Month: January 2025

By Gerald L. Maatman, Jr.

Duane Morris Takeaway: Government enforcement litigation is similar in many respects to class action litigation. In lawsuits brought by the U.S. Equal Employment Opportunity Commission (EEOC), as well as the U.S. Department of Labor (DOL), government enforcement claims typically involve significant monetary exposure, numerous claimants, and complex procedures. These types of lawsuits most often pose reputational risks to companies.

Watch the video below to hear all about this trend with partner and DMCAR editor Jerry Maatman:

As the White House shifts from blue back to red, the incoming Trump Administration has promised less government oversight of business and less regulation, thereby signaling less government enforcement litigation. Change, therefore, is inevitable.

Although agencies like the EEOC will retain their democratic majorities until 2026, President Trump ran on a platform that runs counter to many of the “emerging issues” on the EEOC’s current priority list, signaling a future realignment if not an “about face” on the horizon. Consistent with the precedent established by the Biden Administration, President Trump will appoint new general counsel of the EEOC as well as the NLRB as the new administration settles into place, thus having an immediate influence on the enforcement trajectory of the agencies.

Historically, the EEOC and DOL are among the most aggressive federal agencies in terms of prosecuting government enforcement litigation. In the face of change and a reduction in such enforcement litigation, companies can expect the private plaintiffs’ bar “to fill the litigation void.”

Litigation And Settlement Trends

In FY 2024 (October 1, 2023, to September 30, 2024), the EEOC’s litigation enforcement activity showed a notable decrease in filings in a year of transition for America.

Although the total number of lawsuits filed by the EEOC decreased from 144 in 2023 to 110 in FY 2024, the EEOC’s targeted efforts involve a bevy of September filings concerning discrimination allegations against employers across myriad industries.

Each year, the EEOC’s fiscal year ends on September 30, and the final sprint for EEOC-initiated litigation in September 2024 aligned with prior “last-month” enforcement efforts.

This past year, 67 lawsuits were filed in September, equal to the 67 filed in September of FY 2023.

As with other fiscal years, the EEOC’s filing patterns remained consistent through June 2024, with a slight increase in July 2024, another slight increase in August 2024, and significant jump in September 2024.

Of the 110 total filings this year, more than half – 67 total – were filed in September. The following chart shows the EEOC’s filing pattern over FY 2024:

Comparing these fiscal filings in FY 2024 to previous years, a significant decrease exists from FY 2023 (144 lawsuits), which was an outlier in terms of EEOC litigation in the post-COVID era. The following graph shows the EEOC’s year-over-year fiscal year filings beginning in FY 2017 through FY 2024:

Lawsuit Filings Based On EEOC District Office

In addition to tracking the total number of filings, the litigation filing patterns of the EEOC’s 15 district offices are telling. Some districts tend to be more aggressive than others, and some focus on different case filing priorities. The following chart shows the number of lawsuit filings by EEOC district offices over the course of FY 2024.

In FY 2024, Philadelphia had the most filings with 14, followed by Atlanta, Chicago, and Indianapolis with 11 each, followed by Phoenix with 9 filings, Charlotte, Houston, and New York with 7 each, and Birmingham, Miami, and San Francisco with 6 filings each. Dallas, Memphis, and St. Louis had 5 filings. Notably, Los Angeles had no filings.

While filings across the board were down, the most noticeable trend of FY 2024 was the filing jump in Atlanta (11 lawsuits), compared to FY 2023 where Atlanta had 9 fillings.

In contrast, Philadelphia had a significant decrease in filings (14 lawsuits), compared to FY 2023 where Philadelphia amassed 19 filings.

Like FY 2023, Chicago and Indianapolis remained steady near the top of the list again with 11 filings each, down from the 13 filings both districts launched in FY 2023.

On the opposite end of the spectrum, New York filings (7 lawsuits) fell slightly compared to its 10 filings in FY 2023, and Los Angeles (0 lawsuits) significantly fell compared to its 10 filings in FY 2023.

Although filing trends were down for all Districts, the 110 total filings demonstrate the EEOC maintained its litigation strength, both at the national and regional level.

Lawsuit Filings Based On Type Of Discrimination

In terms of the statutes and theories of discrimination alleged by the EEOC over the past year, several trends emerged, so as to determine how the EEOC is shifting its strategic priorities.

