Class Action Defense

September 14, 2026September 14, 2026 by Gerald L. Maatman, Jr.

Court Bars Employer From Distributing Arbitration Agreement To Settlement Class Members During Pendency Of Class Settlement

By Gerald L. Maatman, Jr. and Anna Sheridan

Duane Morris Takeaways: On September 4, 2026, in Calderon, et al. v. Public Partnerships, LLC, No. 25-CV-02320 (E.D.N.Y. Sept. 4, 2026), U.S. Magistrate Judge Lara K. Eshkenazi of the U.S. District Court for the Eastern District of New York barred a defendant from distributing a proposed dispute resolution agreement (“DRA”) containing a class action waiver to settlement class members during the period between preliminary and final approval of a class settlement. The decision is a reminder that employers seeking to implement arbitration agreements during the pendency of class litigation must carefully consider timing, and that courts will exercise their authority under Rule 23(d) to protect class members from communications that could cause confusion during critical phases of a settlement.

Case Background

Plaintiffs, personal assistants (“PAs”) who received payment through Public Partnerships, LLC (“PPL”) as part of the New York State Medicaid Consumer Directed Personal Assistance Program (“CDPAP”), brought a class action alleging that PPL violated state and federal law by failing to pay them accurately and on time. After extensive mediation, the parties reached a class settlement and submitted a motion for preliminary approval of class certification, appointment of class counsel, and class settlement on June 23, 2026.

At the preliminary approval hearing on July 1, 2026, PPL raised the topic of a proposed DRA that it intended to distribute to PAs, including settlement class members. PPL explained that it wanted to institute the DRA, including a class action waiver, to create a mechanism to address issues raised by PAs without becoming subject to lawsuits related to its role as the statewide fiscal intermediary. Plaintiffs opposed the implementation of the DRA to the extent it would impact settlement class members, arguing it could confuse class members and cause them to mistakenly opt out of the settlement agreement. Plaintiffs also noted that a prior attempt by PPL to implement a DRA had led to significant class confusion, resulting in PPL withdrawing the DRA.

After the parties were unable to resolve the dispute, PPL filed a motion for approval of its proposed DRA and Plaintiffs filed a cross-motion for a Rule 23(d) order barring distribution of the DRA to settlement class members before final approval of the settlement.

The Court’s Decision

The Court denied PPL’s motion and granted Plaintiffs’ motion for a Rule 23(d) order.

The Court applied the framework set forth in Chen-Oster v. Goldman, Sachs & Co., 449 F. Supp. 3d 216, 255 (S.D.N.Y. 2020), considering factors including class members’ relative vulnerability, evidence of actual or contextual risk of coercion, whether the provision was imposed unilaterally, and evidence of misleading conduct, language, or omissions. The Court emphasized that it need not find actual or willful misconduct “so long as the effect is to interfere with class members’ rights.” (Op. at 4).

While the Court acknowledged that the DRA itself was not coercive or misleading, and credited the steps PPL had taken to reduce confusion, the Court concluded that the risk of confusion for settlement class members was high for several reasons.

First, the timing of the DRA rollout would directly overlap with notifications to settlement class members of the settlement, which could confuse class members about the relationship between the DRA and the settlement.

Second, the DRA contained an opt-out process that, despite best efforts at clarity, could still cause settlement class members to inadvertently opt out of the settlement — a risk the Court found was particularly high due to the number of settlement class members for whom English is not their first language. Third, the timing of the DRA rollout could cause settlement class members to believe that accepting the arbitration agreement was a condition of accepting the settlement.

The Court distinguished the case PPL primarily relied on – Carusillo v. FanSided, Inc., No. 20 Civ. 4766, 2021 WL 4311167 (S.D.N.Y. Sept. 21, 2021) – where the court had permitted distribution of an arbitration agreement during a collective action opt-in period. The Court explained that Carusillo involved a relatively early stage of the litigation, whereas Calderon was in its final stages, with a final approval hearing scheduled for November 10, 2026. The Court noted that PPL offered no explanation for the urgency of its request to communicate with settlement class members about the DRA rather than waiting just a few months until the risk of confusion would no longer exist.

The Court further rejected PPL’s argument that Plaintiffs’ concerns about class confusion ended on September 19, 2026 — the deadline for opt-outs and objections — finding that the risk of confusion would persist even after the opt-out deadline because class members would continue to learn about their settlement rights and could potentially submit late opt-outs.

Implications For Employers

The Calderon decision underscores the importance of timing when implementing arbitration agreements during pending class litigation. While courts have permitted employers to introduce arbitration agreements during the pendency of class or collective actions, the Calderon ruling makes clear that courts will scrutinize the timing of such communications, particularly during the sensitive period between preliminary and final approval of a class settlement. The Court’s decision did not prevent PPL from distributing the DRA to non-class members, and it did not find the DRA itself to be coercive or misleading. Employers should take note, however, that even a well-drafted arbitration agreement with meaningful opt-out protections can be blocked if the timing of its distribution could cause confusion or interfere with class members’ rights during a settlement process. Employers considering rolling out arbitration agreements or dispute resolution programs during the pendency of class litigation should work closely with counsel to carefully evaluate the litigation timeline and consider whether it is prudent to delay the rollout until after settlement proceedings conclude.

September 11, 2026September 11, 2026 by Class Action Defense

The Class Action Weekly Wire – Episode 164: Washington Appellate Court Affirms Rejection Of Motion To Compel Arbitration In Wage & Hour Class Action

Duane Morris Takeaway: This week’s episode features Duane Morris partner Jennifer Riley and senior Associate Kat Alphonso with their analysis of a ruling from the Washington Court of Appeals affirming a trial court’s denial of a motion to compel arbitration in a wage & hour class action.

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

Episode Transcript

Jennifer Riley: Hello, everyone, and thank you again for being here for the next episode of the Class Action Weekly Wire. I’m Jennifer Riley and joining me today is Kat Alphonso. Today, we’re discussing an interesting wage and hour ruling out of Washington that employers should really pay close attention to. The case is Daryl Clemons v. Securitas Security Services USA, Inc. The Washington Court of Appeals in that case affirmed a trial court’s denial of an employer’s motion to compel arbitration in a proposed wage and hour class action. So, it’s an important ruling. Kat, thank you for being on the podcast today.

Kat Alphonso: Thank you for having me, Jen. You’re right, this is a very important decision, because it highlights that even in jurisdictions that generally favor arbitration, courts are still going to scrutinize how arbitration agreements are presented to employees. The takeaway here isn’t necessarily about the language of the agreement itself, but about the process that the employer uses when obtaining the employee’s signature.

Jennifer: Great. Let’s start, if we can, with the background. Can you tell our listeners what happened in this case?

Kat: Sure. The plaintiff, Daryl Clemons, began working for Securitas Security Services USA in 2008. During his employment, he signed an updated dispute resolution agreement in 2011 that required employment-related disputes to be resolved through final and binding arbitration rather than in court. Years later, Securitas terminated his employment in 2023. He subsequently filed a proposed wage and hour class action, alleging that the company failed to provide legally required meal and rest breaks, and failed to pay employees all hours worked, including overtime. When Securitas moved to compel the arbitration, and based on the 2011 agreement, the trial court denied the motion, and the company appealed. The Washington Court of Appeals ultimately affirmed the trial court’s decision.

Jennifer: One thing that stood out to me here is that the appellate court acknowledged that Washington strongly favors arbitration. So, this wasn’t a court expressing hostility toward arbitration agreements generally, was it?

Kat: Not at all. In fact, the court expressly reiterated Washington’s long-standing policy favoring arbitration and noted that courts make presumptions in favor of enforcing arbitration agreements, but the court also emphasized that it remains the judiciary responsibility to determine whether a particular arbitration agreement is valid and enforceable. The question here was whether this particular agreement was procedurally unconscionable, and that’s where the employer ran into problems.

