July 2023 – Class Action Defense

July 28, 2023July 28, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 23: EEOC Summer Update

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Jeffrey Zohn with their discussion of recent developments at the EEOC including the Commission’s current enforcement priorities, the nomination of Kalpana Kotagal as the new commissioner, and what employers can expect under the current leadership structure.

Episode Transcript

Jerry Maatman: Blog readers, welcome to our Friday installment of the Class Action Weekly Wire. My name is Jerry Maatman of Duane Morris and I’m joined today by my colleague, Jeffrey Zohn, for this week’s episode. Welcome, Jeff!

Jeffrey Zohn: Thanks, Jerry. It’s great to be here, and I’m especially honored to be here because in today’s episode we get to mix it up where I got to interview you and ask you some questions about what’s going on with the Equal Employment Opportunity Commission, also known as the EEOC.

Jerry: Sounds good, fire away with those questions.

Jeff: All right so we’ll start out with an easier one for you – can you first explain about how the EEOC is structured in terms of its governance – who’s in charge, and how can one become part of the EEOC leadership?

Jerry: The EEOC is a creature of statute, it is in theory to be a bipartisan commission with leadership consisting of a chair, a vice chair, and three commissioners – and those five set policies for the EEOC, approve policy statements and enforcement guidance. A general counsel is also appointed by the President and reports to those commissioners, and typically the party in power that holds the White House will have a three to two advantage in terms of the composition of the five – the chair, the vice chair, and the three commissioners.

Jeff: Now of those five commissioners, are they all currently in place?

Jerry: Well, the EEOC has been dealing, like many government agencies, with recovering from the pandemic and from the election and so it has been operating for quite a while with only four commissioners – two Republicans and two Democrats. Although the EEOC and public pronouncements would not say things are deadlocked, people looking at the EEOC from the outside would suggest that there is an ideological deadlock with two Republican policy makers not agreeing with two Democratic policy makers, but in the last two weeks the Senate approved President Biden’s nomination of the fifth commissioner Kalpana Kotagal – she has yet to be sworn in, but will be sworn in any day now, and that will then allow the EEOC to have a full complement of policy makers and the five Commissioners, and will tip the balance in favor of kind of Democratic views of the policies and enforcement guidance memorandum of the EEOC.

Jeff: That sounds like a major development and something that could possibly bring some pretty significant changes to the EEOC.

Jerry: For employers it’s definitely, in the practical world in which we live, going to have a cause and effect that’s very different than what we’ve seen for the last two years, I think on several levels. The first level will be the issuance of policy guidance where the EEOC opines on how it interprets various statutes – and with a three to two majority with the Democrats, in my experience, what I’ve seen are very expansive interpretations of obligations that employers have under anti-discrimination laws and a broadening of the way the EEOC views rights of workers. Its views are not binding on federal courts, but its views are important, and its views activate the manner in which its investigators, district offices, and regional trial attorneys view the world and enforce the statute – and so there’s going to be a definite change, and the EEOC will act in a more activist manner to fulfill its policy mandates but it will do so with a tilt towards Democratic labor policies.

The second area where there will be a change most commentators believe, and I’m of the same opinion, that lawsuits – or investigations that have been in the queue for approval as lawsuits – will be approved and will begin to be filed. So the last couple of years EEOC-authorized lawsuits where the Commission sues in the public interest, on behalf of the United States against employers, on behalf of groups of employees – have been anywhere between about 85 and 105 lawsuits, and so its fiscal year starts on October 1 and goes to September 30. So we’re halfway through or a little past halfway through in the fiscal year, but I think what we’re going to see is an accelerated filing of lawsuits – especially what are known as systemic lawsuits that are bigger, brought on behalf of various groups of employees, hundreds sometimes thousands of employees, and so one way to look at the impact of the third Democratic commissioner is it will unleash the potential that the EEOC has in terms of litigation enforcement and I expect it to flex its muscle and bring more of those cases.

Jeff: So narrowing in a little bit more on Ms. Kotagal, the fifth appointment, the third Democrat – Jerry you’ve been one of the most distinguished lawyers in this field for a while, can you give us any background information on her?

Jerry: Well she is a very talented lawyer who also thinks expansively about this area and has handled big plaintiff-side employment discrimination class actions, she comes from the Cohen Milstein firm – probably one of the best if not the top plaintiff-side civil rights and employment discrimination law firm – she’s one of the key partners there. I’ve handled a myriad of cases against her, she’s an excellent lawyer, and has in the past few years been involved in movements: both the #MeToo movement and a movement that started in Hollywood, where Hollywood contracts for production of movies were created with a clause that would allow for hiring and use of a more diverse set of cast members and production personnel, and so she’s very interested in opening the doors of employment, she’s interested in bringing test cases to challenge policies, and she’s a champion of protected minority groups – so I expect her to utilize her expertise and bring it to the EEOC and to push the envelope, so to speak, in terms of what the EEOC does in enforcing employment discrimination laws

Jeff: It certainly sounds like her influence is going to be is going to be rapid and significant.

Jerry: I think so. I think the main thing on the EEOC’s agenda in terms of regulatory guidance will be the new Pregnant Workers Fairness Act where the EEOC will issue regulations and fill in the gaps, so to speak, of that law which is an amendment to the Pregnancy Discrimination Act that President Biden signed this year, and look for that to be kind of a signal of where the EEOC is going, and I expect it will be a very expansive document that will push the envelope even on that law to create more rights for workers who are pregnant and more obligations for employers – so that would be the first signal I would be looking for if I were an employer.

Jeff: Beyond that, are there any other EEOC developments that you think are worth talking about right now?

Jerry: I think the most relevant for most employers is the issue of systemic litigation that the EEOC has talked about it, but the number of systemic lawsuits that have been filed have been limited, and because the new commissioner’s background is on what I would call impact litigation, bringing cases to promote change, I think you’re going to be seeing test cases I think you’re going to be seeing cases brought on large against large employers, industry leaders to try and make a point and try and enforce the statute in a way that sends a signal to smaller players in the industry. So I think the EEOC is going to get back into the business of bringing large lawsuits against large employers that are very newsworthy.

Jeff: I think that should be the flashing red lights for the big companies to keep an eye on because that’s going to be impacting them directly. Definitely now is a great time for employers out there to make sure that they are compliant with all these requirements and the things that we think the EEOC is going to be going after.

Jerry: Absolutely, I think change is inevitable and the watchword is compliance compliance compliance is what employers need to be focused on at this point in terms of an activist EEOC.

Jeff: That is definitely a great advice, and I really appreciate all of the insights you had today, Jerry.

Jerry: Thanks all our loyal blog readers for joining us for this week’s Friday podcast. Signing off, this is Jeff and Jerry. Have a great day

Jeff: Bye everyone, thank you!

