California Employer’s Good Faith Defense to Wage Statement Penalties Recognized by State’s Supreme Court

On May 6, 2024, the California Supreme Court issued its decision in Naranjo v. Spectrum Security Services, Inc., Case No. S279397, handing California employers a significant victory. The court unanimously held that a good faith dispute defense applies to claims for penalties or damages for inaccurate wage statements under California Labor Code Section 226(e). The Naranjo decision, in a rare win for California employers, resolves a split in authority in the California Courts of Appeal and enables employers who act in good faith to defend against inaccurate wage statement penalties under Section 226(e). Note: Duane Morris served as appellate counsel for Spectrum in this case.

Read the full Alert on the Duane Morris LLP website.

Class Action Issues In 2024 – Report From The Beard Group Class Action Conference In New York City

By Gerald L. Maatman, Jr., Jennifer A. Riley, Greg Slotnick, and Maria Caceres-Boneau

Duane Morris Takeaways: On May 6, 2024, the Beard Group sponsored the Class Action Money & Ethics Conference in New York City. The agenda is here. During the conference, over 150 attendees discussed key issues impacting class action litigation in 2024. We were privileged to chair the Conference and present the keynote address on class action litigation trends for the past year and what 2024 has in store for Corporate America. The discussion at the program underscores the cutting-edge issues facing companies in this area of law.

Key Trends For The Past Year

In our keynote address, we discussed the top ten developments in the class action litigation space. The leading trends center on the new era of heightened risks and elevated exposures that pivot on record-breaking settlement numbers; the high conversion numbers for class certification motions into certified classes, and the rise in privacy and data breach class actions.

On the settlement front, 2022 saw $66 billion in total proceeds when measured by the top ten settlements in all areas of law. In 2023, that figure totaled $51 billion, for a combined total of $117 billion over the past 24 months.

The pace of class action settlements thus far in 2024 shows no signs of slowing down. In the first four months of the year, three settlements of over $1 billion are in the books and the total (just for the top five settlements in each area) are at $19.8 billion.

In terms of class certification motions, the Plaintiffs bar successfully secured certification in 74% of cases over the past year. Those figures ranged from nearly 97% in securities fraud lawsuits to 14% in data breach cases. That said, the plaintiffs’ bar has proven its track record to convert class action lawsuit filings in to certified classes at a high rate.

In the privacy and data breach space, such claims became ubiquitous in 2023, with a virtual explosion in those types of lawsuits. While certification rates were quite low in data breach situations, the plaintiffs’ bar secured certification in privacy class actions at a higher rate.

Data Breach Panel

An interesting panel discussion – consisting primarily of plaintiffs’ lawyers – ensued after the keynote address on wiretapping class claims under the Video Privacy Protection Act and data privacy class action litigation. They reflected on the patchwork quilt of rulings in these areas over the past year and the low certification rates due to problems in surmounting standing issues based on lack of injury-in-fact showings.

The panelists predicted a subtle shift in privacy and data breach lawsuits to effectuate a “work around” to these impediments. Multiple plaintiffs’ counsel predicted more reliance on state law claims and litigation of class-wide claims in state court.

Panel On Use Of Qualified Settlement Funds

A panel of plaintiffs and defense lawyers addressed best practices in establishing and working on class-wide settlement with qualified settlement funds (QSF).

Several settlement administrators joined the panel and discussed new challenges in handling QSF funds posed by fraud (both by claimants and cyber criminals), as well as better interest rates that result in generation of more money for distribution.

Panel On Class Notice Strategies

The next panel focused on trends for class notice in 2024 and how artificial intelligence is now mainstream in terms of its use to facilitate the notice send to class members. The panelists expressed how these practices are quite innovative and rapidly evolving. Notice through social media and/or texts or email also is considerable cheaper than U.S. Mail, which is driving down settlement administration costs.

The challenge, however, is to prevent fraudulent claims from individuals seeking a share of the settlement pot. As to take rates, social media advertising is driving the rates upward, but the rates in data breach cases remain low at 2% to 5% (as compared to other types of settlements).- Class member demographics also impact the take rate, as older individuals are apt to view social media notice as “junk mail” or a scam. Conversely, staying ahead of fraudsters has created an imperative for settlement administrators (e.g., where settlement shares are claimed by an IP address of a bot).

Panel On Fraud In The Class Action Process

Another panel discussed the rise of fraudsters in the class action space. Some involve “deep fakes” of persons who seek to assert false claims as named plaintiffs or class members. Others involve cyber-criminals who infiltrate the settlement administration process and seek class settlement shares on a false basis.

Judicial responses have run the gamut from shutting down the settlement administration process and rebooting it with enhanced security measures to referrals to law enforcement personnel to combat fraud. Panelists predicted that judges are apt to ratchet up the scrutiny of final settlement approval of class actions, and possibly promote direct mail notice over digital communications.

