Federal Court Approves Landmark NCAA Settlement, Reshaping College Athletics In The Era Of NIL

By Sean McConnell and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On June 6, 2025, Judge Claudia Wilken issued a highly anticipated 76-page order approving the proposed settlement in House v. NCAAOliver v. NCAA and Hubbard v. NCAA (collectively, the House settlement). As discussed in a prior Alert, the settlement—between the NCAA and its Power Five conferences (Atlantic Coast, Big Ten, Big 12, Pac-12 and Southeastern) and a class of current and former NCAA athletes—provides for approximately $2.8 billion in back-pay damages and sets forth the initial revenue share framework that will allow colleges and universities to offer direct payment to their student-athletes.

Judge Wilken’s approval of the settlement follows her directive for multiple revisions to the agreement initially presented at the April 7, 2025, final approval hearing. During that hearing and in the ensuing two months, Judge Wilken expressed significant concerns, particularly regarding whether the NCAA would agree to grandfather in current athletes to protect them from potentially losing scholarships under the new House settlement framework. The judge was ultimately satisfied with the modifications made, and the revised settlement is set to become effective on July 1, 2025.

While the settlement is certain to face additional legal challenges and scrutiny, the NCAA’s new compensation model will mirror elements of professional sports leagues, marking the official end of the “amateurism” era in college athletics.

Key Settlement Provisions

Back Pay

As finalized, the House settlement requires the NCAA and its Power Five conference members to pay approximately $2.8 billion in damages, characterized as “back pay,” to compensate student-athletes for the denial of name, image and likeness (NIL) opportunities under prior NCAA eligibility rules. This component of the settlement was not contested during the approval process. The settlement class—subject to certain exclusions—includes all Division I student-athletes who competed from 2016 to the present, reflecting the applicable statute of limitations. Compensation will be distributed to eligible athletes to account for lost NIL, video game and broadcast-related opportunities that were previously restricted under NCAA rules.

Permissive Revenue Sharing

With Judge Wilken’s approval, the House settlement ushers in a more professionalized era of college sports, effective July 1, 2025. Participating NCAA Division I institutions will be permitted to directly compensate student-athletes with up to 22 percent of the school’s average annual athletic revenue derived from media rights, ticket sales and sponsorships. This amount is capped at $20.5 million per school in the first year of the agreement, with the cap projected to increase by approximately 4 percent annually over the 10-year term of the settlement.

Importantly, the court-imposed “salary cap” excludes contributions from boosters or alumni groups, third-party NIL deals, traditional scholarships and any payments made prior to July 1, 2025.

Participation in the revenue-sharing framework is entirely voluntary. Institutions are not obligated to adopt the model, nor are those that do required to pay student-athletes the full $20.5 million annual cap. The Ivy League, for example, has opted out entirely, citing its recent antitrust victory affirming its policy against athletic scholarships. As such, Ivy League schools will continue to operate under traditional amateurism principles and will not participate in the new compensation structure.

For schools that elect to opt in, the settlement permits direct athlete payments from institutional revenues, subject to the cap. While the model introduces a regulated mechanism for athlete compensation, it also has the potential to create competitive disparities. Institutions with larger alumni bases and robust booster support may continue to offer additional NIL compensation outside the cap, which could significantly enhance their recruiting advantage.

Moreover, few institutions may be in a financial position to fully utilize the cap. Outside the Big Ten and SEC—whose media contracts generate substantial revenue—most Division I schools lack the revenue base to allocate $20.5 million (or more in future years) to athlete compensation. Data indicates that approximately 75 percent of athletic revenue at many institutions comes from football, with an additional 17 percent from men’s and women’s basketball. This structure disproportionately benefits programs with strong football revenues and places smaller or football-absent schools (e.g., Big East basketball programs) at a disadvantage, as their 22 percent revenue share may fall well below the cap.

As such, institutions must conduct a thorough financial and legal assessment to determine whether opting into the revenue-sharing model is feasible. Those that opt in must also ensure that their distribution plans are compliant with the settlement’s terms and applicable legal requirements. In many cases, a significant portion of compensation is expected to flow to revenue-generating sports, potentially pressuring athletic departments to reevaluate their support for nonrevenue sports. This could lead to budget cuts, program reductions or reclassification of certain sports to club-level status.

Institutions adopting the revenue-sharing model should take care to develop clear and compliant agreements and implementation plans. Legal counsel, if engaged early, can help ensure compliance with Title IX, labor laws and evolving NCAA regulations.

Scholarship Limits

A key component of the House settlement is the elimination of NCAA-imposed scholarship limits, allowing institutions to offer a greater number of full or partial scholarships to student-athletes. This shift grants schools increased flexibility in structuring team rosters and allocating financial aid, aligning more closely with professional team management models.

An earlier draft of the settlement included roster limits that would have gone into immediate effect and, in some cases, would have resulted in current athletes losing their roster spots or scholarships. Judge Wilken raised significant concerns about this approach, particularly because affected athletes would have had no opportunity to opt out of the settlement to preserve their eligibility or position.

In response to the court’s concerns, the NCAA and plaintiffs’ counsel revised the agreement to include a “grandfathering” mechanism. Under the final settlement terms, schools may elect to retain current student-athletes and recruits on their rosters for the duration of their NCAA eligibility without those individuals counting toward any new roster or scholarship limits. This adjustment is intended to ensure continuity and fairness for athletes already enrolled or committed.

Despite this revision, certain objectors challenged the adequacy of the provision, arguing that it fails to protect athletes at institutions that choose not to implement the grandfathering option. In rebuttal, the NCAA and plaintiffs’ counsel noted that roster spots in college athletics have never been guaranteed and are traditionally subject to coaching decisions and program needs.

Judge Wilken ultimately approved the revised provision, concluding that it provided a reasonable and sufficient remedy under the circumstances.

Pay-for-Play and Evaluation & Conditional Approval of NIL Deals

Although the settlement creates a path for more direct compensation of student-athletes, it includes significant oversight mechanisms. Any NIL deal exceeding $600 must be reported to and reviewed by the NCAA. This relatively low threshold ensures ongoing NCAA involvement in most NIL arrangements.

The NCAA retains the authority to approve NIL agreements only if they meet two criteria:

  1. The deal must serve a valid business purpose, meaning it must promote or endorse goods or services offered to the general public for profit; and
  2. Compensation must be commensurate with the value of similarly situated individuals, including nonathletes.

To facilitate fair compensation, Deloitte has been appointed to assess the market value of NIL agreements based on 12 evaluative factors, including the athlete’s social media reach, athletic performance, geographic market, deal duration and scope, and potential red flags indicating impropriety. These criteria, however, leave considerable room for litigation over their precise interpretation, requiring schools to invest significant resources in research to accurately determine fair market values ahead of Deloitte’s assessments. Meanwhile, the NCAA retains oversight by mandating that all NIL agreements serve a “valid business purpose,” defined broadly as promotion or endorsement of goods or services offered to the general public for profit, and that compensation be “commensurate with the NIL value of similarly situated individuals.” This framework grants the NCAA substantial discretion to approve or reject NIL agreements, ensuring that payments align with rates and terms paid to comparable individuals outside the institution who possess similar NIL value.

Despite this framework, it remains unclear how the NCAA will define “similarly situated individuals” and apply this standard consistently—leaving open the possibility of further legal disputes.

Does This Settlement Solve All Outstanding Legal Issues?

Although Judge Wilken’s approval was expected, it is not the end of this story. There are still many open legal questions and issues that this settlement did not address and that will be the subject of ongoing litigation for years to come:

Ongoing Litigation for Opt-Out Plaintiffs

Student-athletes who opted out of the settlement continue to pursue their claims (e.g., Fontenot v. NCAA), which will now proceed on an individual basis.

Transfer Portal Rules

The House settlement agreement does not establish specific guidelines regarding the transfer portal or how the “fair market value” analysis will apply to transferring athletes. The process for assessing a player’s fair market value in the fast-moving transfer portal environment remains undefined and is likely to create challenges and potential disputes. Additionally, some institutions have already developed or implemented buyout provisions for athletes who leave early or transfer, particularly those subject to third-party NIL agreements.