Jennifer: Okay, great. Let’s talk about procedural unconscionability. What exactly did the court find here?

Kat: Well, the court found that Mr. Clemons lacked a meaningful opportunity to understand or evaluate the arbitration agreement before signing it. According to his declaration, his supervisor routinely handed employees paperwork and expected them to sign it immediately before beginning work. Mr. Clemons stated that there was no explanation regarding what the documents were, whether signing it was voluntary, or whether employees could take additional time to review. He also said that he didn’t know whether he had a right to refuse to sign. The court found that on those facts, it was significant because the Washington Supreme Court had previously held that undue pressure to sign an arbitration agreement without a reasonable opportunity to consider its terms can render an agreement procedurally unconscionable.

Jennifer: And did Securitas try to rebut the allegations in this case?

Kat: Yeah, the company relied heavily on the declaration from its regional vice president of human resources, who stated that signing arbitration agreements was voluntary, and that employees could opt out if they did not want to participate. According to the declaration, the agreement included opt-out instructions. The problem was, the actual agreement signed by Mr. Clemons did not contain any of those provisions stating that participation was voluntary, nor did it have an opt-out clause. So, the appellate court highlighted this discrepancy and agreed with the trial court’s conclusion that the declaration was not persuasive on that point.

Jennifer: Got it. So, did it come down to a credibility issue for the company?

Kat: Yes, the court observed that Securitas offered evidence describing general policies, but it did not present testimony from anyone who actually participated in the onboarding process or the document signing process involving Mr. Clemons, nor did they provide evidence that his supervisor informed him that he could opt out or take additional time to review the agreement. So, as a result, the employee’s account of what occurred was largely unrebutted.

Jennifer: Got it, understood. So, another interesting aspect of this decision is that the court found circumstantial evidence sufficient. The employee didn’t specifically remember signing the arbitration agreement, yet the court still credited his testimony.

Kat:: That’s right. So, Securitas argued that because Mr. Clemons did not distinctly remember signing the arbitration agreement in 2011, his testimony was speculative, but the court rejected that position. It explained that Mr. Clemons clearly remembered the routine practice of his supervisor when he was presenting paperwork, and that circumstantial evidence is entitled to the same weight as direct evidence. The court concluded that Mr. Clemons’ description of the workplace practice, combined with the lack of evidence showing that he was informed of any right to opt out, was sufficient to establish procedural unconscionability.

Jennifer: Got it. So, despite Washington’s preference for arbitration, the court ultimately focused on the fairness of the process used to obtain assent from this employee.

Kat: That’s exactly right. The court did not hold that arbitration agreements themselves are unenforceable. It held that employees must be given a meaningful choice. Here, the court found that Mr. Clemons was not informed that the agreement was voluntary, he was not informed that he had a right to opt out, and he was not given a reasonable opportunity to consider the agreement’s terms before signing. And under those circumstances, the agreement was procedurally unconscionable and therefore unenforceable.

Jennifer: Got it. So, let’s now shift to the practical implications. What lessons should employers take away from this decision?

Kat: So, employers should ensure that arbitration agreements expressly state that participation is voluntary, and if there is an option to opt out, that the agreement clearly describes the procedures to opt out. If the company intends to rely on those provisions later, they should be in the actual documents that the employee signs. Employers should also document the onboarding process. It’s helpful to have acknowledgements indicating that employees received sufficient time to review, had an opportunity to ask questions, and understood the implications of arbitration. Finally, supervisors and managers should be trained carefully. This case became largely about how the documents were presented in practice.

Jennifer: And from a wage and hour perspective, this ruling potentially has major consequences because the plaintiff’s claims now continue in court as a putative class action. So, if arbitration had been enforced, the litigation landscape would’ve looked very different for this case. Instead, the plaintiff now retains the ability to pursue the class claims in court on behalf of a putative class of Washington hourly non-exempt employees who are alleging unpaid wages, missed meal periods, missed rest breaks, and overtime violations as well. So those are claims that can present some substantial exposure for employers if class certification is granted.

Kat: Exactly. This decision serves as a reminder that arbitration agreements remain a powerful risk management tool, but employers cannot treat implementation as an afterthought. Courts are increasingly examining whether employees truly had a meaningful opportunity to understand what it was they were signing. Even a well-drafted agreement can be vulnerable if the execution process is flawed. So, employers should periodically review not only the language of their agreements, but also the procedures used to distribute, explain, and obtain signatures on those agreements.

Jennifer: Great insights as always, Kat. Thanks so much. So, that wraps up today’s episode. Thank you to our listeners for joining us today for this discussion of the Washington Court of Appeals decision in Clemons v. Securitas Security Services USA. We will continue to monitor developments in wage and hour litigation, class actions, as well as arbitration law, and keep you updated on the latest trends affecting employers nationwide. Thank you so much for listening, and we’ll see you next time.

Kat: Thank you for listening, everyone, and thanks, Jen.

September 11, 2026September 11, 2026 by Gerald L. Maatman, Jr.

Court Grants Conditional Certification Of Mortgage Underwriter’s Collective Action

By Gerald L. Maatman, Jr., Gregory Tsonis and Christian J. Palacios

Duane Morris Takeaways: In Brown v. Equity Prime Mortgage, LLC, Case No. 1:25-CV-1832, ECF No. 38 (N.D. Ga. Aug. 27, 2026), U.S. District Judge Michael L. Brown of the Northern District of Georgia granted a plaintiff’s motion for conditional certification of an FLSA collective action on behalf of a group of mortgage underwriters, alleging misclassification and unpaid overtime violations. This decision is yet another reminder for employers of how lenient the evidentiary standard is in jurisdictions that apply the longstanding “two step” conditional certification analysis employed by many courts. This decision further highlights the potential risk associated with classifying broad categories of employees as “exempt” for overtime purposes, while relying exclusively on the FLSA’s administrative exemption (i.e. office workers that require the exercise of independent judgment on important matters).

Background

Plaintiff Shameen Brown worked for Defendant Equity Prime Mortgage, LLC (“EPM”), a national mortgage lender, as an underwriter between March 2023 and May 2024. Order at 2. On April 7, 2025, she filed a class and collective action complaint against her EPM alleging misclassification and unpaid overtime violations, specifically that she typically worked 60 or more hours per week but received no overtime compensation because EPM misclassified her and others as exempt under the Fair Labor Standards Act. Id.

On September 12, 2025, Brown moved to conditionally certify a collective action, pursuant to 29 U.S.C. § 216(b) of the FLSA, of “[a]ll current and former employees of [EPM] working as Underwriters throughout the United States during the time period from three years prior to the filing of this Complaint until final resolution of [the] action.” Id. at 2. Brown submitted a proposed notice and requested permission to send it to potential collective members via mail, e-mail, and text message. She also requested access to the last four digits of collective members’ social security numbers and permission to send a reminder notice halfway through the notice period. Order at 2-3. EPM opposed the motion. Id.

The Court’s Ruling

On August 27, 2026, the Court granted Plaintiff’s motion for conditional certification. At the outset of its decision, the Court observed that the Eleventh Circuit “sanctioned a two-stage procedure for district courts to effectively manage FLSA collective actions in the pretrial phase.” Order at 3.

At the first stage, or the “notice” stage, the Court observed that it need only determine whether there existed other “similarly situated” employees who should be notified of their ability to join the litigation, describing the applicable standard as “not particularly stringent” and “fairly lenient.” Id. at 4. Only at the second stage, typically after close of discovery, would Plaintiff be required to satisfy a higher evidentiary burden to prove that the collective action is similarly situated and could proceed. Id. at 4-5.

In support of conditional certification, Plaintiff submitted affidavits from other former underwriters describing their duties, alleging each underwriter was required to adhere to the same “predetermined underwriting guidelines” without “any authority to deviate” from those guidelines. Id. at 6. EPM argued that its underwriters were not similarly situated because underwriters worked on different loans, such as retail and wholesale, and were “likely exercising more judgment than an underwriter working primarily on loans to individuals with steady W-2 income and low debt.” Id. at 7.

