Class Action Defense

September 13, 2024 by Class Action Defense

Sixth Circuit Leaves Class Certification Order Intact In Securities Fraud Case And Denies Rule 23(f) Petition To Appeal

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

Duane Morris Takeaways: On September 10 2024, in In Re Tivity Health Inc., et al., No. 23-0504 (6th Cir. Sept. 10, 2024), the U.S. Court of Appeals for the Sixth Circuit denied the defendants’ petition to appeal the U.S. District Court for the Middle District of Tennessee’s order granting class certification to plaintiffs in a securities fraud case. The ruling closes the door to an immediate appeal of the class certification ruling, leaving proceedings to continue in the district court. The decision is a must read for class action defendants seeking to overturn a district court’s Rule 23 class action certification ruling and exercising appellate options.

Case Background

In the underlying lawsuit, the plaintiff filed a lawsuit on behalf of a putative class of investors against Tivity Health and three individual defendants. The lawsuit asserted claims of violations of Sections 10(b) and 20(a) of the Securities and Exchange Act arising from disclosures the company made to investors about its acquisition of Nutrisystem, a prominent diet and nutrition company.

On June 7, 2022, the district court granted the motion of the lead plaintiff, Sheet Metal Workers Local No. 33, Cleveland District, Pension Fund, for Rule 23(a) class certification. The court certified a class of persons who purchased or otherwise acquired the common stock of Tivity Health between March 8, 2019 and February 19, 2020. The defendants filed a Rule 23(f) petition seeking permission to appeal the ruling. The Sixth Circuit granted the petition on November 21, 2022, concluding the district court had not undertaken a “rigorous” analysis of the Rule 23(a) factors. See In Re Tivity Health Inc., et al., No. 22-0502 (6th Cir. Nov. 21, 2022). The Sixth Circuit remanded the case to the district court.

Following remand, the district court again granted class certification pursuant to Rule 23(a). Thereafter, on June 22, 2023, the defendants filed a second Rule 23(f) petition, requesting permission to appeal the second class certification decision. The defendants primarily argued that the district court erroneously decided an open question of law about the scope of “scheme liability” under Section 10(b) of the Securities and Exchange Act.

On July 10, 2023, lead plaintiff Sheet Metal Workers Local No. 33 responded in opposition to the request. In the opposition, the plaintiff contended that the U.S. Supreme Court had ruled definitely on the “open” question in Lorenzo v. Sec. & Exch. Comm’n, 587 U.S. 71 (2019). In Lorenzo, the Supreme Court ruled that Section 10(b) of the Securities and Exchange Act encompassed a wide range of conduct, rejecting the argument that “scheme liability” was limited to deceptive acts. Consequently, the plaintiff argued there was no open question of law warranting interlocutory appeal of the district court’s (second) grant of class certification.

The Sixth Circuit’s Ruling

First, the Sixth Circuit articulated the Rule 23(f) standard for review of a petition to appeal immediately from an order granting or denying class certification. It explained the analysis under Rule 23(f) considers several factors, including: (1) the petitioner’s likelihood of success on the merits; (2) whether the certification decision turns on a novel or unsettled question of law; (3) whether the costs of continuing litigation may present such a barrier that later review is hampered; and (4) the posture of the case as it is pending before the district court.

In applying the Rule 23(f) standard, the Sixth Circuit addressed only the second factor. It roundly rejected the defendants’ argument that the district court’s ruling turned on a novel or unsettled question of law. The Sixth Circuit reasoned that the plaintiffs’ claim appeared to involve a “straightforward application” of the Supreme Court’s ruling on “scheme liability” in Lorenzo. The Sixth Circuit declined to address any of the other factors in the Rule 23(f) analysis.

Accordingly, finding no basis for interlocutory appeal, the Sixth Circuit entered a judgment denying the defendants’ petition for permission to challenge the grant of class certification at this stage of the litigation.

Implications For Class Action Defendants

As any corporation in a class action knows, a district court’s grant of class certification is among the most significant inflection points in the litigation. Rule 23(f) is a tool for litigants to challenge a class certification ruling at the earliest possible stage, before the parties spend years engaging in costly and needless litigation. Similar to the Supreme Court’s decision whether to grant a petition for certiorari, an appellate court has full discretion to grant or deny a Rule 23(f) petition. The Sixth Circuit’s ruling in In Re Tivity Health, Inc. illustrates the exceptionally high hurdle defendants face in overturning a district court’s grant of class certification.

September 12, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 73: Wisconsin Federal Court Blazes A New Path On FLSA Conditional Certification Process

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associates Greg Tsonis and Derek Franklin with their analysis of a Wisconsin federal court decision weighing in on the two-step process for issuing notice of a Fair Labor Standards Act (“FLSA”) collective action, illustrating a gaining momentum among district courts toward rejecting a two-step “conditional certification” approach in favor of a one-step standard.

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

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 and with me today are Greg Tsonis and Derek Franklin. Thank you for being on the podcast today guys.

Derek Franklin: Great to be here, thanks for having me.

Greg Tsonis: Yes, thanks Jen, I’m happy to be here.

Jennifer: Today we are discussing a recent ruling coming from the U.S. District Court for the Eastern District of Wisconsin, Laverenz v. Pioneer Metal Finishing. Greg, can you tell us a little about the background of this case?

Greg: Sure, so in this case the plaintiff Amanda Laverenz filed a class and collective action lawsuit under the FLSA and Wisconsin state law alleging that Pioneer deprived her and other similarly situated hourly employees of wages through its practice of rounding employees’ time clock entries to the nearest quarter hour and paying employees based on that rounded time. Now the plaintiff moved for conditional certification of a collective action, and argued that the court should employ a lenient two-step certification process established in 1987 by a Third Circuit district court in Lusardi v. Xerox Corp. Under the Lusardi framework, named plaintiffs need only present what courts have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step of conditional certification. In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court would then make a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order. Now here, Pioneer responded that the Court should follow the Fifth Circuit’s 2021 decision in Swales v. KLLM Transport Services, LLC, which rejected the longstanding approach developed in Lusardi. Pioneer argued that the two-step approach “is inconsistent with the FLSA’s purpose and Seventh Circuit case law stressing the similarities of FLSA certification to Rule 23 certification, which requires ‘rigorous’ scrutiny.”