Impact on Nonrevenue Sports

The salary cap structure may lead institutions to cut costs associated with nonrevenue sports, potentially reducing participation opportunities in these programs.

Title IX Concerns

Judge Wilken acknowledged that the settlement may raise significant gender equity concerns. Although Title IX compliance was not addressed within the scope of the settlement, the order notes that affected athletes may need to pursue separate legal remedies if violations occur. As Judge Wilken emphasized, potential challenges related to Title IX, state NIL statutes and federal or state employment and labor laws fall outside the court’s jurisdiction. It is widely anticipated that the revenue-sharing framework will face Title IX litigation, given that participating schools are expected to allocate substantially more revenue to male athletes—particularly football players—than to female athletes.

Federal Government Intervention

Congress and President Donald Trump could also consider legislation that alters the legal landscape of various college sports issues, and the president is weighing an executive order on college athlete compensation that might spawn new legal challenges

Conclusion

The House settlement represents a seismic shift in the regulation of college athletics, formalizing a compensation model for student-athletes and introducing robust oversight of NIL activity. While it provides much-needed clarity and structure, it also opens the door to new legal challenges—particularly around compliance, enforcement and equitable treatment across sports and gender lines.

Colleges, collectives and student-athletes must now carefully navigate this evolving regulatory environment. Institutions should consult with counsel to address these considerations and develop strategies, including draft template agreements, that adequately address all of these considerations to optimally position institutions to comply with and profit from this new opportunity.

For More Information

If you have any questions, please contact Sean P. McConnellAndrew John (AJ) RudowitzBryan Shapiro, any of the attorneys in our Antitrust and Competition GroupDaniel R. Walworth, any of the attorneys in our Education Industry GroupGerald L. Maatman, Jr., any of the attorneys in our Class Action Defense Group, any of the attorneys in our Sports Group or the attorney in the firm with whom you are regularly in contact.our Sports Group or the attorney in the firm with whom you are regularly in contact.

Illinois Federal Court Certifies Interlocutory Appeal To Seventh Circuit On The Retroactivity Of The Amended BIPA

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

Duane Morris Takeaways: On June 10, 2025,inClay v. Union Pac. R.R. Co, No. 24-CV-4194, 2025 U.S. Dist. LEXIS 108672 (N.D. Ill. June 10, 2025), Judge Georgia N. Alexakis of the U.S. District Court for the Northern District of Illinois certified for interlocutory appeal her decision denying Union Pacific’s motion for partial summary judgment after concluding the 2024 amendment to the Illinois Biometric Information Privacy Act (the “BIPA”) was not retroactive.  In 10 days from entry of Judge Alexakis’ Order, Union Pacific may request the Seventh Circuit’s review of the certified question of whether the 2024 amendment to the BIPA applies retroactively. This would be a key issue of significant importance to all companies facing BIPA class actions.

Case Background

Plaintiff Reginald Clay is a truck driver that visited Union Pacific’s facilities. He alleges Union Pacific required him to register his fingerprint information and scan his fingerprints upon entering and exiting those facilities.  Id. at *2-3.  Clay also alleges Union Pacific did not “disclose what was done with his [fingerprint] information or how it would be stored.”  Id. at *3.  On April 16, 2024, Clay sued Union Pacific under the BIPA. 

In August 2024, the Illinois legislature amended the BIPA to “clarify that when an entity subject to the [BIPA] ‘in more than one instance, collects, captures, purchases, receives through trade, or otherwise obtains the same biometric identifier or biometric information from the same person using the same method of collection,’ in violation of the [BIPA], the entity ‘has committed a single violation … for which the aggrieved person is entitled to, at most, one recovery.’”  Id. (quoting 740 ILCS 14/20(b), (c), as amended by SB 2979, Public Act 103-0769.)

On November 4, 2024, Union Pacific moved for partial summary judgment and argued “under the 2024 BIPA amendment Clay was now entitled to recover for at most a single BIPA violation rather than the ‘per-scan’” violation under Cothron v. White Castle Sys., Inc., 2023 IL 128004, ¶ 24.  Id. at *3-4.  On April 10, 2025, the Court concluded that “the BIPA amendment was substantive rather than procedural” and therefore the BIPA amendment “was not retroactive under Illinois law, and thus did not apply to Clay’s claim.”  Id. at *4. 

Union Pacific requested certification of the Court’s order for interlocutory appeal.  Clay opposed the request.

The Court’s Order

On June 10, 2025, the Court certified Union Pacific’s request for an interlocutory appeal of the order denying Union Pacific’s partial motion for summary judgment.  Id. at *7.

The Court determined Union Pacific satisfied the four statutory criteria under 28 U.S.C. § 1292 (b)that: “there must be a question of law, it must be controlling, it must be contestable, and its resolution must promise to speed up the litigation.”  Id. at *1-2.  In addition, the Court found Union Pacific satisfied the Seventh Circuit’s fifth “non-statutory requirement: [that] the petition must be filed in the district court within a reasonable time after the order sought to be appealed.”  Id. at *2.

The Court reasoned whether the 2024 amendment to the BIPA is retroactive is “undoubtedly ‘a question of the meaning of a statutory or constitutional provision,” the Amended BIPA “presents ‘an abstract issue of law . . . suitable for determination by an appellate court without a trial record,” and that the question of BIPA retroactivity “is quite likely to affect the further course of litigation.”  Id. at *4.  As Union Pacific argued, and as the District Court agreed, if the “Seventh Circuit were to conclude that Clay was entitled to only one recovery… [that] certainty about the retroactivity of the 2024 amendment would ‘materially advance the ultimate termination of the litigation.”  Id. at *5.

The Court reasoned Union Pacific’s motion was timely because the Court “did not consider 28 days to be unreasonable in preparing a motion to certify for interlocutory appeal a novel question of state law, especially when Clay points to no prejudice he suffers as a result.”  Id. at *6.

The Court also opined that while “the Court shares Clay’s view that its April 10 order was ‘correctly reasoned,’[], its confidence does not mean that BIPA retroactivity is not ‘contestable’ within the meaning of § 1292.”  Id.  In addition, the Court relied on the overwhelming decisions of judges within the Northern District of Illinois and Illinois state court finding the “BIPA amendment does not apply retroactively to pending cases, [], so no current dispute exists among the courts.”  Id. at *6-7.  But that the consensus of these decisions “does not mean there is ‘no substantial ground for difference of opinion’ about retroactivity.”  Id. at *7.

The Court concluded that though its “confidence in its earlier decision” in Schwartz v. Supply, Inc., 23-CV-14319, (N.D. Ill. Nov. 22, 2024) (finding 2024 BIPA amendment not retroactive to pending cases) is not changed that it acknowledges “the novelty and complexity of the legal issue” of retroactivity.  Accordingly, the Court found Union Pacific meet all four statutory requirements and the Seventh Circuits’ timeliness requirement and certified Union Pacific’s interlocutory appeal.

Implications For Companies

The ruling in Clay sparks newfound hope on the hotly contested issue of retroactivity of the 2024 amendment to the BIPA.  Judge Alexakis’ well-reasoned decision allows Union Pacific 10 days from the Court’s order to request the Seventh Circuit’s interlocutory review of the certified question. 

Should the Seventh Circuit grant Union Pacific’s pending request, then the BIPA’s “per-scan” damages for pre-amendment BIPA litigation will receive further consideration.  However, even if the Seventh Circuit grants the request, there is always a possibility the Seventh Circuit certifies the question to the Illinois Supreme Court.

Until then, the deluge of decisions referenced in Clay denying retroactivity remain in effect.  Companies met with BIPA litigation must monitor Clay as it progresses through interlocutory review.

The Class Action Weekly Wire – Episode 105: Key Developments In RICO Class Actions  

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and special counsel Justin Donoho with their analysis of key developments in RICO class actions, including a key ruling from the Ninth Circuit on class certification in the RICO context.