July 27, 2023 by Alex W. Karasik

EEOC Issues New ADA Guidance On Visual Disabilities And Discussing AI Impact

By Alex W. Karasik, Gerald L. Maatman, Jr., and George J. Schaller

Duane Morris Takeaways: On July 26, 2023, the EEOC issued a new Guidance entitled “Visual Disabilities in the Workplace and the Americans with Disabilities Act” (the “Guidance”). This document is an excellent resource for employers, and provides insight into how to handle situations that may arise with job applicants and employees that have visual disabilities. Notably, for employers that use algorithms or artificial intelligence (“AI”) as a decision-making tool, the Guidance makes clear that employers have an obligation to make reasonable accommodations for applicants or employees with visual disabilities who request them in connection with these technologies.

The EEOC’s Guidance

The EEOC’s Guidance endeavors to address four subjects, including: (1) when an employer may ask an applicant or employee questions about a vision impairment and how an employer should treat voluntary disclosure; (2) what types of reasonable accommodations applicants or employees with visual disabilities may need; (3) how an employer should handle safety concerns about applicants and employees with visual disabilities; and (4) how an employer can ensure that no employee is harassed because of a visual disability.

The EEOC notes that if an applicant has an obvious impairment or voluntarily discloses the existence of a vision impairment, and based on this information, the employer reasonably believes that the applicant will require an accommodation to perform the job, the employer may ask whether the applicant will need an accommodation (and, if so, what type). Some potential accommodations may include: (i) assistive technology materials, such as screen readers and website accessibility modifications; (ii) personnel policy modifications, such as allowing the use of sunglasses, service animals, and customized work schedules; (iii) making adjustments to the work area, including brighter lighting; and (iv) allowing worksite visits by orientation, mobility, or assistive technology professionals.

For safety concerns, the Guidance clarifies that if the employer has concerns that the applicant’s vision impairment may create a safety risk in the workplace, the employer may conduct an individualized assessment to evaluate whether the individual’s impairment poses a “direct threat,” which is defined as, “a significant risk of substantial harm to the health or safety of the applicant or others that cannot be eliminated or reduced through reasonable accommodation.” For harassment concerns, the EEOC notes that employers should make clear that they will not tolerate harassment based on disability or on any other protected basis, including visual impairment. This can be done in a number of ways, such as through a written policy, employee handbooks, staff meetings, and periodic training.

Artificial Intelligence Implications

As we previously blogged about here, the EEOC has made it a priority to examine whether the use of artificial intelligence in making employment decisions can disparately impact various classes of individuals. In the Q&A section, the Guidance tackles this issue by posing the following hypothetical question: “Does an employer have an obligation to make reasonable accommodations to applicants or employees with visual disabilities who request them in connection with the employer’s use of software that uses algorithms or artificial intelligence (AI) as decision-making tools?”According to the EEOC, the answer is “yes.”

The Guidance opines that AI tools may intentionally or unintentionally “screen out” individuals with disabilities in the application process and when employees are on the job, even though such individuals are able to do jobs with or without reasonable accommodations. As an example, an applicant or employee may have a visual disability that reduces the accuracy of an AI assessment used to evaluate the applicant or employee. In those situations, the EEOC notes that the employer has an obligation to provide a reasonable accommodation, such as an alternative testing format, that would provide a more accurate assessment of the applicant’s or employee’s ability to perform the relevant job duties, absent undue hardship.

Takeaways For Employers

The EEOC’s Guidance serves a reminder that the Commission will vigorously seek to protect the workplace rights of individuals with disabilities, including those with visual impairments. When employers are confronted with situations where an applicant or employee requests reasonable accommodations, the Guidance provides a valuable roadmap for how to handle such requests, and offers a myriad of potential solutions.

From an artificial intelligence perspective, the Guidance’s reference to the use of AI tools suggests that employers must be flexible in terms providing alternative solutions to visually impaired employees and applicants. In these situations, employers should be prepared to utilize alternative means of evaluation.

July 21, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 22: TCPA Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jennifer Riley, Katelynn Gray, Sheila Raftery Wiggins, and associate Shaina Wolfe with their analysis of key trends and notable rulings in the class action landscape of the Telephone Consumer Privacy Act (“TCPA”). We hope you enjoy the episode.

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 Jen Riley, partner at Duane Morris, and joining me today are partners Sheila Raftery Wiggins and Katelynn Gray and associate Shaina Wolfe. Thank you guys for being on the podcast today.

Today we wanted to discuss trends and important developments in Telephone Consumer Protection Act or “TCPA” class action litigation. The TCPA has long been a booming focus of consumer litigation, particularly in the class action space. The statute was enacted in 1991 – it’s a federal statute – it’s aimed at protecting consumers from companies that use ATDS, meaning automatic telephone dialing systems, to engage in mass telemarketing methods, including robocalls. The TCPA originally focused on unwanted telephone calls and faxes. For many years, plaintiffs successfully have alleged that a defendant used an automatic telephone dialing system (ATDS) to call or send messages to a cell phones without obtaining prior express consent.

Sheila, can you explain some of the recent Supreme Court litigation governing the TCPA’s interpretation – in particular, what constitutes an autodialer?

Sheila Raftery Wiggins: Sure, Jen. In 2021, the U.S. Supreme Court issued its ruling Facebook, et al. v. Duguid, which adopted a narrow interpretation of what devices count as an ATDS. Before Duguid, some federal circuits held that equipment could qualify as an autodialer just because it autodialed stored phone numbers that had not been randomly or sequentially generated in the first instance. But the Supreme Court rejected this interpretation and held that “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called,” because the contrary interpretation “would capture virtually all modern cell phones, which have the capacity to store telephone numbers to be called and dial such numbers.”

Jen: Got it. Are there other types of communication governed by the TCPA?

Katelynn Gray: As you can imagine, Jen, the TCPA was enacted thirty years ago, so of course the methods and the technologies that businesses use to engage customers now has changed. I’m sure all of you have received text messages from businesses for a variety of different reasons, including to communicate with customers, solicit consumer feedback, announce product promotions, identify the status of a delivery, even utilize two-factor security authentication. So, as a result of that – as a result of the changes that have occurred in the last thirty years – courts have now begun interpreting the TCPA to include text messages. The TCPA also empowers the Federal Communications Commission, or something that we refer to as the FCC, to “prescribe regulations to implement” the statute, and to create exemptions to statutory liability “by rule or order.” 47 U.S.C. § 227(b)(2)(B). So under this authority, the FCC has actually created a “two-tier system of consent” for TCPA liability, with different kinds of calls essentially requiring different types of consent.

Jen: Shaina, can you talk about how successful the plaintiffs’ bar has been in obtaining class certification in TCPA class action cases?

Shaina Wolfe: The plaintiffs’ bar was fairly successful in 2022 where they sought class certification over TCPA issues, particularly relating to or involving robocalls. The plaintiffs’ bar won 67% of motions for class certification, and companies secured denials in 33% of the decisions.

Jen: So it sounds like the plaintiffs’ bar has been fairly successful overall. Sheila, can you comment on some of the notable successful certification rulings in this space?

