Class Action Defense

December 19, 2024December 19, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 86: Post-Chevron: Challenges To Administrative Agencies’ Authority

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley with their discussion of a U.S. Supreme Court decision vacating a D.C. Circuit ruling in an NLRB dispute over an employer’s liability for withdrawing recognition from a union under the agency’s successor bar standard. This ruling marks a notable development in the wake of the high court’s Loper Bright Enterprises v. Raimando opinion overturning the Chevron doctrine.

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Episode Transcript

Jerry Maatman: Thank you loyal blog readers and listeners for joining our next episode of the weekly podcast series, the Class Action Weekly Wire. I’m Jerry Maatman of Duane Morris, and joining me is Jen Riley, the vice chair of the Duane Morris Class Action Defense Group. Thanks for being on the podcast, Jen.

Jennifer Riley: Thanks so much, Jerry. Great to be here.

Jerry: Today we’ll be breaking down the Supreme Court’s acceptance of a case for review involving the National Labor Relations Board and Hospital Menonita de Guayama from Puerto Rico. The case is crucial, especially after the Supreme Court’s decision in the Loper Bright Enterprises v. Raimondo case, which reshapes how courts review agencies interpretations of the law. I think this is a fascinating case, and a great opportunity to talk about how the Supreme Court’s shift in its approach is going to affect labor law and employment relations. It’s an interplay between agency discretion, and judicial review. And it’s really at the heart of class action litigation. Jen, can you recap the main points of this case for our viewers and listeners?

Jennifer: Thanks, Jerry, absolutely. The case involves a dispute where a hospital in Puerto Rico withdrew recognition from a union; the National Labor Relations Board ruled that this violated the National Labor Relations Act, citing the successor bar doctrine. That doctrine prevents an employer from withdrawing recognition from a union for at least six months after taking over a bargaining unit. After the hospital filed suit, the D.C. Circuit upheld the NLRB’s decision, and eventually the Supreme Court granted review and agreed to hear the case.

Jerry: Thanks, Jen. The core issue here is whether the successor bar doctrine, which the NLRB has applied for year, is legally valid – especially in light of the Supreme Court’s recent decision in the Loper Bright case. The Supreme Court’s ruling overruled the longstanding Chevron doctrine which had instructed lower federal courts to defer to federal agencies when interpreting ambiguous parts of statutes. That ruling has profound implications for federal courts, which will now review decisions made by agencies like the NLRB in this particular case.

Jennifer: Exactly, Jerry. That is why the Hospital Menonita case is so important. The Chevron doctrine is rooted in the idea that in certain circumstances, agencies with expertise in certain areas are better positioned to interpret ambiguous statutes than courts. If the statute is ambiguous, the court must assess whether the agency’s interpretation of the statute is reasonable. The court will generally uphold the agency’s interpretation, if it is a reasonable interpretation of the ambiguous statute, even if the court itself might have interpreted the statute differently. Courts generally give significant deference to agencies’ expertise and experience in interpreting laws within their jurisdiction.

This is now up for scrutiny, of course, after Loper Bright. Essentially, the hospital argued that the court should independently review whether the NLRB’s interpretation of the law, particularly the successor bar doctrine, was correct under the National Labor Relations Act. The NLRB defended its position, claiming that the D.C. Circuit wasn’t relying solely on Chevron and upholding the decision. The NLRB argued that the circuit actually used pre-Chevron case law that recognized agency discretion in interpreting the National Labor Relations Act. However, the hospital countered that under Loper Bright, any deference to the NLRB’s interpretation would need to be reconsidered.

Jerry: Interesting. I think this is somewhat of a blueprint or a test case for how employers or corporations sued, based on interpretations of agency regulations, can turn the table, so to speak, and argue that federal district court judges should interpret the laws as enacted, and not based on somewhat liberal interpretations of those laws by agencies. That’s exactly what the hospital, as I understand it, argued in terms of the Loper Bright decision requires the court to critically assess an agency’s interpretation, and not simply defer carte blanche to them. In the past, courts would have applied Chevron, and given the agency a wide berth in terms of all benefits, or the jump ball, going to the agency in terms of its interpretation. But now, with Loper Bright we have a new playing field, and the Supreme Court has signaled that agency interpretations will be scrutinized, particularly when the statute in question is ambiguous.

Jennifer: Exactly. The Supreme Court ultimately vacated the D.C. Circuit’s ruling and remanded the case here, sending it back to the D.C. Circuit for reconsideration in light of Loper Bright.

Jerry: It’s interesting, insofar as now the argument is ‘this is the essential reading of the statute, and how the court should interpret it, and the agency’s interpretation is just one data point.’ And now defendants have significant precedent to say agencies’ interpretations have been rejected and basically maybe not even a data point, but shouldn’t even be considered. So, the balance of power has shifted and the litmus test, so to speak, or the playing field on which defendants are operating has completely shifted, based on the Supreme Court’s decision.

Jennifer: Great point, Jerry. The successor bar doctrine itself is already controversial. Some people argue that it’s necessary to protect workers’ rights during employer transitions, while others think it goes too far in restricting employers’ ability to challenge unions.