When considered on a percentage basis, the distribution of cases filed by statute remained roughly consistent in comparing FY 2024 and FY 2023. As can be seen from the graph, Title VII cases once again made up the majority of cases filed, as they constituted 61% of all filings in FY 2024 (significantly down from 68% of all filings FY 2023, down from the 69% filings in FY 2022, and equal to 61% in FY 2021).

Overall, ADA cases also made up a significant percentage of the EEOC’s FY 2024 filings – totaling 41%. This is an overall increase in previous years where ADA filings amounted to 34% in FY 2023, 29.7% in FY 2022, and just below the 37% in FY 2021.

There was also a downward trend in ADEA filings, as 7 ADEA cases were filed in FY 2024, after 12 age discrimination cases were filed in FY 2023 and 7 age discrimination cases filed in FY 2022. However, unlike FY 2023, this past year the EEOC filed four Pregnant Worker’s Fairness Act cases (PWFA) after the PWFA went into effect on June 27, 2023.

These graphs show the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, Age Discrimination in Employment Act, Pregnant Worker’s Fairness Act, and Genetic Information Nondiscrimination Act) and, the graph above shows the basis of discriminatory allegations.

Lawsuits Filings Based On Industry

In monitoring the EEOC’s filings by industry, FY 2024 mirrored EEOC-initiated lawsuits in the top three industries compared to FY 2023, thereby demonstrating the Commission’s focus on a few major industries.

Three industries were the primary targets of lawsuit filings in FY 2024, including Hospitality (Restaurants / Hotels / Entertainment) with 23 filings, Healthcare with 22 filings, and Retail with 21 filings.

The next set of industries did not amount to double-digit filings, but are still well within the EEOC’s sights, including Manufacturing with 11 filings; Logistics with 7 filings; Construction with 4 filings; and Property Management with 3 filings.

This aligns with FY 2023, where Hospitality (primarily Restaurants) was the industry at large with 28 filings. In second and third place were Retail and Healthcare, respectively, with 24 filings. Absent from FY 2024’s industry-based filings, however, were Automotive, Security, and Technology.

Systemic Lawsuits

The EEOC exhibited a renewed focus on systemic discrimination lawsuits this past year. “Systemic” discrimination, according to the EEOC, involves an alleged “pattern or practice, policy and/or class … where the discrimination has broad impact on an industry, profession, company, or geographic location.” These sorts of lawsuits are the most challenging and serious type of government enforcement litigation that companies face.

The EEOC filed 13 systemic lawsuits in FY 2024. By comparison, it brought 25 systemic lawsuits in FY 2023, nearly double the number it filed in each of the prior four years.

The 25 systemic lawsuits filed by the EEOC in FY 2023 likewise constituted the largest number of systemic filings in the past five years.

The graphic shows this year-over-year filing trend:

While these numbers continue to climb, they do not yet reflect the activity that employers observed prior to FY 2018. By the end of FY 2018, the EEOC had 71 systemic cases on its active docket, two of which included over 1,000 victims, and systemic cases accounted for 23.5% of its active docket in that year.

Strategic Priorities

Every few years the EEOC prepares a Strategic Enforcement Plan to focus and coordinate the agency’s work and identify subject matter priorities. This past year, the EEOC released its Strategic Enforcement Plan for Fiscal Years 2024-2028.

In the 2024-2028 Strategic Enforcement Plan, the EEOC identified three guiding principles. First, the Commission states that to maximize the EEOC’s effectiveness, it will focus on those activities that have the greatest strategic impact, including systemic investigations, resolutions, and lawsuits. The EEOC thus “reaffirms its commitment to a nationwide, strategic, and coordinated systemic program as one of the EEOC’s top priorities.”

Second, the EEOC states that it will take an integrated approach at the agency that promotes collaboration, coordination, and information sharing throughout the agency. It explains that “[e]ffective systemic enforcement requires communication and collaboration between the EEOC’s legal and enforcement units, between headquarters and the field, and across EEOC districts.”

Third, the EEOC states that it will ensure that it achieves results “in accordance with the priorities set forth in the [Strategic Enforcement Plan].” This signals that the Commission will continue to emphasize and prioritize the use of systemic, pattern or practice lawsuits to accomplish its agenda.

As in years past, the Strategic Enforcement Plan also sets out the EEOC’s six substantive priorities.