Jennifer: Yes, the Swales ruling changed the conditional certification analysis significantly. The Fifth Circuit in that case recognized that nothing in the text of the FLSA even mentions “conditional certification.” The Swales court directed that courts should consider all available evidence to determine if analyzing the merits of pending claims required a “highly individualized inquiry” into each opt-in’s circumstances and, if so, to declare a certification inappropriate. Derek, which standard did the court in the Laverenz action ultimately use?

Derek: Well, Jen, the court chose to go with Pioneer’s requested standard. The court adopted the Fifth Circuit’s FLSA collective certification approach in Swales and denied Plaintiff’s motion for conditional certification. The court actually cited in its ruling a 2022 Annual Class Action Report our colleague and Duane Morris partner Gerald L. Maatman, Jr. served as General Editor. In its ruling, the court noted that federal courts in 2021 granted FLSA conditional certification motions in 81% of rulings on such motions during the first stage of the two-step process despite – in that same year – granting 53% of FLSA decertification motions at the next stage. The Court gleaned from that data that “over half of those conditionally certified putative classes failed to survive upon a more rigorous review” and concluded, as a result, that the two-step certification process “defeats the very goal it set out to accomplish — efficiency.” The court ultimately found that “significant factual differences exist regarding how the [time rounding] policy affected each employee” given that “the rounding benefitted some and negatively affected others.” The court also stated that too many individualized claims remained in the matter that would necessarily involve fact-specific inquiries. And the court explained that “it would seem particularly inefficient and unfair to notify a broad class of employees,” given its conclusion that Plaintiff’s proposed collective action claims “involve highly individualized inquiries and defenses.” Toward that end, the Court determined that “authorizing notice in a case such as this would turn a tool into a sword,” and that “many a plaintiff would likely join the line, requiring Pioneer to defend dozens — possibly hundreds — more claims despite the fact that Laverenz has not even showed a violation of law.” Ultimately, the Court concluded that Plaintiff “failed to provide a sufficient basis for the court to facilitate notice to potential plaintiffs,” and therefore, the Court denied Plaintiff’s motion for conditional certification.

Jennifer: Wow, thanks for the overview. What a significant ruling for employers. How do you both imagine this will impact future rulings on conditional certification in the Seventh Circuit?

Greg: Well Jen, the Duane Morris Class Action Review actually analyzed FLSA conditional certification rates, and, in 2023, plaintiffs won 75% of first stage conditional certification motions. However, only 56% of those conditionally certified collective actions survived motions for decertification involving a more rigorous scrutiny. Hence, the stakes are quite meaningful in terms of the approach outlined in the Laverenz ruling.

Derek: And I would add to that – as any employer who has been sued by a plaintiff seeking to represent an FLSA collective action knows – the discovery burden imposed by application of the two-step Lusardi standard is onerous. Full merits discovery lasting more than a year is common, as opposed to a narrowly-targeted investigation of the work performed by the plaintiffs along with facts relating to the relevant factors. For that reason alone, employers with operations within the Seventh Circuit will be happy to know they can cite this ruling in the future. While no one can predict the future with any particular degree of certainty, it seems likely that this new legal trend regarding the collective action notice process may eventually need to be resolved by the U.S. Supreme Court.

Jennifer: Thank you both for your great analysis of this ruing and the possible implications it might have in the future on conditional certification motions. We will be providing the new edition of the Duane Morris Class Action Review in early January, which will have statistics on how conditional certification is shaping up for 2024. Greg and Derek, thanks for being here today, and thank you so much to our listeners for tuning in.

Greg: Thanks Jen and thank you listeners.

Derek: Happy to be here and thanks everyone.

September 6, 2024September 6, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 72: Billion-Dollar Benchmark: 2023 & 2024 Class Action Settlements

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley with their analysis of class action settlements over the past 24 months and key factors influencing the era of billion-dollar class actions.

Episode Transcript

Jerry Maatman: Welcome loyal blog readers to our weekly installment of our podcast series, entitled The Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is vice chair of our class action defense group, Jennifer Riley, of our Chicago and New York offices. Welcome, Jen.

Jennifer Riley: Great to be here, and thanks for having me.

Jerry: Today we’re discussing one of the biggest trends in the class action litigation space – involving settlement numbers and settlement amounts in class action litigation. Over the last two years, we’ve seen the highest numbers ever in the history of American jurisprudence. It’s certainly true that settlement numbers have been through the roof, and so we’re going to take a look at not only the last two years, but also the first six months of 2024. It’s clear to us that we’ve certainly entered a new era of heightened risks and higher stakes in class action litigation – Jen, what’s your take on the trends in this particular area?

Jennifer: Thanks, Jerry, I agree completely. The numbers are just staggering. In 2023, parties agreed to resolve 10 class actions for a billion dollars or more. In 2022, parties resolve 14 class actions for a billion dollars or more in settlements. That makes 24 billion-dollar settlements in two years. Many of the settlements in 2023 emanated outside of the products and pharmaceutical space, really signaling a wider base and a greater threat to businesses as these settlements continue to redistribute wealth. However, these settlements have reached virtually all industries and all areas of the country.

Jerry: Let’s talk about one in particular, and that’s the $12.5 billion-with-a-B class action settlement in 2023 stemming from the federal court in South Carolina, In Re Aqueous Film-Forming Foams Products Liability Litigation. It’s somewhat of a mass tort situation as well as product liability – involving chemicals used in film forming work and fire extinguishing agents – claiming that it causes cancer, and PFAS forever chemicals are linked to both health risks and environmental contamination. The plaintiffs claim that exposure to these chemicals resulted in cancer, liver damage, and other health conditions, and that the manufacturers of these chemicals knew or should have been aware. was no trial on the merits. Parties agreed to settle, but at $12.5 billion – the largest class action settlement of the year. What other areas and what other cases spike those big numbers over the past year?

Jennifer: The third largest settlement of 2023 was in an antitrust class action that was called In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. The settlement of $5.6 billion resolved claims by the plaintiffs who were primarily merchants, merchant associations who were alleging that credit card companies and their networks engaged in anticompetitive practices. The core claim there was that the networks, Visa and MasterCard, conspired to fix interchange fees and to prevent competition, thereby inflating the costs for merchants. In particular, the plaintiffs alleged that Visa and MasterCard engaged in practices that restricted merchants from negotiating better terms or accepting competing payment methods. The plaintiffs claimed that those practices harm competition by reducing the incentive for credit card networks to lower their fees or to improve their services. And they argued that this in turn led to higher costs for merchants, which were ultimately passed on to consumers.