The Court agreed with Plaintiff that a collective should be conditionally certified, reasoning that Defendant’s position that underwriters were “likely exercising more judgment” did not contradict the “simplicity” of Plaintiff’s claim that EPM’s underwriters were required to “strictly adhere” to the same “predetermined guidelines” when reviewing loans, and that they were required to apply these guidelines without discretion. Id. The Court also rejected Defendant’s argument that different underwriters had different job descriptions, holding that the postings contained only “minute differences” and involved “similar duties.” Id. at 7. Finally, the Court rejected Defendant’s argument that opt-in plaintiffs were not similarly situated because they used different job descriptions in their LinkedIn postings, quipping that “[o]ne man’s Trash Collector is another man’s Sanitation Expert.” Id. at 8.

As a result, the Court granted Plaintiff’s motion for conditional certification and further approved the form of the proposed notice, authorizing it to be sent via mail, email, and text message. Id. at 9. However, the court denied Plaintiff’s request to send a reminder notice halfway through the notice period, concluding that such notices “would be redundant and ‘could be interpreted as encouragement by the Court to join the lawsuit.”’ Id at 10. It also denied Plaintiff’s request that Defendant be required to provide the last 4 digits of the collective members’ social security numbers, citing privacy concerns. Id. at 11.

Takeaway for Employers

As this case illustrates, employers will continue to face uphill battles at the “conditional certification” stage in jurisdictions that apply the lenient “two step” FLSA certification analysis. Although the Fifth, Sixth, and, most recently, the Seventh Circuit have rejected the majority rule in favor of more rigorous tests, most federal circuits, including the Eleventh Circuit, continue to utilize this plaintiff-friendly analysis. Additionally, employers in all sectors, and in the mortgage industry specifically, should be mindful that classifying employees as exempt carries legal risk, particularly where the employer cannot easily demonstrate that the employees maintain meaningful discretion and exercise independent judgment on important matters as part of their job duties to satisfy the FLSA’s administrative exemption.

September 9, 2026September 9, 2026 by Gerald L. Maatman, Jr.

First District Court In The Fourth Circuit Holds That The TCPA’s Do-Not-Call Provision Does Not Cover Text Messages

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Ryan T. Garippo

Duane Morris Takeaways: On September 3, 2026, in Card, et al. v. R.J. Reynolds Tobacco Holdings, Inc., No. 26-CV-00433, 2026 U.S. Dist. LEXIS 201636 (M.D.N.C. Sept. 3, 2026), Judge Catherine Eagles of the U.S. District Court for the Middle District of North Carolina dismissed a putative class action brought under the Telephone Consumer Protection Act (the “TCPA””), on the basis that § 227(c)(5) of the statute does not extend to text messages. The decision follows the Seventh Circuit’s recent ruling in Steidinger v. Blackstone Medical Services, 182 F.4th 532 (7th Cir. 2026) and represents the first district court within the Fourth Circuit to hold that a text message is not a “telephone call” within the meaning of § 227(c)(5).

Case Background

On May 11, 2026, Plaintiff Shawn Card (“Plaintiff” or “Card”) sued R.J. Reynolds Tobacco Holdings, Inc. (“Reynolds”) under the TCPA claiming the company violated the national do-not-call registry’s requirements. Because Plaintiff alleged his phone number was registered on the national-do-not-call registry, allegedly received unwanted text messages from Reynolds, and supposedly never consented to receive those text messages, he claimed that Reynolds violated § 227(c)(5) of the TCPA.

In the complaint, Plaintiff also sought to represent a class of similarly situated individuals who also received text messages that allegedly violated the TCPA’s long-standing prohibition on telephone calls to numbers on the national do-not-call registry. Plaintiff specifically relied on § 227(c)(5) of the TCPA, which purports to create a private right of action for an individual “who has received more than one telephone call within any 12-month period by or on behalf of the same entity in violation of the regulations prescribed under this subsection.”

Reynolds moved to dismiss and argued that § 227(c)(5) does not apply to text messages. Plaintiff opposed that motion.

The Court’s Decision

Judge Eagles found the reasoning of the Seventh Circuit’s recent decision in Steidinger persuasive and dismissed the complaint because text messages “do not fall within the private right of action created by § 227(c)(5).” Card, 2026 U.S. Dist. LEXIS 201636, at *3.

Judge Eagles explained § 227(c)(5) references a “telephone call” and not a “telephone solicitation,” as used elsewhere in the statute, and which is expressly defined to include telephone messages. This decision demonstrated that “Congress intended ‘telephone call’ in § 227(c)(5) to have a narrower scope.” Id. Thus, the structure and text of the TCPA supported this interpretation.

In addition, Judge Eagles also took care to note that – prior to McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation, 606 U.S. 146, 168 (2025) – most courts had presumed that § 227(c)(5) applied to text messages based largely on the Federal Communications Commission’s (the “FCC”) regulations. But after McKesson, those cases are no longer good law because that case “changed the standard for judicial deference to agency statutory interpretation and called into question such decisions relying on the FCC’s interpretation.” Id. at *4.

Finally, Judge Eagles also rejected the approach adopted by the courts that have held the term “telephone call” encompasses text messages, such as Taha v. Momentive Software, Inc., 2026 WL 974297, at *3 (C.D. Cal. Mar. 11, 2026), which reasoned that “had Congress intended to eliminate textual communications from § 227(c)(5) it would have used the phrase ‘voice call,’ rather than ‘telephone call.’” Judge Eagles, however, noted that “the inverse is also true; if it had been the intent to include all types of communications, Congress more simply could have used the broader term ‘call’ as it did in §227(b), rather than ‘telephone call’ as it did in § 227(c)(5).” Id. at *6.

As a result, Judge Eagles concluded that Plaintiff failed to state a claim and became the first district court judge in the Fourth Circuit to conclude that § 227(c)(5) does not cover text messages.

Implications For Companies

The Card decision is significant for the growing split in authority as to whether the private right of action codified at § 227(c)(5) covers text messages. Card is the first court in the Fourth Circuit to hold that such text messages are not actionable. Indeed, there are now district courts in five federal circuits – including the entire Seventh Circuit – that hold text messages are not covered by this section of the statute. A chart summarizing this authority is depicted below.

Federal Circuit	Sample Opinion
1st Circuit	⮽
2nd Circuit	⮽
3rd Circuit	⮽
4th Circuit	Card v. R.J. Reynolds Tobacco Holdings, Inc., 2026 U.S. Dist. LEXIS 201636 (M.D.N.C. Sept. 3, 2026)
5th Circuit	⮽
6th Circuit	Stockdale v. Skymount Prop. Grp., LLC, 825 F. Supp. 3d 622 (N.D. Ohio 2026)
7th Circuit	Steidinger v. Blackstone Med. Servs., 182 F.4th 532 (7th Cir. 2026)
8th Circuit	Rush v. Selectquote Ins. Servs., Inc., 2026 WL 2495598 (W.D. Mo. July 30, 2026)
9th Circuit	⮽
10th Circuit	⮽
11th Circuit	See, e.g., Davis v. CVS Pharmacy, Inc., 797 F. Supp. 3d 1270 (N.D. Fla. Aug. 26, 2025)

On the other hand, there are district courts in the First, Second, Third, and Fifth Circuits that have ruled in favor of the plaintiffs’ bar on this issue with no decisions ruling in favor of corporate defendants in those circuits. There are no district courts in the Tenth Circuit that have analyzed this issue. And the common wisdom is that Howard v. Republican National Committee, 164 F.4th 1119 (9th Cir. 2026) decided this issue for the entire Ninth Circuit.