Jerry: Well, now the case is back with the District of Columbia Court of Appeals, the D.C. Circuit, and it’s that time of the year when people make New Year’s resolutions and predict what’s going to happen in 2025. What is the Jen Riley prognostication as to the ultimate outcome of this particular case?

Jennifer: Well, this one is hard to say. The D.C. Circuit will have to reconsider its ruling with the Loper Bright framework in mind, which means it will have to engage in a more detailed analysis of whether the NLRB’s interpretation of the law is the best reading of the National Labor Relations Act. If the court decides that the successor bar doctrine doesn’t align with the statute, we could see a major shift in labor law, particularly in how unions and employers navigate these types of transitions.

Jerry: Well, that’s a very succinct summary of the significant implications of this case. Stay tuned, readers and listeners. 2025 – put on your seatbelts. This is going to be a heck of a ruling. Well, thank you so much, Jen, for your thought leadership and your contributions and giving us an inside baseball look at what’s going on in terms of the future interpretations of the Loper Bright doctrine, and how that will impact corporations and their defense of both labor and employment matters and class actions in general.

Jennifer: Thanks so much, Jerry. Thanks for having me, and happy holidays to all of our listeners!

December 18, 2024December 18, 2024 by Gerald L. Maatman, Jr.

Ninth Circuit Dismisses Adtech Class Action For Lack Of Standing

By Gerald L. Maatman, Jr. and Justin Donoho

Duane Morris Takeaways: On December 17, 2024, in Daghaly, et al. v. Bloomingdales.com, LLC, No. 23-4122, 2024 WL 5134350 (9th Cir. Dec. 17, 2024), the Ninth Circuit ruled that a plaintiff lacked Article III standing to bring her class action complaint alleging that an online retailer’s use of website advertising technology disclosed website visitors’ browsing activities in violation of the California Invasion of Privacy Act and other statutes. The ruling is significant because it shows that adtech claims cannot be brought in federal court without specifying the plaintiffs’ web browsing activities allegedly disclosed.

Background

This case is one of the hundreds of class actions that plaintiffs have filed nationwide alleging that Meta Pixel, Google Analytics, and other similar software embedded in defendants’ websites secretly captured plaintiffs’ web browsing data and sent it to Meta, Google, and other online advertising agencies. This software, often called website advertising technologies or “adtech” is a common feature on many websites in operation today.

In Daghaly, Plaintiff brought suit against an online retailer. According to Plaintiff, the retailer installed the Meta Pixel and other adtech on its public-facing website and thereby transmitted web-browsing information entered by visitors such as which products the visitor clicked on and whether the visitor added the product to his or her shopping cart or wish list. Id., No. 23-CV-129, ECF No. 1 ¶¶ 44-45. As for Plaintiff herself, she did not allege what she clicked on or what her web browsing activities entailed upon visiting the website, only that she accessed the website via the web browser on her phone and computer. Id. ¶ 40.

Based on these allegations, Plaintiff alleged claims for violation of the California Invasion of Privacy Act (CIPA) and other statutes. The district court dismissed the complaint for lack of personal jurisdiction. Id., 697 F. Supp. 3d 996 (S.D. Cal. 2023). Plaintiff appealed and, in its appellate response brief, the retailer argued for the first time that Plaintiff lacked Article III standing.

The Ninth Circuit’s Opinion

The Ninth Circuit agreed with the retailer, found that Plaintiff lacked standing, and remanded for further proceedings.

To allege Article III standing, as is required to bring suit in federal court, the Ninth Circuit opined that a plaintiff must “clearly allege facts demonstrating” that she “suffered an injury in fact that is concrete, particularized, and actual or imminent.” Id., 2024 WL 5134350, at *2 (citing, e.g., TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021)).

Plaintiff argued that she sufficiently alleged standing via her allegations that she “visited” and “accessed” the website and was “subjected to the interception of her Website Communications.” Id. at *1. Moreover, Plaintiff argued, the retailer’s alleged disclosure to adtech companies of the fact of her visiting the retailer’s website sufficiently alleged an invasion of her privacy and thereby invoked Article III standing because the adtech companies could use this fact to stitch together a broader, composite picture of Plaintiffs’ online activities. See oral argument, here.

The Ninth Circuit rejected these arguments. It found that Plaintiff “does not allege that she herself actually made any communications that could have been intercepted once she had accessed the website. She does not assert, for example, that she made a purchase, entered text, or took any actions other than simply opening the webpage and then closing it.” Id., 2024 WL 5134350, at *1.As the Ninth Circuit explained during oral argument by way of example, it is not like the Plaintiff had alleged that she was shopping for underwear and that the retailer transmitted information about her underwear purchases. Moreover, the Ninth Circuit found “no authority suggesting that the fact that she visited [the retailer’s website] (as opposed to information she might have entered while using the website) constitutes ‘contents’ of a communication within the meaning of CIPA Section 631.” Id.

In short, the Ninth Circuit concluded that Plaintiff lacked Article III standing, and that this conclusion followed from Plaintiff’s failure to sufficiently allege the nature her web browsing activities giving rise to all of her statutory claims. Id. at *2. The Ninth Circuit remanded with instructions that the district court grant leave to amend if properly requested.