Jerry: So, as our readers know, we examine class action settlements every day; we track all the rulings, filings in every state court, in every federal court throughout the United States. And so we’ve done an analysis of settlements from January 1 through June 30, and we wanted to kind of preview what that looked like – Jen, what do you think the numbers are showing, or the trend is showing, in comparing the first half of 2024 to what happened over the past two previous years?

Jennifer: Great question, Jerry. So, 2024 is looking to be another blockbuster settlement year. It might not be quite as robust as the past two years. But there are several settlements that already have been approved by the courts that hit that one billion-dollar benchmark. For example, in the consumer fraud space, a $1.5 billion settlement was announced in a case called Fitzgerald, et al. v. Wildcat, which is a class action alleging that around 2012 or 2013, a federally recognized Native American tribe a began partnering with a non-tribal payday lender, who entered into agreements that allowed them to oversee and collect on loans issued by lenders owned by the tribe. In that case, the tribe alleged that the lenders collected millions of dollars in unlawful debts, and conspired with each other and others to repeatedly violate state lending laws resulting in the collection of unlawful debts from the plaintiffs and from the class members.

Jerry: That’s a really interesting settlement, certainly an incredibly interesting class action. Another one that is beginning to get play in the press involves a government enforcement action – looks like a class action, basically functions like one – involving the State of Texas suing Meta Platforms for privacy violations. And it looks like a settlement coming in at $1.4 billion. So, given the size of some of these settlements, I agree that 2024 is shaping up to be even higher than the previous two years. So it’s very clear that we’re in a new era, a new zone in terms of the price of settlements, the expectations of plaintiffs, and the way the plaintiffs’ bar is pushing the numbers in terms of their theory – to file, certify, and then monetize these class actions.

Well, thanks so much, Jen, for your time and your expertise, and thank you to our loyal blog readers for listening in to this installment of our Class Action Weekly Wire.

Jennifer: Thanks, and thanks everyone for joining us.

September 6, 2024 by Class Action Defense

Fifth Circuit Vacates The U.S. Department Of Labor’s Tip Credit “Final Rule”

By Gerald L. Maatman, Jr., Jennifer A. Riley, Emilee N. Crowther, and Derrick Fong-Stempel

Duane Morris Takeaways: In Restaurant Law Center et al v. U.S. Department of Labor, No. 23-50562, 2024 WL 3911308 (5th Cir. Aug. 23, 2024), the Fifth Circuit reversed a decision of Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas that had upheld the U.S. Department of Labor’s final rule that stated that an employer could only take a “tip credit” against the federal minimum wage for work performed by a tipped employee that was part of the employee’s tipped occupation. The Fifth Circuit held that, pursuant to the U.S. Supreme Court’s holding in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244, 2273 (2024) (which the Fifth Circuit expressly noted was rendered after Judge Pitman’s trial court decision), it was not required to defer to the DOL’s interpretation of the Federal Labor Standards Act. Accordingly, it found the Final Rule contrary to the express language of the FLSA, and that it should be vacated because it was arbitrary and capricious.

This case previews the likely new federal circuit court regime regarding agency interpretations of ambiguous statutes post-Loper Bright. The ruling is also a required read for all hospitality industry organizations.

Case Background

The Fair Labor Standards Act (“FLSA”) permits employers to take a “tip credit” when paying the wages of any “tipped employee,” such that employers may pay tipped employees $2.13 per hour “under the theory that a large portion of such employees’ total earnings comes from tips.” Id. at *2. If the difference between the $2.13 wage and the general minimum wage of $7.25 per hour is not paid by tips, the FLSA requires the employer to pay the remainder to ensure that the tipped employee makes at least $7.25 an hour. Id.

The DOL is permitted to promulgate rules interpreting and clarifying the FLSA, and issued an 80/20 guidance concerning the tip credit in its sub-regulatory Field Operations Handbook in 1988. Id. at *3. The 80/20 guidance provided that an employer was permitted to take a full tip credit for employees that provided both tipped and non-tipped work, so long as the employee’s non-tipped work did not constitute more than 20% of that employee’s work. Id.

In 2021, the DOL issued a “Final Rule” concerning the 80/20 guidance, which mandated that “[a]n employer may only take a tip credit for work performed by a tipped employee that is part of the employee’s tipped occupation.” Id. at *4 (citing 29 C.F.R. §531.56(f) (2021)). Notably, the term “tipped occupation” is not defined in the FLSA. Id. However, the Final Rule demarcated three categories of work, including: (a) directly tip-producing work (e.g., a server); (b) directly supporting work (e.g., bussing tables); and (c) work not part of the tipped occupation (e.g., preparing food). Id. The Final Rule stated that an employer could take the tip credit for “tip-producing work,” but that if more than 20 percent of an employee’s workweek is spent on “directly supporting work,” then the employer cannot claim the tip credit for the excess. Id. Moreover, the Tip Credit stated that any “directly supporting work” could not be performed for more than 30 minutes at a time. Id.

Thereafter, in December 2021, the Restaurant Law Center and the Texas Restaurant Association (collectively, the “Associations”) filed suit against the DOL, seeking to permanently enjoin the DOL’s enforcement of the Final Rule, and moved for a preliminary injunction. Id. at 5. The district court denied the preliminary injunction, and the Associations appealed to the Fifth Circuit. Id.

The Fifth Circuit’s Decision

The Fifth Circuit held that the DOL’s 2021 Final Rule was contrary to the FLSA’s text, was arbitrary and capricious, and should be vacated. Id. at *2.

In so holding, the Fifth Circuit first focused on the impact of the U.S. Supreme Court’s recent holding in Loper Bright. Prior to Loper Bright, “[u]nder Chevron, a court reviewing agency action for compliance with [a] relevant statute had to defer to ‘permissible’ agency interpretations, ‘even if not the reading the court would have reached if the question initially had arisen in a judicial proceeding.’” Id. (citing Loper Bright, 144 S. C.t at 2264).

However, post-Loper Bright, the Fifth Circuit noted that it was required “to return to the APA’s basic textual command: independently interpret [an ambiguous] statute and effectuate the will of Congress” and “use every tool at [its] disposal to determine the best reading of the statute and resolve the ambiguity.”” Id. (citing Loper Bright, 144 S. Ct. at 2263, 2266). And, since the Supreme Court’s holding in Loper Bright came out after the district court’s holding, the Fifth Circuit reasoned that it was required “to depart from the district court’s analysis at the very start.” Id. at *10.