#1 – Eliminating Barriers In Recruitment and Hiring – The EEOC will focus on recruiting and hiring practices that discriminate, including, among other things the use of technology, including artificial intelligence and machine learning, to target job advertisements or assist in hiring decisions; job advertisements that exclude or discourage certain protected groups from applying; and the use of screening tools or requirements that disproportionately impact workers on a protected basis, including those facilitated by artificial intelligence or other automated systems.

#2 – Protecting Vulnerable Workers – The EEOC will focus on harassment, retaliation, job segregation, discriminatory pay, disparate working conditions, among other things, that impact “particularly vulnerable workers,” which include immigrant and migrant workers; people with developmental or intellectual disabilities; individuals with arrest or conviction records; LGBTQI+ individuals; temporary workers; older workers; individuals employed in low wage jobs, including teenage workers; among others.

#3 – Addressing Selected Emerging And Developing Issues – The EEOC will continue to prioritize issues that may be emerging or developing, which includes qualification standards and inflexible policies or practices that discriminate against individuals with disabilities; protecting workers affected by pregnancy, childbirth, or related medical conditions; and addressing discrimination influenced by or arising as backlash in response to local, national, or global events.

#4 – Advancing Equal Pay Protections for All Workers – The EEOC will continue to focus on combatting pay discrimination in all forms. It notes that, because many workers do not know how their pay compares to their co-workers’ pay and, therefore, are less likely to discover and report pay discrimination, the EEOC will continue to use directed investigations and Commissioner Charges to facilitate enforcement.

#5 – Preserving Access to the Legal System – The EEOC will focus on policies and practices that discourage or prohibit individuals from exercising their rights or impede the EEOC’s enforcement efforts, including, among other things, overly broad waivers, releases, or non-disclosure agreements; and unlawful, unenforceable, or otherwise improper mandatory arbitration provisions.

#6 – Preventing and Remedying Systemic Harassment – The EEOC will continue to focus on combatting systemic harassment in all forms. It notes that, with respect to charges and litigation, a claim by an individual or small group may fall within this priority if it is related to a widespread pattern or practice of harassment.

Some – but certainly not all – of the EEOC’s lawsuits initiated over the past year fall into one or more of these six categories. The EEOC’s focus on systemic litigation underlies many of these enforcement priorities. Because the EEOC views systemic cases as having a particular strategic impact, insofar as they affect how the law influences a particular community, entity, or industry, companies should brace for the expansion of these cases.

What’s Next For The EEOC?

Now that the EEOC has a majority of Democratic-appointed Commissioners firmly in place, along with a significantly increased proposed budget, we expect that the Commission is posed for continued expansion of enforcement activity in 2024.

Moving into FY 2025, the EEOC’s budget includes a $33.221 million increase from 2024, and prioritizes five key areas, including advancing racial justice and combatting systemic discrimination on all protected bases, particularly with respect to vulnerable workers; advancing pay equity; addressing the use of artificial intelligence in employment decisions; providing information to assist employers that chose to undertake lawful approaches to fostering diversity, equity, inclusion, and accessibility (DEIA) in their workplaces; and preventing unlawful retaliation and harassment.

The EEOC also maintained its FY 2024 goals for its own Diversity, Equity, Inclusion, and Accessibility (DEIA) program where it seeks to achieve four goals, including workplace diversity, employee equity, inclusive practices, and accessibility. Additionally, the EEOC continues to emphasize and build upon its FY 2021 software initiatives addressing artificial intelligence (AI), machine learning, and other emerging technologies in continued efforts to provide guidance. The EEOC notably recognized that AI systems may offer new opportunities for employers but cautioned AI’s potential to facilitate discrimination. Finally, the joint anti-retaliation initiative among the EEOC, the DOL, and the National Labor Relations Board (NLRB) will continue to address retaliation in American workplaces.

But then came the election results of November of this past year.

Employers can expect that the EEOC will be in flux through 2025. The Trump Administration is apt to move to replace policymakers, decrease the Commission’s budget, and deemphasize government enforcement litigation.

In sum, it is expected the Trump Administration will pivot the focus of the EEOC to a more business-friendly posture. Budget cuts instead of increases may be the order of the day.