Implications For Companies

The holding of Daghaly is a win for adtech class action defendants and should be instructive for courts around the country. Other courts already have found that an adtech plaintiff’s failure to identify what allegedly private information allegedly was disclosed via the adtech warrants dismissal under Rule 12(b)(6) for failure to plausibly plead various statutory and common-law claims. See, e.g, our blog post about such a decision here. Daghaly shows that adtech plaintiffs also need to identify what allegedly private information beyond the fact of a visit to an online retailer’s website was allegedly disclosed via the adtech, in order to have Article III standing to bring their federal lawsuit in the first place.

December 13, 2024December 13, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 85: Mapping Out The “Judicial Hellholes” – Top Plaintiff-Friendly Jurisdictions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Bernadette Coyle with their discussion of the 2024-2025 edition of the American Tort Reform Association’s (“ATRA”) “Judicial Hellholes” report, which details the 10 least favorable venues for corporate defendants across the country.

Episode Transcript

Jerry Maatman: Thank you, loyal blog readers and listeners for joining us for our weekly podcast series. My name is Jerry Maatman, and I’m a partner at Duane Morris, and joining me today is my colleague, Bernadette Coyle. Thanks so much for being on the podcast.

Bernadette Coyle: Thanks, Jerry. I’m very happy to be here.

Jerry: Today, our podcast covers one of my most favorite topics, and that is the annual report issued by the American Tort Reform Association, which goes by the acronym of ATRA, in terms of its annual report called the “Judicial Hellholes” report. It focuses on litigation issues and does a comparative study of litigation in all 50 states, and then ranks those states with respect to fairness or unfairness of the judicial system and bias, or lack of bias, in the administration of justice. So, it’s an important read for corporate counsel, those facing class action litigation, because it identifies what are suboptimal jurisdictions, what are challenging jurisdictions. And as a result, obviously in terms of our annual study of class action litigation, settlements, and rulings, many of the jurisdictions on that watch list happen to be epicenters for class action litigation. So, Bernadette, in this year’s report there were 10 specific jurisdictions listed as the top Judicial Hellholes, and I’m sure our loyal blog readers and listeners are anxious to hear – so what jurisdiction came out as on top of that infamous list of the worst jurisdictions in which to be sued in 2024?

Bernadette: This year, #1 was a defending champion from 2023; it was the Philadelphia Court of Common Pleas and the Pennsylvania Supreme Court ranked as the most challenging venue for defendants. And over the past few years, the courts there have been issuing nuclear verdicts. We’re talking about eye-popping nine figure damage awards that seem to be handed out with very little consideration for fairness. And additionally, a recent decision from the Pennsylvania Supreme Court has led to a flood of medical liability lawsuits by removing an important legal requirement for entry. In fact, I think they even allowed for duplicative damages in certain cases which only encourages more litigation. So, it’s definitely becoming a very plaintiff-friendly environment.

Jerry: So, kind of the watchwords are: it’s a petri dish or a hotbed for growing certain types of lawsuits. Moving on to #2, which I understand to be New York City. The report highlights it as one of the other really tough places to be sued. What’s your take on the ranking of New York City on the report?

Bernadette: Yeah, I think in New York City they noted a rise in fraudulent lawsuits, particularly with RICO lawsuits being filed against plaintiff firms and the city’s laws, including the Scaffold Law and the consumer protection act, are definitely ripe for abuse. And we’re seeing plaintiffs’ lawyers that are really cashing in on these opportunities, and it’s led to what the report is calling a “fraudemic.” It’s a growing problem in the city’s civil justice system, and unfortunately, leadership seems to be looking the other way.

Jerry: That’s certainly a very concerning trend for corporations that are sued in those jurisdictions. I know that #3 on the list is South Carolina in particular, its treatment of mass torts and the asbestos litigation. What are the problems identified there?

Bernadette: South Carolina’s asbestos judge has become infamous for being highly biased against corporate defendants. The judge often imposes unwarranted sanctions, modifies jury verdicts in favor of plaintiffs, and is becoming known for appointing a receiver to maximize insurance recoveries. All of that creates a legal environment where defendants don’t stand a fair chance, and plaintiffs are given an unfair advantage. This is really a textbook example of how judicial bias can distort the civil justice system.

Jerry: Sounds like that issue systemic to South Carolina in general, and mass tort litigation in particular. Moving on to #4, Georgia, where I litigate the defense of many class actions – what did the report have to say about the state of litigation in the Peach State?

Bernadette: Last year, Georgia was tied for #1 with Pennsylvania, and this year the report notes that Georgia is facing a rise in nuclear verdicts, huge excessive damage awards. And additionally, there’s a trend of inflated medical costs and laws that seem to set defendants up for failure. For example, Georgia still has an archaic seatbelt gag rule, meaning juries can’t even consider whether an occupant was wearing a seatbelt during a crash. It’s part of a broader trend in Georgia’s civil justice system that seems to favor plaintiffs and puts defendants at a severe disadvantage.