As such, the Fifth Circuit’s analysis started with the express text of the FLSA, which states that a “tipped employee” means “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.” Id. at *11 (citing 29 U.S.C. § 203(t)). Importantly, the FLSA does not define the terms “engaged in” or “occupation.” Id. Since the terms were not expressly defined, the “ordinary meaning of these terms in 1966, when the tip credit was added to the FLSA, controls.” Id.

After reviewing the “contemporary dictionary definitions” of the words “engaged” and “occupation,” the Fifth Circuit found that the phrase “‘engaged in an occupation’ most naturally indicate[d] a focus ‘on the field of work and the job as a whole,’ rather than specific tasks.” Id. at *11-13. Importantly, the Fifth Circuit noted that “[t]he FLSA does not ask whether duties composing [a] given occupation are themselves each individually tip-producing.” Id. at *14. Accordingly, the Fifth Circuit held that “the Final Rule applies the tip credit in a manner inconsistent with the FLSA’s text.” Id.

Finally, the Fifth Circuit noted that the plain language of the FLSA “asked only whether the employee is engaged in an occupation in which he receives tips.” Id. at *20. As such, the Fifth Circuit determined that the Final Rule “replace[d] the Congressionally chosen touchstone of the tip-credit analysis — the occupation — with one of the DOL’s making — the timesheet.” Id. For these reasons, the Fifth Circuit concluded that the Final Rule was arbitrary and capricious. Id. at 821.

Implications For Employers

This decision has wide-ranging implications. The Fifth Circuit’s ruling in Restaurant Law Center sets aside 36 years of precedent upholding the 80/20 standard contained in the Final Rule. It arms employers with additional ammunition to fight wage & hour class and collective actions brought by private plaintiffs who have relied on the DOL’s Final Rule to position their lawsuits. It also previews what could be the new federal circuit court regime regarding agency interpretations of ambiguous statutes post-Loper Bright. As the Fifth Circuit stated, Congressional intent controls, and “while longstanding agency practice might have the power to persuade, it has never had the power to control.” Id. at *16 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944)).

September 4, 2024 by Class Action Defense

Announcing A New Journal Article By Justin Donoho Of Duane Morris Explaining Best Practices To Mitigate High-Stakes AI Litigation Risk

By Justin Donoho

Duane Morris Takeaway: Available now is the recent article in the Journal of Robotics, Artificial Intelligence & Law by Justin Donoho entitled “Three Best Practices to Mitigate High-Stakes AI Litigation Risk.” The article is available here and is a must-read for corporate counsel.

Organizations using AI-based technologies that perform facial recognition or other facial analysis, website advertising, profiling, automated decision making, educational operations, clinical medicine, generative AI, and more increasingly face the risk of being targeted by class action lawsuits and government enforcement actions alleging that they improperly obtained, disclosed, and misused personal data of website visitors, employees, customers, students, patients, and others, or that they infringed copyrights, fixed prices, and more. These disputes often seek millions or billions of dollars against businesses of all sizes. This article identifies recent trends in such varied but similar AI litigation, draws common threads, and discusses three best practices that corporate counsel should consider to mitigate AI litigation risk: (1) add or update arbitration clauses to mitigate the risks of mass arbitration; (2) collaborate with information technology, cybersecurity, and risk/compliance departments and outside advisors to identify and manage AI risks; and (3) update notices to third parties and vendor agreements.

Implications For Corporations

Companies using AI technologies face multimillion- or billion-dollar risks of litigation seeking statutory and common-law damages under a wide variety of laws, including privacy statutes, wiretap statutes, unfair and deceptive practices statutes, antidiscrimination statutes, copyright statutes, antitrust statutes, common-law invasion of privacy, breach of contract, negligence, and more. This article analyzes litigation brought under these laws and offers corporate counsel three best practices to mitigate the risk of similar cases.

August 29, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 71: WARN Act Class Actions In The Era Of Remote Work

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Kathryn Brown with their discussion of key rulings issued in WARN Act class action litigation over the past year, and the notable challenges for employers defending WARN Act claims in the wake of the COVID-19 pandemic and the rise of remote work.

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 Kathryn Brown. Thank you so much for being on the podcast, Kathryn.

Kathryn Brown: Great to be here, thanks for having me.

Jennifer: Today we wanted to discuss trends and important developments in class action litigation involving the Worker Adjustment and Retraining Notification Act, or the WARN Act. Class actions brought under the WARN Act remain an area of key focus for skilled class action litigators in the plaintiffs’ bar. Unlike the flood of cases we saw in 2022 examining the WARN Act in the context of the COVID-19 pandemic, the significant decisions in 2023 examined more foundational concepts under WARN in a variety of factual contexts. In sum, despite that shift, the WARN Act remains a high stakes fuel for class action litigation. Kathryn, can you explain to our listeners some of the requirements for employers under the WARN Act?

Kathryn: Sure, so the WARN Act requires employers to give written notice to affected employees at least 60 days before conducting a plant closing or mass layoff at a single site of employment. The WARN Act defines a plant closing as the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, where the shutdown results in a defined employment loss during any 30-day period for at least 50 full-time employees. The WARN Act defines a mass layoff as a reduction in force that is not a plant closing, and that results in an employment loss at a single site of employment during any 30-day period for at least 50 full-time employees who constitute at least 33% of the active full-time employees at that single site of employment, or where 500 or more full-time employees at a single site of employment suffer employment losses during any 30-day period. The WARN Act regulations require aggregation of employment losses at a single site of employment during a rolling 90-day period, thereby in essence extending the statute’s 30-day period to 90 days.

Jennifer: Thanks so much for that overview. Can you speak to how often courts grant a class certification in these types of class Actions?

Kathryn: Yes. So, in 2023 plaintiffs’ lawyers achieved somewhat mixed results in their efforts to secure class certification in WARN Act cases. Overall, plaintiffs won a slight majority of class certification motions filed in WARN Act cases obtaining certification in 54% of the motions and with courts denying certification 46% of the time.

Jennifer: Wow, that sounds high, but that’s actually a big contrast to 2022 when courts granted class certification in 100% of WARN Act class actions. We track those numbers in the Duane Morris Class Action Review. What were some of the most significant rulings in WARN Act class actions over the past 12 months?