Sheila: Sure – in Head, et al. v. Citibank, N.A., the plaintiff received 100 robocalls from the defendant, a bank, over the course of three months regarding an overdue credit account of a man she did not know. The plaintiff was never a customer of the defendant and did not authorize the man or anyone else to open an account with the defendant using her cellphone number. The plaintiff filed a class action, alleging that the defendant routinely violated the TCPA by placing calls using an artificial or prerecorded voice to telephone numbers assigned to a cellular telephone service, without prior express consent. The court granted the motion. The court explained that the defendant did not deny that it places billions of calls each year regarding delinquent accounts, or that millions of accounts in its system are marked “wrong number” and that at least one unsolicited call must be placed to the number before a telephone number is marked wrong. Moreover, the court noted that the defendant did not dispute that it called the plaintiff repeatedly before it marked the account associated with her number “cease-and-desist,” making a clear inference that there may be numbers not yet marked “wrong,” “no consent,” or “cease-and-desist” for which the defendant does not have authorization to robocall. The court also found that the proposed class satisfied the typicality and commonality requirements, that common questions of law and fact predominated, and that in the absence of a class action, thousands of meritorious claims would likely go unredressed because the cost of litigation would dwarf any possible reward under the TCPA.

Jen: Thanks so much Sheila. Katelynn, were there any memorable class certification rulings denying certification in 2022?

Katelynn: So there was one that I’ll talk about, but I just would generally say in 2022 it seems that defendants in TCPA class actions continued to succeed in defeating class certification by demonstrating that the proposed representative, or the individual who sought to represent the class, was inadequate or atypical, so essentially didn’t have anything in common with the other class members – especially where the circumstances surrounding their consent distinguish them from those other class members. So one of those examples was a case called Bustillos, et al. v. West Covina Corp. Fitness. This was a case where a former gym member went into the defendant’s gym and he provided his phone number to an employee who entered it into his profile – and I’m sure a lot of us do this all the time. Unfortunately for the company, the phone number provided was actually one digit off from the actual number of the former gym member – and belonged to the plaintiff in this case. At one point, the defendant authorized its marketing agency to send out a one-time pre-recorded telephone message to former gym members and guests who had expressed interest in joining the gym at a certain point – essentially inviting them to join or rejoin. Most of these individuals had provided their telephone numbers when they filled out a guest registration or a contract with the defendant when they joined the gym the first time. The plaintiff was one of 1,400 individuals that received a pre-recorded message on her cell phone from the defendant offering a gym membership promotion. So in this instance, the Court denied certification because they found the plaintiff in this case did not allege or produce evidence that any of the other messages were sent to wrong numbers and therefore found she was not typical to the members of the class she proposed to represent.

Shaina: Another common reason that courts deny class certification in TCPA cases is due to predominance of an individualized issue. For TCPA cases, one of the most powerful affirmative defenses is showing consent to the telemarketing messages. Courts have tended to rule in favor of defendants where they can show that a substantial portion of the proposed class consented to the communications; the purpose and nature of each communication varied from person to person; or identifying who provided consent and who did not would be impractical or impossible. There were also several case rulings that demonstrated this defense, including Cooper v. Neilmed Pharmaceuticals, Inc., where the defendant successfully offered five methods by which it received prior express invitation or permission from recipients before sending faxes, which creates almost a sort of presumption that the consent issue will be individualized.

Jen: Before we turn to settlements, if I recall the largest TCPA jury verdict ever was overturned on appeal last year, is that correct?

Sheila: That’s correct. The largest TCPA jury verdict involved in an award of $925 million, however, the defendant successfully overturned the verdict on appeal. In Wakefield, et al. v. ViSalus, Inc., the plaintiffs filed a class action alleging that the defendant made unlawful telephone calls using prerecorded voice messages in violation of the TCPA. Following a trial, the jury returned a verdict in favor of the plaintiffs and found that the defendant sent over 1.8 million prerecorded calls to class members without prior express consent. Accordingly, the jury awarded the minimum statutory damages of $500 per call for a verdict against the defendant of $925 million. The defendant filed a post-trial motion challenging the constitutionality of the statutory damages award under the due process clause of the Fifth Amendment as being unconstitutionally excessive. The district court denied the motion. On appeal, the Ninth Circuit vacated and remanded the district court’s denial of the defendant’s motion. On appeal, the defendant contended that even if the TCPA’s statutory penalty of $500 per violation was constitutional, an aggregate award of $925,220,000 was so “severe and oppressive” that it violated the defendant’s due process rights. So this case has ultimately obtained an extension of time from the Supreme Court to file a petition for certiorari.

Jen: Wow, we will absolutely keep listeners updated as to what happens next in that case. As far as TCPA settlements, I doubt there were any quire that large, but were there any significant settlements over the past year – Shaina, can you comment on that?

Shaina: I can. Although none were in the hundreds of millions, there were several multi-million class-wide TCPA settlements in 2022. Four of the top 10 were over $15 million and the value of the top 10 totaled over $134 million.

Jen: Thanks Shaina. Great insights and analysis, everyone. I know that these are only some of the cases that had interesting rulings over the past year in the TCPA class action space. The remainder of 2023 is sure to give us some more insights into the ways that class actions are evolving in the TCPA class litigation area. Thanks again everybody for joining us today, thanks to the panel – we look forward to connecting again next Friday on the next episode of the Class Action Weekly Wire.

July 20, 2023July 20, 2023 by Class Action Defense

California Supreme Court Rules That So Long As They Are Aggrieved, PAGA Plaintiffs Can First Pursue Individual Claims In Arbitration And Then Can Pursue Non-Individual Claims In Court

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

Duane Morris Takeaways: On July 17, 2023, the California Supreme Court issued its long-awaited decision in Adolph v. Uber Technologies, Inc., No. S274671 (July 17, 2023), addressing standing requirements under the Private Attorneys General Act of 2004 (“PAGA”). The Supreme Court held that, once a PAGA plaintiff’s individual claims are compelled to arbitration, the plaintiff retains standing to maintain non-individual, representative PAGA claims in court so long as they are an aggrieved employee. If the plaintiff loses in arbitration, they are not aggrieved and therefore lack standing. However, if the plaintiff prevails or settles their individual claims in arbitration, they can then return to court to prosecute their non-individual PAGA claims. For companies facing PAGA claims, the ruling in Adolph is required reading, as it will usher in a new period of workplace litigation in California.

Case Background

Erik Adolph, an Uber delivery driver, alleged that Uber misclassified him as an independent contractor. Although Adolph initially sought to maintain a class action, those efforts were thwarted by a class action waiver in his workplace arbitration agreement. Adolph then amended his complaint to allege PAGA claims. The trial court denied Uber’s motion to compel arbitration, and the Court of Appeal affirmed on the basis of California’s prior rule, under Iskanian v. CLS Transportation, 59 Cal. 4th 348 (2014), that PAGA claims cannot be split into individual and non-individual parts and that a PAGA claim was non-arbitrable.

