 401.

There is currently a circuit split regarding the Commission’s “early RTS” regulation, and it has been upheld as lawful by the Ninth, Eleventh, and Tenth Circuits (prior to Loper-Bright). See Saulsbury v. Wismer & Becker, Inc., 644 F.2d 1251 (9th Cir. 1980); Sims v. Trus Joist MacMillan, 22 F.3d 1059 (11th Cir. 1994); Walker v. United Parcel Serv., Inc., 240 F.3d 1268 (10th Cir. 2001). In contrast, the D.C. Circuit has invalidated the regulation while the Third Circuit has opined, in dicta, that early RTS letters should be discouraged as contrary to congressional intent. See Martini v. Federal Nat. Mortg. Ass’n, 178 F.3d 1336 (D.C. Cir. 1991); Moteles v. Univ. of Penn., 730 F.2d 913, 917 (3d Cir. 1984). The Second Circuit has not addressed this question, however as Judge Komitee observed in his ruling, district courts have decided this issue both ways. Prichard Order, at 5.

The Court’s Ruling

In a short, seven-page order, Judge Eric Komitee sided with LIU, concluding that the EEOC exceeded its statutory authority by issuing an RTS letter before the 180-day period had expired. As the Court observed, “Prichard’s assertion that deference is due the EEOC’s interpretation of the statute effectively urges this court to operate in a parallel universe in which Loper Bright had been decided the other way. No case that Prichard cites (or that the Court has identified) sided with the EEOC on textual grounds without according deference: they either deferred to the agency pre-Loper Bright, or relied primarily on policy considerations.” Id. at p. 7. The Court then “directed” the EEOC to reopen Prichard’s charge and granted Prichard leave to re-file once: (1) the Commission dismissed her claim; or (2) investigated for 123 more days and neither filed a lawsuit or entered into a conciliation agreement. Id.

Takeaway for Employers

The Prichard ruling illustrates the consequential impact of Loper Bright on employment discrimination litigation, specifically with respect to the Commission’s ability to interpret the employment discrimination statutes it is meant to enforce. Although the issue decided in Prichard is comparatively low stakes (given plaintiff’s lawsuit was ultimately dismissed without prejudice and she was granted leave to re-file), this ruling may be one of many where courts challenge other, more consequential EEOC regulations, in the absence of Chevron deference.

From a strategy perspective, employers may now be able to better control the timing of when plaintiffs bring their employment discrimination claims (ensuring they first exhaust the 180-day waiting period). Such a strategy carries with it, its own risks, however, and many employers welcome early RTS letters. In the event an employment discrimination charge is heavily investigated by the Commission, and the employer receives a request for information (“RFI”) from the EEOC, the employer may be forced to provide the complaining employee with wide-ranging “free discovery” that it would ordinarily be able to contest in court. Employers should evaluate such early RTS letters on a case-by-case basis and determine, as a matter of strategy, whether it makes sense to contest the lawsuit-permission letter, or simply litigate the matter in court.

August 7, 2025August 7, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 113: Attorneys’ Fee Awards In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Justin Donoho with their discussion of significant attorneys’ fee awards in class action litigation over the past 12 months.

Episode Transcript

Jerry Maatman: Thank you loyal blog listeners for joining us for this week’s installment of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is special counsel Justin Donoho. Thanks for being on the podcast, Justin.

Justin Donoho: Great to be here. Thanks for having me.

Jerry: Today we have a little different topic. We’re going to be discussing significant attorneys’ fee awards in the class action space – sometimes known as mini litigation inside a class action. Justin, how are attorneys’ fees generally calculated to class counsel in a class action situation?

Justin: Sure. In federal courts, settlements are approved under Rule 23(h), which allows the court to award reasonable attorneys’ fees and nontaxable costs that are authorized by law or by the parties’ agreement. Courts typically use two methods: the percentage-of-the-fund method, common in “common fund” class actions, where attorneys receive a fraction – often 25 to 33% – of the settlement or judgment. There’s also the lodestar method, where fees are tied to hours worked times hourly rate, often with a multiplier for risk or complexity. Courts also use the lodestar as a reasonable cross-check. Courts must carefully assess fee requests to protect absent class members and weigh results, effort, risk assumed, and any class objections.