Department Of Labor Enforcement Year-End Recoveries

The U.S. Department of Labor’s Wage and Hour Division recovered approximately $202.6 million in back wages in FY 2024 and conducted 17,300 compliance actions. By comparison, the DOL secured $212.3 million in back wages in FY 2023 and concluded 20,215 compliance actions. These numbers align with the numbers we saw in FY 2022, in which the WHD recovered $213.2 million in back wages and concluded 20,422 compliance actions. The number of compliance actions, and the subsequent back wages recoveries in FY 2022-23 was measurably lower than in FY 2021 and FY 2020. In FY 2021, the WHD concluded 24,746 compliance actions and recovered $232.4 million in back wages and in 2020 it concluded 26,096 compliance actions and recovered $257.8 million in back wages.

The agency imposed civil money penalties to employers at a 10-year-high of $25.8 million for violations of federal labor laws in FY 2023. This was the highest number in a decade and was significantly higher than the penalties assessed in 2022 ($21.6 million), 2021 ($20.4 million), and 2020 ($17.9 million).

In FY 2024, civil money penalties exploded to $35.92 million (as specified at Civil Money Penalties Assessed) for violations of federal labor laws. Although FY 2023 was an outlier yielding the highest number for penalties assessed in a decade, FY 2024 exceed the penalties assessed by nearly an additional $10 million. This stark rise in assessed penalties for violations of federal labor laws can partially be attributed to the DOL’s Civil Penalties Inflation Adjustment Act Annual Adjustment for 2024 final rule that was published in January 11, 2024. FY 2024 and FY 2023 civil money penalties contrast with previous penalty assessments previously seen in 2022 ($21.6 million), 2021 ($20.4 million), and 2020 ($17.9 million).

By Jennifer A. Riley

Duane Morris Takeaway: The California Private Attorneys General Act (PAGA) inspired more representative lawsuits than any other statute in America over the past year. According to the California Department of Industrial Relations, plaintiffs filed more than 9,464 PAGA notices in 2024, a nearly 22% increase over 2023, and a whopping 85,936% increase over the 11 PAGA notices filed in 2006. The so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to nothing to curb interest in these cases, which continue to present one of the most viable workarounds to workplace arbitration agreements.

Watch the video below to see Jennifer Riley explain this trend in detail:

The PAGA created a scheme to “deputize” private citizens to sue their employers for penalties associated with violations of the California Labor Code on behalf of other “aggrieved employees,” as well as the State. A PAGA plaintiff may pursue claims on a representative basis, i.e., on behalf of other allegedly aggrieved employees, but need not satisfy the class action requirements of Rule 23. In other words, the PAGA provides the plaintiffs’ class action bar a mechanism to harness the risk and leverage of a representative proceeding without the threat of removal to federal court under the CAFA and without the burden of meeting the requirements for class certification.

If successful in prosecuting such a case, aggrieved employees receive 25% of any civil penalties and pass the other 75% to the California Labor and Workforce Development Agency (LWDA). The plaintiffs’ attorneys who pursue the action may collect their attorneys’ fees and costs.

1. The Explosion Of PAGA Notices Continues

According to data maintained by the California Department of Industrial Relations, the number of PAGA notices filed with the LWDA has increased exponentially over the past two decades. The number grew from 11 notices in 2006, to 1,606 in 2013, and then experienced three sizable jumps – to 4,530 in 2014, to 5,732 in 2018, and to 7,464 in 2023, each coinciding with a significant shift in the legal landscape, as discussed below. In 2024, notices exceeded 9,464 for the first time, an all-time high.

From 2013 to 2014, employers saw the largest single year increase, from 1,605 notices in 2013 to 4,532 notices in 2014, an increase of 182%. The most significant drop in the past two decades occurred in 2022, when notices fell from 6,502 in 2021 to 5,817 in 2022, before their resurgence in 2023 and continued growth in 2024. The following chart illustrates this trend.

These numbers closely tie to the shifting landscape of workplace arbitration, as discussed below, in that each of the major shifts coincides with the timing of a significant expansion or pull back in the law governing the enforcement of arbitration agreements.