ESG Class Action Litigation Panel

Class actions over environmental. social, and governance issues went mainstream in the past year. Panelists tracking these cases predicted that ESG class actions will continue to increase, especially as the plaintiffs’ bar refines their theories of recovery and begin to monetize their claims.

in particular, securities fraud class actions over DEI commitments are increasing as a result of the U.S. Supreme Court’s recent decision in Students For Fair Admissions, Inc., et al. v. President And Fellows Of Harvard College, Case No. 20-1199 (U.S. June 29, 2023). Both plaintiffs’ lawyers and defense counsel anticipate more litigation in this space.

Panel On “Lead Generation” Techniques In Mass Torts & Class Actions

The final panel explored new strategies utilized by the plaintiffs’ bar in reaching out to potential litigants in mass tort and class action litigation situations. The numbers behind the advertising – on television, social media, and radio – top $1.1 billion on an annual basis. On average, plaintiffs’ law firms run over 45,000 advertisements per day across the country with mass tort cases constituting the majority of ad placements.

The panelists opined that nuclear verdicts, large class action settlements, and social inflations are the main factors fueling the advertising. They concluded that these forms of advertising are a staple of the litigation system and not going away anytime soon.

Implications For Companies

Class action litigation is a fact of life for corporations operating in the United States. Today’s conference underscored that change is inevitable, and class actions litigation is no exception.

The Class Action Weekly Wire – Episode 53: 2024 Preview: EEOC Litigation And Strategy


Duane Morris Takeaway:
This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik with their discussion of our upcoming webinar, the Duane Morris Mid-Year Review of EEOC Litigation and Strategy. Reserve your virtual seat for the program here, and check out the 2024 edition of the Duane Morris EEOC Litigation Review here.

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

Episode Transcript

Jerry Maatman: Welcome to all of our listeners. Thank you for being here for our weekly podcast, the Class Action Weekly Wire. I’m Jerry Maatman, partner at Duane Morris, and joining me today are my colleagues and fellow partners, Jen Riley and Alex Karasik. Thanks so much for being on the podcast today.

Jennifer Riley: Thank you, Jerry, happy to be part of the podcast.

Alex Karasik: Thanks, Jerry. Glad to be here.

Jerry: Today we’re very excited, we have a great message about an upcoming webinar, the Duane Morris Mid-Year Review of the EEOC Litigation and Strategy. This is a must-see and must-attend webinar, that in essence gives a mid-year report card on what the EEOC is doing in the courthouse. And the hosts will be myself, Jen, and Alex, and we wanted to personally invite each of you, our listeners and our readers, to sign up and attend the event, which, of course, is for free. Jen, could you talk a little bit for our listeners about the contents of this year’s webinar?

Jen: Sure, Jerry. Essentially, this is a quick 30 min panel discussion, where the three of us will do two primary things. First, we’ll analyze the EEOC’s latest strategic priorities. And second, we will analyze and review the lawsuit filings that we’ve seen so far during the first half of the Commission’s fiscal year 2024. We will bring that analysis to you in a half hour segment.

Jerry: Thanks. This is a great virtual program that’s perfect for human resource professionals, business leaders, and corporate counsel, and is designed to provide insights, in essence, inside baseball news, regarding the EEOC’s latest enforcement initiatives and strategies. And it’s designed to keep businesses off the radar of the EEOC. Alex, what are some of the details of the webinar that our listener should know?

Alex: The webinar is scheduled for Monday, May 13 at 2 pm, and it runs from 2 pm to 2:30 pm Central Time. We will provide a sign up link in the episode transcript on the class action defense blog. This webinar is a great information-packed 30 minutes – we understand a lot of our corporate counsel, HR professionals, and business leaders, that you just mentioned, Jerry, have busy schedules. So we’re going to do our best to pack this into a 30 minute webinar, and then we’ll go from there and to give insights into the EEOC’s activities throughout the first half of the fiscal year.

Jerry: Well, the past is prologue. Last year we had over a thousand attendees, from the United States, Europe, and Asia, so we hope all the listeners can tune in this year.

Jen: We also want to remind listeners that we recently published a primer on EEOC litigation, called the EEOC Litigation Review – 2024. Complying with workplace anti-discrimination laws is important for companies looking to stay out of the EEOC’s crosshairs. The review is a great resource for corporate counsel and human resources professionals alike. It is available on the class action defense blog in e-book format.

Alex: We were also fortunate enough to discuss the EEOC strategic priorities with EEOC Commissioner Keith Sonderling at our Duane Morris Class Action Review book launch in February 2024 – for anyone interested in watching that discussion, it is also available on our blog.

Jerry: Thanks, Alex, and thanks, Jen. Certainly looking forward to the upcoming webinar on the EEOC in a few weeks, and, as always, we will keep our blog readers and listeners fully updated on these important announcements.

Alex: Thanks, Jerry. We look forward to seeing everyone soon.

Jen: Thanks for having me, Jerry, and, thanks to all of our listeners.

Jerry: Have a great day.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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