One of the most interesting parts of Card is that Judge Eagles’s opinion suggests that the issue is still live in the Ninth Circuit. Howard was decided in the context of a § 227(b)(3) claim. Thus, when Judge Eagles suggested that the term “any call” in § 227(b)(3) is a “broader term” than was used in § 227(c)(5), it also suggests that there may be some daylight between Howard and the growing number of district courts that hold §227(c)(5) does not cover text messages. Card, 2026 U.S. Dist. LEXIS 201636, at *6.

While this decision is undoubtedly a positive development for corporate counsel, we are not yet at the stage where companies can consider revising their text messaging programs. The new decisions are coming in rapidly and the landscape is changing quickly. Nonetheless, the Card decision provides corporate defendants with a powerful tool to challenge putative § 227(c)(5) class actions, premised on the receipt of text messages, particularly in the Fourth Circuit. As a result, companies should continue to raise this argument and monitor this blog to stay on top of this growing split in authority.

September 8, 2026September 8, 2026 by Gerald L. Maatman, Jr.

One Step At A Time: Another District Court Rejects The Lusardi Bifurcated Discovery And Conditional Certification Approach

By Gerald L. Maatman, Jr., Mike Rosenblatt, and Anna Sheridan

Duane Morris Takeaways: On September 3, 2026, in Harris, et al. v. Shoe Show, Inc., No. 3:25-CV-00398 (W.D.N.C. Sept. 3, 2026), Judge Susan C. Rodriguez denied Plaintiffs’ pre-discovery motion for conditional certification of an FLSA collective action and granted Defendant’s emergency motion for expedited, single stage discovery. The decision joins the growing trend of courts declining to bifurcate FLSA discovery into conditional certification and post-conditional certification stages.

Case Background

Plaintiffs Benjamin Harris and Marticilla Roberts brought suit against Shoe Show, Inc., alleging violations of the Fair Labor Stands Act (“FLSA”). According to the Complaint, filed June 11, 2025, Defendant Shoe Show, Inc. allegedly failed to pay store managers for all overtime hours worked. Specifically, Plaintiffs allege that they were required to communicate with co-workers and supervisors about work-related matters outside of the store while off-the-clock. The Complaint defined Plaintiffs’ proposed FLSA collective action as “all hourly-paid and overtime-eligible Store Managers, who worked over 40 hours in any workweek for Defendant” for the prior three plus years (the alleged lookback period was slightly longer than the typical three years for an FLSA claim due to an alleged tolling agreement).

On July 25, 2025, Plaintiffs filed a pre-discovery motion for conditional certification of a collective action under FLSA § 216(b). On July 28, 2025, Defendant filed a motion to expedite discovery and requested a stay on briefing on Plaintiffs’ pre-discovery motion for conditional certification. Defendant’s motion stated that Plaintiffs used “boilerplate declarations” that “call[ed] into question their evidentiary value.” Defendant also provided declarations from thirty store managers to counter Plaintiffs’ claims to demonstrate that their claims “are not commonly shared by the Company’s Store Managers.”

The District Court’s Ruling

In a 3-page opinion, Judge Rodriguez denied Plaintiffs’ pre-discovery motion for conditional certification and granted Defendant’s motion for expedited discovery. The Court was brief in its analysis, citing “the arguments, record, and applicable authority, including the text” of the FLSA. Op. at 1.

The Court primarily relied on the growing case law revisiting the so-called “two-step process” for certification of FLSA collective actions. Prior to 2021, in what is commonly referred to as the Lusardi approach, courts almost universally applied a two-step process to certification of FLSA collective actions, first requiring a plaintiff to make a modest factual showing that plaintiff was similarly situated to others, followed by a second stage with a more thorough examination of evidence with the benefit of discovery. See Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987). In 2021, the Fifth Circuit in Swales, et al. v. KLLM Transport Services, LLC, 985 F.3d 430, 436 (5th Cir. 2021), rejected the two-step approach for evaluating motions for certification of collective actions, holding that district courts should “rigorously scrutinize the realm of ‘similarly-situated’ workers … at the outset of the case.” In 2023, the Sixth Circuit in Clark v. A&L Homecare & Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), likewise rejected the two-step approach, though introduced a new standard requiring plaintiffs to demonstrate a “strong likelihood” that other employees are “similarly-situated” to the plaintiff.

Though the Fourth Circuit has yet to weigh in on this issue, Judge Rodriguez cited the Fifth Circuit’s approach in Swales, the Sixth Circuit in Clark, and two district court decisions within the Fourth Circuit rejecting bifurcated certification under the FLSA. Op. at 2. See Hubbard v. Southwood Realty Co., No. 3:24-CV-00481, 2026 WL 823169 (W.D.N.C. Mar. 25, 2026); Mathews v. USA Today Sports Media Grp., LLC, 1:22-CV-1407, 2023 WL 3676795 (E.D. Va. Apr. 14, 2023).

Implications for Companies

When addressing FLSA collective action claims, corporate counsel should be cautioned against accepting Lusardi’s bifurcated approach without pushback and cite to Swales and Clark to slow down a plaintiff’s race to conditional certification. After Hubbard, the Harris decision is now the second district court opinion within the Fourth Circuit in 2026 to reject Lusardi and adopt a single, streamlined discovery approach for FLSA certification. While most circuits still use the Lusardi approach, the circuit split created by the Swales (5th Circuit), Clark (6th Circuit), and Richards, et al. v. Eli Lilly & Co., 149 F.4th 901 (7th Cir. 2025), rejecting Lusardi shows that momentum is moving away from bifurcated discovery.

In the Fourth Circuit in particular, companies can add Harris, in addition to Hubbard and Mathews,to their toolkit to strengthen their arguments against the two-step Lusardi approach. As with any circuit split, this latest trend against bifurcated discovery reinforces how critical it is for companies to understand the approach in the district where they are being sued, but the recent trend away from Lusardi should give companies the impetus in any jurisdiction for arguing against bifurcated discovery and rushing to conditional certification.

September 4, 2026September 4, 2026 by Class Action Defense

The Class Action Weekly Wire – Episode 163: DOJ Secures $400 Million Settlement To Resolve TikTok Children’s Online Privacy Protection Act Lawsuit

Duane Morris Takeaway: This week’s episode features Duane Morris partner Jerry Maatman and special counsel Justin Donoho and Tyler Zmick with their analysis of significant settlement agreement resolving a DOJ enforcement lawsuit against TikTok under the Children’s Online Privacy Protection Act (“COPPA”).

Episode Transcript

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

Justin Donoho: Glad to be here, Jerry.

Tyler Zmick: Thank you for having me, Jerry.

Jerry: Today, we’re discussing one of the most significant privacy enforcement settlements we’ve seen in years. TikTok has agreed to pay $400 million to resolve allegations that it violated the Children’s Online Privacy Protection Act, known as COPPA, by collecting personal information from children under the age of 13, without allegedly complying with federal regulations and requirements. According to the U.S. Department of Justice, this is one of the largest recoveries ever, in terms of monies collected under the COPPA. It’s also accompanied by a separate effort by the government to vacate a 2019 consent decree that had governed the predecessor of TikTok for years. Justin, let’s start with the headline. What happened here in this litigation?

Justin: Thank you, Jerry. The government announced a $400 million settlement with TikTok to resolve allegations that the company knowingly allowed children under 13 to create accounts on the platform and collected personal information from those users without obtaining parental consent as required by COPPA. The settlement reportedly requires TikTok to pay $300 million immediately, and another $100 million if, and when, a federal court vacates a consent decree that was entered against Musical.ly, TikTok’s predecessor, in 2019. The settlement resolves a lawsuit that the DOJ filed in 2024 following a referral from the Federal Trade Commission.

Jerry: So, I take it this is not a new issue that TikTok has faced on the litigation front?