Kathryn: Well, one of the significant class certification rulings of the past year was Igarashi v. H.I.S. Guam, Inc., a WARN Act claim brought in the District Court for the Island of Guam. The plaintiff filed a class action alleging that the defendant, a travel service agency, violated the WARN Act when the plaintiff and other employees were terminated without 60 days advance notice. The plaintiff filed a motion for class certification pursuant to Rule 23, and the court granted the motion. The court found that the class met the numerosity requirements under Rule 23(a)(1), as there were approximately 96 employees affected by the mass termination. Likewise, the court found the class met the commonality requirement under Rule 23(a)(2). The court concluded that the plaintiff sufficiently demonstrated the existence of common questions of law and fact, including whether under the WARN Act: (i) the defendant is a covered employer; (ii) the class members were covered employees; (iii) the employees suffered a covered employment loss through a covered mass layoff; and finally (iv) there was a failure to issue the required 60 day written notice. The court also determined that typicality was met under Rule 23(a)(3) because the plaintiff and other class members experienced the same injury and the same course of conduct, i.e. a mass termination without the required WARN Act notice resulting in employment loss. The court also found that the Rule 23(a)(4) requirement for adequacy of representation was also satisfied. For the analysis of the Rule 23(b) factors, the court opined that common questions of fact predominated, because the issues were identical to each employee, because they all received the same separation notice, and any justification offered by the defendant for failing to provide a 60 day notice applied to each proposed class member. The court reasoned that common questions of law also predominated, including whether the WARN Act applied to the defendant’s mass layoff and whether the defendant was exempt from the requirements of the WARN Act. As to the superiority requirement, the court ruled that a class action would be the superior method of adjudication, because each proposed class member would also be analyzed under the same statutorily defined compensation framework under the WARN Act statute. Therefore, the court concluded that judicial economy would be served by certifying the class. So that’s one of the important rulings we saw in the past year.

Jennifer: Thanks so much, Kathryn, for that overview. The question as to what the single site of employment means for employees who work from home has become an increasingly significant issue with the dramatic rise of remote work, a trend that may well become a permanent fixture in the modern workplace. Do you have any examples of rulings addressing that question?

Kathryn: Yes, so under the WARN Act a plant closing is defined as the shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment. The DOL’s regulations implementing the WARN Act define the terms single side of employment and operating unit. But the definitions are far from bright lined. So in a recent Second Circuit opinion, we can see how this question is addressed, and how it will continue to be a hot button issue. In the case of Roberts v. Genting N.Y., LLC, the Second Circuit Court of Appeals allowed a class action lawsuit by former employees of a buffet restaurant within a casino to proceed under the WARN Act and corresponding New York law on the basis that a question of fact existed as to whether the buffet was a covered operating unit under the WARN Act, which would entitle the employees to 60 days advance notice before the closing of the buffet. The plaintiffs, a group of 177 former employees, were provided no notice when the defendant casino closed the buffet located inside the casino where the plaintiffs worked. After both parties moved for summary judgment, the district court granted the defendant’s motion, dismissing the employees claims under the WARN Act, because it found that the buffet was neither a single site of employment nor an operating unit within a single site of employment as required to trigger the notice requirements under the WARN Act. In reaching this conclusion, the district court primarily focused on the fact that the buffet was dependent upon the casino’s centralized services. So in reversing the district court’s grant of summary judgment, the Second Circuit Court of Appeals concluded that whether the buffet could operate independent from the casino was not dispositive in deciding if it was operationally or organizationally distinct particularly in light, of the DOL’s inclusion of entities, such as housekeeping and its illustrative examples of operating units in the WARN Act regulations. The Second Circuit detailed several differences between the buffet employees and other employees of the casino that could evidence the status of the buffet as a distinct operating unit for purposes of WARN, such as employee uniforms that were particular to the buffet and managers that worked only for the buffet. In doing so, the Second Circuit gave no special weight to a collective bargaining agreement which did not identify the buffet as a separate department, division, or unit within the larger casino. Viewing the evidence as a whole, the Second Circuit found that the record before the district court did not clearly establish that the buffet was not an operating unit for WARN Act purposes. Therefore, the Second Circuit concluded that neither party was entitled to summary judgment, sending the case back to the district court for a trier of fact ultimately to decide.

Jennifer: Great insights and analysis, Kathryn, thank you so much for being here today and for sharing this information. I know that these are only some of the cases that had interesting rulings in 2023, in WARN Act class actions – 2024 is sure to give us some additional insights into the ways that class actions are evolving in the WARN Act space. Thanks so much for our audience for tuning in today, and we will see you next week on the Class Action Weekly Wire.

August 29, 2024August 29, 2024 by Class Action Defense

Georgia Federal Court Dismisses Data Privacy Class Action Against Healthcare Company For Failure To Sufficiently Allege Any Invasion Of Privacy, Damages, Or Wiretap Violation

By Gerald L. Maatman, Jr., Justin Donoho, and Ryan T. Garippo

Duane Morris Takeaways: On August, 2024, in T.D. v. Piedmont Healthcare, Inc., No. 23-CV-5416 (N.D. Ga. Aug. 24, 2024), Judge Thomas Thrash of the U.S. District Court for the Northern District of Georgia dismissed in its entirety a class action complaint alleging that a healthcare company’s use of website advertising technology installed in its MyChart patient portal disclosed the plaintiffs’ private information in commission of the common law torts of invasion of privacy, breach of fiduciary duty, negligence, breach of contract, and unjust enrichment, and in violation of the Federal Wiretap Act. The ruling is significant because it shows that such claims cannot surmount Rule 12(b)(6)’s plausibility standard for legal reasons broadly applicable to a wide range of adtech class actions currently on file in many jurisdictions across the nation.

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. As the Court explained, “cases like this have sprouted like weeds in recent years.” Id. at 5.

In Piedmont, Plaintiffs brought suit against Piedmont Healthcare, Inc. (“Piedmont”). According to Plaintiffs, Piedmont installed the Meta Pixel on its public-facing website and its secure patient portal, and thereby transmitted to Meta Plaintiffs’ “personally identifiable information (PII) and protected health information (PHI) without their consent.” Id. at 1-2.

Based on these allegations, Plaintiffs alleged claims for invasion of privacy, breach of fiduciary duty, negligence, breach of contract, unjust enrichment, and violation of the Electronic Communications Privacy Act (“ECPA”). Piedmont moved to dismiss under Rule 12(b)(6) for failure to state sufficient facts that, if accepted as true, would state a claim for relief that is plausible on its face.

The Court’s Opinion

The Court agreed with Piedmont and dismissed all of Plaintiffs’ claims.

