September 26, 2024 – Class Action Defense

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Sean McConnell with their analysis of class action litigation in the antitrust space involving student-athletes and their Name, Image, Likeness (“NIL”) claims.

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Episode Transcript

Jerry Maatman: Thank you, loyal blog readers and listeners, for joining us for this episode of the Class Action Weekly Wire. It’s my privilege and honor to introduce Sean McConnell, who chairs Duane Morris’ antitrust group, who’s joining us today to talk about all things antitrust in the class action space. Welcome, Sean.

Sean McConnell: Great to be here. Thanks for having me, Jerry.

Jerry: Today we wanted to discuss a newsworthy lawsuit, the filing of which has been reported wide and far. A federal court lawsuit filed against the NCAA and various universities called Robinson v. NCAA. What should our listeners and readers know about that case? What does it mean?

Sean: Thanks, Jerry. Well, we’ve talked several times about the name, image, and likeness, or NIL, antitrust class actions that have been filed against the National Collegiate Athletic Association, or NC2A, and various athletic conferences. Arguing that past prohibitions by the NCAA preventing athletes from being compensated for their name, image, and likeness and various issues have arisen related to those claims leading to litigation. And this Robinson case is one of the latest in those lines of cases. This case was filed by former University of Michigan football players, who were NCAA student-athletes prior to June 15, 2016 on similar grounds to the House NCAA case. But the House case, that class only went back to 2016. So this this new Robinson case is for student-athletes that played sports for NC2A colleges before 2016, on grounds of a continuing violation theory basically that the settlement proceeds should extend back beyond 2016 and cover their prohibition on compensation dating back before that time, arguing that they should have been compensated for their name, image, and likeness, as well as the plaintiffs in the House case.

Jerry: These types of NIL cases seem to be at the forefront of antitrust class action litigation involving universities. And it seemed like when the NCAA lifted the restrictions on compensation for student-athletes, it opened, so to speak, the floodgates of litigation. Is that what you’re seeing in terms of the poll side of the courthouse?

Sean: That’s exactly right, Jerry. Now that student-athletes are able to be compensated for their name, image, and likeness – which athletes were not able to do so, for you know, over a hundred years – we’re now seeing, you know, several antitrust class actions being filed against member institutions of the NCAA and the NCAA itself for money that they believe they should have been able to earn, whether it’s from television revenue sharing, from their name, image, and likeness being sold on jerseys and other memorabilia that was sold by the schools and by other third parties. So that is certainly the current trend.

Jerry: There’s certainly a lot of money at issue. If you become a little more granular and drill down into the theories of recovery in the Robinson lawsuit that has just been filed, what is it exactly that the plaintiffs are trying to recover?

Sean: Sure. So the theory of the case in Robinson is that the NCAA, its member institutions, and then, you know, networks such as the Big 10 Network that profited off of the name, image, and likeness of student-athletes by selling television rights and broadcasting games in which those players played – that much like players in professional leagues are compensated through revenue-sharing programs from television rights – that the plaintiffs in the Robinson case believe that they are entitled to a revenue share from the use of their name, image, and likeness, from television distribution, as well as from various products sold by those institutions.

Jerry: Well, thanks for that update and that analysis. I’m sure we’ll be circling back to you when the litigation proceeds to the class action certification stage – obviously, the Holy Grail in any class action that the plaintiffs are seeking. Also wanted to talk a little bit about the recent ruling a few weeks ago, where a federal district court judge declined to approve a class action settlement on antitrust theories against the NCAA to the tune of a $2.78 billion class-wide settlement. Tell our readers and listeners a little bit about how that came about?

Sean: Sure. So that’s the House antitrust case that I that I mentioned earlier, which covers student athletes from 2016 to the present. And as you as you referenced Jerry, I mean the settlement amount was quite large at first blush. I mean the notion that student-athletes would now be entitled to, you know, almost $3 billion in compensation from member institutions and conferences. But the problem with the settlement, as some objectors raised, and as the court took note of, was that apportioning different amounts of the revenue share by conference by school still amounted to seemingly price-fixing, because when you’re setting the limits on how much revenue can be shared with different student athletes, even as part of a settlement, those revenue sharing programs and limits on what certain conferences or certain schools could do from a revenue perspective, how different collectives organized by school could compensate student athletes, even as part of the settlement still amounted to, you know, apparently price-fixing, and that’s what the court was concerned with those limits, and whether that still constituted a Sherman Act violation. And so the judge told the parties to go back to the drawing board and try to work out a fix that was a little bit you know more in line with the antitrust laws.

Jerry: That’s so interesting, and certainly a blockbuster settlement in 2024. And one would think that the parties are going to reboot, do a 2.0 settlement, so to speak, and put that before the court – apt to be one of the largest settlements that we report on this coming January, when we publish the Duane Morris Class Action Review, as well as the mini-book on antitrust class action litigation that you’re an author of. Well, thank you so much for Sean, for joining us and lending your thought leadership and expertise. It’s been great to speak with you.