Justin: No, not at all. This really represents the latest chapter in a dispute that goes back nearly a decade. The original allegations involved Musically, the video sharing platform that TikTok acquired and eventually merged into its current product. The government has consistently maintained that the children’s privacy and data collection practices were at the center of both the 2019 case and the more recent litigation.

Jerry: Tyler, if you look at the allegations at issue in this lawsuit. What exactly was the Department of Justice asserting?

Tyler: So, the government’s allegations were serious and extensive. The DOJ claimed that TikTok knowingly permitted large numbers of children under the age of 13 to create standard accounts and interact on the primary TikTok platform. According to the DOJ, TikTok collected various forms of personal data from those users without notifying their parents or obtaining their parents’ consent, as required under COPPA. The government also alleged that TikTok’s efforts to identify underage users were ineffective, and basically that the company failed to delete the children’s accounts and information when the parents requested it.

Jerry: I take it, then, that these allegations overlapped with obligations in the 2019 consent decree, and so that prior order was at issue here, too.

Tyler: That’s exactly right, Jerry, and that’s what made the later enforcement action so notable. The government claimed that despite the 2019 settlement and the compliance obligations imposed by that agreement, deficiencies remained in TikTok systems for identifying children under 13 and preventing the unlawful data collection. So, from a regulator’s perspective, allegations involving children’s data are really one of the most serious privacy issues a company can face. COPPA has been a major enforcement priority for years, and when regulators believe a company has repeatedly failed to comply with the law, penalties can become significant.

Jerry: I take it that helps explain, at least in part, how we got from a $5.7 million settlement with the consent decree in 2019 to a $400 million settlement in 2026. And the settlement certainly reflects and manifests the seriousness of the alleged conduct at issue and the government’s continued focus on children’s privacy protections. Let’s turn to another aspect, which I think is the most interesting one of the story. Justin, it seems very unusual for the government to collect $400 million, and at the same time tell a court that an existing consent decree should be removed. Why would they do that, and what was at issue there?

Justin: Thanks, Jerry. Yes, the government’s position is that the circumstances today are dramatically different from those that existed when the original consent decree was entered in 2019. In the motion filed with the court, the DOJ emphasized that the original decree addressed conduct involving Musical.ly, and predecessor entities that existed years before the current structure of TikTok’s U.S. operations. The government also points to major changes in ownership and corporate governance. According to the filing, TikTok USA’s operations are now controlled by a newly formed U.S.-based entity known as TikTok US, following a restructuring and divestiture process. The government argues that this represents a fundamentally different organization than the one that engaged in the historical conduct that led to the original settlement.

Jerry: I guess it underscores the notion that no corporation is static, change is inevitable, and the same as in the law, and here’s an argument about how something should be modified or adjusted, just seven years after the 2019 decree.

Justin: Yes, that’s exactly the DOJ’s argument. They contend that the consent decree imposes requirements that go beyond the underlying statutory requirements contained in the COPPA itself, and that continued enforcement is no longer necessary or equitable, given the changes that have occurred.

Jerry: A very seminal aspect of the agreement, however, is that the statement that TikTok remains subject to COPPA regardless of what happens to the consent decree.

Justin: Correct. The DOJ makes clear that vacating the decree would not eliminate TikTok’s obligation to comply with federal privacy laws. According to the motion, TikTok would still be fully subject to the COPPA FTC enforcement authority, and future government actions if violations occur.

Jerry: Let’s talk about the broader issues and implications here. Tyler, what should corporate counsel and compliance professionals take away from this settlement, and what do you see as the most important lesson here?

Tyler: Well, the first takeaway here is simple: privacy enforcement remains a top regulatory priority. A $400 million settlement sends a powerful message that regulators view children’s privacy as an area warranting substantial penalties when they believe that companies fail to comply with the law. The second takeaway is that compliance programs matter. The government’s court filings repeatedly highlight measures that TikTok says it implemented after the original settlement, including enhanced age verification systems, artificial intelligence tools designed to identify underage users, human moderation teams, and efforts to remove accounts that appear to belong to children under the age of 13.

Jerry: I guess, in other words, regulators are looking beyond written policies and increasingly expect organizations to implement audit, operational controls, technological safeguards, monitor systems, and have a governance framework that demonstrates actual compliance in practice. A company, for instance, can’t simply point to an employee handbook and say, “We have a policy.” Governmental regulators want evidence that compliance controls are functioning in effect and have a causative impact on behavior. What about for companies involved in mergers, acquisitions, and restructuring, which certainly seem to be the backdrop here in the difference between 2019 consent decree and the 2026 settlement?

Tyler: That is another important lesson. Businesses often assume that changing ownership structures can eliminate historical regulatory concerns. This settlement shows that regulatory obligations and scrutiny can follow a company for years. Successor entities may still need to address legacy issues, regulatory settlements, and historical compliance failures. At the same time, this settlement suggests that regulators may be willing to account for meaningful remediation efforts and significant organizational changes when evaluating future remedies.

Jerry: Before we sign off on this week’s episode, how about your final thoughts in this area?

Justin: I’ll start. Jerry, what stands out to me is that this case reflects a balance between accountability and remediation. The government obtained a substantial monetary recovery for alleged historical violations, while also recognizing that the company has undergone significant changes in ownership, management, compliance functions, and privacy practices. The settlement appears designed to achieve both of these objectives.

Tyler: From my point of view, the biggest lesson is that privacy compliance has evolved into a core enterprise risk management function. It’s no longer solely a legal issue. It’s also a governance issue. It’s a technology issue. And increasingly, it is a board-level issue. Organizations that collect consumer data, especially data involving kids, should expect regulators to closely scrutinize how they obtain consent, how they manage their personal information, how they verify user age, and how they respond to consumer requests.

Jerry: Well, thanks so much. Those are great insights from both of you. The settlement certainly is a story we’ll continue to follow, both on our blog and in the Class Action Weekly Wire, as the court considers the government’s request to vacate the 2019 consent decree and as companies continue to evaluate what this record-setting settlement means in terms of privacy compliance moving forward. So, thanks so much for being here today, both Justin and Tyler, and thanks to our listeners for tuning in.

Tyler: Thanks for having me, Jerry. Thank you, listeners.

Justin: Thanks, everybody. Thanks everyone for listening.

August 31, 2026August 31, 2026 by Gerald L. Maatman, Jr.

EEOC Finalizes Strategic Plan And Proposes Overhaul Of Federal Sector Complaint Process

By Gerald L. Maatman, Jr., Bernadette M. Coyle, and Elizabeth G. Underwood

Duane Morris Takeaways: On August 26, 2026, the EEOC took two significant actions – finalizing its FY 2026-2030 Strategic Plan and voting to issue a Notice of Proposed Rulemaking that would fundamentally overhaul the equal employment opportunity complaint process for federal sector employees. Among other changes, the proposed rule would eliminate mandatory pre-complaint counseling, replace the automatic right to an administrative hearing with a targeted referral model, impose heightened pleading standards, and abolish administrative class complaints.

Given the EEOC’s responsibility to enforce federal anti-discrimination laws, these developments are a “must read” for employers.

EEOC Finalizes FY 2026-2030 Strategic Plan

The EEOC approved its FY 2026–2030 Strategic Plan, which carries forward the core priorities outlined in the draft released in early July: strategic enforcement, intake modernization, and outreach expansion. Key performance metrics include a target of 90% favorable resolution in enforcement lawsuits and a 2% annual reduction in intake inventory from FY 2025 baseline levels. For a detailed analysis of the plan’s provisions, see our blog post on the topic.

Proposed Rulemaking To Overhaul The Federal Sector Complaint Process

29 C.F.R. Part 1614 governs discrimination complaints against federal agencies. Under the current framework, an aggrieved employee or applicant must contact an EEO counselor at the agency where the individual works or applied for a job within 45 days of the alleged discriminatory action, participate in counseling or an alternative dispute resolution program, file a formal complaint if counseling or ADR is unsuccessful, await an agency investigation, and then either request a final decision from the agency as to whether discrimination occurred or request a hearing before an EEOC Administrative Judge.