To state a claim for invasion of privacy, Plaintiffs were required to allege facts sufficient to show “an unreasonable and highly offensive intrusion upon another’s seclusion.” Id. at 5. Plaintiffs argued that Piedmont intruded upon their privacy by using the Meta Pixel to secretly transmit their PII and PHI to a third party for commercial gain. Id. at 4. Piedmont argued that these allegations failed to plausibly plead an intrusion or actionable intent, or that any intrusion was reasonably offensive or objectionable. Id. The Court concluded that “it seems that the weight of authority in similar pixel tracking cases is now solidly in favor of Piedmont’s argument. There is no intrusion upon privacy when a patient voluntarily provides personally identifiable information and protected health information to his or her healthcare provider.” Id. at 5-6 (collecting cases). The Court further commented that “it is widely understood that when browsing websites, your behavior may be tracked, studied, shared, and monetized. So it may not come as much of a surprise when you see an online advertisement for fertilizer shortly after searching for information about keeping your lawn green.” Id. at 3-4.

To state claims for breach of fiduciary duty, negligence, breach of contract, and unjust enrichment, one of the elements a plaintiff much allege is damages or, relatedly, enrichment. Id. at 7-10. Plaintiffs argued that they alleged seven categories of damages, as follows: “(i) invasion of privacy, including increased spam and targeted advertising they did not ask for; (ii) loss of confidentiality; (iii) embarrassment, emotional distress, humiliation and loss of enjoyment of life; (iv) lost time and opportunity costs associated with attempting to mitigate the consequences of the disclosure of their Private Information; (v) loss of benefit of the bargain; (vi) diminution of value of Private Information and (vii) the continued and ongoing risk to their Private Information.” Id. at 9. Piedmont argued that these damages theories stemming from “the provision of encrypted information only to Facebook” were implausible. Id. at 7. The Court agreed with Piedmont, rejected all of Plaintiffs’ damages theories. Accordingly, it dismissed the remainder of Plaintiffs’ common-law claims. As the Court explained: “No facts are alleged that would explain how receiving targeted advertisements from Facebook and Piedmont would plausibly cause any of the Plaintiffs to suffer these damages. This is not a case where the Plaintiffs’ personal information was stolen by criminal hackers with malicious intent. The Plaintiffs received targeted advertisements because they are Facebook users and have Facebook IDs. The Court finds the Plaintiffs’ damages theories untenable. Indeed, this court has rejected many identical theories arising under similar circumstances.” Id. (collecting cases)

To state a claim for violation of the ECPA, also known as the federal wiretap act, a plaintiff must show an intentional interception of the contents of an electronic communication. Id. at 11. The ECPA is a one-party consent statute, meaning that there is no liability under the statute for any party to the communication “unless such communication is intercepted for the purposes of committing a criminal or tortious act in violation of the Constitution or laws of the United States or any State.” 18 U.S.C. § 2511(2)(d)); 18 U.S.C. § 2511(2)(d). Piedmont argued that it could not have intercepted the same transmission it received on its website, nor could it have acted with a tortious or criminal purpose in seeking to drive marketing and revenue. Id. at 10-11. In response, the Plaintiffs contended that they stated a plausible ECPA claim, arguing that Piedmont intercepted the contents of their PII and PHI when it acquired such information through the Meta Pixel on its website and that the party exception is inapplicable because Piedmont acted with criminal and tortious intent in “wiretapping” their PII and PHI. Id. at 11. The Court concisely concluded: “As was the case in the invasion of privacy context, the weight of persuasive authority in similar pixel tracking cases supports Piedmont’s position.” Id. at 11-12 (collecting cases).

Implications For Companies

The holding of Piedmont is a win for adtech class action defendants and should be instructive for courts around the country. While many adtech cases around the country have made it past a motion to dismiss, many have not, and, for many which continue to be filed regularly, it remains to be seen, Piedmont provides powerful precedent for any company defending against adtech class action claims for invasion of privacy, common-law claims for damages or unjust enrichment, and alleged violation of the federal wiretap act.

August 28, 2024 by Class Action Defense

Wisconsin Federal Court Rejects Two-Step “Conditional Certification” FLSA Process

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin

Duane Morris Takeaways: On August 21, 2024, Judge William C. Griesbach of the U.S. District Court for the Eastern District of Wisconsin joined in the fray over whether the long-used two-step process for issuing notice of a Fair Labor Standards Act (“FLSA”) collective action is consistent with the text of the statute. In Laverenz v. Pioneer Metal Finishing, LLC, No. 1:22-CV-00692 (E.D. Wis. Aug. 21, 2024), Judge Griesbach held that it is not. He ruled that in actions brought under the FLSA, plaintiffs must show by a preponderance of evidence that they are “similarly situated” to other individuals allegedly subject to the same violations of the statute in order to secure certification of a collective action. The decision in Laverenz reflects potential growing momentum among district courts toward rejecting a two-step “conditional certification” approach in favor of “one-step” standard placing the “similarly situated” burden in Plaintiff’s court at all relevant times. The ruling should be required reading for all businesses defending wage & hour litigation in the states comprising the Seventh Circuit.

Case Background

Plaintiff Amanda Laverenz filed a class and collective action lawsuit under the FLSA and Wisconsin state law alleging that Defendant Pioneer Metal Finishing, LLC (“Pioneer”) deprived her and other similarly situated hourly employees of wages through its practice of rounding employees’ time clock entries to the nearest quarter hour and paying employees based on that rounded time. Id. at 2. In connection with her proposed FLSA collective action, Plaintiff filed a motion with the Court seeking conditional certification of a collective of employees whom she claimed Pioneer subjected to the same rounding practice. Id. at 3.

As is typical, Plaintiff argued that her lawsuit should proceed immediately as a collective action by issuance of an order sending notice to include hourly-paid employees at seven of Pioneer’s divisions around the country who she claimed were similarly situated. Id. She maintained that the Court should employ a lenient two-step certification process established in 1987 by a Third Circuit district court in Lusardi v. Xerox Corp. Id.

Under the Lusardi framework, named plaintiffs need only present what courts have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step, i.e., certification of a collective action on a conditional basis. In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court would then make a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order. Plaintiff claimed that she offered sufficient evidence of similarity and a violation of law to satisfy that standard at the conditional certification stage. Id.