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 joining me today is Justin Donoho. Thank you for being on the podcast, Justin. Today, we wanted to dive into the RICO Act. It’s a law that comes up a lot, but a lot of people probably don’t fully understand what it is. Justin, could you start by explaining to our listeners what RICO means?

Justin Donoho: Absolutely, Jen, and thank you for having me on the podcast today. The RICO Act, short for the Racketeer Influenced and Corrupt Organizations Act, is a federal law passed in 1970. It was originally aimed at tackling organized crime in the U.S., but over time it’s been applied to a much broader range of criminal activity. Essentially, it allows for extended criminal penalties, and even civil lawsuits, against individuals or groups involved in ongoing criminal enterprises.

Jennifer: So, you’re saying that RICO goes beyond just criminal prosecutions?

Justin: Exactly. It has both criminal and civil components. On the criminal side, someone found guilty under RICO can face up to 20 years in prison and fines up to $250,000. And on the civil side, it’s quite powerful, too – victims can recover treble damages, meaning three times the amount of actual damages, plus attorneys’ fees and the cost of the lawsuit.

Jennifer: Interesting. So, who can bring a civil RICO claim?

Justin: They can be brought by private individuals who’ve been harmed in their business or property as a result of a RICO violation. But they must meet certain requirements – often referred to as RICO’s statutory standing requirements. In other words, you have to prove causation and injury.

Jennifer: Interesting. So, what do plaintiffs have to prove to demonstrate a RICO violation?

Justin: So, there are three main elements. First, they have to prove racketeering activity. This includes a long list of criminal acts, everything from murder and kidnapping to mail fraud, wire fraud is a big one, we see a lot money laundering and securities fraud.

Jennifer: Wow, that’s quite a range.

Justin: Yeah, it really is. And that’s why RICO can be applied to so many different types of cases, especially fraud-related ones across various industries. Second, there must be a pattern of racketeering activity – at least two criminal acts – and they need to be related in some way, whether by method, victim, or timeframe.

Jennifer: Got it. What’s the third?

Justin: The third is the existence of an enterprise. Broadly, that includes individuals, partnerships, corporations, associations, or even groups that aren’t legally recognized as entities. What’s key here is the relationship between the defendant and the enterprise. The defendant can’t be the enterprise. Instead, they must be shown to have conducted the affairs of the enterprise through a pattern of racketeering activity.

Jennifer: Got it, that makes sense. So, what is the statute of limitations applicable to a RICO claim?

Justin: It’s four years from the date of discovery of the injury caused by the RICO violation.

Jennifer: So, now I understand that RICO class actions have become more significant recently, can you tell us about some of the key rulings from the past year?

Justin: Yes, the past year was a big one for RICO class actions. Courts granted class certification in about 33% of cases in 2024, while denying it in 67%. These decisions can have massive implications, especially because treble damages in class actions can pose serious risks for defendants.

Jennifer: Can you give us an example of a case where class certification was granted and the class was certified?

Justin: Sure, so one notable one was Sihler v. Global E-Trading, LLC. It involved alleged fraudulent charges for diet pills. The so-called “Keto Racket.” The court found that common legal and factual issues, like the alleged conspiracy to mislead consumers and artificially suppress chargebacks, outweighed individual differences. That was enough to certify a nationwide class under RICO. In that case, the court emphasized that the harm stemmed from the overall conduct of the enterprise. They also dismissed the idea that plaintiffs had to prove reliance in these RICO claims.

Jennifer: Do you have any examples where class certification was denied in the RICO context?

Justin: Yes. So, the Ninth Circuit in White, et al. v. Symetra Assigned Benefits Services reversed the district court’s order granting class certification in a RICO lawsuit. The plaintiffs were approximately 2,000 individuals who had received structured settlement annuities, or SSAs, to resolve personal injury claims who thereafter entered into factoring transactions exchanging their future annuity payments for immediate but discounted lump sums. The plaintiffs alleged that the defendants, the issuer and obligor of the SSAs, wrongfully induced them into these factoring agreements through misleading representations, unfair business practices, and hidden conflicts of interest in violation of the RICO. The district court granted the plaintiffs’ motion for class certification. On appeal, though, the Ninth Circuit found that “individual issues of causation will predominate over common ones when evaluating whether defendants’ acts and omissions caused the plaintiffs to enter factoring transactions and to incur their alleged injuries.” The Ninth Circuit held that the “defendants’ allegedly uniform course of conduct was not as uniform as plaintiffs suggest,” including because although the defendants’ “initial communications were standardized, the process became more individualized to the annuitant as it went along.” Further, the Ninth Circuit held that “even assuming defendants engaged in uniform conduct, plaintiffs have not shown there is a common question of whether such conduct improperly induced plaintiffs to enter into factoring agreements to their detriment. Here, resolving the critical element of causation will require consideration of individualized issues that swamp the assertedly common ones.” Thus, the Ninth Circuit ruled that “any assessment of whether the defendants’ alleged acts and omissions caused the plaintiffs to enter the factoring transactions, or led them into accepting inferior factoring deals than they otherwise would have absent the alleged misconduct, would require an analysis of each plaintiff’s individual circumstances – including their understanding of the transaction and motivations. The result would be 2,000 mini-trials on causation.” Given the variety in interactions and state court processes, the Ninth Circuit concluded that individualized issues of causation would predominate, making class certification improper. For these reasons, the Ninth Circuit reversed the district court’s ruling granting the plaintiffs’ motion for class certification.

Jennifer: Got it. Thanks for that overview, Justin, what about settlements in these types of cases? Are they common in the RICO context?

Justin: Large settlements are not exceedingly common, however, there were several in 2024 that crossed that $1 million mark. The biggest one we saw was In Re Juul Labs, Inc., Marketing, Sales Practices, And Products Liability Litigation, in which the court granted final approval to a settlement of $45 million to resolve claims with defendant Altria Group alleging that the company created, marketed, and sold tobacco products by misleading the public about the addictiveness and risks of the product, and by trying to expand the market by capturing and addicting individuals who had not previously used tobacco or e-cigarette products, including in violation of the RICO.

Jennifer: Well, Justin, this has been incredibly informative. Thanks so much for breaking down such a complex topic in an understandable way for our listeners and thank you to our listeners for tuning in today.

Justin: My pleasure, Jen. Always happy to talk legal strategy, especially about class actions. Thanks to all the listeners.

Jennifer Riley and Jerry Maatman of Duane Morris Receive The Top Rankings In Mondaq’s 2025 Thought Leadership Awards

Duane Morris partners Jennifer Riley and Jerry Maatman were recognized in the latest 2025 edition of the Mondaq Thought Leadership Awards. Riley won the top award as the #1 rated thought leader in the Data Protection and Privacy space in the United States. Maatman finished in the #2 slot. The rankings showcase the most popular articles across 16 areas of law published by authors around the globe between October 2024 and March 2025. We’d like to express our gratitude to our loyal blog readers and podcast listeners for this distinction and your continued support.

Jennifer Riley’s video episode “DMCAR Trend #7 – Data Breaches Gives Rise To An Unprecedented Number Of Class Action Filings” was ranked #1 across all data protection content on the platform.

Ranked #2 was Jerry Maatman’s launch announcement of Duane Morris’ Data Breach Class Action Review – 2025. Bookmark or download our virtual data breach desk reference, which is fully searchable and viewable from any device.

Stay tuned – coming soon to the Duane Morris Class Action Defense Blog is our mid-year class action report including key analysis of developments in the data privacy class action landscape.

The Class Action Weekly Wire – Episode 104: Key Developments In Securities Fraud Class Actions  

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and senior associate Nelson Stewart with their analysis of key developments in securities fraud class actions, including a notable decision from the U.S. Supreme Court clarifying the standard for claims brought under the Securities Exchange Act alleging pure omissions of fact.

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

Episode Transcript

Jerry Maatman: Thank you for being here again, loyal blog listeners and readers, for the next episode of our weekly podcast series, the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is Nelson Stewart from our New York office. Thanks so much, Nelson, for being on the podcast.