Jerry: Our Duane Morris Class Action Review surveys leading class action fee awards throughout the United States. What were some of the significant rulings in your mind over the past 12 months?

Justin: Well, in 2024 there were some record attorney paydays in high-stakes litigation.

In the In Re Syngenta AG MIR162 Corn Litigation, a $1.51 billion settlement between Syngenta and corn farmers resulted in an attorney fee award of $503 million.

In environmental class actions against 3M resolving lawsuits related to PFAS contamination in public drinking water systems, a $10.3 billion settlement generated an attorneys’ fee award of $840 million, one of the largest ever.

In a securities fraud shareholder litigation – just one more example – firms representing Dell investors secured a $267 million fee award from the $1 billion class settlement, which was later upheld by Delaware’s highest court.

Jerry: Well, suffice to say, 2024 was a banner year for the plaintiffs’ class action bar in taking down large fee awards. I know there was also a noteworthy fee award in the past month or so in the In Re College Athlete NIL Litigation, where $515 million in attorneys’ fees were awarded in various consolidated antitrust class actions. The court also found it reasonable to allow class counsel to apply for future fee awards in administering the settlement involving student at student athlete-benefits, which will add even more to that number.

What do you see here, Justin, in what’s going on?

Justin: That one you just talked about from just last month reflects a broader trend class action settlements of over $40 billion dollars for the third straight year, with 2024 totaling around $42 billion dollars. The size of settlements tends to scale attorneys’ fees dramatically.

Jerry: Now, there are some lawyers that police these agreements. They’re known as objectors. There are some serial objectors, professional objectors, legitimate objectors – what do you make of that space in terms of objections that are filed to these sorts of fee awards?

Justin: The objections matter. Objectors often challenge disproportionate fees, especially in no-cash or low-claim situations. However, as we discussed recently on the Duane Morris Class Action Defense Blog, the Third Circuit in In Re Wawa Data Security Litigation approved a $3.2 million class fee award for class counsel finding that fees can be based on relief made available to the class and does not have to be capped by a percentage of the relief actually claimed in low-harm data breach security class actions where the claim rate is notoriously low. The Third Circuit also held that clear sailing agreements and fee reversions are not per se impermissible and, rather, there must be evidence of collusion or harm to class members to invalidate a fee award on that basis.

Jerry: In terms of sitting at the mediation table and trying to bring home a settlement for a company in the class action space, do you have any thoughts for companies in terms of negotiating out attorneys’ fee awards?

Justin: Certainly. It’s important to understand how percentage-of-fund and lodestar methods play out based on settlement type and jurisdiction. Parties negotiating settlements should prepare for objector scrutiny, especially around any clear sailing terms and reversions. And it’s necessary to recognize that record-breaking settlements are driving fee awards into the hundreds of millions or close to billions. These cases illustrate just how large and complex class attorneys’ fee awards can get.

Jerry: Well, great thoughts and analysis, Justin. Certainly true that these massive settlements are driving the cottage industry of huge attorneys’ fee awards that we’re probably going to see in 2025 and beyond. So, thanks so much listeners for joining us for this week’s Class Action Weekly Wire.

Justin: Thanks for having me on the podcast and thanks to the listeners.

August 6, 2025August 6, 2025 by Gerald L. Maatman, Jr.

The Seventh Circuit Raises The Bar For Conditional Certification Under The FLSA And The ADEA

By Gerald L. Maatman, Jr., Ryan T. Garippo, and George J. Schaller

Duane Morris Takeaways: On August 5, 2025, in Richards, et al. v. Eli Lilly & Co., et al., No. 24-2574, 2025 U.S. App. LEXIS 19667 (7th Cir. Aug. 5, 2025), the Seventh Circuit issued an opinion that vacated and remanded a district court’s decision to conditionally certify a group of potential opt-in plaintiffs in an Age Discrimination in Employment Act (“ADEA”) collective action. The opinion breaks new ground on the contours of 29 U.S.C. Section 216(b), and as a result, also applies to conditional certification of wage & hour collective actions under the Fair Labor Standards Act (“FLSA”). The opinion elucidates the standards for notice in FLSA collective actions. While the opinion is undoubtedly a win for employers, only time will tell the scope of the win, as this opinion ultimately may create more questions than it answers.

