Class Action Defense – Class Action Defense

July 23, 2025July 23, 2025 by Class Action Defense

California Federal Court Rejects Cy Pres Distribution In Massive Class Action

By Gerald L. Maatman, Jr., Eden E. Anderson, and Eisha Perry

Duane Morris Takeaways: Judge William Alsup of the U.S. District Court for the Northern District of California issued a decision in Nehmer, et al. v. U.S. Department of Foreign Affairs, Case No. 3:86-CV-06160 (N.D. Cal. May 20, 2025), rejecting class counsel’s proposed cy pres distribution of over $63,000,000 in funds appropriated by Congress to settle the claims of deceased Vietnam veterans injured by Agent Orange. Judge Alsup explained that a cy pres distribution was not authorized by the 1991 consent decree in the case, nor by any statute and that class counsel needed to redouble efforts to locate veterans’ survivors or to pay veterans’ estates. The decision makes clear that, absent an express cy pres provision in a class action settlement or statutory authority supporting it, a cy pres distribution is not authorized.

The ruling is an important primer for corporate counsel in the consideration and use of settlement tools – such a cy pres distribution – in resolving class actions.

Case Background

The Nehmer case settled in 1991 and involved the claims of veterans who suffered from illnesses because of the use of Agent Orange during the Vietnam War. Because the extent of harm caused by Agent Orange was not then fully known, the consent decree that was entered after the settlement required claims to be automatically reopened if they turned on diseases the Department of Veterans Affairs had earlier rejected but later recognized as service related. The consent decree did not contain a time limit sunsetting the opportunity to file claims, nor for the VA’s obligation to re-adjudicate claims. Over the last nearly 35 years, more than $4.5 billion in retroactive payments have been made to veterans under the settlement.

At issue before the Court was the re-adjudicated claims of 1,137 veterans who are now deceased and whether the $63,000,000 in settlement payments owed to those deceased veterans could instead, as proposed by class counsel, be paid to a cy pres organization. A large portion of the deceased veterans owed these funds had no eligible survivors nor any open estate and, for those that did have eligible survivors, efforts to locate the survivors through the use of private investigators proved unsuccessful. The VA took the position that, because the consent decree did not provide for a cy pres distribution, the funds should remain in the VA’s possession, available for payment should any survivor ever emerge to claim their share.

The Decision

The Court rejected class counsel’s proposed cy pres distribution, noting it was not authorized by the consent decree nor by any statute, and that the Court therefore lacked power to order such a distribution. As to the deceased veterans with survivors, the Court held that more effort needs to be undertaken to find them, including repeating the private investigator’s efforts and through the placement of advertisements. As to the deceased veterans who seemingly had no survivors and closed estates, the Court determined that more effort needs to be expended to pay the estates, even if costly. The Court explained that payment to the estates might be possible without having to re-open the estates and class counsel needed to expend more efforts in this regard, efforts that might even reveal beneficiaries.

Implications of the Decision:

The Nehmer decision makes clear that, absent an express cy pres provision in a class action settlement or statutory authority supporting it, a cy pres distribution is not authorized. Even when there is a cy pres provision in a class action settlement, courts are increasingly scrutinizing such clauses. Parties need to think carefully about utilizing the doctrine and the designation of unclaimed settlement funds.

July 18, 2025July 18, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 110: Key Developments In WARN Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Kathryn Brown with their analysis of key developments in class action litigation involving the Worker Adjustment and Retraining Notification (“WARN”) Act.

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

Episode Transcript

Jerry Maatman: Hello everyone and welcome to the Class Action Weekly Wire, the podcast where we explore critical issues in class action litigation. I’m Jerry Maatman of Duane Morris, and joining me today is Kathryn Brown, one of our class action lawyers based in Ohio. Great to see you, Kathryn. Welcome to the podcast.

Kathryn Brown: Thanks, Jerry. I’m so glad to be here.

Jerry: Today, we’re diving into a very complex area in the class action world – class actions under the WARN Act. Let’s start with some of the basics. Kathryn, can you describe for our listeners what WARN is all about?

Kathryn: Sure, the WARN Act, which stands for the Worker Adjustment and Retraining Notification Act, is a federal law that requires large employers, those with 100 or more full-time employees, to give at least 60 days’ notice before conducting a mass layoff or plant closing. What’s made this area explode recently, especially post-COVID, is the sheer volume of layoffs that occurred with little or no notice that opened the door for a wave of class actions which are still weaving through the courts. Now, if employers fail to comply with the WARN Act, they may owe up to 60 days of wages and benefits to each impacted employee.

Jerry: COVID-19 certainly has been a tipping point in the courthouse in many areas of litigation. Specifically, how has it shaped WARN Act litigation?