Uber filed a Petition for Review and, while it was pending, the U.S. Supreme Court issued its decision in Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022), holding that PAGA claims are divisible and that the Federal Arbitration Act preempted California law insofar as it precluded arbitration of an individual PAGA claim. The U.S. Supreme Court further opined that, once a PAGA plaintiff’s individual claims are compelled to arbitration, they lose standing to pursue non-individual PAGA claims. Against this backdrop, the California Supreme Court granted review in Adolph.

The California Supreme Court’s Decision

In a unanimous decision, the California Supreme Court disagreed with Viking River’s interpretation of PAGA standing. The California Supreme Court held that, so long as an employee alleges they are aggrieved by a violation, they maintain standing under the PAGA. Thus, even after individual PAGA claims are compelled the arbitration, the plaintiff retains standing to pursue non-individual PAGA claims in court.

As to logistics, the Supreme Court clarified several things. First, even though individual PAGA claims may be pending in arbitration and non-individual PAGA claims pending in court, the claims all remain one action, and the court action may be stayed pending completion of arbitration. Second, if the plaintiff loses in arbitration, at that juncture, the plaintiff no longer has standing to maintain non-individual PAGA claims. Third, if the plaintiff prevails in arbitration or settles their individual claims, they continue to possess standing to return to court to pursue non-individual PAGA claims on behalf of others.

Implications for Employers

In the wake of Adolph, the stakes for employers in individual PAGA arbitrations are high. Employers facing PAGA claims should conduct an early assessment of the plaintiff’s individual claims and if unmeritorious aggressively defend the matter because a win in arbitration will extinguish the case in court as well. We also anticipate that PAGA plaintiffs may begin alleging their aggrieved employee status, yet disclaiming any individual relief, in order to bypass arbitration altogether. It remains to be seen if that pleading strategy will be condoned by California courts.

July 20, 2023 by Gerald L. Maatman, Jr.

Illinois Supreme Court Refuses To Reconsider “Per-Scan” BIPA Accrual Ruling In Cothron v. White Castle

By Gerald L. Maatman, Jr. and Tyler Zmick

Duane Morris Takeaways: As we previously blogged, on February 17, 2023 the Illinois Supreme Court held in Cothron v. White Castle, 2023 IL 128004 (2023), that a separate claim for damages accrues under the Biometric Information Privacy Act (“BIPA”) each time a private entity scans or transmits an individual’s biometric data in violation of Sections 15(b) or 15(d) of the statute. On July 18, 2023, the Illinois Supreme Court denied White Castle’s petition for hearing, resulting in the February 17 ruling becoming the final “law of the land” in Illinois. The Court’s decision to deny White Castle’s rehearing petition was not unanimous, however, as reflected by the blistering dissent penned by Justice Overstreet and joined by Chief Justice Theis and Justice Holder White. For companies involved in BIPA class action litigation, the dissent is required reading, as it foreshadows an array of defense-oriented arguments over damages issues in privacy litigation.

Illinois Supreme Court’s Majority Decision In Cothron

In a 4-3 split ruling, the Illinois Supreme Court held on February 17, 2023 that a separate claim accrues under the BIPA each time a private entity scans or transmits an individual’s biometric data in violation of Sections 15(b) or 15(d), respectively.

Relying on the statute’s plain language and the fact that the actions of “collecting” and “disclosing” biometric data can occur more than once, the Supreme Court agreed with Plaintiff’s interpretation – namely, that Section 15(b) “applies to every instance when a private entity collects biometric information without prior consent” and that Section 15(d) “applies to every transmission to a third party.” Cothron, 2023 IL 128004, ¶¶ 19, 23, 28. The Supreme Court acknowledged that this interpretation – coupled with the statute allowing prevailing plaintiffs to recover up to $1,000 or $5,000 for each “violation” – could lead to astronomical damages awards that may be “harsh, unjust, absurd or unwise,’” id. ¶ 40 (citation omitted), but noted that it must apply the statute as written and that policy-based concerns should be addressed by the Illinois legislature.

Dissent To Majority’s Decision To Deny White Castle’s Rehearing Petition

On July 18, 2023 the Illinois Supreme Court denied White Castle’s petition for rehearing in Cothron v. White Castle, effectively leaving White Castle with no further avenues for challenging the ruling.

Three Justices (the same three who dissented to the February 17 majority decision) disagreed with the decision to deny White Castle’s petition for rehearing. In opining that the Supreme Court should have granted rehearing, the Dissent focused on three issues, including: (1) the majority’s “per scan” theory of liability subverting the intent of the Illinois legislature; (2) the majority’s “per scan” theory of liability threatening the survival of Illinois businesses and raising “significant constitutional due process concerns,” id. ¶ 70; and (3) the majority’s decision in failing to provide trial courts with criteria to use in exercising their discretion whether to award statutory damages for BIPA violations.

First, the Dissent stated that the Illinois legislature meant for the BIPA to be a straightforward remedial statute that allows individuals to choose to provide (or not to provide) their biometric data after being informed that the data is being collected, stored, and potentially disclosed. The Dissent rejected the majority’s “flawed construction” of the statute, which mistakenly presumes that the legislature meant for the BIPA to “establish a statutory landmine” and “destroy commerce in its wake when negligently triggered.” Id. ¶ 73; see also id. (“The majority’s construction of the [BIPA] does not give effect to the legislature’s true intent but instead eviscerates the legislature’s remedial purpose of the [BIPA] and impermissibly recasts [it] as one that is penal in nature rather than remedial.”).

Second, the Dissent opined that by construing the statute to allow for awards of statutory damages that bear no relation to any actual monetary injury suffered, the majority’s decision raises due process concerns that “raise doubt as to [the BIPA’s] validity.” Id. ¶ 74; see also id. ¶ 75 (“The legislature’s authority to set a statutory penalty is limited by the requirements of due process. When a statute authorizes an award that is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable, it does not further a legitimate government purpose, runs afoul of the due process clause, and is unconstitutional.”).

Finally, the Dissent took issue with the majority’s refusal to clarify its February 17 holding with respect to the discretionary (rather than mandatory) nature of liquidated damages under the statute. Specifically, the Dissent noted that the majority opinion did not provide trial courts with standards or criteria to apply in determining whether to award statutory damages in a particular BIPA case and, if so, in what amount. The Dissent asserted that the Supreme Court should have agreed to clarify “that statutory damages awards must be no larger than necessary to serve the [BIPA’s] remedial purposes” and to “explain how lower courts should make that determination.” Id. ¶ 85. Per the Dissent, “[w]ithout any guidance regarding the standard for setting damages, defendants, in class actions especially, remain unable to assess their realistic potential exposure.” Id.

Implications For Corporations

Assuming White Castle cannot convince the U.S. Supreme Court to grant review of the Cothron decision based on constitutional issues, Cothron is now the final law of the land in Illinois. White Castle and other BIPA defendants may, however, attempt to raise constitutional challenges to the statute in other BIPA cases moving forward based on the same concerns expressed by the three dissenting Justices in Cothron.