Background

In 2022, Monica Richards (“Richards” or “Plaintiff”) sued Eli Lilly & Co and Lilly USA, LLC (collectively, “Eli Lilly”), the international pharmaceutical manufacturers and her one-time employer, alleging discrimination under the ADEA. The ADEA incorporates the FLSA’s “enforcement provision, permitting employees to band together in collective actions when suing an employer for age discrimination.” Id. at *3. Richards, as a result, alleged that Eli Lilly promoted younger employees in violation of the ADEA.

Shortly after she filed her lawsuit, Richards “moved to conditionally certify a collective action, asserting that the unfavorable treatment she experienced was part of a broader pattern of age discrimination against Eli Lilly’s older employees.” Id. at *9. “Conditional certification” of such claims has traditionally been thought of in two steps. At the first step, an employee moves for conditional certification, i.e., to send notice of the lawsuit, to all individuals that he or she contends are similarly situated to him or her. Drawing on a District Court of New Jersey opinion from 1987, Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), many courts hold that the employee has a light burden at this stage, and thus rely solely on the plaintiff’s allegations, and do not consider competing evidence submitted by the employer.

If the employee’s motion is granted, as they are with exceedingly high rates, those individuals covered by the collective action definition receive notice of the lawsuit and then have the ability to opt-in as party plaintiffs to the case and participate in discovery. At the close of discovery, if the case has not settled, the employer can then move to decertify the conditionally certified collective action, and prove the employees are not similarly situated, which results in the opt-in plaintiffs’ claims being dismissed without prejudice if successful.

In this case, the fight over the applicability of Lusardi took center stage as it has in many other collective actions. In recent years, the Fifth and Sixth Circuit Courts of Appeal, have found that Lusardi’s two step approach is inconsistent with the text of the FLSA. Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430 (5th Cir. 2021); Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023). In Swales, 985 F.3d at 443, the Fifth Circuit rejected Lusardi’s two-step approach outright, and required its district courts to “rigorously enforce” the FLSA’s similarity requirement at the outset of the litigation in a one-step approach. Similarly, in Clark, 68 F.4th at 1011, the Sixth Circuit adopted a comparable, but slightly more lenient standard, requiring the employee to show a “strong likelihood” that others are similarly situated to him or her before the district court can send notice.

In contrast, the Second, Ninth, Tenth, and Eleventh Circuits continue to either follow or allow the district court to adopt the two-step framework outlined in Lusardi. Harrington v. Cracker Barrel Old Country Store, Inc., 142 F.4th 678 (9th Cir. 2025); Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095 (10th Cir. 2001); Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010); Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001). This brewing circuit split gave rise to the dispute in Richards.

Against this backdrop, the district court in Richards ultimately followed Lusardi, and decided to send notice to the employees whom Richards contended were similarly situated to her. But Eli Lilly filed a motion for interlocutory appeal, which was subsequently granted, and the Seventh Circuit set out to opine on the circuit split for itself.

The Seventh Circuit’s Opinion

The Seventh Circuit, in an opinion written by Judge Thomas Kirsch, rejected the Lusardi framework but declined to go as far as Clark or Swales. The Seventh Circuit observed that the notice process should be facilitated by three guiding principles: (1) the timing and accuracy of notice; (2) judicial neutrality; and (3) the prevention of abuses of joinder. Richards, 2025 U.S. App. LEXIS 19667 at *14. It reasoned that the Lusardi standard threatened the latter two principles by “incentivizing defendants to settle early rather than attempt to ‘decertify’ at step two . . . transforming what should be a neutral case management tool into a vehicle for strongarming settlements and soliciting claims.” Id. at * 17. Thus, the Seventh Circuit rejected Lusardi, but what to do in the alternative was a more difficult question.