The proposed rule would eliminate mandatory pre-complaint counseling and replace it with a direct-filing model. According to the EEOC, from 2017 to 2021, federal agencies conducted an average of 35,618 counselings per year, with only 385 cases settling at the counseling stage each year. Instead, individuals would have 60 days from the discriminatory act to file a complaint directly with the federal agency at issue. The agency would then have to investigate and issue a prompt final decision.

Another significant change is the replacement of the current automatic right to an EEOC administrative hearing with a “targeted referral model.” Under the current system, the EEOC processes an average of 7,514 hearing requests per year, yet only 4% proceed to an actual hearing, and only 1.7% result in a finding of agency liability. Average processing time from docketing to decision is 442 days, and successful complainants wait an average of over 2.5 years for resolution. Under the proposed rule, after the issuance of a final decision, the complainant may appeal to the EEOC, which could refer the case for Administrative Judge proceedings when a hearing or other additional proceedings are deemed necessary or efficient. Referral grounds include genuine disputes of material fact, credibility determinations, incomplete records, and complex issues.

The proposed rule would also eliminate administrative class complaint adjudication under Part 1614. The EEOC cited its limited resources, approximately 2,000 employees and 70 to 130 Administrative Judges responsible for a federal workforce of nearly two million individuals and characterized class complaints as a “perennial source of delay,” with some taking over a decade to resolve at the threshold certification stage alone. The proposal preserves putative class claims for administrative exhaustion purposes, meaning that employees could still pursue class actions in federal court. Related individual complaints may also be jointly processed.

Key Employer Takeaways

Although the Notice of Proposed Rulemaking applies only to the federal sector, it is part of a broader enforcement realignment that private sector employers should understand. Read alongside the EEOC’s FY 2025-2029 National Enforcement Plan and FY 2026-2030 Strategic Plan, the EEOC is signaling that it intends to concentrate its resources on specific substantive priority areas, such as DEI enforcement and disparate treatment theories, rather than casting a wide net.

Given the volatility of the EEOC’s priorities, it is more crucial than ever for employers to stay abreast of EEOC developments and comply with anti-discrimination laws.

August 28, 2026August 28, 2026 by Class Action Defense

The Class Action Weekly Wire – Episode 162: FLSA Conditional Certification Denied By Colorado Federal Court In Meal And Rest Break Case

Duane Morris Takeaway: This week’s episode features Duane Morris partner Jerry Maatman and associate Brett Bohan with their analysis of Colorado federal court decision denying conditional certification of an FLSA collective action brought by nurses and medical staff over alleged meal and rest break violations.

Episode Transcript

Jerry Maatman: Hello, everyone, and thank you for being here again for the next episode of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is my colleague, Brett Bohan, an associate in our Class Action Defense Group. Thanks so much for being on the podcast, Brett.

Brett Bohan: Thanks for having me, Jerry.

Jerry: Today, we’re discussing a significant Fair Labor Standard Act decision out of the U.S. District Court for the District of Colorado; name of the case is Lightner v. DaVita, Inc. It was decided by Judge Nina Wang on August 21, 2026. The case involved allegations that the employer failed to properly compensate nurses and medical technicians for shorted rest breaks and interrupted meal breaks, resulting in alleged unpaid overtime under the FLSA. Let’s start with the background, Brett. What was this case about when you strip it down to its bare essentials?

Brett: Sure, Jerry. So, the plaintiff filed the lawsuit on behalf of herself and other similarly situated employees under the FLSA. The plaintiff specifically alleged that unpaid 30-minute meal breaks were frequently interrupted because nurses and technicians remained responsible for patient care, and that DaVita failed to pay for breaks lasting less than 20 minutes. Under Department of Labor regulations, breaks generally lasting between 5 and 20 minutes are compensable work time. The plaintiff claims that employees were required to clock out for these short breaks, and that the unpaid time reduced overtime compensation when employees worked more than 40 hours in a week. The plaintiff sought to represent current and former hourly paid nurses and technicians who provided direct patient care across DaVita facilities in 41 states.

Jerry: The decision at issue involved one where the plaintiff moved for conditional certification of a collective action, and the issue at the heart of that motion is whether or not the plaintiffs had shown sufficient evidence to conditionally certify a collective action and send notices to other workers about their right to potentially opt in to the litigation. Under Tenth Circuit precedent, district courts there use a two-step process. At the first stage, plaintiffs have a rather modest burden to show that they are similarly situated to other workers, and that the case could be managed on a representative basis. Historically, courts often grant conditional certification because the standard is known to be fairly lenient. But, as Judge Wang stressed in her ruling, certification is certainly not automatic. What evidence, in this case, did the plaintiff rely upon and supported their motion?

Brett: Yeah, so in the complaint, the plaintiff argued that nurses and technicians across DaVita facilities were similarly situated because they were all non-exempt hourly employees, were eligible for overtime, all used the same timekeeping system, and they were subject to the same meal and rest break policies. The plaintiff also asserted that DaVita maintained a company-wide practice of not paying employees for breaks shorter than 20 minutes. And to support those allegations, she relied on employee testimony regarding interrupted meal breaks and certain time records that showed a break lasting only 19 minutes. So, although this is a common claim in wage and hour cases, the issue became whether there was enough evidence showing that this allegedly unlawful practice existed across the entire proposed collective.

Jerry: And as I understand it, the company essentially argued that the plaintiffs had not demonstrated a common nationwide policy that cut the same way with respect to all members of the collective action, and that the evidence really was anecdotal and isolated, so therefore the plaintiff had not shown that workers across over a dozen states had experienced the same sort of uncompensated breaks. As I understand it, the court basically concluded that the plaintiff failed to even satisfy the relatively lenient first stage burden of showing that the members of the proposed collective action were victims of a common, uniform policy, and practice. What specifically did the judge identify in terms of deficiencies with the plaintiff’s case?

Brett: Yep, that’s right, Jerry. First, the judge stated that the complaint contained largely conclusory allegations. It asserted that the employees were subjected to an unlawful pay practice but provided very little detail regarding how the alleged practice operated across DaVita’s nationwide network workforce. Second, the court found the evidentiary record to be extremely thin. The plaintiff repeatedly relied on the records of a single employee showing a 19-minute meal break. Third, although many employees testified that meal breaks were interrupted, the court emphasized a critical distinction. Interrupted meal breaks did not automatically establish unpaid, compensable short breaks under the FLSA. What was missing was evidence showing employees routinely clocked back in within 20 minutes and were not paid for that time. The court essentially said that evidence of interruptions is not the same thing as evidence of an unlawful payment practice. One employee testified that she sometimes returned to work after only 5 or 10 minutes, but Judge Wang found that isolated testimony, combined with the single time record, was insufficient to establish a common nationwide policy affecting workers in 41 states.

Jerry: For me, this is a big win for an employer. The data analytics that we run every year in creating the Duane Morris Class Action Review showed over the last three years that plaintiffs won these first-stage conditional certification motions anywhere from 72 to 83% of the time. Last year was actually 75% of the time, so think about that – 3 out of 4 cases are granted. In your mind, what was the reasoning of the judge in this case that won the case for the employer and prevented conditional certification?

Brett: Yeah, I think, Jerry, that the thing that the court really emphasized here was that although the burden for conditional certification is modest, it isn’t non-existent. And so, a plaintiff still needs to provide some meaningful evidence that connects the individual experiences of a plaintiff to a common company-wide practice. And here, the court refused to infer a nationwide policy from the scattered examples and unsupported assertions that the plaintiff gave.