The denial of White Castle’s rehearing petition indicates that the well is beginning to dry for businesses in terms of potential BIPA defenses. While employers and other BIPA defendants can still explore novel defenses, such as the exception for information captured from a patient in a health care setting or challenges to personal jurisdiction, many companies caught in the crosshairs of BIPA class actions will face pressure to settle due to the risk of facing monumental potential damages. Moreover, attempts to reform the BIPA statute failed in 2023, and the Illinois legislature likely will not consider any further reform proposals until 2024. Given the bleak outlook of the law as it stands, it is imperative that businesses immediately ensure they are compliant with the BIPA.

July 19, 2023 by Gerald L. Maatman, Jr.

D.C. Circuit Issues A “How-To” Ruling Regarding Issue Certification For Rule 23 Class Actions

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

Duane Morris Takeaways: On July 18, 2023, the U.S. Court of Appeals for the District of Columbia Circuit ruled that district courts must analyze the predominance and superiority requirements for certification of a class action when considering an “issue class” under Rule 23(c). In Harris v. Medical Transportation Management, Inc., No. 22-7033 (D.C. Cir. July 18, 2023), the three-judge panel ruled that the district court erred when it certified an “issue” class under Rule 23(c)(4) without first undertaking an analysis of whether the class certification prerequisites of Rule 23(a) and 23(b) had also been satisfied. The case was remanded for further proceedings. The D.C. Circuit’s decision ought to be required reading for employers with large workforces and those dealing with wage & hour class actions. It bears watching whether the district court’s analysis of the rigorous requirements of Rule 23(b) on remand also results in a pro-certification decision, given the instructions provided on remand.

Case Background

In Harris, the named plaintiffs were non-emergency medical drivers for the defendant, a company that provides transportation to individuals on public assistance who require transit getting to medical appointments. They alleged that they and a class of other drivers who they seek to represent in a class action lawsuit were denied minimum and overtime pay in violation of District of Columbia and federal wage and hour laws. Slip op. at 5-6.

Whether defendant MTM could as a matter of law be held liable as the drivers’ employer is a threshold question in the litigation. Id. at 6. The district court certified issues classes as to (i) whether MTM is the drivers’ joint employer (along with its sub-contractors); and (ii) whether MTM is a general contractor under D.C. law and thus strictly liable. Id. at 8. The district court did so despite finding previously that the predominance requirement of Rule 23(b)(3) was not met under the facts of the case specifically as they relate to the payment system for the drivers. Id. at 7-8.

MTM appealed the issue certification ruling.

The D.C. Circuit’s Decision

In a straightforward ruling, but one that delves into the complexities of Rule 23 with law-professor like precision, the D.C. Circuit panel consisting of Judges Millett, Childs and Rogers determined that the district court could not certify the issue classes under Rule 23(c)(4) without deciding whether those classes also meet the requirements of Rule 23(a) – commonality and typicality – and 23(b) – predominance and superiority. In essence, the D.C. Circuit read the plain language of Rule 23 and observed that sub-sections (a), (b) and (c) all bear on the certification inquiry conducted by the district court and therefore must be considered on an equal basis. Id. at 14-15.

In the penultimate statement of the holding, Judge Childs opined that “Rule 23’s text and structure offer no quarter to the view that Rule 23(c)(4) creates an independent type of class action that is freed from all of Rule 23’s other class action prerequisites. So the district court should have ensured that the issue class that it certified met all, and not just some, of Rule 23(a) and (b)’s preconditions to class status.” Id. at 15-16.

The D.C. Circuit instructed the district court that it must analyze on remand each of the potential class actions available under Rule 23(b)(3)’s predominance analysis. Id. at 19-20. It discussed various ways in which Rule 23(c)(4) can be applied in the context of the joint employer analysis that is at issue in Harris, such as bifurcating the liability issue from remedial claims, or where affirmative defenses may muddy the waters of class-wide evidence in a certified issues class. Id. at 21-22.

In a similar vein, Judge Childs instructed that summary judgment motions on discrete issues represent another way in which district courts could management issue certified class actions where the predominance of individualized issues threaten to overrun the common proof. Id. at 24-25.

Implications For Employers

The D.C. Circuit opinion in Harris v. MTM provides corporate counsel and executives a clear and easily understandable explanation of how Rule 23(b) and (c) intersect with one another when an issue class or classes are certified in class action litigation. District courts cannot certify issue classes under Rule 23(c)(4) without undertaking the rigorous analysis required to conclude that a class action is superior and manageable, that common issues will predominate over individualized issues, and that there are common and typical issues to be resolved in the first place. And by suggesting specific mechanisms that a district court has at its disposal for case management purposes such as targeted summary judgment motions, the decision provides reasonable strategies to consider when facing class action litigation.

July 14, 2023 by Class Action Defense

Not Again – No More Notices: North Carolina Federal Court Denies Conditional Certification In Duplicative FLSA Collective Action

By Gerald L. Maatman, Jr., Alex W. Karasik and Shaina Wolfe

Duane Morris Takeaways: In Emmanuel Jean-Francois et al. v. Smithfield Foods, Inc., et al., No. 7:22-CV-63, 2023 U.S. Dist. LEXIS 118136 (E.D.N.C. July 10, 2023), a federal district court in North Carolina denied plaintiffs’ motion for conditional certification of an FLSA collective action, holding that the collective action they sought to certify was duplicative to the conditionally certified collective actions in two other pending cases.

This decision is well worth a read for companies who are confronted with numerous collective action lawsuits containing similar alleged violations of wage and hour laws.

Case Background

Three employees (“Plaintiffs”) sued their employer, Smithfield Fresh Meats Corp. (“Smithfield”), and three of its sister companies (collectively “Defendants”) for violations of the Fair Labor Standards Act (“FLSA”), and specifically, for failing to include a “responsibility bonus” in their pay when calculating overtime. Id. at 1. During COVID-19, Plaintiffs received a “responsibility bonus,” which entitled them, as hourly employees, to a bonus of “$5 per hour for all regular hours worked up to and including forty in a workweek,” between April 1, 2020 and October 31, 2020. Id. at 3. Plaintiffs alleged that Defendants underpaid them for overtime pay during the period between April 1, 2020 and October 31, 2020. Id.

Plaintiffs moved to certify a collective action of a similarly situated group of 8,000 employees who were not properly compensated by Defendants for overtime work performed. Id. at 1. Defendants opposed the motion for conditional certification and argued, among other things, that the proposed collective action could not be certified because it was duplicative to two other cases entitled Canas and Winking. Id. at 2. The parties in Canas and Winking had recently reached agreements to settle the FLSA claims concerning the same responsibility bonus for employees and notices to opt-in plaintiffs who opted into the settlement had already been distributed. Id. at 2-3.

The Court’s Decision

The Court agreed with Defendants and denied Plaintiffs’ motion for conditional certification. Id. at 11. Significantly, the Court found that the Canas action encompassed claims identical to the claims Plaintiffs alleged in Jean-Francois. Id. at 11.