Kathryn: It’s been a game-changer. Many employers tried to argue that the COVID-19 pandemic was a natural disaster or an unforeseeable business circumstance that excused the 60-day notice requirement under the WARN Act, but some courts rejected those defenses outright – especially where the employer failed to give any notice or gave only partial notice.

Jerry: Really interesting, both from a legal and societal perspective, in terms of, I take it, courts still expected companies, employers to abide by the prescriptions of WARN, despite all the challenges posed by COVID-19.

Kathryn: Yes, and some of the 2024 decisions confirm that courts looked closely at whether employers gave as much notice as possible as required, even under those exceptions, to WARN.

Jerry: Well, you’ve done a lot of writing in this area, and you were one of the authors of the Duane Morris Class Action Review. In your opinion, what are some of the standout decisions in this space in 2024?

Kathryn: There were several. One important case was Staley v. FSR International Hotel, which involved the Four Seasons Hotel in New York City. The court in Staley granted class certification of a class of hotel workers furloughed during the pandemic. The court found that common issues of law and fact predominated because the central issues in the case – whether the extended furlough qualified as a “mass layoff” or “plant closing” under the WARN Act, and whether the employees were entitled to severance pay – were common issues across all class members. The court opined that although there were some individual differences among the class members, such as the fact that some employees worked at other hotel properties after the hotel closed, the court determined that these variations did not override the predominance of common legal questions.

Jerry: So even in certain circumstances, extended furloughs rather than terminations can trigger WARN Act obligations?

Kathryn: They can, especially if they last over six months. Courts are treating those as employment losses under both federal and state WARN acts. Other important rulings under the WARN Act in 2024 addressed employers’ notice obligations when an anticipated date of termination is postponed, the need to provide a brief statement of the reason for a shortened notice period, employers’ greater risk of exposure to liability under state law versions of the WARN Act, and how back pay damages owed to affected employees are calculated following a determination of liability. This was the case in Messer v. Bristol Compressors, where the employer postponed the employees’ final termination date, but failed to issue additional notice. The court held that once a shutdown is delayed by 60 days or more, a new 60-day notice under warrant is required.

Jerry: I know if the compliance obligations weren’t tough enough, we also are dealing with a patchwork quilt of state law mini-WARN acts. Have there been decisions, in your mind, in terms of those state law provisions that also complicated this space?

Kathryn: Absolutely. The New York and New Jersey WARN Acts, for example, often require longer notice periods than the federal WARN Act. They require notice periods of up to 90 days and impose stricter requirements than under the federal WARN Act. States often have different definitions, different notice formats, and different exceptions than under the federal WARN Act. The plaintiffs’ bar knows this and uses it to their advantage.

Jerry: Well, the plaintiffs’ bar is nothing if not innovative, and certainly is always kind of chasing that money trail. What sorts of verdicts, damages, settlements did you see in the past year on the WARN front?

Kathryn: Right, so a core component of potential damages in a WARN Act lawsuit is back pay owed to affected employees for the period of the violation. Given the strict standards for notification under the WARN Act, it’s no surprise that the standards of calculation of damages owed to affected employees likewise heavily favor employees. So, one case is Chaney v. Vermont Bread Company. In that case, the court awarded millions of dollars in back pay, even rejecting attempts by the employer to offset damages based on help the employer provided after the layoffs or payments made by a receiver. The court provided guidelines as to acceptable forms of calculating damages in WARN Act cases, as well as made clear that employers cannot mitigate damages based on efforts to assist employees post-layoff or by suggesting that payments made by a receiver should offset their liability.

Jerry: One of the attributes of the Duane Morris Class Action Review is an analysis of major settlements in the class action world. What about in the WARN area – what were some of the major class action settlements over the past year?

Kathryn: Well, in the case of Nunn v. Bitwise, the court approved a $20 million settlement to resolve claims under both the federal WARN Act and the California WARN Act. WARN Act settlements often come through bankruptcy proceedings, which adds certain amount of complexity – but does not erase liability.

Jerry: At the end of the day, then, what would be your takeaways for employers in dealing with WARN Act issues in the class action space?

Kathryn: The key takeaway is to treat WARN notice obligations extremely seriously, and get counsel involved. If you’re downsizing or restructuring, you may be triggering WARN Act, and failing to comply can lead to massive liability.

Jerry: Well, that’s great succinct advice. Kathryn, thanks so much for joining us on the podcast today.

Kathryn: Thank you so much for having me, Jerry, and thank you, listeners.