Jerry: For me, the underlying message here is that courts are increasingly scrutinizing claims, especially on a nationwide basis, and large wage and hour collective actions, even at the first stage in the so-called lenient stage of considering these types of motions. Employers that I speak with often believe that because of the data analytics underlying the plaintiffs’ victories across the United States, that sometimes it’s not even worthwhile to spend the time, effort, and money to oppose these sorts of requests, but certainly the decision is a reminder that in appropriate circumstances, when called to test the proof and the pleadings, plaintiffs don’t always win, and employers can actually turn the tables and beat a motion for conditional certification of a collective action. So, let’s talk about the practicalities, and the practical implications of this ruling – what should employers take away from it?

Brett: Employers should take away several things. So, they should continue to maintain accurate timekeeping records. One reason that DaVita prevailed here is that a plaintiff couldn’t point to broad evidence demonstrating a systemic violation. Employers should also review meal break and rest break procedures to ensure they comply with FLSA requirements. Specifically, breaks of 20 minutes or less generally must be paid, and employers should ensure their timekeeping systems are not inadvertently creating unpaid short break issues. Employers in healthcare face unique risks because patient care responsibilities often interrupt breaks. And here, the court did not determine that its practices were lawful. The judge expressly stated that she was not deciding the merits of the underlying FLSA claims. So, healthcare employers still should therefore examine whether employees are routinely interrupted during breaks, and whether interruptions are being tracked and compensated appropriately.

Jerry: Well, great discussion, Brett. The bottom line here is Judge Wang denied conditional certification because the plaintiff was unable to show that the employers, nurses, and technicians across 41 states were subject to a unifying common policy of denying compensation for breaks of less than 20 minutes. So, basically, the court interpreted the statute, 29 U.S.C., Section 216(b), to create a meaningful evidentiary threshold, even if it’s a relatively modest one. So, Brett, thanks so much for being here today and lending your thought leadership in this space, and thank you to our listeners for tuning in.

Brett: Thanks everyone for listening, and thanks, Jerry.

August 27, 2026August 27, 2026 by Gerald L. Maatman, Jr.

Colorado’s Proposed Rules Require Meaningful Human Review And Reconsideration Of Employment Decisions Materially Influenced by AI

By Gerald L. Maatman, Jr., Justin Donoho, and Hayley Ryan

Duane Morris Takeaways: On August 11, 2026, the Colorado Department of Law released a set of proposed rules intended to govern the implementation of Colorado’s Automated Decision-Making Technology Act (“ADMT Act”) and Conversational Artificial Intelligence Service Operator Requirements (the “Chatbot Safety Act”). Both laws, and the proposed rules (to the extent they become final, following a notice and comment period), take effect January 1, 2027.

The proposed rules under the ADMT Act would add additional layers of regulatory burdens on companies using AI-based tools to make consequential automated decisions affecting a consumer’s access to, eligibility for, or terms of employment, education, housing, lending, financial services, insurance, health care, essential government services, and public benefits.

Take AI employment tools, for example — if Colorado’s ADMT rules were to become final, they would require companies using AI employment tools to make available and readily accessible to job candidates and employees:

the make, model, and version number of any AI tool whose outputs were used or will be used to materially influence a consequential employment decision such as in candidate screening, interviewing, hiring, firing, and other consequential employment decisions;
the types and categories of personal data input to the model;
the sources of these input data, including the identities of intermediary and original sources; and
to the recipients of any adverse outcomes materially influenced by the AI tool:
1. within 30 days, notifications of the adverse outcome setting forth the decision, purpose of the AI tool, the reasoning and primary factors relied upon by the AI tool to produce the output, and the relative roles of the AI tool and human reviewers in the decision — such as whether the employer followed the human best practices to mitigate the risk of AI hiring tool noncompliance with antidiscrimination statutes that we identified in our blog (here); and
2. within 45 days after receipt of a request for review, complete a meaningful human review and reconsideration of any adverse outcome, to the extent commercially reasonable.

The proposed rules under the Chatbot Safety Act would add age-assurance, disclosure, privacy, minor-protection, crisis-response, and reporting requirements on companies using AI-based chatbots.

The analysis in our blog post focuses on the “meaningful human review and reconsideration” component of the ADMT Act and its corresponding proposed rules, in the context of adverse employment decisions (number 4(b), above), to assist companies in preparing for compliance by January 1, 2027, and in commenting on the proposed rules before the comment period closes on October 26, 2027, as may be appropriate for their businesses.

Organizations evaluating and seeking to comply with the proposed rules should continue monitoring the rulemaking process, as key provisions, including those discussed below, may change before the rules become effective.

Background

Colorado’s ADMT Act (Colo. Rev. Stat. § 6-1-1701, et seq.) was enacted May 14, 2026, and will become effective January 1, 2027. It provides, among other things, that when an employee or job applicant experiences an adverse outcome resulting from a consequential decision that was materially influenced by AMDT such as an AI employment tool, then the employee or job applicant may request, and the employer must provide (i) instructions for requesting personal data and correcting factually incorrect or materially inaccurate personal data used in the decision; and (ii) “an opportunity for meaningful review and reconsideration of the consequential decision, to the extent commercially reasonable.” Id. § 6-1-1705.

“Meaningful Human Review,” as defined under the ADMT Act, requires the employer to designate an individual who has authority to approve, modify, or override a consequential decision to perform the review. Id. § 6-1-1701(15). Further, in conducting the review, the designated individual must consider relevant, available primary evidence, must be trained to conduct the review, must not default to the system output, and must have access to sufficient information to understand (i) the output’s intended use, material limitations, and categories of inputs; and (i) the principal factors used to generate the output, without requiring disclosure of proprietary source code, model weights, or other trade secrets. Id.

The ADMT Act also provides that, on or before January 1, 2027, Colorado’s Attorney General shall adopt rules to clarify and implement these requirements. Id.

On August 11, 2026, the Colorado Department of Law released a set of proposed rules under the ADMT Act and Chatbot Safety Act that, among other things, would clarify and implement rules regarding reviewer standards, commercial reasonableness, response requirements, and documentation requirements, as discussed below.

Who Can Perform A Meaningful Human Review?

The proposed rules provide that an individual who conducts a meaningful human review must meet the following criteria:

Independence – The reviewer must be an independent reviewer who did not make the original decision and who is not a subordinate of the original decision-maker, whenever feasible.
Subject matter understanding – The reviewer must have a level of subject matter understanding that is commensurate with the nature of, and negative consequences resulting from, the adverse outcome of the consequential decision being reviewed.
Sufficient training – The reviewer must be trained regarding (a) accuracy and objectivity in decision-making; (b) information considered by the AI employment tool; (c) the output’s intended use, material limitations, and categories of inputs; and (d) the subject matter at issue at a level that would enable the reviewer to identify whether review of additional available primary evidence would be valuable, and to review and understand that evidence.
Sufficient authority – The reviewer must not be subject to steering by the upper management that would influence the reviewer’s decision, and they must be shielded from potential retaliation.
Unassisted by AI – The reviewer may not use any ADMT in conducting his or her review.

When Is Meaningful Human Review Commercially Reasonable?

Under the ADMT Act, employers receiving requests to review adverse outcomes materially influenced by an AI employment tool must conduct a meaningful human review and reconsideration of such outcome “to the extent commercially reasonable.”

The proposed rules provide that an employer bears the burden of demonstrating that meaningful human review is not commercially reasonable.

To meet this burden, employers must use specific evidence, and consider the following factors, weighed together, with no single factor being dispositive:

type of review required — i.e., either (a) if the circumstances and request indicate that the AI tool may have malfunctioned, then correcting and re-performing the decision-making process; or (b) if additional evidence is submitted by the employee or job applicant, then considering whether that evidence changes the adverse outcome;
magnitude of harm resulting from the adverse outcome;
reversibility of the adverse outcome;
value provided by the review of available primary evidence;
employer size and capacity;
marginal cost and technical feasibility of the review; and
availability of qualified reviewers.