The Court explained that, “[i]n Canas, the collective [action members] settled claims against Smithfield (including employees in North Carolina) based on the same facts and during the same time period.” Id. In Canas v. Smithfield Packaged Meats Corp., No. 1:20-CV-4937 (N.D. Ill.), some employees brought a collective action lawsuit for violations of the FLSA against Smithfield, one of its sister companies, and another company. Id. at 2. On September 13, 2021, the judge in Canas approved a settlement between “the FLSA settlement class plaintiffs who opted into the settlement” and the two Smithfield companies concerning the responsibility bonus. Id. at 2–3. The settlement included employees who worked in North Carolina. Id. at 3.

The Court further explained that Plaintiffs were already part of the collective action that received notice as part of the Canas collective action, and that the scope of the Canas collective action included every potential opt-in plaintiff in the current proposed collective action at issue in Plaintiffs’ motion. Id. at 9-10. Instead of certifying another collective action, the Court opined that Plaintiffs’ remedy was “to proceed with their action as an individual action or request to be paid now what they would have received had they submitted a claim for from the Canas reserve fund.” Id. at 10-11. For these reasons, the Court denied Plaintiffs’ motion for conditional certification.

Implications For Employers

In FLSA collective actions, it is not uncommon for a series of cascading lawsuits to be filed against the same company, especially in scenarios when employees in scattered locations may independently retain their own counsel. However, it can be distracting for a business to have its workforce receive multiple notifications providing opportunities to join lawsuits against their employer, especially when the lawsuits may appear to be similar. This is an excellent ruling for employers to use when they are confronted with multiple, duplicative FLSA collection action lawsuits. Accordingly, businesses involved in wage and hour litigation would be wise to keep this ruling tucked away.

July 14, 2023 by Class Action Defense

Eleventh Circuit Requests Refined Class Definition For Data Breach Class Action

By Gerald L. Maatman, Jr., Alex W. Karasik, and George J. Schaller

Duane Morris Takeaways: In Steinmetz et al. v. Brinker International, Inc., No. 21-13146, 2023 U.S. App. LEXIS 17539 (11th Cir. July 11, 2023), the Eleventh Circuit vacated the district court’s order certifying a nationwide class and California-only class in a data breach case. In so doing, it remanded the case with instructions to the district court to define the phrase “who had their data accessed by cybercriminals” and to analyze the viability of the California class.

For employers facing data breach claims in class actions, this decision is instructive in terms of what reviewing courts consider in certifying a class, especially when class definition terms or phrases are broad.

Case Background

Defendant Brinker International, Inc, owner of Chili’s restaurants, faced a cyber-attack between March and April 2018, in which customers’ credit and debit cards were compromised. Id. at 2. Hackers targeted Chili’s restaurant systems and stole both customer data and personally identifiable information, and posted that information on an online market place for stolen payment data. Id. at 2-3. Plaintiffs alleged that 4.5 million cards were accessed by hackers. Id. at 3.

The three named plaintiffs – Shenika Theus, a Texas resident, Michael Franklin, a California resident, and Eric Steinmetz, a Nevada resident – alleged they used their cards at Chili’s restaurants between March and April in their respective states. Id. at 3-4. After their visits, Theus and Franklin had unauthorized charges on their cards requiring them to cancel their cards, Steinmetz did not experience fraudulent charges. Id. at 3-4.

Plaintiffs moved to certify two classes, including a nationwide class and California statewide class, seeking both injunctive and monetary relief. Id. at 4. The district court certified the nationwide class for negligence claims and a separate California class under the state’s unfair competition laws. Id. at 5. Brinker appealed the district court’s class certification orders. Id.

The Eleventh Circuit’s Decision

The Eleventh Circuit held that Plaintiffs alleged a concrete injury that was sufficient to establish Article III standing. Id. at 10. Plaintiffs showed both a present injury – by alleging their personal information was taken by hackers and put on the dark web – and a substantial risk of future misuse through future misuse of information associated with the hacked credit card. Id. at 9-10.

The Eleventh Circuit, however, vacated the district court’s order and found Franklin and Steinmetz could not meet the traceability requirement for standing. Id. at 11. Franklin alleged two visits outside the “at-risk timeframe” when Chili’s was compromised in the data breach and therefore his injury was not fairly traceable. Id. Steinmetz similarly stated in responses to interrogatories and his deposition that he visited Chili’s on a date outside the affected period and could not “fairly trace” any alleged injury to Brinker’s action. Id. at 12-13. For these reasons, the Eleventh Circuit opined that Theus did meet traceability for standing purposes. Id. at 13.

As to the class definitions at issue in the litigation, the Eleventh Circuit ruled that the district court’s phrase “data accessed by cybercriminals” in both class definitions was too broad and limited the class to “cases of fraudulent charges or posting of credit information on the dark web.” Id. at 15. The Eleventh Circuit determined that the district could need to refine the class definition to include those two categories only and then conduct a new predominance analysis to include uninjured individuals who simply had their data accessed. As a result of the problems with the class definition, the Eleventh Circuit remanded the case. Id. at 15-16. The Eleventh Circuit also remanded the case in light of Franklin’s lack of standing to determine the viability of the California-based class. Id. at 16.

Implications For Employers

Employers confronted with class certification motions in data breach lawsuits should take note that the Eleventh Circuit relied on the broad phrase “data accessed by cybercriminals” in remanding the district court’s order.

Further, from a practical standpoint, employers should carefully evaluate district court’s class definitions for overbroad terms or phrases when preparing an appeal.

July 14, 2023July 14, 2023 by Class Action Defense

Ohio Federal Court Denies Conditional Certification In An Early Application Of The Sixth Circuit’s “Strong-Likelihood” Standard, Signaling A New Normal For Wage & Hour Lawsuits

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

Duane Morris Takeaways: In Hutt v. Greenix Pest Control, LLC, et al., No. 2:20-CV-1108 (S.D. Ohio July 12, 2023), U.S. District Judge Sarah D. Morrison denied plaintiff’s motion for court-supervised notice to potential opt-in plaintiffs under 29 U.S.C. § 216(b) in one of the first applications of the Sixth Circuit’s new standard for ruling on such motions in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023).

On May 19, 2023, the Sixth Circuit replaced the long-standing lenient test for facilitating notice under the Fair Labor Standards Act (FLSA) with a more rigorous test akin to the standard used to obtain a preliminary injunction. Whereas under the prior framework a plaintiff need only make a “modest factual showing” that other employees are “similarly situated,” Clark requires plaintiffs to demonstrate a “strong likelihood” that “similarly situated” employees exist to warrant notifying other potential plaintiffs about the lawsuit.

The Court’s opinion in Hutt sends a clear message that the “strong likelihood” evidentiary standard has teeth. The ruling is a boon for employers defending FLSA claims on behalf of multiple employees.