PAGA Reform seemingly has had little to no impact on the growth on PAGA filings. On June 18, 2024, Governor Newsom announced that labor and business groups had inked a deal to alter the PAGA in return for removing the referendum to repeal the PAGA from the November 2024 ballot. The California Legislature quickly moved to approve two bills (AB 2288 and Senate Bill 92). The alterations include reforms to the penalty structure, new defenses for employers, changes to the PAGA’s standing requirements, and a new “cure” process for both small and large employers, among other changes. These reforms affect all PAGA notices filed on or after June 19, 2024, with some exceptions.

2. The PAGA As A Work-Around To Arbitration

The growing adoption of arbitration programs has led the plaintiffs’ class action bar to identify work-arounds, and the PAGA has emerged as one of the most popular.

The California Supreme Court cemented the PAGA as the frontrunner for employment-related claims with its decision in Iskanian, et al. v. CLS Transportation Los Angeles, 59 Cal.4th 348 (Cal. 2014). The California Supreme Court held that representative action waivers in arbitration agreements are “contrary to public policy and unenforceable as a matter of state law.” Id. at 384. In so holding, Iskanian established the PAGA as a mechanism by which a plaintiff could pursue a representative action unhindered by arbitration agreements or commitments to arbitrate on an individual basis. The decision undoubtedly fueled the filing of PAGA notices in 2014, which catapulted from 1,606 in 2013 to 4,530 in 2014.

The PAGA-workaround movement suffered its first significant set-back in 2022 with the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022). In Viking River, the U.S. Supreme Court held that, to the extent Iskanian precludes division of PAGA actions into individual and non-individual claims, and thereby “prohibit[s] parties from contracting around this joinder device,” the FAA preempts such rule. Id. The Supreme Court opined that the PAGA provides no mechanism to enable a court to adjudicate non-individual claims once an individual claim has been committed to a separate proceeding. As a result, the U.S. Supreme Court opined that Moriana lacked statutory standing to continue to maintain her non-individual claims in court, and, after compelling arbitration of the plaintiff’s individual PAGA claims, the lower court should have dismissed the PAGA representative claims. Id.

The set-back was short lived as, in 2023, the California Supreme Court minimized the impact of the Viking River decision. In Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (Cal. 2023), the California Supreme Court took up the issue of whether, under California law, a PAGA plaintiff whose individual PAGA claims are compelled to arbitration retains standing to bring representative PAGA claims. The California Supreme Court answered the question in the affirmative. It disagreed with the U.S. Supreme Court’s interpretation of California law and held that, once a PAGA plaintiff’s individual claims are compelled to arbitration, the plaintiff retains standing to maintain non-individual PAGA claims in court so long as he is an “aggrieved employee.” Id. at 1105. By deciding that an individual who signs an arbitration agreement can return to court after arbitration to pursue representative proceedings under the PAGA, the California Supreme Court relegated arbitration agreements to a mere hurdle rather than a bar to PAGA representative actions.

Although Viking River and Adolph are a mere one and two years old, respectively, the plaintiffs’ bar is continuing to attempt to find ways to eliminate the arbitration hurdle all together and to allow plaintiffs to proceed with their representative actions in court. One emerging trend is for plaintiffs to file complaints seeking to pursue only representative components, explicitly excluding their individual PAGA claims. These claims informally have become known as “headless” PAGA claims.

While this line of reasoning seemingly goes against the ruling in Adolph and other cases, which have held that a PAGA claim necessarily consists of both and individual and representative portion, the California Court of Appeal supported it in April 2024 with its decision in Balderas, et al. v. Fresh Start Harvesting, 101 Cal.App.5th 533 (2024). In that opinion, the California Court of Appeal denied a motion to compel arbitration, holding that a plaintiff could maintain a representative PAGA action, even without an individual PAGA claim, so long as the plaintiff alleges that he or she suffered a Labor Code violation.

We expect parties to heavily litigate this line of reasoning in 2025, with multiple appeals already filed as to rulings that follow the Balderas “headless” PAGA standard.

Given the technical requirements of California wage & hour law, coupled with the potentially crushing statutory penalties available to successful plaintiffs, employers should anticipate continued growth of PAGA lawsuits in 2025.

By Gerald L. Maatman, Jr.

Duane Morris Takeaway: PFAS class actions inspired some of the most attention-grabbing headlines this past year across the legal landscape. PFAS, or per- and polyfluoroalkyl substances, are a group of manmade chemicals that are resistant to oil, water, and heat. They are used in many consumer and industrial products and are commonly called “forever chemicals” because of their persistence, meaning they do not break down easily in the environment.