Nelson Stewart: Thank you. Great to be here, Jerry.

Jerry: Today we want to discuss trends and important developments in the securities fraud class action space. Certainly, securities fraud claims generally turn on alleged public misrepresentations by a security issuer and adjudication of these claims often are done on a class-wide basis. The plaintiffs’ bar obviously has made class action litigation in the securities fraud space a very active area, and 2024 was certainly no exception. Nelson, can you explain to our listeners a little bit of the background of how federal securities laws work in this context?

Nelson: Sure, the pillars of the federal securities law are the Securities Act of 1933, and the Securities Exchange Act of 1934, both of which were enacted in the wake of the stock market crash of 1929 to help regulate the securities markets and promote transparent disclosure to investors. The Securities Act generally regulates securities offerings, while the Securities Exchange Act governs the trading of existing securities and securities markets. The Securities Act allows private litigants to pursue claims against corporate issuers for material misrepresentations or omissions made in connections connection with the securities offering. Although the Securities Act expressly provides a private cause of action, for losses related to an offering a plaintiff must demonstrate the shares of the security at issue trace back to that offering. Because of this limitation, plaintiffs tend to look to the broader implied right of right of action under the Securities Exchange Act Section 10(b) and SEC Rule 10b-5, which prohibit fraudulent schemes and fraudulent misrepresentations in connection with any securities transaction.

Jerry: Well, thanks so much for that context. In the class action space, securing class certification is the Holy Grail for the plaintiffs’ bar because it’s very dangerous to try a certified class action. And so, the parties put lots of effort into either prosecuting or opposing a motion for class certification. And that in turn requires that questions of law or fact predominate over those that are pertinent to individuals, and that a class action is superior to all of their methods to adjudicate the dispute. In the securities fraud context, what are some of the challenges and litigations in terms of securing or defending against class certification?

Nelson: For a large and varied group of plaintiffs, proving reliance on a misstatement of material fact – which is one of the prerequisites of a securities fraud action – often creates individual fact issues among investors that could overwhelm common fact issues and present an insurmountable hurdle to class certification. This challenge was substantially mitigated when the U.S. Supreme Court adopted the “fraud on the market theory” of reliance in Basic v. Levinson. This theory avoids the need to show individual alliance by employing the presumption that, when a stock trades in an efficient market, investors “rely on the market as an intermediary for setting the stock price in light of all publicly available information; accordingly, when an investor buys or sells the stock at the market price, the investor has, in effect, relied on all publicly available information, regardless of whether the investor was aware of that information personally.”

Jerry: How does the plaintiff’s bar invoke the Basic presumption to be able to litigate securities fraud class actions?

Nelson: To invoke the Basic presumption, plaintiffs must demonstrate that a misrepresentation was publicly known; that it was material; that the stock traded in an efficient market; and that the plaintiffs traded the stock between the time the misrepresentation was made and the date the misrepresentation was revealed to be untrue.

Jerry: Well, I know a lot of cases and rulings in 2024 pivoted on that presumption. In your mind, what were some of the key rulings in the past 12 months?

Nelson: In 2024, the U.S. Supreme Court clarified the standards for claims brought under the Exchange Act that allege a pure omission of fact. In Macquarie Infrastructure Corp., et al. v. Moab Partners, L.P., plaintiffs alleged Macquarie omitted material facts and public statements, but did not identify any material misleading statements of fact made by Macquarie. Under the Securities Act, a pure omission of fact is expressly prohibited if it makes the statement in an offering document misleading. The Supreme Court held that Macquarie’s pure omission did not impose liability under Rule 10b-5, even when there is a duty to disclose, unless they render the affirmative statement misleading. In this case, plaintiffs had not alleged any affirmative misstatement. The decision also resolved a split among the courts of appeal concerning private right of action, arising from an Item 303 statement issued pursuant to SEC Regulation S-K. Item 303 statements require a publicly held company to disclose trends and uncertainties that affect the company’s financial condition. The Supreme Court ruled that, half-truths, in which a defendant discloses some, but not all, material facts that render the statement misleading can create liability for an Item 303 statement. However, a pure omission, as in this case, in an Item 303 statement does not create a private right of action. Other notable decisions discuss the reasonable investor standard established by the Supreme Court in Omnicare, Inc. v. Laborers District Council Construction Industries Pension Fund and the presumption for omissions under Rule 23 set forth in the Supreme Court’s decision in Affiliated UTE Citizens v. United States.These cases were addressed in In Re Ocugen, Inc. Securities Litigation, and in Crews, et al. v. Rivian Automotive, Inc.

Jerry: It’s like the plaintiffs’ bar in the securities fraud class action area is constantly pushing the legal envelope and innovating with new theories. How successful was the plaintiffs’ bar in 2024 in securing certification of motions for class certification?

Nelson: In 2024, 70% or 19 out of 27 class certification motions in securities fraud actions were successful. Defendants fared better on motions to dismiss, motions to strike, and motions for summary judgment, which were granted in whole or in part at a fairly high rate.

Jerry: That is a high rate. Do you have a sample, in terms of your thinking, of what class certification ruling kind of crystallizes all this, and is representative of victories on the plaintiff side?

Nelson : In Pampena v. Musk, plaintiffs filed a class action under 10(b) of the Exchange Act alleging Elon Musk made misleading statements to artificially depress the share price of Twitter, after Musk announced his intention to acquire the company. In April 2022, Twitter agreed to be acquired by an entity that was wholly owned by Musk for $54.20 per share. From May 14, 2022, to May 17, 2022, Musk made three public statements concerning the anticipated acquisition. First, Musk stated that the merger was on hold because the presence of fake accounts and spam on the Twitter platform would prevent him from completing the acquisition. Musk followed that comment by stating that these accounts comprise more than 20% of Twitter users. Finally, Musk announced that the merger could not move forward until Twitter’s CEO issued accurate SEC statements after the CEO declined to publicly disprove Musk’s claims about the fake accounts. Plaintiffs alleged that the share price dropped from $45.08 on May 12 to $35.76 by May 24. In opposition to the motion for class certification, Musk did not dispute the numerosity requirement or the commonality requirements of Rule 23. His opposition focused primarily on the predominance requirement of Rule 23(b)(3). Musk argued that the sophisticated investors would have understood that his statements were false and would not have relied on them. Accordingly, the class could not show individual reliance among the sophisticated investors and the other investors in the class. The court noted that the plaintiffs asserted their claims under the fraud on the market theory of reliance adopted by the Supreme Court in Basic. In challenging the fraud on the market theory, Musk argued the difference between sophisticated investors and other investors in the class rendered the market for Twitter shares inefficient. The court found that this argument misplaced the emphasis on investors. The fraud on the market theory presumes that in an efficient market, all publicly available information, not an investor’s interpretation of that information,  is deemed to be reflected in the share price. Once the Basic presumption is established, predominance is satisfied, absent a rebuttal of the price impact caused by the misrepresentation. The court found that Musk had not presented any evidence that would sever the link between his misrepresentations and the decline in share price that is required to rebut the basic presumption. Musk also argued that the lead plaintiffs were not typical of those in other of other class members, because there were certain class members who did not rely on his statements. The court found this argument similar to the predominance defense and held that the lead plaintiff’s experience reflected common issues among the plaintiffs, and that the claims were sufficiently typical. Finally, Musk argued that the class was overbroad because it would include individuals who either did not realize a loss or profited from the trades within the class period. The court ruled that a subset of class members who did not incur damages does not defeat a class action at the certification stage. It reasoned that injured parties and non-injured parties should be sorted out in the damages phase of the litigation, and the court granted the plaintiff’s motion for a class certification.