Sean: Thank you, Jerry. It’s been great to be here again.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory S. Slotnick

Duane Morris Takeaways: On September 24, 2024,in Local 2507 et al. v. City of New York, No. 22-CV-10336, (S.D.N.Y. Sep. 24, 2024), Judge Analisa Torres of the U.S. District Court for the Southern District of New York granted class certification in a suit accusing the City of New York (the “City”) and the Fire Department of the City of New York (“FDNY”) of discriminatory pay practices, suppression of wages, and denial of employment opportunities based on sex, gender, and/or race, in violation of: (i) Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-1 et seq. (“Title VII”); (ii) the New York State Human Rights Law, New York Executive Law § 290 et seq.; and (iii) the New York City Human Rights Law, N.Y.C. Admin. Code § 8-101 et seq. The Court certified a class of all persons employed by the City in the Emergency Medical Services (“EMS”) Bureau of the FDNY working as an Emergency Medical Technician, Paramedic, Lieutenant, Captain, Deputy Chief, and Division Commander/Chief at any time from December 2019 through present (the “Class”), as well as a sub-class of workers who identify as non-white, and another sub-class of employees who identify as female (the “Sub-classes”). Plaintiffs – current and former members of the FDNY’s EMS Bureau and their representative unions – generally alleged that the City discriminates in its pay practices against members of the Class and Sub-classes (which they claim are much more demographically diverse) in favor of its mostly white, male Fire Bureau employees.

In her order certifying the Class and Subclasses, Judge Torres explained that the plaintiffs satisfied their burden to meet the numerosity, commonality, typicality, and adequacy requirements of Rule 23, relying heavily on plaintiffs’ expert testimony and statistical analyses filed in support of their motion. The Court was unpersuaded by the City’s arguments that variations in job title, compensation, tenure, and supervisory responsibility should preclude class certification, and stated that it would not engage in “free-ranging merits inquiries” at this stage. Instead, the Court held that plaintiffs had offered significant proof that the City operated under a general policy of discrimination, including substantial (and sometimes unrebutted) evidence of common policies disparately impacting members of the Class and Sub-classes, and statistics confirming that EMS First Responders were more diverse by race and sex/gender, and paid significantly less, than Fire First Responders.

Case Background

Since 1996, the FDNY has functioned as an integrated department with two bureaus of first responders, including: (1) EMS (employing emergency medical technicians and paramedics, as well as their supervisors and commanding officers); and (2) Fire (employing firefighters, as well as their supervisors and commanding officers). Id. at 2. Plaintiffs claim that the core of the work of both EMS and Fire First Responders is the same, with their jobs substantially equal in required skill, effort, responsibility, and working conditions. Id. Plaintiffs contended that the City pays EMS First Responders substantially lower salaries than it pays Fire First Responders, and that Fire First Responders also receive more generous overtime, pension, disability, medical, dental, line of duty death, and educational benefits compared to EMS First Responders. Id. Plaintiffs also asserted that these differences in compensation result from the “pronounced difference in demographics” between EMS and Fire First Responders – specifically alleging that while EMS First Responders are “at least 55% non-white and approximately 24% female,” only “14% of Fire First Responders are non-white” and “less than 1%” are female.” Id. at 2-3.

The Court noted had previously denied a motion to dismiss the Complaint by the City, finding that plaintiffs’ claims were timely filed and that plaintiffs sufficiently pleaded their discrimination claims against the City. Id. at 3.

The Court’s Decision

The Court first set forth the applicable legal standard for class certification, including confirmation that the proposed Class must meet each of the numerosity, commonality, typicality, and adequacy requirements of Rule 23(a) by a preponderance of the evidence. Id. at 4.

The Court addressed the numerosity and ascertainability standards of Rule 23 together, concisely confirming that plaintiffs met their burden of a proposed class exceeding 40 members. Id. Moreover, the City did not contest that plaintiffs satisfied this burden, as plaintiffs asserted that the Class included approximately 4,500 to 5,000 members, with each Sub-class including well over 1,000 members, through expert analysis of pre-2023 City employment data. Id. at 5. The City also did not contest that the members of the Class and Sub-classes were readily identifiable and ascertainable. Id.

Most of the Court’s analysis focused on the commonality, predominance, and typicality requirements of Rule 23 class certification. The Court set forth the commonality standard, requiring that the action present at least one question capable of generating a “common answer apt to drive the resolution of the litigation,” but which does not mandate that the claims need be identical amongst the plaintiffs. Id. at 5-6. The Opinion confirmed that the commonality standard is satisfied where plaintiffs identify a unifying thread among class members’ claims warranting class treatment, and where plaintiffs show that their alleged injuries “derive from a unitary course of conduct by a single system.” Id. at 6. Finally, the Court confirmed that a proposed class satisfied the predominance standards “if resolution of some of the legal or factual questions that qualify each class member’s case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof,” even if other matters within a case must be tried separately (i.e., damages). Id. The Court noted that typicality requires each member’s claim arise from the same course of events, with similar legal arguments made to prove defendant’s liability. Id. at 7.