Jerry: Thanks. Well, next up is California, and I think that for the 42 years I’ve been a lawyer and dealing with corporate counsel, that seems to be the biggest litigation headache that they face in terms of doing business and getting sued in the state of California. What’s driving the inclusion of California this year in the Judicial Hellholes report?

Bernadette: California continues to be a major destination for plaintiffs’ lawyers looking to expand liability. The state’s legal landscape is very favorable for certain types of lawsuits. I mean, first off, California has the highest number of nuclear verdicts in the nation, and then you’ve got cases like Lemon Law claims and no injury lawsuits under the Private Attorneys General Act and the Americans with Disabilities Act. These are bogging down businesses and creating endless litigation that’s both costly and inefficient.

Jerry: What about Cook County, Illinois, where I was born and raised and sitting today? That deserves special mention this year – what was your take on Cook County’s inclusion?

Bernadette: Yes, Cook County is obviously very near and dear to us, and it’s also become infamous for its disproportionate share of lawsuits, especially no injury litigation and asbestos cases. One of the biggest issues here, though, is the Biometric Information Privacy Act, which has been abused to the point where lawsuits are filed over the very smallest technicalities.

Jerry: Well, those are the major geographic tours of the Hellholes. What about a brief overview of the remainder of the top 10 list?

Bernadette: Absolutely. Next is St. Louis, Missouri, which is also a hotbed for asbestos lawsuits, and for plaintiff-friendly rulings; the Michigan Supreme Court, which seems to allow reliance on junk science; followed by King County, Washington, which made it onto the list for the first time because of judges’ tendency to allow unfair group trials and junk science into court; and finally, Louisiana, with its nuclear verdicts that distort the fairness of its civil justice system.

Jerry: Well, that’s quite a tour of judicial highlights. The ATRA report, though, also has positive developments. What were some of those in terms of the legal landscape in 2024?

Bernadette: Yes, there are bright spots. For example, several states have strengthened their expert evidence rules to prevent junk science from entering court. The Third Circuit Court of Appeals ruled against lawsuits claiming insufficient product warnings when those warnings had been federally approved. And in Kentucky and Utah, we’ve seen courts make decisions that uphold fairness in the legal system.

Jerry: Well, that is good news in terms of judges being umpires and calling balls and strikes rather than being biased in favor of plaintiffs. I do believe that the report is essential, if not required reading, for our corporate counsel, and one can learn a lot looking at these reports from year to year and transposing them against litigation statistics that basically show the epicenters or hotspots of class action litigation tend to be clustered in these states that are identified by the report in terms of constituting a judicial hellhole. Well, thank you so much, Bernadette, for joining us on your very first podcast we really appreciate your contributions and thought leadership today, and thanks so very much.

Bernadette: Thank you for having me, Jerry, and thank you, listeners.

December 10, 2024 by Gerald L. Maatman, Jr.

The 2024-2025 Judicial Hellholes Report From The American Tort Reform Association Ranks The Worst Jurisdictions For Defendants

By Gerald L. Maatman, Jr.

Duane Morris Takeaways: The American Tort Reform Association (“ATRA”) annually publishes its “Judicial Hellholes Report,” focusing on litigation issues and identifying jurisdictions likely to have unfair and biased administration of justice. The ATRA recently published its 2024-2025 Report and one of the top-ranking states from 2023 maintained its #1 position for 2024 – Pennsylvania, specifically the Pennsylvania Supreme Court and the Philadelphia Court of Common Pleas – as the most challenging venue for defendants. Readers can find a copy here and the executive summary here.

The Judicial Hellholes Report is an important read for corporate counsel facing class action litigation because it identifies jurisdictions that are generally unfavorable to defendants. The Report defines a “judicial hellhole” as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.

The 2024 Hellholes

In its recently released annual report, the ATRA identified 10 jurisdictions on its 2024 hellholes list – which, in order, include: (1) Pennsylvania (especially in the Philadelphia Court of Common Pleas and the Supreme Court of Pennsylvania); (2) New York City (with unique state laws and lawsuit abuses); (3) South Carolina (particularly due to a bias against corporate defendants in asbestos litigation); (4) George (tied for #1 in 2023, the state has seen nuclear verdicts and endless liabilities for defendants); (5) California (with a huge overall volume of lawsuits, huge verdicts, Private Attorney General Act (PAGA) litigation, lemon law litigation, and high-stakes environmental litigation); (6) Cook County, Illinois (with no-injury claims filed under the state’s Biometric Information Protection Act (BIPA) and being a hotbed for asbestos litigation); (7) St. Louis, Missouri (with focuses on junk science in the courtrooms and nuclear verdicts); (8) the Michigan Supreme Court (particularly due to liability-expanding decisions and pro-plaintiff legislative activity); (9) King County, Washington (a first appearance on the list due to trial courts conducting unfair group trials, allowing junk science into evidence, and swapping to other state laws when favorable to plaintiffs); and (10) Louisiana (with long-running costal litigation and nuclear verdicts against defendants).

According to the ATRA’s analysis, these venues are less than optimal for corporate defendants and often attract plaintiffs’ attorneys, particularly for the filing of class action lawsuits. As a result, corporate counsel should take particular care if they encounter a class action lawsuit filed in one of these venues.