The Seventh Circuit decided that rather than endorse the rigid standards of Clark or Swales, its approach would be guided by “flexibility” and an analysis that is not an “all-or-nothing determination.” Id. at *19. Indeed, a plaintiff must now “make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated.” Id. at *21. Or, in other words, a plaintiff must “produce some evidence suggesting that they and the members of the proposed collective are victims of a common unlawful employment practice or policy.” Id, at *21-22. To counter a plaintiff’s evidence, an employer “must be permitted to submit rebuttal evidence and, in assessing whether a material dispute exists, courts must consider the extent to which plaintiffs engage with opposing evidence.” Id., at *22.It is not clear, however, the burden a plaintiff must satisfy to refute the defendant’s evidence to move forward.

In considering that threshold determination, the district court has the discretion to send notice or not.It also has the discretion to resolve some of the disputed issues, and narrow the scope of notice, or not. It also may authorize limited and expedited discovery to make the determination, or not. Id., at *24.It also has the discretion to allow a plaintiff to come forward with more evidence, or not. In essence, “[t]he watchword here is flexibility.” Id. And, with those principles in mind, the Seventh Circuit vacated and remanded for further proceedings consistent with the opinion.

Implications For Employers

The Seventh Circuit’s opinion is undoubtedly a win for employers, but the opinion introduces ambiguity into the equation with its focus on “flexibility.” See id. Plaintiffs in Illinois, Wisconsin, and Indiana can no longer rely on mere allegations to send notice and must wrestle with an employer’s evidence contradicting claims of a common unlawful policy or practice. This result is most certainly a win.

It is what comes next that is the problem. What is the level of scrutiny a district court must apply when deciding whether a plaintiff engaged with an employer’s evidence? Should a district court apply a one-step approach or two-step approach? Should it allow limited and expedited discovery? What is the standard to obtain such discovery? When should a court allow a plaintiff to come forward with more evidence? When should it not? All these questions go unanswered.

These unanswered questions continue to contribute to the procedural morass that employers must navigate in wage-and-hour collective actions under the FLSA. In addition to these questions, employers are also now navigating the 4-way circuit split on whether Lusardi applies at all and a separate circuit split, also discussed on our blog, regarding the applicability of Bristol Myers Squibb Co. v. Super. Ct. of Cal., 582 U.S. 255 (2017) to collective actions. With both issues ripe for consideration by the U.S. Supreme Court, corporate counsel facing a collective action should consider hiring experienced outside counsel to help navigate these complicated procedural issues and monitor this blog for further developments.

August 1, 2025August 1, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 112: Sanctions Issues In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Rebecca Bjork with their discussion of key sanctions rulings in class action litigation over the past 12 months.

Episode Transcript

Jerry Maatman: Thank you, loyal blog readers and listeners, for joining us for our next episode of the Duane Morris Class Action Weekly Wire. I’m Jerry Maatman, a partner here at Duane Morris, and joining me today is special counsel Rebecca Bjork of our Washington, D.C. office. Thanks so much, Rebecca, for being on our podcast.

Rebecca Bjork: Jerry, it’s great to be here. Thanks for having me.

Jerry: Today we have a little bit of a different topic. We’re going to focus on significant issues considering motions for sanctions in class action litigation. Rebecca, describe for our listeners some of the reasons why a court might contemplate entering sanctions in class action litigation.

Rebecca: Sanctions are just simply thought of as penalties – in civil cases, they are typically in the form of a monetary fine usually issued in response to violating procedures or abusing the judicial process somehow. But the most extreme sanction that can be imposed in civil cases is dismissal with prejudice of the filing party or dismissal of the answer of the responding party, which means that the sanctioned party would have no further recourse available, and the case would be over with judgment entered against them.

Jerry: Well, thanks for that overview. Let’s jump right into it and talk about some of the most significant rulings over the past 12 months. What about the Ikea case – what happened there?