Pioneer responded that the Court should follow the Fifth Circuit’s 2021 decision in Swales v. KLLM Transp. Servs., LLC, which rejected the longstanding approach developed in Lusardi. 985 F.4th 430 (5th Cir. 2021). Pioneer argued that the two-step approach “is inconsistent with the FLSA’s purpose and Seventh Circuit case law stressing the similarities of FLSA certification to Rule 23 class certification, which requires ‘rigorous’ scrutiny.” Id. at 3.

The Court’s Decision

Judge Griesbach sided with Pioneer. He adopted the Fifth Circuit’s FLSA collective certification approach in Swales and denied Plaintiff’s motion for conditional certification on August 21, 2024.

Citing a 2022 Annual Class Action Report that Gerald L. Maatman, Jr., for which this post’s co-author served as General Editor, Judge Griesbach noted that federal courts in 2021 granted FLSA conditional certification motions in 81% of rulings on such motions during the first stage of the two-step process despite – in that same year – granting 53% of FLSA decertification motions at the next stage. The Court gleaned from that data that “over half of those conditionally certified putative classes failed to survive upon a more rigorous review” and concluded, as a result, that the two-step certification process “defeats the very goal it set out to accomplish — efficiency.” Id.

The Court’s adoption of the Swales framework in Laverenz required it to assess following factors to determine whether Plaintiff sufficiently proved similarly between she and proposed opt-in plaintiffs: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to the defendant which appear to be individual to each plaintiff; and (3) fairness and procedural considerations.” Id. at 15-16.

As to the first factor, the Court noted that “significant factual differences exist regarding how the [time rounding] policy affected each employee” given that “[t]he rounding benefitted some and negatively affected others.” Id. at 1. As to the second factor, the Court found that too many individualized claims remained in the matter that would necessarily involve fact-specific inquiries. Id. at 20. As to the final factor, the Court explained that “it would seem particularly inefficient and unfair to notify a broad class of employees,” given its conclusion that Plaintiff’s proposed collective action claims “involve highly individualized inquiries and defenses.” Id. Toward that end, the Court determined that “[a]uthorizing notice in a case such as this would turn a tool into a sword,” and that “[m]any a plaintiff would likely join the line, requiring Pioneer to defend dozens — possibly hundreds — more claims despite the fact that Laverenz has not even showed a violation of law.” Id. at 20.

Ultimately, the Court concluded that Plaintiff “failed to provide a sufficient basis for the court to facilitate notice to potential plaintiffs,” and denied Plaintiff’s motion for conditional certification. Id. at 20.

Implications For Employers

Our annual class action review analyzed FLSA conditional certification rates, and, in 2023, plaintiffs won 75% of first stage conditional certification motions. However, only 56% of those conditionally certified collective actions survived motions for decertification involving a more rigorous scrutiny. Our previous post on these statistics is here. Hence, the stakes are quite meaningful in terms of the approach outlined in the Laverenz ruling.

As any employer who has been sued by a named plaintiff seeking to represent an FLSA collective action knows, the discovery burden imposed by application of the two-step Lusardi standard is far more onerous than what Judge Griesbach established in this case. Full merits discovery lasting more than a year is common, as opposed to a narrowly-targeted investigation of the work performed by the plaintiffs along with facts relating to the relevant independent contractor factors. For that reason alone, employers with operations within the Seventh Circuit will be happy to know they can cite Judge Griesbach’s ruling in the future.

While no one can predict the future with any degree of certainty, it seems likely that this new legal trend regarding the collective action notice process may eventually need to be resolved by the U.S. Supreme Court.

August 25, 2024August 25, 2024 by Class Action Defense

California Federal Court Certifies Class Of Hundreds Of Thousands Of Job Seekers Alleging They Were Subjected To Offensive And Unrelated Medical Questions

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

Duane Morris Takeaways: In Raines, et al. v. U.S. Healthworks Medical Group, Case No. 19-CV-1539 (S.D. Cal. Aug. 16, 2024), Judge Dana M. Sabraw of the U.S. District Court for Southern District of California recently certified a class consisting of every applicant for a paid position who underwent a post-offer, pre-placement examination and allegedly received the employer’s health history questionnaire pursuant to Rule 23(a) and (b)(3). This case gives a warning to businesses acting as agents for employers in the on-boarding process.

Case Background

Under California’s Fair Employment and Housing Act (“FEHA”), Cal. Gov’t. Code § 12900, et seq, an employer can condition an employment offer upon the job application passing a pre-placement examination (“PPE”) only if the examinations are related to the job and consistent with business necessity. Gov’t Code 12940(e). In this case, Plaintiffs Kristina Raines and Darrick Figg, two applicants for jobs, filed a class action lawsuit alleging that the PPE involved “intrusive, highly offensive, overbroad, and unrelated” medical questions on a standardized health history questionnaire (“HHQ”), used by Defendant U.S. Healthwors Medical Group (“USHW”), an occupational health provider that acted on behalf of employers. Id. at 1.

After applying for a food service position, Plaintiff Raines allegedly answered all of the 150 questions on the HHQ and save for one she thought completely unrelated to her job duties. Id. The employer then allegedly revoked its employment offer to Raines because she refused to complete the medical examination. Id. at 3. Plaintiff Figg alleged that, like Raines, USHW directed him to complete the same HHQ for a volunteer position. Id. Figg answered all of the questions, and his employer ultimately hired him as an unpaid volunteer. Id.

In their complaint, Plaintiffs Raines and Figg claimed, individually and on behalf of putative class members, that USHW’s medical examinations: (1) violated the FEHA; (2) violated the Unruh Civil Rights Act, Cal. Civ. Code § 51, et seq.; (3) intruded on Plaintiffs’ right to seclusion; and (4) violated California’s Unfair Competition Law, Cal. Business & Professions Code § 17200, et seq. Id. Plaintiffs sought to certify a class under the FEHA against USHW consisting of 370,000 job applicants for both paid and unpaid positions who underwent a PPE and were subjected to USHW’s standardized HHQ at one of its approximately 78 facilities in California between October 23, 2017, and December 31, 2018. Id. at *4.

The Court’s Class Certification Ruling

The Court examined all prerequisites under Rule 23(a), including numerosity, commonality, typicality, and adequacy of representation. Id. at 6. The Court held that Plaintiff Raines met all of the prerequisites under Rule 23(a) but that Plaintiff Figg failed to satisfy the typicality requirement because he was not an applicant for a paid position and therefore did not attain employee status under the FEHA. Id. at 8.