The 2025 “Watch List”

The ATRA also included one jurisdiction on its “watch list” — the Texas Court of Appeals for the Fifth District, which had three noteworthy decisions overturned by the Texas Supreme Court that would have expanded liability to defendants. The ATRA emphasized the need for oversight of this appellate court to ensure that it does not deviate from Texas precedent.

The 2025 “Dishonorable Mentions”

The ATRA included a few jurisdictions on its “dishonorable mentions” list, for making unsound decisions, engaging in abusive practices, or other actions that “erode the fairness of a state’s civil justice system.” The venues on the list include the Maryland Supreme Court, following a ruling which rejected a higher standard for expert evidence; Tennessee, as a new hotspot for abusive Americans with Disabilities Act Litigation; and Illinois courts where asbestos claims remain prevalent.

Points Of Lights

In addition, the ATRA recognized that several jurisdictions made significant positive improvements this year, highlighting decisions by the Third Circuit, which ruled that lawsuits alleging insufficient warnings on product labels, even with federal approval, cannot proceed; the Kentucky Court of Appeals, which overturned a previous problematic ruling for defendants; and the Utah Supreme Court, which upheld the state’s statute of repose for medical liability lawsuits.

Implications For Employers

The Judicial Hellholes Report often mirrors the experience of companies in high-stakes class actions, as Pennsylvania, New York, South Carolina, Georgia, California, Illinois, Missouri, Michigan, Washington, and Louisiana are among the leading states where plaintiffs’ lawyers file class actions. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and more generous damages recovery possibilities under state laws.

December 6, 2024December 6, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 84: DOL Seeks To End Lower Minimum Wage For Workers With Disabilities

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Gregory Tsonis with their discussion of a proposed rule from the U.S. Department of Labor (“DOL”), entitled “Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act,” that would put an stop to the issuance of new certificates that allow employers to pay workers with disabilities a subminimum wage.

Episode Transcript

Jennifer Riley: Thank you for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is Greg Tsonis. Thank you for being on the podcast, Greg.

Greg Tsonis: Welcome, Jen, glad to be here.

Jennifer: So, big news this week from the U.S. Department of Labor. It has announced a major move to end the ability of employers to pay workers with disabilities below the federal minimum wage. This has been in the works for a while, though, right Greg?

Greg: Yes, it’s definitely been a long time coming. So, this rule is aiming to end the use of Section 14(c) of the Fair Labor Standards Act, the FLSA, which has allowed employers to pay workers with disabilities below the federal minimum wage way back since the 1930s, actually. So, this new proposal would stop the issuance of new certificates under that provision and existing employers with those certificates would have up to three years to phase out paying subminimum wages.

Jennifer: Right. I think a lot of people are surprised to see this move happening now, especially since it’s coming at the end of President Biden’s administration. What does the timeline look like for this rule?

Greg: Yeah, good question. So right now, the rule is in the proposed stage. So there’s a comment period that just started and runs through January 17th of next year. We’ll be hearing a lot of feedback from various stakeholders in that time. After that, the next steps will be determined, based on the comments that are received and what they say. But here’s the kicker – since it’s so close to Inauguration Day, it’s likely that the next administration will have a big role in finalizing that rule.

Jennifer: That’s right. And as we saw with some other issues under Biden’s administration, regulations like this can face challenges, especially if they come out toward the end of a presidency. But the push to end this practice has been building for a while, wouldn’t you say?

Greg: Absolutely. So, this is actually one of the farthest steps the federal government has taken to end Section 14(c). Democrats have been trying to get rid of it for years with legislation like Raise the Wage Act and the transformation to Competitive Integrated Employment Act. Both are still pending. But the platform for the Democratic party, both in 2020 and in 2024, has included a commitment to end subminimum wages for people with disabilities, and even some Republicans have backed this idea, especially in the Senate.

Jennifer: That’s true. Speaking of lawmakers, we have seen varying amounts of support. There was a pretty positive reception from some key figures in the Republican side as well as in the Democrat side. For instance, Representative Bobby Scott praised the announcement, calling it a step toward fairness. He made it clear that all workers, regardless of disability, should be treated with dignity and receive at least the minimum wage.

Greg: Exactly. He’s been an advocate for this for a long time, and his comments really emphasize the broader shift toward equality in the workforce. Democratic Senator Patty Murray also weighed in saying that paying workers with disabilities less than the minimum wage is discriminatory, and that this rule is a major step toward better economic outcomes for people with disabilities.

Jennifer: Right. But, as to be expected, there’s also pushback from some lawmakers going the other way. Republican Representative Virginia Foxx, for instance, was pretty vocal against the rule. She called it misguided and irresponsible, saying that the 14(c) program actually protects job opportunities for individuals with disabilities. She even pointed out that in states where the program was phased out, many workers ended up jobless or even isolated.

Greg: Yes, and that’s a real concern for some. Representative Foxx and others argue by eliminating 14(c), you could have unintended consequences. They believe that the program has helped individuals with disabilities gain employment in a way that would be difficult in a competitive market. Some critics are worried that this change could lead to job loss and greater social isolation for those workers who rely on these programs.