Rebecca: Sure. In Donofrio, Ikea was hit with sanctions in an age discrimination collective action. Plaintiffs had alleged that older workers were passed over for promotions in favor of younger employees based on so-called “future potential” and their willingness to relocate. The court had ordered Ikea to preserve and produce emails from certain managers, which is obviously common in such litigation, but instead, Ikea deleted four of those accounts in violation of the court’s order. The court said that this spoliation wasn’t intentional, but it still caused significant prejudice to the plaintiffs, and as a result Ikea had to pay attorneys’ fees and expenses related to their sanctions motion.

Jerry: Always viewed that case as a great example of how simple negligence and not intentional or bad faith conduct can trigger sanctions in the class action space. Let’s pivot to a sanctions ruling that made a lot of headlines in the consumer fraud class action space. The Dukas v. KLM Airlines case. What stood out for you there in that situation?

Rebecca: Well, that one centered on climate-related advertising. Plaintiffs, led by class action lawyer named Spencer Sheehan, claimed that KLM had misled customers about their environmental commitments. But the named plaintiff admitted that she never saw the ads in question – so she never had standing. Now the attorney Sheehan did not withdraw the suit or fix the issue even after KLM raised these points with the court, so the court hit him with a $1,000 fine and ordered him to pay KLM’s legal fees. The court also referenced this attorney’s history of filing questionable consumer class actions, so this is a clear signal – do your diligence before filing your lawsuit.

Jerry: Good admonition. But speaking of high costs, what about Durant v. Big Lots that involved over $140,000 in attorneys’ fees? What happened there?

Rebecca: Well, that case was about allegedly deceptive labeling of coffee, and the court found that the lawsuit was frivolous, especially since it mirrored previously dismissed case out of New York. The judge used the lodestar method to calculate fees, and rejected the plaintiff’s objections as vague. But importantly, while the defendant requested a multiplier for the work their attorneys did, the court said that standard fees were enough, but still this was a big hit for the plaintiff’s counsel, both financially and reputationally.

Jerry: Let’s continue and take a tour of the sanctions jurisprudence that developed over the last year. Tell us briefly about the cases of Hamm v. Acadia Healthcare and Plunkett v. FirstKey Key Homes.

Rebecca: Sure. In Hamm, the court partially granted sanctions against the plaintiff’s counsel in a wage and hour case, and it was all about discovery misconduct, which is often the case in these cases – missed depositions, failure to cooperate. The judge trimmed the fee award, though, for inefficiencies like block billing, but he still ordered reimbursement for time spent preparing the sanctions motion.

But in Plunkett v. FirstKey, the other case you mentioned, the tables were turned there. The plaintiffs were awarded sanctions because the defendant, FirstKey Homes, tried to settle directly with potential opt-in plaintiffs outside of court supervision. The court called this coercive, issued a protective order, and awarded fees and costs to the plaintiffs. So, there’s another cautionary tale – never sidestep judicial oversight in FLSA cases.

Jerry: Let’s talk about courts declining to order sanctions or appellate review of sanctions order. Let’s talk about the rare reversal in the In Re Sanford Law Firm case.

Rebecca: Yeah, in that case the Eighth Circuit concluded that the district court had not given the firm that was involved there, or its managing partner, sufficient notice before suspending them from handling FLSA cases for two years – that’s another type of sanction that courts have the authority to impose. It was about allegedly excessive billing, but the appeals court said that due process matters, even in sanctions proceedings.

Jerry: And then what about the word count – in a very interesting decision, called Larsen v. PTT?

Rebecca: Yeah, that case was funny. The plaintiffs accused the defense team of submitting overly long briefs in violation of local rules by falsely certifying compliance with word limits, and it turns out that the Microsoft Word settings excluded footnotes from the count. Now the court here wasn’t thrilled, but called it inadvertent, and actually denied sanctions in that case.

Jerry: Well, that’s a good reminder to double check your software settings. We have time for two quick ones – how about the Mazurek v. Metalcraft case and the Ortiz v. Sazerac case?

Rebecca: There, plaintiffs lost their FLSA claims after not being able to show unrecorded work hours. But the court said that their legal theories were not frivolous, so, even though they ultimately lost no sanctions were awarded.