July 17, 2025July 17, 2025 by Class Action Defense

No Right To Bear Arms In Class Action Complaint: Federal Court Rejects Shotgun Pleading

By Jerry Maatman, Shannon Noelle, and Alek Smolij

Duane Morris Takeaway: On July 2, 2025, in Bush v. Honda Development & Manufacturing of America, LLC, Case No. 1:25-CV-893, 2025 WL 1830702 (N.D. Ala. July 2, 2025), Judge R. David Proctor of the U.S. District Court for the Northern District of Alabama dismissed a class action complaint with leave to replead on the basis that the complaint utilized impermissible “shotgun pleading” in connection with a Title VII and Section 1981 class action brought by current employees, associates, and contractors alleging that the employer (an automobile manufacturing company) engaged in a pattern and practice of racial discrimination in employment opportunities. The Court granted leave to file an amended complaint containing the required specificity demonstrating “common answer[s]” to the question of why class members were allegedly “disfavored” by the employer such that class action treatment is justified. This decision underscores that plaintiffs must plead factual content showing ascertainability, commonality, typicality, adequacy of representation, predominance, and superiority at the pleading stage to move forward with claims asserted through the class action vehicle.

Background

On October 29, 2024, Plaintiff Johnny Bush, Jr. — an African American employee in a supervisory fleet maintenance role at Defendant Honda Development & Manufacturing of America, LLC (“HDMA”) — brought an action on behalf of himself and a putative class of African American employees, associates, and contractors alleging violations of Title VII of the Civil Rights Act of 1964 and Section 1981 of the U.S. Code claiming class members did not have the opportunity, due to their race, to apply for certain jobs or promotions, were discouraged from applying, or applied and did not receive such positions while working for HDMA. Bush v. HDMA, 2025 WL 1830702, at *1 (N.D. Ala. July 2, 2025) (citing ECF No. 1). HDMA brought a Motion to Dismiss and For A More Definition Statement arguing that the class action complaint failed to satisfy Federal Rule of Civil Procedure 23(a) requirements (i.e., ascertainability, commonality, typicality, adequacy, predominance, and superiority) and maintaining that the complaint was an impermissible shotgun pleading. Id. (citing ECF No. 16, at 17-20). The Court agreed on all fronts.

The Court’s Decision

The Court found that the complaint failed to meet Rule 23(a) requirements rejecting Plaintiff’s argument that Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), requires an “evidentiary record” to conduct such an analysis and finding, instead, that class allegations must be reviewed for “some specificity . . . even as early as the pleadings stage.” Bush, 2025 WL 1830702, at *3.

The Court found ascertainability to be lacking as HDMA’s business records would not be able to identify: (1) class members that did not apply for positions because the position was not properly posted; (2) class members that were unaware of vacancies; or (3) class members that did not hear about positions through word of mouth. Id. at *1. On the issue of commonality, the Court determined that the proposed class was not likely to generate “common answers” to the question of how or why class members were allegedly disfavored due to their race because the complaint alleged “a full range of different claims,” such as “being discouraged from applying for a job, applying for a job and not getting it, or not being told about an opportunity,” which are all separate theories presenting different factual scenarios. Id. at *2. The complaint also failed to establish that Plaintiff Bush was an adequate class representative as he holds a supervisory position at HDMA but seeks to represent class members in non-supervisory roles as well as contractors who cannot bring Title VII claims. Finally, on the requirement of predominance, the Court found that the class complaint sought damages that could only be assessed on an individual basis, i.e. “back pay; front pay; lost job [and] preferential rights to jobs.” Id. at *4 (citing ECF No. 1). The Court rejected Plaintiff’s argument that the injunctive relief sought established predominance given that the monetary damage sought were not “incidental” to the injunctive relief but, instead, at the forefront of the redress requested. Id.

The Court also considered the “form of the complaint” to be a deficient “shotgun pleading” as it was replete with vague and conclusory allegations. The Court gave the specific examples of allegations that: (1) “word-of-mouth information disproportionately excluded or disadvantaged African American employees from knowing about and competing for positions and training,” (2) non-African American employees were “promoted at a faster pace to a higher-level position,” (3) HDMA’s “discriminatory practices . . . deterred the Plaintiff and putative class members from further pursuing additional vacancies and job opportunities,” (4) “departmental and plant-based selection criteria and/or restrictions [] favored employees in departments and/or facilities or locations that were disproportionately Caucasian,” (5) HDMA’s “recruitment and selection process perpetuated past and existing racial disparities in the jobs at issue,” and (6) “Plaintiff [] has personal knowledge of the discriminatory obstacles and disparate impact experienced by other members of the putative class.” Id. at *4. The Court concluded, quoting Dukes, that these allegations failed to demonstrate “glue holding the alleged reasons for all th[e challenged employment] decisions together” and therefore fail to show how class treatment would generate a common answer as to why members of the class were allegedly disfavored.