Jennifer: Right. It’s definitely a tough issue with strong opinions on both sides. But if the rule does go through, it could be a big shift in the rights and protections for people with disabilities. The government has already taken steps to end subminimum wage for federal contractors, and some states have banned it, too. So, it’s clear that momentum is building to move away from this practice.

Greg: Yeah, it’s been a major point of debate for years, and with the public comments coming in now, we’re likely to see even more perspectives emerge. There are certainly valid concerns about the potential impact on job opportunities. But at the same time, we’ve seen a shift in how workers with disabilities are treated in the broader workforce. Ending subminimum wage could create more opportunities for integration and fair pay.

Jennifer: It will definitely be interesting to see how this plays out with the comment period and potential changes from the next administration. There’s a lot of uncertainty about how quickly this rule will become a reality. But it’s definitely something to watch closely.

Greg: For sure, it’s a defining issue for both the disability rights community and the broader workforce, and whichever way it goes, it will have lasting implications for how workers with disabilities are treated in the job market. The next few months will be crucial in shaping that future.

Jennifer: Thanks, Greg, for breaking this down. It’s certainly going to be a topic that gets a lot of attention over the coming months. We will be sure to keep our listeners updated. Thanks for being here today, Greg, and thank you to everyone in the audience for tuning in.

Greg: Thanks for having me, Jen, and thank you to the listeners.

December 5, 2024December 5, 2024 by Gerald L. Maatman, Jr.

The Duane Morris Class Action Review – 2025 Is Coming Soon!

By Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaway: Happy Holidays to our loyal readers of the Duane Morris Class Action Defense Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – the Duane Morris Class Action Review – 2025. We will go to press in early January and launch the 2025 Review from our blog and our book launch website.

The 2025 Review builds on the success of our previous editions and represents our twentieth annual study of the class action space. At over 600 pages, the 2025 Review has more analysis than ever before, with discussion of over 1,250 class certification rulings from federal and state courts over this past year. The Review will be available for download as an E-Book too.

The Review is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America, including the substantive areas of antitrust, appeals, the Class Action Fairness Act, civil rights, consumer fraud, data breach, EEOC-Initiated and government enforcement litigation, employment discrimination, the Employee Retirement Income Security Act of 1974, the Fair Credit Reporting Act, labor, privacy, procedural issues, product liability and mass torts, the Racketeer Influenced and Corrupt Organizations Act, securities fraud, state court class actions, the Telephone Consumer Protection Act, wage & hour class and collective actions, and the Worker Adjustment and Retraining Notification Act. The Review also highlights key rulings on attorneys’ fee awards in class actions, motions granting and denying sanctions in class actions, and the top-class action settlements in each area. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2025.

We are humbled and honored by the recent review of the Duane Morris Class Action Review – 2024 by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said, “The Duane Morris Class Action Review is ‘the Bible’ on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.” EPLiC continued, “The review is a must-have resource for in-depth analysis of class actions in general and workplace litigation in particular. The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting corporate America and provides insight as to what companies and corporate counsel can expect in terms of filings by the plaintiffs’ class action bar and government enforcement agencies like the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”

We look forward to providing the 2025 edition of the Review to all our loyal readers in early January. Stay tuned and Happy Holidays!

December 4, 2024 by Gerald L. Maatman, Jr.

Rhode Island Federal Court Rules That Defendants Waived Their Right To Arbitration By Refusing To Pay AAA Filing Fees

By Gerald L. Maatman, Jr., Rebecca S. Bjork, and Eden E. Anderson

Duane Morris Takeaway: In 5-Star General Store, et al. v. American Express Co., 2024 U.S. Dist. LEXIS 217246 (D.R.I. Dec. 2, 2024), Judge Mary McElroy of the U.S. District Court for the District Court of Rhode Island held that the defendants could not move to compel arbitration on the issue of whether it was required to pay filing fees to the American Arbitration Association. This ruling presents an unusual twist to arbitration issues typically resolved by federal courts and is a cautionary warning for companies.

Background

The 5-Star General Store case is an antitrust action brought by merchants who resolved certain claims with American Express entities in arbitration relating to the acceptance of the defendants’ credit cards for purchases at their stores. After the final order was issued, the defendants refused to pay their share of the filing fees to the American Arbitration Association, which totaled more than $17 million. The AAA administratively closed the case and the plaintiffs filed a class action relative to those fees. The defendants moved to compel arbitration of the lawsuit’s claims and to strike the plaintiffs’ class allegations.

The Court’s Ruling

The court denied the defendants’ motion to compel arbitration on whether they were required to pay the AAA filing fees and denied the defendants’ motion to strike the plaintiffs’ class allegations. The plaintiffs sought to represent more than 5,000 merchants accepting the defendants’ cards. They argued that the defendants had waived their right to arbitration by failing to pay their share of the arbitration fees because they were in default of the agreement under § 3 of the FAA. First, the court ruled that it, not an arbitrator, had the authority to decide whether the defendants defaulted on the arbitration agreement. Although the court found no controlling case law authority directly on point, it decided to follow the Fifth, Ninth, Tenth and Eleventh Circuits, which have held that courts may decide whether failure to pay arbitration fees constitutes a default under § 3.