And in the Ortiz case. the plaintiffs voluntarily dismissed their suit alleging Fireball’s malt labeling was misleading. The defendant sought fees under Rule 11, but because they withdrew the complaint within the safe harbor period. Under that rule, the court concluded that sanctions were not appropriate there either.

Jerry: As always, it’s been an interesting year in terms of sanctions decisions throughout the United States. I know that you focused a lot in your writings and thought leadership in this area – what would you share with our readers and listeners as the general takeaways in this space?

Rebecca: Oh, it’s definitely a fun area of the law to work in – very unique area of class action jurisprudence. I would say that the courts try to balance accountability of the parties to comply with the rules and fairness. and that’s probably reflective of what the rules require. Courts are willing to impose serious consequences, but only after very careful consideration, and I see the trend being judges increasingly scrutinizing discovery matters and professional conduct matters in complex litigation, and that both sides, plaintiffs and defendants, are being held to the same standards.

Jerry: Well, thanks so much for your insights, Rebecca, and I know our readers are looking forward to the launch of the 2026 Duane Morris Class Action Review and the Appendix II on sanctions orders throughout the United States over the past 12 months, which you’re the co-author of. Thanks so much for joining us today and sharing your thought leadership.

Rebecca: You’re very welcome. Thanks so much for having me on.

July 24, 2025July 24, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 111: California Court Greenlights “Headless” PAGA Suit

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Samson Huang with their discussion a key ruling from a California appeals court allowing a plaintiff to pursue PAGA claims solely on behalf of other aggrieved employees.

Episode Transcript

Jerry Maatman: Hello everyone, and welcome to the Class Action Weekly Wire, the podcast where we explore critical class action legal developments. I’m Jerry Maatman, a partner at Duane Morris, and joining me today for the first time is Samson Huang, our newest member of our class action team, who is based in our Los Angeles office. Samson, thanks so much for being here today.

Samson Huang: Of course. Thanks, Jerry. I’m so glad to be here.

Jerry: Today we’re discussing the recent ruling coming out of the California Court of Appeal in CRST Expedited, Inc. v. Superior Court of Fresno County, which addresses the legality of something known as a “headless” PAGA action. Can you start by explaining for our listeners the central issue in the case?

Samson: Absolutely. The heart of the case was whether an employee can bring a so-called “headless” PAGA action, meaning a Private Attorneys General Act claim that seeks civil penalties for labor code violations suffered only by other employees and not by the plaintiff themselves. This came up after the plaintiff dismissed, or tried to dismiss, his individual claims to avoid arbitration.

Jerry: So, as I understand it, the Court of Appeal in California had to decide whether or not this sort of lawsuit is even viable under the PAGA?

Samson: That’s correct. The employer, CRST Expedited, argued that the statute’s language—specifically the phrase “on behalf of himself or herself and other current or former employees”—meant that you must have, and bring, your own individual claim in order to piggyback off of, to have standing, for the nonindividual claims and they wanted the court to interpret the word “and” strictly in the conjunctive.

Jerry: And so how did that go for the employer in the Court of Appeal with respect to that particular argument?

Samson: Well unfortunately, the Court of Appeal disagreed with the employer, and found that the statutory language was ambiguous, holding that the word “and” could be actually interpreted as meaning either “and” or “or “—what we call an inclusive disjunctive—and the panel emphasized that PAGA is a remedial statute designed to empower private enforcement of labor laws. They reasoned that, allowing headless PAGA claims better served the statute’s purpose, especially in light of recent procedural hurdles around arbitration after Viking River Cruises v. Moriana.

Jerry: Well, things weren’t complicated enough. I know that Viking River Cruises created new law and basically stood for the proposition that if you’re a worker, and you had signed an arbitration agreement with a class action waiver, you had to proceed in arbitration. And then, as I understand it, California courts have thereafter interpreted Viking River to allow, nonetheless, the employee, after arbitration, to go forward with a representative action on behalf of other representative employees. How did the Court of Appeal deal with Viking River Cruises in terms of whether that had an impact on headless PAGA actions?