Jerry: That last point is interesting. Yesterday morning, the U.S. Supreme Court issued an 8-to-1 ruling in LabCorp v. Davis and indicated that certiorari had been improvidently granted. But Justice Kavanaugh issued a dissent – and this is a class action case that many people were following – where he indicated that if a class contains uninjured class members, a district court cannot certify it, and it’s not something in the damages phase. Obviously, it’s just one vote. It’s in a dissent. But, when a Supreme Court Justice dissents like that, it’s very important. So, it will be interesting to see if there’s a motion for reconsideration brought or the defense in that case continues to assert the defense that to the extent an uninjured class member is in the four corners of the class definition – that’s a reason why the class can’t be certified. But separate and apart from that, obviously, when cases get certified, settlements typically follow. How did the plaintiffs’ bar do on the settlement front in the securities fraud class action space?

Nelson: The plaintiffs’ class action bar successfully converted class certification rulings into class-wide settlements at a brisk pace in securities fraud litigation.  The top 10 securities fraud class action settlements totaled $2.65 billion in the past year. By comparison, the top 10 securities fraud class action settlements totaled $5.4 billion in 2023.

Jerry: Well, that’s certainly a drop, but it’s still an incredible amount of money that was collected by the plaintiffs’ securities fraud class action bar. So, it will be interesting to see if 2025 replicates that sort of success that the plaintiffs enjoyed in 2024. Well, great analysis, Nelson, and thanks so much for joining this week’s Class Action Weekly Wire.

Nelson: Thank you.

U.S. Supreme Court DIGs A Rule 23 Case And Justice Kavanaugh Dissents, Arguing Predominance Cannot Be Met Where Classes Include Uninjured Class Members

By Gerald L. Maatman, Jr. and Rebecca S. Bjork

Duane Morris Takeaways: On June 5, 2025, the U.S. Supreme Court issued a decision in Laboratory Corporation of America Holdings d/b/a Labcorp v. Davis, No. 24-304 (U.S. June 5, 2025), that dismissed the writ of certiorari as improvidently granted, an extremely rare move colloquially known as a “DIG.”  Even more interesting, from the vantage point of issues that are the subject of this blog – namely, defense of class action litigation – Justice Kavanaugh wrote in dissent, stating that he would have decided the case and ruled that federal courts may not certify damages classes under Rule 23 that include both injured and uninjured class members.  He reasoned that allowing such classes would not satisfy the Rule 23(b)(3) requirement that common issues predominate over individual issues.  This unique decision, while it does not carry precedential weight, is instructive because the dissenting opinion provides a new roadmap for defendants facing class claims involving uninjured class members to challenge class certification, potentially keeping the door open for future review by the U.S. Supreme Court. 

Background

The U.S. Supreme Court’s majority per curiam opinion dismissing the writ as improvidently granted is, as is typical, a perfunctory statement that says: “The writ of certiorari is dismissed as improvidently granted.”  Slip op. at 1.  The dissenting opinion authored by Justice Kavanaugh provides the background of the case, at least as it informs the issues he addresses in his dissent.  His dissent starts by explaining that the majority decided the case was moot, but that he found that issue to be “insubstantial.”  Id. at 1.  He stated that he would have decided the case. 

He provided the following background information — a federal district court in California certified a Rule 23 class of blind and visually impaired individuals who sued Labcorp, a company providing diagnostic medical testing services to consumers.  The plaintiffs who brought the class action alleged they were “denied full and equal enjoyment of” goods, services, and accommodations required under the Americans with Disabilities Act by “LabCorp’s [sic] failure to make its e-check-in kiosks accessible to legally blind individuals.”  Id. at 2.  Later, the district court issued an order refining the class definition to include “all legally blind individuals who . . ., due to their disability” were unable to use Labcorp’s e-check in kiosks in California.  Id. at 3. 

Labcorp appealed the class certification decision to the Ninth Circuit under Rule 23(f).  Id. The Ninth Circuit affirmed the district court and held that even if more than a de minimis number of class members are uninjured, Rule 23 allows district courts to certify such classes.  Id. After en banc review was denied by the Ninth Circuit, the U. S. Supreme Court granted certiorari to decide the question whether Rule 23 authorizes certification of damages classes including uninjured class members.

Justice Kavanaugh’s Dissent From The U.S. Supreme Court’s DIG

In the substance of his dissenting opinion, Justice Kavanaugh opined that the predominance requirement of Rule 23 (b)(3) precludes district courts from certifying damages classes that include individuals who have suffered no legally cognizable injury.  After discussing his disagreement with the majority’s analysis of the mootness issue (relating to whether Labcorp filed its Rule 23(f) petition against the correct class certification order), he analyzed the merits of the predominance inquiry.  Id. at 4-5. 

He reasoned that the Ninth Circuit decision ignores several U.S. Supreme Court decisions in the class actions area that, in his view, rule out including non-injury class members in damages classes (among them Comcast v. Behrend and Wal-Mart v. Dukes.)  He also pointed to the Advisory Committee notes history of Rule 23(f) to conclude that it was established to prevent efforts to “coerce businesses into costly settlements” that include an unknown number of persons to have suffered no loss at all.  Id. at 6.  He also opined that such settlements raise the cost of doing business such that they create public policy effects such as higher costs of living that ultimately harm consumers, retirees and workers.  Id.

Implications Of The Decision

The U.S. Supreme Court’s DIG order, while exceedingly rare, is actually not the big news embedded in this decision.  The dissent by Justice Kavanaugh to the DIG order provides an explanation of how future litigants facing class actions that include individuals who have no legal injury conferring standing can present the issue in arguing Rule 23(b)(3) predominance.  Companies facing the litigation pressures that class actions often produce should follow this blog for future developments in what we predict will be a significant area of litigation in the coming years. 

The Class Action Weekly Wire – Episode 103: Procedural Issues In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Nathan Norimoto with their analysis of key procedural issues in class action litigation addressed by the Second, Third, and Seventh Circuit Courts.  

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 Friday weekly podcast, the Class Action Weekly Wire. I’m Jennifer, Riley, partner at Duane Morris, and joining me today is Nathan Norimoto. Thank you so much for being on the podcast today, Nathan.

Nathan Norimoto: Thanks. Happy to be here again, Jen. I appreciate it.

Jennifer: So, today we wanted to discuss trends and important developments with procedural issues in class action litigation. In our Class Action Review, this topic is somewhat of a catch-all in terms of the legal issues involved. Class action litigation presents significant procedural issues to litigants and courts alike. In 2024 courts addressed myriad procedural issues in class action litigation. Nathan, can you tell our listeners some of the highlights in this area over the past year?

Nathan: Certainly, jurisdiction is always an important consideration in class action litigation. Jurisdictional defenses are often can be dispositive when a defendant challenges the ability of plaintiffs to maintain their class action in court. This past year, the plaintiffs in Hasson v. FullStory, Inc. challenged district court decisions dismissing their class action lawsuits against FullStory, Inc., one of the defendants, and also Papa John’s International, Inc., for lack of personal jurisdiction, and essentially in their complaint plaintiffs allege that they were being unlawfully wiretapped by the defendants without their consent. Both of the defendants were incorporated in Delaware and based in Georgia, and the core legal issue that was presented in both cases centered on whether the defendants’ actions constituted sufficient contact with Pennsylvania to warrant jurisdiction from the court. The district court ruled against the plaintiffs on the grounds that they had failed to show that FullStory, one of the defendants, specifically aimed its conduct at Pennsylvania, where the action was venue. The district court also found that the claims were inadequate under both the “traditional” and “effects” tests for establishing personal jurisdiction. This decision from the district court was appealed to the Third Circuit, which ultimately affirmed the district court’s ruling. The Third Circuit ruled that the plaintiff’s allegations had failed to show that one of the one of the defendants, Papa John’s, targeted Pennsylvania specifically as the company’s website was intended for a national audience. The Court of Appeals also held that just simply operating an accessible website does not equate to targeting a specific state for purposes of the personal jurisdiction analysis. Additionally, the Third Circuit rejected one of the plaintiffs’ arguments that Papa Johns’ business activities in Pennsylvania established sufficient jurisdiction, analyzing that the alleged wiretapping would have occurred regardless of the company’s operations in that state. The court acknowledged Papa Johns’ significant presence in Pennsylvania but found that the plaintiffs’ claims did not arise out of or relate sufficiently to those contacts. So, ultimately the Third Circuit ruled that the connection between the website’s operation and the wiretapping claims was too weak to satisfy jurisdictional requirements as to the other plaintiff’s claims. The Third Circuit ruled that the plaintiff did not allege that FullStory, the other defendant, knew that he or any other user was in Pennsylvania before this alleged wiretapping app application was dispatched to his browser. The court held that FullStory was a degree removed from the alleged harm in the chain of events preceding this application’s transmission to the plaintiff’s browser failed to establish that FullStory, the defendant, expressly aimed its alleged wiretapping at Pennsylvania. So, for these reasons, the Third Circuit affirmed the district court’s ruling dismissing the case.