Second, the court focused on whether the defendants were in default of the agreement. Relying on Black’s Law Dictionary, which defines “default” as “the omission or failure to perform a legal or contractual duty; esp., the failure to pay a debt when due,” the court found the issue to be clear and concluded that the defendants defaulted on the arbitration agreement. Id. at *12. It also opined that a second arbitration likely would not fare any better than the first and the parties would end up before the court again.

Third, the court rejected the defendants’ claim that the plaintiffs lacked clean hands and therefore should not be allowed to pursue their claims in court. The court reasoned that the plaintiffs did not change their theory of their case sufficiently when filing the instant case to rescind the defendants’ waiver of arbitration. Therefore, the court denied the defendants’ motion to compel arbitration.

Finally, the court also denied the defendants’ motion to strike the plaintiffs’ class allegations because the class was ascertainable by objective means and the class definition was not “fail safe” because it did not contain a legal conclusion that determines eligibility for class membership. Id. at *32-33. The court further considered and rejected the defendants’ claims that the plaintiffs’ requests for injunctive and declaratory relief under Rule 23(b)(2) and 23(c)(4), including certification of issues classes, should be stricken at the pleading stage.

Implications For Companies:

This ruling should serve as a cautionary tale to companies that regularly seek to enforce mandatory arbitration agreements when those agreements require individual arbitration. The defendants’ failure to pay filing fees for thousands of individual arbitrations could lead to a complete waiver of the ability to compel arbitration of the claims in the future.

December 4, 2024 by Gerald L. Maatman, Jr.

The FTC Issues Three New Orders Showing Its Increased 2024 Enforcement Activities Regarding AI And Adtech

By Gerald L. Maatman, Jr. and Justin R. Donoho

Duane Morris Takeaways: On December 3, 2024, the Federal Trade Commission (FTC) issued an order in In Re Intellivision Technologies Corp., (FTC Dec. 3, 2024) prohibiting an AI software developer from making misrepresentations that its AI-powered facial recognition software was free from gender and racial bias, and two orders in In Re Mobilewalla, Inc. (FTC Dec. 3, 2024), and In RE Gravy Analytics, Inc. (FTC Dec. 3, 2024), requiring data brokers to improve their advertising technology (adtech) privacy and security practices. These three orders are significant in that they highlight that in 2024, the FTC has significantly increased its enforcement activities in the areas of AI and adtech.

Background

In 2024, the FTC brought and litigated at least 10 enforcement actions involving alleged deception about AI, alleged AI-powered fraud, and allegedly biased AI. See the FTC’s AI case webpage located here. This is a fivefold increase from the at least two AI-related actions brought by the FTC last year. See id. Just as private class actions involving AI are on the rise, so are the FTC’s AI-related enforcement actions.

This year the FTC also brought and litigated at least 21 enforcement actions categorized by the FTC as involving privacy and security. See the FTC’s privacy and security webpage located here. This is about twice the case activity by the FTC in privacy and data security cases compared with 2023. See id. Most of these new cases involve alleged unfair use of adtech, an area of recently increased litigation activity in private class actions, as well.

In short, this year the FTC officially achieved its “paradigm shift” of focusing enforcement activities on modern technologies and data privacy, as forecasted in 2022 by the FTC’s Director, Bureau of Consumer Protection, Samuel Levine, here.

All these complaints were brought by the FTC under the FTC Act, under which there is no private right of action.

The FTC’s December 3, 2024 Orders

In Intellivision, the FTC brought an enforcement action against a developer of AI-based facial recognition software embedded in home security products to enable consumers to gain access to their home security systems. According to the complaint, the developer described its facial recognition software publicly as being entirely free of any gender or racial bias as shown by rigorous testing when, in fact, testing by the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) showed that the software was not among the top 100 best performing algorithms tested by NIST in terms of error rates across different demographics, including region of birth and sex. (Compl. ¶ 11.) Moreover, according to the FTC, the developer did not possess any of its own testing to support its claims of lack of bias. Based on these allegations, the FTC brought misrepresentation claims under the FTC Act. The parties agreed to a consent order, in which the developer agreed to refrain from making any representations about the accuracy, efficacy, or lack of bias of its facial recognition technology, unless it could first substantiate such claims with reliable testing and documentation as set forth in the consent order. The consent order also requires the developer to communicate the order to any of its managers and affiliated companies in the next 20 years, to make timely compliance reports and notices, and to create and maintain various detailed records, including regarding the company’s accounting, personnel, consumer complaints, compliance, marketing, and testing.

In Mobilewalla and Gravy Analytics, the FTC brought enforcement actions against data brokers who allegedly obtained consumer location data from other data suppliers and mobile applications and sold access to this data for purposes of online advertising without consumers’ consent. According to the FTC’s complaints, the data brokers engaged in unfair collection, sale, use, and retention of sensitive location information, all in alleged violation of the FTC Act. The parties agreed to consent orders, in which the data brokers agreed to refrain from collecting, selling, using, and retaining sensitive location information; to establish a Sensitive Location Data Program, Supplier Assessment Program, and a comprehensive privacy program, as detailed in the orders; provide consumers clear and conspicuous notice; provide consumers a means to request data deletion; delete location data as set forth in the order; and perform compliance, recordkeeping, and other activities, as set forth in the order.