Samson: Well, the issue of headless PAGA actions really wasn’t addressed. In Adolph v. Uber Technologies, the California Supreme Court simply held that merely the fact that a plaintiff’s individual PAGA claims compelled to arbitration pursuant to Viking River didn’t mean that the plaintiff lost standing to maintain the representative nonindividual PAGA claims in court, and strongly suggested that if a plaintiff gets compelled to arbitration on the individual claim, the nonindividual claims should be stayed pending resolution of the arbitration. In this recent CRST case, this is a strategy that the plaintiffs’ bar has developed in order to avoid arbitration.

Jerry: So, as I understand it, that was a gambit by the plaintiff’s lawyer, a conscious decision to dismiss their individual claim, to try and get around Viking River?

Samson: That’s right. And basically, the argument goes that if a plaintiff has no individual claim, there would be nothing left to compel into arbitration. Therefore, the court proceedings on the nonindividual claims can proceed. The employer in the case argued that by doing so, he lost standing and meaning by dismissing an individual PAGA claim, the plaintiff loses standing again. The Court of Appeal disagreed, and it held that even though the plaintiff wasn’t personally seeking penalties anymore, he still qualified as an aggrieved employee because he had been subjected to labor code violations, or at least had alleged that he had been subjected to labor code violations, and completed the required notice procedures under PAGA.

Jerry: Well, what would be your prognostication for our listeners about whether or not there’s a chance this could get reversed by the California Supreme Court?

Samson: Jerry, prior to this case there was another Court of Appeal in a case called Leeper v. Shipt which, while addressing the same issue, reached the opposite conclusion, and held that every PAGA claim necessarily includes both an individual and nonindividual component. And that case has actually been taken up to the California Supreme Court, which has granted review. So, CRST is definitely not the final word, and until the Supreme Court issues its opinion in Leeper, trial courts are free to choose between Leeper and CRST, in terms of which decision they want to follow. So, until then, employers and practitioners alike should be cautious.

Jerry: I know you do a lot of thought leadership in this particular space and help many employers with respect to PAGA compliance. What would be your quick advice for employers in dealing with this situation until there’s resolution at the California Supreme Court level?

Samson: Well, I think this ruling really reinforces California’s commitment to robust enforcement of labor laws through PAGA, and employers should revisit their arbitration agreements and attorneys should stay tuned to Leeper. The terrain is shifting quickly.

Jerry: Well, thanks so much for your thoughts and analysis in this very complex area, and welcome to the show and to your first podcast on behalf of Duane Morris. Thanks so much.

Samson: Thanks for having me, Jerry, and thank you, listeners.

July 24, 2025July 24, 2025 by Class Action Defense

California Court of Appeal Rears Its Head On Headless PAGA Actions By Finding That Dismissal Of Individual PAGA Claims Did Not Bar Pursuit Of Non-Individual Claims

By Gerald L. Maatman, Jr., Jennifer A. Riley, Samson C. Huang, and Betty Luu

Duane Morris Takeaway: On July 7, 2025, in CRST Expedited, Inc. et al. v. The Superior Court of Fresno County, Case No. F088569 Cal. App. July 7, 2025), the California Court of Appeal for the Sixth Appellate District denied an employer’s petition for writ of mandate of a trial court’s decision that a worker’s dismissal of his individual PAGA claims did not bar him from pursuing claims on behalf of other aggrieved employees only. This tactic – known as a headless PAGA action – is the latest innovation of the plaintiffs’ class action bar and another challenge employers face in operating in the Golden Bear State.

Background

Defendant CRST Expedited, Inc. (“CRST Expedited”) employed Plaintiff Espiridion Sanchez (“Plaintiff”) as a tire maintenance technician from 2017 until 2018. Id. at 5. On March 22, 2019, Plaintiff provided written notice to the Labor & Workforce Development Agency (“LWDA”) and CRST Expedited asserting claims under the California Private Attorneys General Act (“PAGA”) on behalf of all current and former employees of CRST Expedited and cited nine Labor Code violations. Id. at 6. After receiving no response from the LWDA, Plaintiff filed a PAGA action on behalf of himself and other aggrieved employees against CREST Expedited. Id.