See the video below with Duane Morris partner and DMCAR editor Jerry Maatman to learn more about this trend:

PFAS generated the largest class action settlement in 2024, which came in at more than twice the next highest settlement, which also involved PFAS, and generated an attorneys’ fee award of nearly one billion dollars. These numbers are going to inspire a continued wave of PFAS class actions, as the plaintiffs’ class action bar targets more companies with claims that their products or packaging contained PFAS, and those companies, in turn, search for claims against their material suppliers.

Numbering in the thousands, PFAS are found in consumer, commercial, and industrial products, and due to their presence in so many products, it is challenging to assess the health impact of PFAS. In recent years, the U.S. Environmental Protection Agency (EPA) has issued a number of guidelines regarding PFAS in drinking water. Meanwhile, the EPA has undertaken efforts to understand how to remediate, manage, and dispose of PFAS present in drinking water supplies more efficiently.

In 2024, PFAS regulations from another six states went into effect and will continue in 2025, including Colorado, Maryland, Connecticut, Minnesota, Hawaii, and New York. The graphic outlines these regulations.

The discovery of PFAS in drinking water has spurred states attorneys general to bring lawsuits on behalf of their constituents seeking to impose liability relating to drinking water contamination on the PFAS manufacturers and asserting claims under various products liability and negligence laws.

In April 2024, the EPA finalized a rule setting the first-ever limits for PFAS in drinking water. The rule already is subject to multiple legal challenges. In October 2024, the White House Office of Science and Technology Policy said in a report that it will continue to look for new technologies to remove so-called forever chemicals from the environment and find safe alternatives for the substances.

Since 2018, more than 300 lawsuits have been filed over PFAS contamination, with many suits being consolidated in the South Carolina-based MDL focused on the chemicals in aqueous film-forming foam used in firefighting applications. On March 29, 2024, the court granted final settlement approval of $10.3 billion in In Re Aqueous Film-Forming Foams Product Liability Litigation, MDL 2873 (D.S.C. Mar. 29, 2024), to resolve claims for the damage allegedly incurred from using PFAS for decades in specialized fire suppressants, called aqueous film-forming foams, that were sprayed directly into the environment and reached drinking water.

These numbers are likely to inspire a continued wave of PFAS class actions, as the plaintiffs’ class action bar targets more companies with claims that their products or packaging contained PFAS, and those companies, in turn, search for claims against their material suppliers. In November 2024, for example, Mohawk, the world’s largest flooring manufacturer sued 3M Co., E.I. de Pont de Nemours and Co., The Chemours Co., and Daikin America alleging that these chemical manufacturers lied about the dangers of forever chemicals in their products. Mohawk alleges that it purchased oil-resistant carpet treatment products from the chemical manufacturers for decades without the manufacturers disclosing that the products contained PFAS and that the manufacturers wrongly concealed internal studies regarding the dangers of PFAS. Mohawk alleges that it has been named in a series of lawsuits, already has paid over $100 million to settle some of the claims, and seeks to pass the cost of those settlements onto the defendants.

While the plaintiffs’ bar has been filing lawsuits for over two decades over alleged health and environmental consequences associated with PFAS, as of late the types of plaintiffs and defendants, as well as the types of claims, have multiplied and evolved. Many recent PFAS plaintiffs have filed their class actions against consumer product manufacturers under consumer fraud statutes and other misrepresentation theories. Most of these PFAS class actions have not yet advanced to the class certification stage. Class certification theories remain a work in progress for plaintiffs, as most PFAS class actions to date have involved settlements and motions to dismiss.