Judge Torres next examined plaintiffs’ arguments in support of class certification. Plaintiffs contended that they alleged a “unitary” course of conduct in the form of three “centralized” discriminatory policies and practices applying to all Class and Sub-class members equally, claiming the City: (1) failed to assess whether FDNY’s Fire and EMS First Responders are similarly situated for purposes of compensation; (2) as a result, failed to ensure that the occupational segregation of EMS and Fire First Responders does not disparately impact the compensation of protected groups; and (3) took affirmative steps to suppress the compensation of the more diverse EMS First Responder workforce by refusing to grant EMS personnel the “uniformed” pattern increase in collective bargaining. Id. In response, the City argued that the Class and Sub-classes fail to account for differences in job duties and responsibilities amongst EMS First Responders, including the fact that some respond to calls in the field while others work in dispatch or training and instruction, and different field training and tasks, such as some working as rescue paramedics, with others working advanced services. Id. at 7-8. The City also pointed out differences in that some EMS First Responders receive percentage increases in salary to account for additional training and responsibility, and that these variances, plus dissimilar rank and tenure, undermine plaintiffs’ commonality and typicality arguments. Id. at 8.

The Court, however, was not persuaded by the City’s claimed distinctions based on rank and job responsibility, citing to plaintiffs’ arguments that the City took action or failed to act “in a centralized manner and on a Bureau-wide scale, uniformly suppressing the compensation of EMS First Responders regardless of rank, tenure, title, training, or assignment.” Id. The Court also held that questions of whether the alleged policies exist and violate federal and state law are common to all Class members, regardless of potential differences in ultimate damages owed amongst Class members. Id. The Court further ruled that for the same reason, the lead plaintiffs satisfied typicality because they all alleged they are paid less than their Fire counterparts due to the same policies, regardless of specific position, supervisory duties, and whether field-assigned or non-field-assigned. Id. at 8-9.

As for the City’s claim that plaintiffs failed to show EMS and Fire First Responders were adequate comparators for Title VII purposes, the Court opined that the City’s argument sought to turn the class certification motion into a summary judgment motion, and that Rule 23 “does not grant the court a license to engage in free-ranging merits inquiries.” Id. at 9. Moreover, through experts, Judge Torres found that plaintiffs offered statistical evidence in support of their disparate impact claims of racial, sex/gender, and compensation disparities among EMS and Fire First Responders, which the City did not dispute. The Court held that at least one of the policies plaintiffs sought to substantiate—the City’s refusal to grant EMS First Responders the uniformed pattern increase in collective bargaining—was not disputed by the City’s 30(b)(6) deposition witnesses. Id. at 9-10. Plaintiffs further provided abundant statistical evidence and expert analysis “of a kind and degree sufficient to reveal a causal relationship” between the challenged policies and the observed racial, gender, and compensation disparities. Id. at 10.

In summary, the Court found that plaintiffs offered significant proof that the City has “operated under a general policy of discrimination” through: (i) substantial (and in some cases unrebutted) evidence of common policies disparately impacting the Class and Sub-classes; (ii) statistical analyses showing EMS First Responders are more diverse by race and sex/gender than Fire, and are paid significantly less; and (iii) expert analyses showing EMS and Fire First Responders perform similar jobs and no job-relevant rationale explaining the difference in compensation. Id. at 11. The Court also very briefly confirmed that in this case, a class action is superior to individual actions, as plaintiffs alleged that individual Class members were relying on membership in the Class to vindicate their rights – another point not disputed by the City. Finally, the Court found that the lead plaintiffs were adequate representatives, since their interests aligned with those of the Class and Subclasses, and the City did not contest this position.

Implications For Employers

The Court’s grant of class certification for the Class and Sub-classes against the City and the FDNY serves as an important reminder that employers should not necessarily count on defeating class-wide claims by pointing to different job titles and roles, salary levels, or even departments. While this case concerns a very large employer and workforce, the Court’s opinion provides businesses with a roadmap of how courts in the Second Circuit tend to address class certification motions – particularly where plaintiffs rely heavily on expert testimony and statistical analyses to support their allegations.

Perhaps most importantly, companies operating in New York and within the Second Circuit must remain alert and monitor potential compensation variations amongst employees performing jobs that could be considered “similar” in nature. If they find any such variations, employers should ensure that they can pinpoint valid job-based justifications for the differences, particularly where one section of the workforce may be more demographically diverse than another. This is especially so when businesses are applying common policies and practices to all such workers, since courts will address common questions of law and fact for all proposed class members, rather than engage in the underlying factual merits at class certification.

Employers should heed this Opinion as a lesson on how courts evaluate class-wide claims and certification motions even where there may be concrete differences in job title, compensation, rank, the field or non-field nature of work, and the presence or absence of supervisory responsibilities. Moreover, although situation-dependent, businesses should always be weary of not contesting allegations made by plaintiffs and their experts in all motions filed with the court, or else risk surrendering possible defenses the court would otherwise consider!