In 2023, the trial court granted CRST Expedited’s motion to compel arbitration of Plaintiff’s individual PAGA claims and dismissal of the non-individual claims in light of the U.S. Supreme Court’s ruling in Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2023) (“Viking River”). Id. at 8. In Viking River, the U.S. Supreme Court held that once an employee’s individual PAGA claims are compelled to arbitration, the employee lacks standing to represent other aggrieved employees as to their PAGA claims. Id.

The ruling in Viking River was short lived once the California Supreme Court issued its decision in Adolph v. Uber Technologies, Inc., 14 Cal.5th 1104, 1114, 310 Cal.Rptr.3d 668, 532 P.3d 682 (2003), which held that “an order compelling arbitration of the individual [PAGA] claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.” Id.

Plaintiff sought reconsideration on that basis, and the trial court reinstated the nonindividual PAGA claims. Id. at 9.

In 2024, the trial court granted Plaintiff’s unopposed motion to dismiss his individual PAGA claims. Id. at 9. In response, CRST Expedited sought dismissal of Plaintiff’s nonindividual PAGA claims on the grounds that Plaintiff no longer had standing because he dismissed his individual PAGA claims. Id. at 9-10. The trial court disagreed. Id.

The California Court Of Appeal’s Ruling

The California Court of Appeal addressed whether the PAGA statute allows an aggrieved employee to recover civil penalties for violations of the Labor Code suffered only by other employees.

To do so, the Court of Appeal conducted a thorough analysis of the statutory interpretation of the PAGA statute, ultimately finding that the PAGA statute is ambiguous. Id. at 39. Faced with an ambiguous statute, the Court of Appeal concluded it “must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute.” Id.

The Court of Appeal began its analysis by examining the legislative intent behind the use of the terms “and” and “or” in a 2003 amendment to the PAGA statute. Id. at 40. The 2003 amendment revised the statute to say: “An aggrieved employee may recover the civil penalty described in subdivision (b) in a civil action filed on behalf of himself or herself and others.” Id. at 40. (emphasis added). However, a review of the legislative history revealed that the revised language merely corrected a drafting error. Id. The Court of Appeal also held that it was unlikely that the original drafters could have anticipated a bifurcation of the individual and nonindividual PAGA claims — as recognized in such as Viking River — when amending the statute. Id. at 41.

Finding that the analysis of legislative intent was inconclusive, the Court of Appeal analyzed the purpose of the PAGA statute. Id. It opined that the primary objective of the PAGA statute is to maximize enforcement of labor laws and deter employer violations. Id. at 42. As such, requiring arbitration of individual claims before pursuing non-individual claims would undermine those enforcement efforts. Id.

To achieve effective enforcement, the Court of Appeal held that the PAGA statute should be interpreted to allow “PAGA plaintiffs and their counsel the flexibility to choose among bringing a PAGA action that seeks to recover of civil penalties on (1) the LWDA’s individual PAGA claims, (2) the LWDA’s nonindividual PAGA claims, or (3) both.” Id. at 47. The Court of Appeal emphasized that this interpretation does not eliminate or weaken the PAGA standing requirements, as a plaintiff must still be an aggrieved employee to bring a headless PAGA action. Id. at 47-48.

In sum, the Court of Appeal reaffirmed that a broad construction of the statute permits an aggrieved employee to pursue a headless PAGA action.

Implications For Companies

The CRST Expedited decision confirms that aggrieved employees can pursue representative PAGA actions on behalf of other aggrieved employees even if their individual claims are subject to arbitration or dismissed.

The ruling underscores the importance for employers to reassess their arbitration strategies and compliance practices, as the enforcement of labor laws through the PAGA remains robust despite contractual arbitration clauses.

It remains to be seen whether the landscape of the headless PAGA action will be turned on its head in light of the California Supreme Court’s decision to review Leeper v. Shipt, Inc.,107 Cal.App.5th 1001, 328 Cal.Rptr.3d 632 (2024), which effectively eliminated the headless PAGA action. We will continue to follow the developments in PAGA and keep our blog readers informed.