In 2024, we saw numerous rulings on motions to dismiss, with the plausibility of plaintiffs’ claims often turning on the nature of defendants’ alleged misrepresentations, specificity and content of plaintiffs’ allegations regarding the nature of the testing they performed on the alleged products, temporal proximity of purchases to testing, and test results. Rulings in this area of the law have been numerous and mixed. Compare, e.g., Lowe, et al. v. Edgewell Personal Care Co., 2024 U.S. Dist. LEXIS 7238(N.D. Cal. Jan. 12, 2024) (dismissing PFAS class action because plaintiffs’ allegations regarding their independent testing for presence of PFAS in consumer product lacked specificity); Bounthon, et al. v. Procter & Gamble Co., 2024 WL 4495501, at *2-3, 7-10 (N.D. Cal. Oct. 15, 2024) (dismissing PFAS class action, finding the alleged reliability of plaintiffs’ total organic flourine analysis refuted by plaintiffs’ own allegations and finding implausible plaintiffs’ allegations that 30 parts per million of PFA are harmful); Onaka, et al. v. Shiseido Americas Corp., 2024 WL 1177976, at *3 (S.D.N.Y. Mar. 19, 2024) (dismissing PFAS class action because plaintiffs failed to allege their testing was near in time to their purchases); with Winans, et al. v. Ornua Foods Inc., 2024 WL 1741079, at *5 (E.D.N.Y. Apr. 23, 2024) (finding that whether FDA regulations exempting insignificant levels of incidental food additives from disclosure preempted consumer’s omission-based claims regarding PFAS was question of fact not amenable to motion to dismiss), Hicks, et al. v. L’Oreal U.S.A., Inc., 2024 WL 4252498, at *11 (S.D.N.Y. Sept. 19, 2024) (denying in part and granting in part motion to dismiss and finding plaintiffs’ alleged testing sufficient to “allow for the plausible inference at this stage that there was a pervasive PFAS presence in the Products”).

Given the settlement numbers to date, companies can expect PFAS to generate more filings in the coming year as plaintiffs seek a share of the PFAS treasure chest and their targets, in turn, seek to pass costs down the chain.

By Jennifer A. Riley

Duane Morris Takeaway: Data breach litigation remained expansive in 2024 as plaintiffs filed more data breach class actions than in any other year and double the number filed in 2022. As the number of data breaches has accelerated, such events have provided the fuel for a surge of class actions. Despite the significant increase in filings, courts issued few (only four) class certification decisions in 2024, suggesting that many motions are in the pipeline or that, observing the difficulty that plaintiffs have faced in certifying such cases over the past two years, plaintiffs are electing to monetize their data breach claims prior to reaching that crucial juncture. So long as defendants continue to play ball on the settlement front, we are likely to see settlement payouts continue to lure plaintiffs to this space and fuel those filing numbers.

Watch the video below to learn more about this trend from Review co-editor Jennifer Riley:

1. Filing Numbers Continue Their Upward Trajectory

The volume of data breach class actions continued to proliferate in 2024. Data breach has emerged as one of the fastest growing areas of class action litigation. After every major (and not-so-major) report of a data breach, companies now can expect the resulting negative publicity to prompt one or more class action lawsuits, saddling companies with the significant costs of responding to the data breach as well as the significant costs of dealing with high-stakes class action lawsuits, often on multiple fronts.

Companies that are unfortunate enough to fall victim to data breaches in 2024 faced class actions at an increasing rate. In 2024, we tallied 1,488 class action filings in the data breach area, compared with 1,320 in 2023, and 604 in 2022.

As the graphic depicts, the growth of filings in the data breach area has been extraordinary, from 108 class action filings in 2018 to 1,488 class action filings in 2024, an increase of more than 1,265% over six years.

Several factors likely contributed to this continued surge in data breach class actions in 2024. First, data breaches have continued to increase at a rate that roughly tracks the shape of the curve depicted above. Second, whereas data breach actions pursued a decade ago faced little prospect of success, recent court decisions have provided a roadmap for plaintiffs to attempt to show standing and successfully plead duty, causation, and damages, thereby providing additional momentum for the plaintiffs’ class action bar. Third, settlement numbers have fueled filings, as plaintiffs are succeeding in monetarizing claims early before facing the investment or risk of class certification, making data breach claims a continued area of popularity for the plaintiffs’ bar.

2.           Plaintiffs Continue To Face Hurdles In The Courthouse

The U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez, et al., 141 S.Ct. 2190 (2021), presents a fundamental threshold challenge for many data breach class action plaintiffs in terms of whether the plaintiff can show that he or she suffered a concrete injury such that he or she has standing to assert a claim. In TransUnion, the Supreme Court ruled that certain putative class members, who did not have their credit reports shared with third parties, did not suffer concrete harm and, therefore, lacked standing to sue. Since the TransUnion decision, standing has emerged as a key defense to data breach litigation because the plaintiffs often have difficulty demonstrating that they suffered concrete harm.