The Court then examined the requirements under Rule 23(b)(3), which calls for two separate inquiries, including: (1) whether the issues of fact or law common to the class “predominate” over issues unique to individual class members; and (2) whether the proposed class action is “superior” to other methods available for adjudicating the controversy. Id. at 9. The Court found that Plaintiffs’ proposed class met both requirements and certified the class. Id. at 18.

In reaching its conclusion, the Court determined that: (1) USHW “administered the PPEs on behalf of and at the direction of employers;” (2) all class members received the same HHQ from USHW regardless of the duties or functions of the job conditionality offered; and (3) at least one question on the HHQ was not relevant to any job. Id. at 14-15. The Court held that, given such evidence, whether USHW acted on behalf of referring employers and engaged FEHA-related activities by administering a medical questionnaire could be adjudicated on a class-wide basis. Id. at *15.

The Court further ruled that Plaintiffs’ common evidence also addressed injury, causation, and damages because the alleged injury to class members was caused by their being subjected to overbroad and offensive medical inquiries from a standing HHQ in violation of § 12940(e). Id. Because Plaintiffs were pursuing only nominal and punitive damages, the Court disagreed that it would need to engage in thousands of individualized inquiries among class members to properly assess damages. Id.

Key Takeaways

This class certification ruling shows how a court can use the workers’ common evidence to resolve class-wide agency issue. Additionally, the massive number of potential class members pursuing only nominal and punitive damages convinced the Court to certify the class. The decision further implicates the potential hurdles faced by businesses acting as “agents” of referring employers in challenging putative class actions under the FEHA. Businesses acting as agents should carefully evaluate whether their practices are in compliance with FEHA as this ruling confirms that the FEHA’s definition of “employer” may include employer’s agents.

August 22, 2024August 22, 2024 by Alex W. Karasik

Data “Down Under” – AI, CyberSecurity, And Data Breach Class Action Takeaways From The ASIAL Security Exhibition + Conference In Sydney, Australia

By Alex W. Karasik

Duane Morris Takeaways: Data breach litigation is a billion-dollar industry worldwide. At the ASIAL Security Exhibition + Conference in Sydney, Australia, on August 22, 2024, Partner Alex W. Karasik of the Duane Morris Class Action Defense Group gave a highly anticipated 40-minute address, “A Deep Dive Into Data Breach Class Action Litigation.” The Conference, which had over 10,000 attendees, produced excellent dialogues on cybersecurity threats, mitigation strategies, data breach litigation, and the implications of artificial intelligence on data security.

The Conference’s robust agenda featured over 35 speakers from a wide array of backgrounds, including Australian government officials, data security industry experts, executives from blue-chip companies such as Amazon and Microsoft, and a lawyer from Chicago. In a masterful way, the agenda provided valuable insight for attendees from a broad range of backgrounds, including business owners, c-suite executives, risk officers, privacy professionals, technology start-ups, vendors, attorneys, journalists, and other individuals with interests in the tech, legal, and security industries.

I had the privilege of speaking about global data breach litigation risk, with a focus on the Unites States’ data breach class action landscape. A few of the highlights from my presentation include the following:

1. Data breach class action lawsuit filings doubled from over 300 in 2021 to over 600 in 2022, and then doubled again to over 1,300 in 2023. I do not expect this trend to slow down any time soon.
2. The last two years procured massive settlement totals, with over $515 million in 2023. Google and T-Mobile each settled data breach class actions for $350 million in the last two years. The financial exposure is enormous in data breach class action litigation.
3. Major U.S. Supreme Court decisions (TransUnion LLC v. Ramirez, et al., 141 S.Ct. 2190 (2021)); pending class action litigation (In Re MOVEit Customer Data Security Breach Litigation, MDL No. 3083 (J.P.M.L. Oct. 4, 2023); and the next wave of data security class action claims (stemming from the recent CrowdStrike outage) will all continue to collectively and profoundly impact the data breach class action landscape.
4. Low class certification rates, generally trending below 50%, provide some room for optimism for data breach class action defendants. Plus, with the large number of breaches that have now impacted a plurality of major corporations across all sectors, causation of damages is more difficult to prove than ever.
5. Some of the “toolkit takeaways” for businesses include: (i) implement a multi-faceted approach to data security mechanisms; (ii) develop a data security task force within the organization; (iii) provide extensive training to employees, which will need to evolve as the types of threats change; and (iv) utilize arbitration agreements with class action waivers.

Finally, one of the greatest joys of attending an international conference is the opportunity to draw on the wisdom of my fellow presenters from across the globe. Below are a few of the highlights:

1. “Employers cannot contract out risk.” I loved this quote from Australian government official, Justine Jones. This sentiment echoes many of my conversations with and publications prepared by U.S. EEOC Commissioner, Keith Sonderling, who has consistently noted in the artificial intelligence context that employers cannot simply point their fingers at vendors if hiring or recruiting software procures discriminatory outputs. Jones opined that even if businesses use third-parties for data security purposes, they still remain responsible.
2. Brett McGrath, President of the Law Society of New South Wales, provided excellent insight on what I interpreted to be “cautious optimism” from the Australian legal system in terms of embracing artificial intelligence. He discussed the creation of a task force involving judges, lawyers, academics, and technology experts. Jurisdictions in the United States – at the local, state, and federal levels – would be wise to follow suit.
3. Amazon’s Lindsay Maloney, Lead of Security & Loss Prevention, Australia & Singapore, highlighted hiring risks associated with different geographical markets. From my perspective, the rapid emergence of artificial intelligence laws involving employment decisions are often similar but not the same. This means American businesses likewise should take heed of where they are hiring and what technology they are using in each locale.
4. Philip Meyer, a Technology Strategist at Microsoft, delivered an impactful address that examined the history of ChatGPT and the future of artificial intelligence. Philip’s commentary regarding Microsoft’s commitment to providing training meshed well with my message about how companies must embrace the training process, so that artificial intelligence and data security measures are deployed ethically and in the best interests of the organization.
5. Brian de Caires, CEO of the ASIAL, opined on the need for consistent security standards across Australia. For those of you who follow my publications on artificial intelligence, privacy, and data security, a motif of my writings is that there is a patchwork of laws among a myriad of jurisdictions, creating a compliance minefield for employers.

Thank you to ASIAL and its incredible team, my fellow speakers, the engaging attendees, the media personnel, and all others who helped make this week in Sydney, Australia an informative and unforgettable experience “Down Under.”

For more information on the Duane Morris Class Action Group, including its Data Breach Class Action Review e-book, please click the link here.