Jennifer: Thanks, Nathan. The issue of standing is always also a hot topic in class action litigation. For instance, I know the Second Circuit weighed in on associational standing in a case called Do No Harm, et al. v. Pfizer Inc. this past year. So, associational standing is a legal doctrine that allows an organization to sue on behalf of its members when those members have suffered injury, even if the organization itself hasn’t experienced harm. Essentially, it gives an organization the right to act as a representative of its members in court. So, in that case the defendant was Pfizer. It launched a program called the Breakthrough Fellowship Program in 2021 to increase minority representation and leadership opportunities. The program included a summer internship, two years of full-time employment, a fully paid MBA, MPH, or MS degree, additional internships, and postgraduate employment with Pfizer, the defendant. Eligibility for the program was restricted to the U.S. citizens or permanent residents who were undergraduate juniors with 3.0 GPAs and who exhibited commitment to pursuing one of those degrees, and it specifically aimed to enhance opportunities for Black/African American, Latino/Hispanic, and Native American candidates. The plaintiff in that case was an advocacy organization and filed a lawsuit claiming that the fellowship’s focus on increasing diversity excluded White and Asian American applicants in violation of Title VII. The organizations sought a temporary restraining order, or TRO, to halt the selection process for 2023. The district court in that one dismissed the case, ruling that the plaintiff, the association, lacked standing because it failed to identify any harmed members by name, and also did not sufficiently demonstrate that its members were directly affected. The district court there opined also that the fellowship program did not violate the federal civil rights laws. On appeal, the Second Circuit affirmed the ruling of the district court. The plaintiff argued that the dismissal was premature because it had met the standing requirements for a preliminary injunction. The Second Circuit disagreed. It ruled that the plaintiff, who was of course pursuing claims as an association, had to name at least one injured member in order to establish standing, and therefore the dismissal was appropriate because the plaintiff failed to meet that requirement.

Nathan: Interesting. I’m interested to see how that doctrine progresses through 2025. Jen, I also wanted to address the issue of consolidation and class action litigation, since oftentimes consolidation issues surface when defendants are subject to multiple class actions and are assessing whether or not to consolidate multiple cases in one form is a strategic imperative for defendants. In Willis, et al. v. Government Employees Insurance Co., the plaintiffs filed a collective action alleging that GEICO had failed to pay overtime wages under the Fair Labor Standards Act, or the FLSA. The case was connected to two other FLSA collective actions against GEICO already pending in that court and the defendant, GEICO, had sought a dismissal of the case as duplicative since the named plaintiffs were also part of another lawsuit entitled Benvenutti v. GEICO. The court denied the motion and ultimately consolidated the actions, stating that the Benvenutti action specifically involved service representatives at GEICO’s operation working out of its Macon, Georgia call center, and had alleged that GEICO failed to pay overtime under a policy that had only compensated logged in hours. The current plaintiffs, while also part of the Benvenutti case, represented employees in different positions who had similar claims regarding unpaid hours worked. The court noted that there was a substantial overlap in the parties’ issues and relief sought between the two cases, emphasizing that both actions revolved around claims of unpaid overtime under these alleged timekeeping practices. And so, the court ruled that consolidating the cases would actually enhance judicial efficiency and avoid repetitive litigation to provide a more streamlined resolution of the common issues.

Jennifer: Thanks, Nathan. Agreed – centralization is key for parties when attempting to litigate the claims of several actions in a particular forum. So, let’s talk about one more topic, and one that is always interesting in terms of how courts rule – sanctions, sanctions in  class action litigation. Were there any interesting rulings on sanctions in 2024?

Nathan: Definitely. One interesting sanctions case was Mazurek, et al. v. Metalcraft Of Mayville, Inc. The plaintiff machinist had filed a collective action alleging that the defendant had failed to pay overtime compensation in violation of again the FLSA. The plaintiff specifically asserted that the defendant’s timekeeping system allowed employees to clock in and out up to 15 minutes before and after their scheduled shifts. However, the plaintiff alleged that if employees clocked in early but didn’t ultimately end up working that time, the recorded start time was adjusted to reflect the regular shift start time that was already programmed in the system. The plaintiff claimed employees were not compensated for this early time, despite them working. So, a timeclock issue. The court initially granted conditional certification of the collective action, but after discovery it subsequently decertified the collective action. The plaintiffs, following that decertification ruling, filed 16 additional cases which the court moved to consolidate or consolidated, and then the court selected two cases for summary judgment briefing. Out of those 16, the court had granted summary judgment to the defendant in all the selected cases. It ruled that even though the FLSA plaintiffs have a lower burden of proof when employer records are inaccurate. For example, the plaintiffs must still provide some proof of the hours they worked and were not compensated for that time. And so, the court noted that reconstructed work time had to be more than mere guesswork and found that plaintiffs’ attempts to estimate their work hours were just insufficient. So, in a separate order, in addition to that motion for summary judgment order, the court noted that since the two selected cases shared similar issues, it might be indicative of the broader problem with all of the pending cases. The court instructed plaintiffs’ counsel to then provide any specific facts or legal arguments that could differentiate the remaining cases from the two that have already been decided. In response, the plaintiffs in the remaining cases voluntarily dismissed their complaints with prejudice. Given the court’s ruling and the other actions, the defendant then moved for sanctions across all 16 cases, arguing that the allegations were based on speculation rather than evidence, and that plaintiffs’ counsel should have realized the cases were baseless when they filed the complaints. The district court ultimately denied the sanctions motion finding that while the evidence provided by the plaintiffs was insufficient to win at summary judgment, it still didn’t rise to the level of frivolousness or baselessness to warrant sanctions. Defendants appealed, and on appeal, the Seventh Circuit affirmed the district court’s ruling, agreeing that the plaintiffs’ claims were based on legitimate legal arguments and methods of proof and also, of course, that the district court had not abused its discretion denying that motion for sanctions.

Jennifer: Thanks, Nathan, great insights and analysis. I know that these are only some of the manners in which procedural issues can and have impacted and shaped class action litigation. I expect the ways in which both sides utilize these procedural tools, and the manner in which the courts rule on their applications, will continue to evolve in 2025. Thanks so much for joining us today. And thank you, Nathan, for your insight and excellent analysis.

Nathan: Thank you, listeners. Thank you, Jen.

The Class Action Weekly Wire – Episode 102: Key Developments In Labor Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman, senior associate Elizabeth Mincer, and associate Niyah Dantzler with their analysis of the key developments in labor class actions, including claims sparked by the impact of the COVID-19 pandemic on the workforce.

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

Episode Transcript

Jerry Maatman: Hello, everyone, and thank you for being here again for our next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are Niyah Dantzler and Elizabeth Mincer. Thanks so much for being on our podcast.

Elizabeth Mincer: Great to be here, Jerry.

Niyah Dantzler: Thanks for having me on the podcast, Jerry.

Jerry: Today, we wanted to discuss trends and important developments in the area of labor-related class action litigation. Liz, I know this is an area of special interest in your practice – tell us about the highlights of the past year.