Courts, however, have continued to disagree over the application of TransUnion in the data breach context and have handed down a kaleidoscope of decisions. For instance, in cases where plaintiffs fail to assert plausible allegations of present injury that are fairly traceable to the data breach and rely instead on an asserted risk of future harm, some courts have found that mere public disclosure of private facts is sufficiently “concrete” to establish standing, whereas others have required allegations showing that the risk of future harm is substantial.

In Logan, et al. v. Marker Group, Inc., 2024 WL 3489208 (S.D. Tex. July 18, 2024), for example, plaintiffs alleged that the defendant failed to properly secure their protected health information and personally identifiable information (PII), thus leaving them to “face a lifetime of heightened risk of identity theft and fraud” as a result of the data breach. Id. at *6. The court granted the defendant’s motion to dismiss on the basis of lack of standing, finding that “the mere risk of future harm, standing alone, cannot qualify as a concrete harm.” Id. (citing TransUnion).

In Jones, et al. v. Sturm, Ruger & Co.,2024 WL 1307148 (D. Conn. Mar. 27, 2024), by contrast, plaintiff alleged that a breach compromised customers’ PII and payment card data (PCD). The court denied the defendant’s motion to dismiss for lack of standing. The court concluded that, under TransUnion, the plaintiff’s alleged injury was sufficiently “concrete” for standing purposes because “exposure of Plaintiffs’ PII to unauthorized third parties ‘bears some relationship’ to the ‘well-established common-law analog: public disclosure of private facts.’” Id. at *3 (quoting Bohnak v. Marsh & McLennan Companies, Inc., 79 F.4th 276, 285 (2d Cir. 2023)).

Plaintiffs who clear the standing hurdle face another key inflection point at the class certification phase. Despite the significant increase in filings, however, courts issued only five rulings on motions for class certification in 2024. This suggests that hundreds of motions are in the pipeline or that, observing the difficulty that plaintiffs have faced in certifying data breach such cases over the past two years, plaintiffs are electing to monetize their data breach claims prior to reaching that crucial juncture.

In Baker, et al. v. Parkmobile, LLC, 21-CV-2182, ECF No. 243 at 23 (N.D. Ga. Apr. 8, 2024), for example, a plaintiff’s expert conceded in detail at his deposition that, to resolve plaintiff’s claims, the court would need to undertake highly individualized inquiries as to whether the plaintiff was subject to a credential stuffing attack and whether such attack caused any injury. The parties reached a settlement while the motion for class certification was fully briefed and a decision was pending.

The certification rate, however, improved somewhat for plaintiffs in 2024. Courts issued five rulings on motions for class certification, and plaintiffs prevailed on two, a success rate of 40%. By comparison, in 2023, courts issued seven rulings on motions for class certification, and plaintiff prevailed in one, for a success rate of 14%.

Despite the increase in success rate, the recipe for successfully certifying a data breach class remains a work in progress, as unsuccessful plaintiffs encountered both new and old issues in 2024. For instance, in In Re Blackbaud, Inc. Customer Data Breach Litigation, 2024 WL 2155221 (D.S.C. May 14, 2024), the court denied class certification because plaintiffs failed to identify any administratively feasible way for the court to ascertain the identities of about 1.5 billion putative class members whose data was stored in 90,000 backup files.

In Vest Monroe, LLC, et al. v. Doe, No. S-23-G-1224, 2024 Ga. LEXIS 187 (Ga. Sept. 4, 2024), the Georgia Supreme Court upheld the denial of class certification because variation in the materials allegedly disclosed prevented plaintiff from showing commonality or typicality. The plaintiff’s claim arose from the conduct of an ex-employee who disclosed digital copies of documents and recordings. In finding a lack of commonality, the trial court noted the differences in the type of documents allegedly disclosed with respect to members of the proposed class, as some contained diagnosis and treatment information, while others did not. Id. at *4. Relatedly, some members of the proposed class had clinical information revealed, while plaintiff did not. The Georgia Supreme Court determined that the trial court did not err in its determination.

Although plaintiffs continue to search for a road map to reliably certify data breach class actions, defendants are continuing to fund settlements, allowing plaintiffs to monetize their claims without clearing the certification hurdle. Such circumstances are apt to continue to draw plaintiffs’ class action lawyers to the data breach space and to continue to generate filings.