Case Background

In Hutt, the plaintiff, a former pest control technician, filed a Complaint against his former employer, Greenix, on February 28, 2020. The plaintiff sought to recover unpaid minimum wages and overtime wages allegedly owed to him under the FLSA. He alleged that Greenix failed to pay him an overtime rate of pay for overtime hours worked, did not pay for certain tasks performed “off the clock” and took improper deductions from his pay. In his Complaint, the plaintiff alleged that approximately 186 other pest control technicians were subject to the same wage violations as he had experienced.

On February 27, 2022, the plaintiff filed a motion for conditional certification. The plaintiff sought to issue notice to all pest control technicians employed at any of Greenix’s four facilities in Ohio during the three-year period before he filed the Complaint. In support of the motion, the plaintiff relied on his own declaration, various pleadings, and Greenix’s responses to written discovery requests. Greenix opposed the motion. Although the motion was fully briefed, the Court held the motion in abeyance pending the Sixth Circuit’s ruling in Clark.

Following the Sixth Circuit’s ruling in Clark, the Court ordered the parties in Hutt to brief the issue of whether the plaintiff could satisfy the new, stricter standard to facilitate notice under 29 U.S.C. § 216(b). In the plaintiff’s supplemental brief, he argued that he had submitted enough evidence to satisfy the new standard. The plaintiff emphasized Greenix’s prior statement in a discovery response that each of its Ohio facilities had consistent pay policies. In its supplemental brief, Greenix asserted that its statement did not mean that all putative class members perform the same job duties or work the same schedules, among other arguments.

The Court’s Decision

The Court held that the plaintiff fell short of the evidentiary showing necessary to demonstrate a “strong likelihood” that there is a group of potential plaintiff employees “similarly situated” to him under the standard in Clark.

First, the Court explained the FLSA is silent as to the procedure for a plaintiff to advance claims with others who are “similarly situated.” In the absence of statutory guidance, courts have exercised their discretion to set the procedure governing collective treatment of FLSA claims.

For this reason, the Court analyzed the two-step standard announced in Clark. The first step evaluates whether the plaintiff has shown a “strong likelihood” that other employees are similarly-situated to the plaintiff. Overcoming the first step requires a plaintiff to submit evidence that the plaintiff’s FLSA injury “resulted from a corporate-wide decision” to violate the FLSA, not human error or a rogue manager.

Under the second step, the plaintiff must prove, by a preponderance of the evidence, that the employees who have opted to join the lawsuit are similarly situated to the plaintiff. If the plaintiff makes that showing, the opt-in plaintiffs become actual parties to the lawsuit and proceed with the named plaintiff to trial. As the Court reasoned, the Sixth Circuit’s opinion in Clark left the second step of the analysis relatively unchanged from the prior standard.

In assessing the plaintiff’s status as similarly-situated to others, the Court opined that no single factor is determinative. Among the relevant factors are whether the named plaintiff performed the same tasks and was subject to the same policies as the potential other plaintiffs, whether the potential other plaintiffs are subject to individualized defenses, and whether other potential plaintiffs have submitted affidavits.

In applying the Clark standard, the Court found insufficient the plaintiff’s reliance on hearsay statements in his own declaration, including what co-workers allegedly told him, to argue that Greenix had company-wide pay practices. Further, the plaintiff put forth no evidence of the company’s actual compensation plan. The Court explained that even if the plaintiff proved that Greenix has a company-wide compensation plan, that fact alone would not prove company-wide FLSA violations. In essence, the Clark standard required the plaintiff to show more.

Therefore, the Court denied the plaintiff’s motion seeking court-supervised notice to potential plaintiffs pursuant to 29 U.S.C. § 216(b) of the FLSA.

Implications For Employers

The ruling in Hutt has persuasive value to other district courts in Ohio, Tennessee, Michigan and Kentucky. Gone are the days of plaintiffs in the Sixth Circuit winning the right to send notice to dozens, hundreds, or even thousands of other employees on hearsay evidence alone. The Court roundly rejected the notion that a sole declaration from the named plaintiff is enough to obtain court-sanctioned notice. It remains to be seen how other courts will apply Hutt to a different set of facts.

Given the emerging trend among federal courts across the country in rejecting the lenient two-step standard, the decision in Hutt is an indicator of a major shift in leverage from plaintiffs to defendants in FLSA litigation.

July 14, 2023July 13, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 21: State Court Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and special counsel Brandon Spurlock with their analysis of key trends and notable rulings throughout class action litigation at the state court level.

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 special counsel Brandon Spurlock. Thank you, Brandon, for being on the podcast.

Brandon Spurlock: Great to be here, Jen.

Jen: So today we wanted to discuss trends and important developments in state court class action litigation, since the decision on where to file a class action will always be an important strategic decision for plaintiffs’ lawyers – especially those seeking to maximize their odds for class certification, as well as seeking larger verdicts, settlements, and things of that nature. Whether it is between state or federal court, or deciding in which particular to state to file, many factors impact this decision. Brandon, can you tell our listeners what some of those factors are?

Brandon: Sure. Although almost all state law procedural requirements for class certifications mirror Rule 23 of the Federal Rules, the plaintiffs’ bar often perceives state courts as having a more positive predisposition toward their clients’ interests, particularly where putative class members have connections to the state or when the events at issue occurred in the state where the action is filed. But beyond forum shopping between state and federal court, the plaintiff’s bar also seeks out individual states that are believed to be “plaintiff friendly” such as California, Georgia, Florida, Illinois, Louisiana, Massachusetts, Missouri, to name some others – these are all among the leading states where plaintiffs’ lawyers file a volume of class actions. These courts are thought to have more relaxed procedural rules related to discovery, consolidation, and class certification, a lower bar for evidentiary standards, higher than average jury awards, among other considerations. All of this incentivizes forum-shopping related to state class actions.

Jen: In reviewing key state court class action decisions and analyzing class certification rulings, it seems that many state courts tend to apply a fairly typical Rule 23-like analysis, similar to the analysis we would see in federal court, although many state decisions also focus on the underlying claims at issue to address whether a class certification is appropriate and whether the matter should proceed on a class basis. Nevertheless, that said, understanding how state courts apply those respective Rule 23 analyses under the applicable state procedural law is really crucial I think toward effectively navigating those complexities and developing effective defense strategies in these types of lawsuits.

Brandon: Jen, I think that’s absolutely right. Another important topic for companies is state private attorney general laws. In particular, California’s controversial Private Attorneys General Act that we all know as PAGA. PAGA authorizes workers to file lawsuits to recover civil penalties on behalf of themselves, and other employees in the State of California for state labor code violations. Although California is the only state to have enacted this type of law so far, several other states are considering their own similar private attorney general laws, including New York, Washington, Oregon, New Jersey, and Connecticut. So it will be crucial to monitor state legislation on this topic given the impact such laws will have on class litigation strategy.

Jen: Absolutely – and we will continue to monitor all those developments and getting them out to listeners of the podcast as well as readers of the blog as they occur. Brandon, were there any key rulings from your perspective in specific state courts in 2022, going into 2023?