Elizabeth: So, labor law issues often result in class action litigation either brought by advocacy groups, including unions, or by private plaintiffs asserting violations of labor-related statutes. In turn, labor-related class actions can arise in many contexts as the consequence of alleged mistreatment or abuse of workers can give rise to various statutory or constitutional claims. In 2024, courts addressed a number of labor issues in class action litigation. Historically, class action rulings have been brought under statutes such as the Migrant and Seasonal Agricultural Workers Protection Act, the Victims of Trafficking and Violence Protection Act, the Labor Management Relations Act, as well as under various constitutional based theories, and then the state law equivalents. Significantly, the majority of the key labor-related class action litigation decided in 2024 involved claims relating to COVID-19 vaccination requirements.

Jerry: Thanks very much for that overview. Let’s talk about COVID-related rulings then in 2024. Niyah, could you give us a brief overview of the key rulings covered in the 2025 Class Action Review in this space?

Niyah: Absolutely. There were several important rulings, particularly in cases stemming from claims relating to COVID-19 vaccines. For example, the U.S. Court of Appeals for the Ninth Circuit weighed in on a case, Bacon v. Woodward, and that case was brought by a group of firefighters from Spokane, Washington, alleging that the city unlawfully discharged them while they refuse to receive COVID-19 vaccinations in accordance with the governor’s Proclamation that all healthcare providers be fully vaccinated against COVID-19. Although the Proclamation was intended to accommodate sincerely held religious beliefs, the plaintiffs alleged that Spokane did not provide religious accommodations to any city firefighters. They instead claimed that the Proclamation, as applied to them, violated their Free Exercise rights under the U.S. Constitution. The state joined the action as an intervener to defend the Proclamation, and move for a judgment on the pleadings under Rule 12(c). The district court granted the motion, finding that Spokane lawfully applied the proclamation, but on appeal, the Ninth Circuit reversed it, determined that the firefighters had plausibly alleged that the city applied the Proclamation arbitrarily and capriciously, and showed callous disregard to the firefighters’ religious rights, and so the Ninth Circuit highlighted the fact that the fire departments outside of Spokane had permitted religious accommodations and actually sent non-vaccinated firefighters to provide services in Spokane pursuant to mutual aid agreements. Accepting the plaintiffs’ allegations as true, the Ninth Circuit held that firefighters’ claims should move forward because it was possible that they could establish that the Proclamation, as it applied to them, was not narrowly tailored to achieve the goal of stopping COVID-19 spread, as it failed to account for less restrictive alternatives, such as testing, masking, or considering natural immunity.

Jerry: Upon reading that decision, it sure seems to me the Ninth Circuit decision provided some good guideposts for employers trying to accommodate religious exemptions in terms of dealing with public health mandates and underscores the importance of ensuring that these policies are generally applicable but flexible, insofar as they don’t discriminate on the basis of religious practices. Liz, were there significant rulings under the Trafficking Victims Protection Act in 2024 that companies should know about in this space?

Elizabeth: Yes, there was a very interesting case that involved the global supply chain that is important for employers to know about. So, in a case called Doe, et al. v. Apple Inc., the plaintiffs, a group of former child miners who were injured in accidents and their representatives filed a class action against the defendants under the Trafficking Victims Protection Reauthorization Act of 2008, we’ll call TVPRA, which essentially makes it illegal to participate in a venture that uses forced labor. The plaintiffs argued that the defendants participated in a venture by purchasing cobalt through the global supply chain, which included cobalt that had been mined under forced labor conditions. The defendants had purchased this cobalt from large international suppliers, but those suppliers had subsidiaries in the Democratic Republic of the Congo involved in both mechanized, industrial mining, but also informal mining – and informal mining is really a less sophisticated, more crude operation, where the plaintiffs asserted that sort of operation posed severe safety risks and forced labor. The defendants filed a motion to dismiss, and the district court granted the motion. So, a positive outcome there. The district court had determined that the plaintiffs failed to sufficiently prove a direct connection between their injuries and the defendants’ actions, which was just merely buying that cobalt. The district court stated that purchasing cobalt through a supply chain without more direct involvement or control over the mining operations, did not constitute “participation in a venture” under the TVPRA. The case was appealed, and the DC. Circuit affirmed that ruling. It agreed that the plaintiffs failed to prove that the defendant’s participation in that venture actually violated the TVPRA. The D.C. Circuit found that the plaintiffs failed to show how an injunction against the defendants would remedy their injuries, as they were no longer involved in the mining, and the effectiveness of such an injunction was too speculative. The D.C. Circuit also reasoned that the plaintiffs failed to establish that the defendants had a sufficient degree of control or shared purpose with the suppliers to be considered participants in a venture, and that the relationship was that of a buyer and seller.

Jerry: Thanks very much for that overview, that’s a really important case. And those led to some substantial settlements in the labor class action space in 2024. How did the settlement numbers this past year compare to 2023?

Niyah: So, we saw a significant increase in the numbers from 2023 to 2024. In 2023, the top 10 labor settlements totaled about $139 million, whereas in 2024, we got up to $237 million.

Jerry: Well, that’s a big jump. The top settlement areas are something we track every year in the Duane Morris Class Action Review, and we’ll want to keep our eyes on these numbers in 2025 in terms of labor-related class action settlements. Well, Liz and Niyah, thank you very much for lending your thought leadership in this area and being with us today on our podcast. Listeners, thank you for tuning in. And if you have any questions or comments on today’s podcast, please send us a direct message on Twitter @DMClassAction.

Niyah: Thanks, everyone. Great to be here.

Elizabeth: Thanks for having me and thank you to the listeners for being here today.

When Removing Diversity Cases Defendants Cannot “Embiggen” The Amount-In-Controversy Through Attorneys’ Fee Estimates

By Gerald L. Maatman, Jr., Shannon Noelle, and Anna Sheridan

Duane Morris Takeaways:  In an order issued on May 13, 2025, Judge Joshua Wolson of the U.S. District Court for the Eastern District of Pennsylvania ruled that a case removed to federal court on the basis of diversity jurisdiction had to be remanded back to state court given that the amount-in-controversy (AIC) alleged was based on an attorneys’ fee award that exceeded the plaintiff’s damages award by “at least seven times.”

Case Background

On January 9, 2025, Plaintiff Frank Wise sued his former employer Kimberly-Clark, a manufacturer of paper-based consumer products, in the Philadelphia Court of Common Pleas on behalf of himself and a putative class, accusing his former employer of violating the Pennsylvania Minimum Wage Act (“PMWA”) by failing to pay overtime for the time spent walking to and from job assignments in the Defendant’s manufacturing facility.  As part of its remedial regime, the PMWA permits a prevailing party to recover “reasonable” attorneys’ fees.  Plaintiff Wise estimated that his damages totaled $9,350.30, but on his cover sheet he indicated that the amount in controversy totaled “[m]ore than $50,000.00” for the amalgamated claims of the class.  (ECF No. 1-3, p. 2). 

On February 26, 2025, Defendant Kimberly-Clark removed the action to federal court, asserting that the amount in controversy was over $75,000 because Plaintiff Wise “may try to recover at least $78,375.00 in attorney’s fees.”  (ECF No. 1 ¶¶ 24, 29). Plaintiff Wise moved to remand by including with that motion a declaration from his attorneys that if the lawsuit proceeded on an individual, rather than a class wide basis, the Plaintiff and his attorneys would waive the right to recover attorneys’ fees that would cause the amount in controversy to cross $75,000.

The Court’s Order

Judge Wolson found that Defendant Kimberly-Clark did not carry its burden to demonstrate that the amount in controversy exceeded $75,000, which the Defendant primarily based on its attorneys’ fees estimate.  Although attorneys’ fees can be factored into the amount in controversy threshold, the attorneys’ fees sought must be reasonable.  To pinpoint the legal standard under Pennsylvania law for determining when an award of attorneys’ fees is reasonable, Judge Wolson surveyed case law interpreting statutes similar to the PMWA, such as the Pennsylvania Unfair Trade Practices and Consumer Protection Law, where Pennsylvania courts determined that the “term reasonable” incorporates the concept of proportionality between the damages award and attorneys’ fees award.  Though Pennsylvania law contains no “hard-and-fast rule for the acceptable ratio,” courts consider “the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite properly to conduct the case, the customary charges of the members of the bar for similar services, the amount involved in the controversy and benefits resulting to the clients from the services, and the contingency or certainty of the compensation.”  (internal citations and quotations omitted).  Applying this framework, Judge Wolson found that a 7:1 ratio for attorneys’ fees as compared to damages was unreasonable and could not be used to reach the jurisdictional threshold. 