Implications For Companies

The FTC’s increased enforcement activities in the areas of adtech and AI serve as a cautionary tale for companies using adtech and AI.

As the FTC’s recent rulings and its 2024 dockets show, the FTC is increasingly using the FTC Act as a sword against alleged unfair use of adtech and AI. Moreover, although the December 3 orders do not expressly impose any monetary penalties, the injunctive relief they impose may be costly and, in other FTC consent orders, harsher penalties have included express penalties of millions of dollars and, further, algorithmic disgorgement. As adtech and AI continue to proliferate, organizations should consider in light of the FTC’s increased enforcement activities in these areas—and in light of the plaintiffs’ class action bar’s and EEOC’s increased activities in these areas, as well, as we blogged about here, here, here, here, and here—whether to modify their website terms of use, data privacy policies, and all other notices to the organizations’ website visitors and customers to describe the organization’s use of AI and adtech in additional detail. Doing so could deter or help defend a future enforcement action or class action similar to the many that are being filed today, alleging omission of such additional details, and seeking a wide range of injunctive and monetary relief.

November 28, 2024November 28, 2024 by Class Action Defense

Quebec Bar Association Hosts National Conference On Cutting-Edge Class Action Issues

By Jennifer A. Riley

Duane Morris Takeaways: Jennifer A. Riley, the Vice-Chair of the Duane Morris Class Action Defense Group recently spoke at 21st National Class Action Conference organized by the Barreau du Québec (Québec Bar Association). As the sole guest presenter from the United States on employment class actions, she spoke on cross-border class action defense strategies.

This week I had the pleasure of speaking at the Colloque national sur l’action collective, the National Class Action Conference in Montreal, Quebec.

The conference was the 21 National Class Action Conference organized by the Barreau du Québec (Québec Bar Association) and was held on November 27 and 28 at the Palais des congrès de Montréal.

One of the largest international conferences on class actions, the event brought together nearly 60 speakers and moderators from Canada, the United States, and Europe.

The Conference

The organizers compiled a wide range of knowledge and experience on cutting edge class action topics, including recent trends, emerging issues, and the proliferation of industry-wide class actions.

The presenters covered the latest developments in class action trends across Canada, the United States, and Europe. They discussed trends and legal developments in consumer, privacy, and employment class actions, and reviewed the growth of AI class actions, which have exploded in terms of filings from 2021 (2 filings) to 2024 (32 filings).

I had the pleasure of discussing developments on the employment class action front and providing a sneak peek at 2024 filing, settlement, and certification numbers.

Class Action Trends

In terms of overall settlement numbers, in 2023, the largest settlements across all substantive areas of class actions in the U.S. totaled more than $51.4 billion. In 2024, settlements are on track to exceed $37 billion, representing a continued use of the class action mechanism to effective a massive redistribution of wealth.

Plaintiffs’ success on the certification front is continuing to fuel this trend. In 2023, plaintiffs certified class actions at high rates by winning 324 out of 451 rulings (72%). In the employment space, such numbers were equally high, as plaintiffs converted 82% of rulings in the ERISA space, prevailed on 75% of motions for conditional certification of FLSA collective actions, and prevailed on 50% of certification rulings in discrimination class actions.

In 2024, the numbers remain plaintiff-friendly. So far in 2024, we have logged 363 decisions of U.S. courts on motions for class certification. Courts have granted 232 of those motions, for a certification rate of 64%. Although the overall rate might trend down from 2023, the 2024 numbers are showing more consistency across substantive areas.

In the employment space, plaintiffs’ success on certification motions has surpassed the 2023 numbers. So far in 2024, plaintiffs have prevailed on 81% of rulings on motions for FLSA conditional certification, 80% of rulings on motions to certify WARN classes, 67% of motions to certify ERISA classes, and 53% of motions to certify discrimination classes.

Conclusion

Overall, the conference presented a one-of-a-kind opportunity to share class action experiences and knowledge across jurisdictions. It provided a unique look at the areas of consistency in terms of the focus of the plaintiffs’ class action bar across jurisdictions and an interesting overview of the deviations the plaintiffs class action bar has implemented as it has molded to the unique contours of the prevailing laws across jurisdictions.

November 26, 2024November 26, 2024 by Class Action Defense

Webinar Replay: Year-End EEOC Strategy And Litigation Review

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Duane Morris Takeaway: Thank you to all the loyal blog readers and followers who joined us last week for our Year-End EEOC Strategy And Litigation Review webinar! In this 30-minute program, Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik analyzed the enforcement lawsuit filings in the Commission’s fiscal year 2024, discussed the EEOC’s latest strategic priorities, and provided insights into how the 2024 presidential election could transform the agency’s operations and directives going into 2025.

If you were unable to attend the webinar, it is now available on our podcast channel. Click to watch below and stay tuned for important EEOC trends and developments throughout the year.