Brandon: Well, California being the epicenter of class actions filed in state courts – it’s a state that has more class action litigation than any other state. So needless to say we got some important rulings out of California. While all varieties of class-wide cases are filed in California, a high majority are consumer fraud and employment-related. Even when an employer’s written, formal policies appear facially neutral and compliant, employees may successfully seek class certification for demonstrating common issues where an employer’s practices and protocols allegedly violate law. So you asked about some key cases – one, in Cruz, et al. v. Health, the plaintiff filed a class action against his former employer for wage and hour violations stemming from defendant allegedly utilizing a time rounding policy that systemically resulted in uncompensated hours worked, as well as for failing to provide the plaintiff and other hourly employees with full, uninterrupted meal periods in compliance with the California Labor Code. So in this case, the plaintiff also brought derivative claims for inaccurate wage statements, failing to pay all wages due, and violations of California Business & Professions Code, as well as penalties under the PAGA. The court granted the plaintiff’s motion to certify his rounding-time, meal period, and derivative claims. In certifying the class for the “rounding policy” claim, the court reasoned that the plaintiff’s theory of liability – that the defendant’s policy of rounding employees’ time punches to the nearest quarter-hour increment resulted in employees’ systematic under compensation – presented common questions of law and fact that predominated over the individualized issues that might arise, including the calculation of damages to which each putative class member might be entitled. So, with respect to the meal period claims, the court agreed that while the defendant’s formal, written meal break policy may comport with California law, this fact alone did not preclude class certification. The plaintiff presented evidence of numerous meal break violations, including missed, short, and late employee breaks, which the court found sufficient to establish a rebuttable presumption that defendant had a “de facto policy” that failed to provide putative class members with compliant meal periods, and constituted a predominant question appropriately resolved on a class-wide basis. Having determined the rounding time and meal period claims appropriate for class certification, the court also certified the plaintiff’s derivative claims, concluding that they too involved common questions of law or fact also suitable for certification.

Jen: Thanks Brandon. Another key example of a PAGA ruling from last year occurred in a case called Estrada, et al. v. Royalty Carpet Mills, Inc. In that case were a group of hourly workers at the defendants’ carpet manufacturing facilities, brought claims primarily based on purported meal and rest break violations. Following a bench trial and an appeal, the California court of appeal addressed several issues, including: (i) the defendants’ policy of requiring workers to stay on premises during paid meal breaks; and (ii) the trial court striking of the PAGA claims based on manageability concerns. Regarding the meal break question, the defendant in that case had a policy of paying workers their regular wages during meal periods, but did not give them premium pay for having to remain on the premises. The defendants argued the on-premises meal policy was lawful because the employees were relieved of duty and paid wages during the meal period. The court of appeal ultimately disagreed with that argument – it opined that employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please, and if an employer does not provide an employee with a compliant meal period, then the employer had to provide the employee with premium pay for the violation. Turning to the trial court’s dismissal of the representative PAGA meal period claim due to unmanageability, which is probably an even more crucial part of the decision, the court of appeal addressed the question of whether the PAGA has a manageability requirement similar to class actions. The court of appeal stated that a representative action under the PAGA is not a class action, but rather an administrative law enforcement action where the legislative purpose is to augment the limited enforcement capacity or capability of the Labor Workforce Development Agency (“LWDA”) by empowering employees to enforce the Labor Code as representatives of the Agency. The court reasoned that allowing courts to dismiss PAGA claims based on manageability concerns would actually interfere with the PAGA’s express design as a law enforcement mechanism, and create this extra hurdle that does not apply, and should not apply, to LWDA enforcement actions.

Brandon: Jen that was fantastic and insightful analysis. Florida was a state where the courts were disinclined to allow plaintiffs to proceed on a class-wide basis on claims related to the COVID-19 pandemic. There have a been a lot of class actions on the court docket that are related the pandemic. In University Of Florida Board Of Trustees v. Rojas the plaintiff, a graduate student, filed a class action asserting claims for breach of contract and unjust enrichment related to paid fees not refunded following the campus shut-down due to COVID-19. To support the breach of contract claim, the plaintiff filed a copy of the University’s financial liability agreement; an estimate of tuition and fees for the 2019-2020 academic year; and the plaintiff’s tuition statement showing he paid his tuition and fees for the Spring 2020 semester. The complaint also cited to various university webpages that contained general statements or descriptions of various campus amenities. The plaintiff, on behalf of a class of other students, asserted that these documents, in the aggregate, made up an express written contract between him and the university for specific on-campus resources and services during the relevant time period. However, the trial court dismissed the unjust enrichment claim, but allowed the contract claim to move forward. The Florida court of appeal then disagreed. It ruled that the “hodge-podge” of documents did not constitute an express written contract sufficient to overcome sovereign immunity enjoyed by the university. The court of appeal further found that the liability agreement merely conditioned a student’s right to enroll upon the agreement to pay tuition and fees, and although the agreement mentioned the provision of “educational services,” that general phrase fell far short of conveying an express promise by the university to provide in-person or on-campus services to a student at any specific time. For these reasons, the court of appeal reversed and remanded to the trial court for entry of judgment in favor of the university on the basis that sovereign immunity barred the action.

Jen: The last one I wanted to mention, because it really was a novel situation, was a ruling from Massachusetts that addressed the issue when the named plaintiff dies before class certification. The case is Kingara, et al. v. Secure Home Health Care Inc. In that case the plaintiff, a licensed practical nurse, filed suit against the defendant, an in-home care provider for the elderly, alleging causes of action arising under the state wage act, minimum fair wage law, and overtime law. The plaintiff died before the plaintiff’s counsel had filed a motion for class certification. Thereafter, the plaintiff’s counsel filed a motion to send notice to the putative class informing them of the plaintiff’s death and inviting them to join the action. The plaintiff’s counsel also sought an order requiring the defendant to identify the putative class members’ names and addresses and extend the tracking order deadlines to allow substitution of another putative class representative. The trial court granted the motions, and the defendant appealed. The Massachusetts Supreme Judicial Court explained that, upon a client’s death, the lawyer’s authority to act for the client terminates. So because the plaintiff had not filed a motion for class certification before he died, the plaintiff’s counsel could not take further action absent a motion by the deceased plaintiff’s legal representative. In addition, although counsel for a certified class has a continuing obligation to each class member – again here, there was not a certified class – the appeals court concluded that counsel does not have any authority to act for a putative class when no motion for class certification was pending, counsel had not located the deceased client’s representative, and counsel had not identified any other putative class member to serve as a putative class representative.

Brandon: Very interesting ruling Jen. It’s not often your plaintiff in the class action is going to pass away during the litigation, but definitely a good one for corporate counsel to note in the event that situation happens to them in the future.

Jen: Thanks so much, Brandon. Great insights and analysis Brandon. I know that these are only some of the cases that had generated some really interesting rulings in the myriad types of class action litigation pending across the country. 2023 is sure to give us some exciting rulings as well that we will look forward to blogging about and presenting on in future installations of the Class Action Weekly Wire. Thanks everyone for joining us today – great to have you here.