Judge Wolson further opined that this conclusion also was consistent with protecting the judicial economy of federal courts as litigants and attorneys should not be able to use exorbitant attorneys’ fees estimates to circumvent the amount in controversy requirement to invoke diversity jurisdiction.  In the case at hand, the parties agreed for purposes of the motion that Plaintiff Wise could recover $9,350.30 in monetary damages and that the legal issues at hand involved straight-forward unpaid overtime claims.  Notably, Judge Wolson also found the Plaintiff’s attorneys’ declaration, waiving the right to collect attorneys’ fees, to be unavailing as it arguably amended the complaint.

Implications For Employers

The Court’s holding in Wise emphasizes the importance of providing concrete evidence regarding damages sought and reasonable attorneys’ fee estimates when seeking to remove based on diversity jurisdiction.  Ultimately, the damages and attorneys’ fees alleged in the complaint take precedence, but proportionality must be considered even in the context of fee shifting statutes.  If a party’s jurisdictional math does not add up, they may be sent back to where the matter started:  state court.  

The Class Action Weekly Wire – Episode 101: Key Developments In Civil Rights Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Nathan Norimoto discussing the key developments in civil rights class actions, including a notable ruling from the U.S. Supreme Court.  

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: Hello, everyone, and 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 Nathan Norimoto. Thank you, Nathan, for being on the podcast today.

Nathan Norimoto: Thank you, Jen. Great to be here.

Jennifer: Today, we wanted to discuss some trends and important developments in the area of civil rights class action litigation. Nathan, do you want to talk a bit about this area before we get into the recent developments?

Nathan: Sure. Yeah, so for over 70 years, class actions have been amongst the most powerful tools to secure civil rights in America. This began with the class action of Brown, et al. v. Board Of Education, in which the United States Supreme Court declared school segregation unlawful and arguably set the stage for the civil rights movement. In 1966, Congress and the judicial rule-making authorities crafted Federal Rule of Civil Procedure Rule 23 with the express goal of empowering litigants, challenging systematic discrimination – particularly segregation – to force courts to order widespread injunctive relief that would protect members of the class as a whole. And ever since, this provision remains as salient to the enforcement of federal civil rights statutes and constitutional claims as it was at its inception.

So, for a multitude of reasons, class actions are often a tool of first resort by advocacy groups to remedy civil rights violations – which we certainly saw in 2024.

Jennifer: Thanks, Nathan. What were some of those major developments in 2024 in this area of civil rights class action litigation?

Nathan: So, class actions in the civil rights context span numerous issues. Last year, given this breadth of subject area, there are well over 100 decisions in this space. However, the percentage of times courts granted a plaintiff’s or plaintiffs’ motion for class certification was down significantly last year, with courts granting certification about 40% of the time – in contrast to 2023, where courts granted class certification around 62% of the time. And so last year we saw a bit of a downtrend as to when these classes were being certified.

Jennifer: Are there any key rulings that our listeners need to know about in this area?

Nathan: So, among all civil rights cases, the United States Supreme Court issued an important ruling in the City Of Grants Pass, Oregon, et al. v. Johnson. In that case, the Supreme Court addressed whether a city’s public camping laws violated the Eighth Amendment’s prohibition against cruel and unusual punishment. Grants Pass, Oregon had ordinances banning camping on public property which can lead to fines and imprisonment. The Ninth Circuit had previously ruled that such laws could not be enforced against homelessness if there were not enough shelter beds available. The plaintiffs, two individuals experiencing homelessness, had filed a class action alleging that Grants Pass’ enforcement of these laws was unconstitutional under the Eighth Amendment. The district court agreed with the plaintiffs and issued an injunction against the city’s enforcement of the public camping laws, and then the Ninth Circuit affirmed the district court’s ruling. The United States Supreme Court then granted certiorari, and it overruled the Ninth Circuit’s decision. The Supreme Court determined that enforcing general public camping laws does not violate the Eighth Amendment. The court opined that the Eighth Amendment’s cruel and unusual punishment clause focuses on the nature of the punishments and not the criminalization of certain behaviors. And so, the court found that the punishments of fines and brief jail time terms imposed by grants passed were not cruel or unusual under the Eighth Amendment. The court also rejected arguments that the enforcement of these laws against individuals who are involuntarily homeless should be considered cruel and unusual, and in the end the court concluded that issues like homelessness and how to address homelessness involved complex policy decisions that were best left for elected representatives and not federal courts to address. So, in conclusion, the court overruled the Ninth Circuit’s ruling, finding that the enforcement of public camping laws by Grants Pass did not violate the Eighth Amendment.

Jennifer: Wow, what an interesting decision. So, you mentioned that there were over a hundred rulings in this area last year. How are things progressing so far in 2025 – have there been any interesting cases, interesting rulings where class certification was granted?

Nathan: Definitely, yeah. So, one example is Rossow, et al. v. Jeppesen. In that case, the plaintiff filed a punitive class action against the defendant, the Director of the Idaho Department of Health and Welfare, challenging a regulation that designated the prenatal use of controlled substances as child abuse, neglect, or abandonment – with the exception, of course, being that any substances that were prescribed by medical professional would not fall under this regulation. The regulation also included a clause that mandated individuals who use controlled substances be listed on the Central Registry for a minimum of ten years, and the plaintiff in this case was placed on the registry in December of 2021 after she tested positive for THC following the birth of her child. The plaintiff filed a class action, alleging violations of due process and equal protection under the United States Constitution on behalf of herself and others in similarly situated positions. Plaintiff filed a motion for class certification, and the court granted the motion. The court had found that the class met the numerosity requirement, as there were over 1,000 women on the registry for a similar reason as the plaintiff. The court also determined that the plaintiff’s claim raised common questions of law and fact, including whether the placement on the Central Registry affected a class member’s access to employment and their other personal rights, substantive rights, and whether there was a discriminatory intent, and how reports of child abuse were substantiated based on prenatal drug use. There were some procedural details and statute of limitations differences between the class members. But despite these differences, the court found that commonality was met because the class shared at least one significant common issue, including being placed on the registry. The court determined that the plaintiff’s claims for declaratory and injunctive relief met the requirements under Rule 23, and ultimately certified the class.

Jennifer: Well, it certainly seems like we will be continuing to see courts granting these motions in 2025, and the plaintiffs’ bar aggressively pursuing certification on behalf of plaintiffs. We know that successful certification often leads to settlements between the parties rather than a continuation of the litigation and ultimately a trial. So, how successful were plaintiffs in securing settlement dollars in 2024?

Nathan: So, settlement dollars in civil rights class actions in 2024 were significant. The top 10 settlements totaled $313.8 million. However, this was a significant decrease from the prior year, when the top 10 civil rights class action settlements in 2023 topped $643.15 million.

Jennifer: Wow, what a difference! So, the top settlement amounts in each area of law have been massive in recent years. And that’s a major trend that we track in the Duane Morris Class Action Review. We will continue to track those numbers in 2025 and keep our listeners aware of developments. Nathan, is there anything else corporate counsel and employers should be on the lookout for over the upcoming year?

Nathan: Definitely. Given the volume of litigation in the civil rights area, as well as the frequency with which these classes are granted, and also burgeoning issues that percolate, for example, claims regarding COVID-19, claims regarding increased issues with homelessness, and others, it’s anticipated that the plaintiffs’ bar will continue to be creative and inventive in this space for the coming year.

Jennifer: Well, thank you so much for all of your great analysis, Nathan – thank you for being here with me today. Listeners, thank you for tuning in. And if you have any questions or comments on today’s podcast, please send us a DM on Twitter @DMClassAction.

Nathan: Thanks, Jen. Thanks for having me on this morning!

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