When the harm to an employee or job applicant resulting from an adverse outcome is a severe and irreversible denial of a basic human need, meaningful human review is presumed to be commercially reasonable. This presumption of commercial reasonableness can be rebutted by evidence showing that the review is technically or financially impossible or could not change the adverse outcome of the consequential decision.

When And How Must An Employer Respond To A Request For Review?

Within 10 days after receiving a request for review of an adverse outcome of a consequential decision meaningfully influenced by an AI employment tool, the employer must confirm receipt of the request and provide information about how the employer will process the request.

Within 45 days of receiving the request, meaningful human review must be completed, and a response must be provided to the employee or job candidate. The response must include the reviewer’s decision to confirm or override the consequential decision, the type of review conducted, the factors considered in making that decision, and the reasons the reviewer decided to confirm or override the consequential decision. Reasons provided must be specific to the evidence provided, and not a recitation of the AI tool’s general logic.

Where possible, an adverse outcome must be stayed pending meaningful human review.

What Documentation Of Meaningful Human Reviews Must Be Retained?

When a meaningful human review is conducted, the employer must retain a record showing:

the reviewer identity, authority, and relevant training;
review timestamps;
primary evidence available to the reviewer, including information provided by the employee or job candidate;
the reviewer’s access to the AI tool’s intended use, limitations, inputs and principal factors;
whether the reviewer approved, modified, or overrode the output; and
a written justification for the reviewer’s decision to approve, modify, or override the output.

Implications For Companies

Colorado’s ADMT Act and Chatbot Safety Act and their corresponding proposed rules add significant operational obligations and compliance burdens for companies using automated decision-making technology to meaningfully influence consequential decisions, and using chatbots, respectively.

This blog post identified one component of these multifaceted burdens relating to one type of ADMT – meaningful human review and consideration of employment decisions materially influenced by AI employment tools.

Although the ADMT Act and Chatbot Safety Act do not provide a private right of action, violations may be prosecuted by the Colorado Attorney General and are treated as a deceptive trade practice under the Colorado Consumer Protection Act, carrying civil penalties of up to $20,000 per violation.

Companies using or considering using ADMT or chatbots should consider whether to comment on the proposed rules before the comment period closes on October 26, 2027, should continue to monitor the content of the rules as they may evolve during the notice and comment period, and should prepare for complying with the rules by the time they are scheduled to come into effect on January 1, 2027.

August 26, 2026August 26, 2026 by Gerald L. Maatman, Jr.

Colorado Federal District Court Denied FLSA Conditional Certification In Meal And Rest Break Case Due To Insufficient Evidence Of A Companywide Practice

By Gerald L. Maatman, Jr., Tiffany Alberty, and Brett Bohan

Duane Morris Takeaways: On August 21, 2026, in Lightner v. DaVita, Inc., No. 23-CV-03104 (D. Colo. Aug. 21, 2026), Judge Nina Y. Wang of the U.S. District Court for the District of Colorado denied a motion seeking conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”). Plaintiff, a former DaVita nurse, alleged that the healthcare company maintained a practice of failing to pay its nurses and technicians for rest breaks lasting fewer than 20 minutes across 41 states. The Court concluded that Plaintiff had not made the threshold factual showing necessary to demonstrate that putative collective members were victims of a common policy or plan, despite the lenient standard that applies at the conditional-certification stage. The decision highlights the evidentiary burden that FLSA plaintiffs must meet to obtain conditional certification and demonstrates that conclusory allegations and sparse evidence, even at this early stage, will not suffice.

Case Background

Plaintiff Anduin Lightner, an hourly nurse formerly employed by DaVita, a nationwide dialysis and healthcare provider, filed this action in November 2023. Id. at 1-3. She alleged that DaVita routinely required its nurses and technicians to “remain responsible for patient care” during their meal breaks, causing frequent interruptions. Id. at 2. Despite those interruptions, DaVita automatically deducted 30 minutes from each shift lasting at least six hours, depriving employees of compensation for time they actually worked. Id. Lightner further claimed that DaVita required employees to clock out for rest breaks lasting fewer than 20 minutes. Id. Combined, she claimed, this off-the-clock time resulted in unpaid overtime for employees who worked more than 40 hours per week. Id.

Based on these allegations, Lightner moved for conditional certification of a collective covering “all current and former hourly nurses and technicians” who provided “direct patient care” at DaVita facilities across 41 states and who allegedly lost overtime pay because of the company’s failure to compensate them for short rest breaks. Id. at 3. Before the Court ruled on the motion, Lightner withdrew her request to certify a separate meal-break collective, narrowing the case to the rest-break theory alone. Id. at 3, n. 1.

After Lightner filed her motion, DaVita moved to strike all consent forms on the grounds of false and misleading communications to recruit opt-in plaintiffs. Id. at 3-4. The Court agreed and ordered a curative notice; approximately half of the original opt-in plaintiffs filed corrected consent forms. Id. at 4.

The Court’s Opinion

Applying the two-step framework approved by the Tenth Circuit in Thiessen v. General Electric Capital Corp., the Court assessed whether Lightner had raised substantial allegations that the proposed collective members were victims of a single decision, policy, or plan. Id. at 4.

The Court found that the complaint contained only conclusory assertions about DaVita’s supposed practice of failing to pay for short rest breaks. Id. at 10. The allegations did not explain how the alleged practice was implemented, how frequently it deprived employees of compensation, or which of DaVita’s many facilities (spanning 41 states) were involved. Id. The Court noted that such bare-bones allegations, without more, do not qualify as “substantial” for conditional-certification purposes. Id.

Turning to the evidentiary record, the Court found the showing equally deficient. Id. at 11-13. Lightner supported her conclusory allegations with citations to only one piece of evidence: the time records for a single employee (who had not filed a corrected consent form and who did not identify in which state she worked), but the Court determined this did “little to establish a companywide practice, across 41 states, of failing to compensate employees for short rest breaks.” Id. at 11-12. Although Lightner attached hundreds of pages of deposition testimony to her motion, she failed to “cite any of this evidence in support of her claim.” Id. at 12.

Nevertheless, the Court reviewed the deposition testimony and acknowledged that testimony from several employees established that their meal breaks were frequently interrupted. Id. at 12. However, that testimony did not demonstrate that interrupted employees “started working again within 20 minutes of starting their break.” Id. The Court concluded that Lightner had not bridged the gap between the “interruptions happening” and an alleged 41-state common practice of not paying for sub-20-minute breaks. Id. at 13-14.

The Court emphasized that while the conditional-certification standard is lenient, “it is not nonexistent, and it cannot be satisfied by unsupported assertions.” Id. at 14. Accordingly, the Court denied the motion. Id. at 15.

Implications For Employers

The Lightner decision offers several important lessons. First, it reaffirms that, even at the initial conditional-certification stage where the standard is intentionally modest, courts will scrutinize whether a plaintiff has offered any concrete evidence of a common policy or plan. Conclusory allegations that a practice existed “companywide” will not carry the day absent at least some factual support tying the alleged practice to the employer’s operations.

Second, the decision illustrates the challenges FLSA plaintiffs face when attempting to certify geographically broad collectives. The Court was unwilling to conclude that, because meal breaks were sometimes interrupted for some employees at some locations, Plaintiff had shown that the company systematically refused to pay for compensable short breaks across dozens of states.

Third, the ruling underscores the importance of employers maintaining clear timekeeping practices and policies. DaVita’s own time records were a focal point of the Court’s analysis, and the absence of widespread evidence of unpaid sub-20-minute breaks in those records undermined Plaintiff’s theory.

Finally, the case serves as a cautionary note about opt-in solicitation practices in FLSA collective actions. The Court’s finding that Plaintiff’s counsel used false and misleading communications to recruit opt-ins—resulting in a curative notice order and the loss of approximately half the original opt-ins—demonstrates the risks of aggressive solicitation tactics and the scrutiny courts will apply to the process.