The Court gave Plaintiff leave to replead the class allegations to cure the identified deficiencies but instructed that any amended complaint should only include allegations for which Plaintiff has a “good faith basis . . . supported by Supreme Court and Eleventh Circuit case law.”

Implications For Defendants

This decision serves as an important reminder that motion to dismiss scrutiny of class claims is more than just a cursory review particularly where the class definition spans employees at different levels (supervisory, non-supervisory, and contractor) and challenges a wide array of alleged employment decisions not facially suitable for common answers that would make class treatment of such claims efficient or logical.

Moreover, shotgun pleading that features vague and conclusory allegations devoid of factual content will not survive motion to dismiss or for a more definite statement review and provides fertile ground for discerning defendants to mount challenges to avoid the cost and expense of class adjudication at the outset.

July 10, 2025July 10, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 109: Mid-Year Class Certification Report & Analysis

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley with their report on trends analyzed in the class certification rulings issued through the first six months of 2025.

Read our detailed breakdown of 2025 class certification rulings here.

Episode Transcript

Jerry Maatman: Hello everyone, and welcome to the next episode of our Class Action Weekly Wire series. I’m Jerry Maatman, and I’m joined today by my partner, Jennifer Riley, to talk about the mid-year review of class certification numbers. Jen, welcome to the podcast.

Jennifer Riley: Thanks so much, Jerry. It’s great to be here, especially with so much going on in the class action space.

Jerry: Well as of June 30, 2025, we’re six months into the new year. Let’s start with the big picture: courts ruled on approximately 207 class certification motions in the first half of the calendar year, and plaintiffs were successful in 69% of those motions. That’s quite a jump from 2024, isn’t it?

Jennifer: It is. So, last year the success rate was 63%. We’re seeing a notable uptick there, although it’s still a bit lower than what we saw in 2023, and even 2022, when certification success rates hit 72% and 74% respectively. The trajectory so far this year suggests that plaintiffs are regaining some of that ground.

Jerry: Sure sounds like it. I know that certification is a function of where the case is, the judges before it, and the subject matter area. So these are general numbers. What do you look when you peel back that number and look at the specific areas?

Jennifer: Well, I think the subject matter area has been particularly notable in terms of the numbers we’re seeing. The highest success rates in 2025 so far have come from WARN, antitrust, ERISA, and wage and hour. WARN has had a 100% certification rate so far, even though that was only two cases. Antitrust and ERISA are close behind at 92%. And then there’s wage and hour, which is always a hot topic. Wage and hour is showing us a strong 82% success rate in terms of courts granting certification.

Jerry: Let’s focus on wage and hour. Let’s talk about Fair Labor Standards Act conditional certification. That continues, it appears to be, a very, very hot area of the law, isn’t it?

Jennifer: Absolutely. From January through June of this year, courts issued 74 rulings in FLSA matters. 71 of those were first stage motions for conditional certification, and plaintiffs won 58 of them. That is an 82% success rate, up slightly from the 79% success rate we saw in 2024.

Jerry: I think it’s certainly obvious that there are epicenters of wage and hour FLSA litigation, particularly the Second and Third Circuits, in terms of the number of filings and the success rates there. What makes these places more favorable to the plaintiffs?

Jennifer: That’s absolutely right. So, we’re seeing those jurisdictions particularly show favorable results for the plaintiff at the decertification stage. Also, the usual trend where defendants succeed more often isn’t really playing out this year. We’ve only seen three decertification rulings so far, and plaintiffs have won two of those.

Jerry: I know location impacts certification numbers in terms of the standards in the various circuits. We’re seeing fewer rulings than in past years in the wage and hour space in both the Fifth and Sixth Circuits which are controlled by the Swales case and the Clark case. What’s your thoughts or takeaways on what we’re seeing in 2025?

Jennifer: That’s very important to know, Jerry. I completely agree. I think, what we’re seeing there in those circuits, it’s reflective of a strategic move by the plaintiffs. Both of those circuits have adopted stricter standards for conditional certification, which makes them arguably less appealing venues for plaintiffs. So plaintiffs, therefore, are shifting their filings and their motions toward those more lenient circuits which really boosts their odds of success.

Jerry: Think it’s ironic that [the FLSA] is a piece of new deal legislation signed in 1938. And here, in 2025, we still have three different standards around the country for the circumstances under which wage and hour cases will be certified. Do you see a shift in a geographical sense of where the plaintiffs’ bar hunts out these cases, files them, to maximize their chances for certification?

Jennifer: Absolutely. I think the mid-year numbers are showing us that things like venue selection, subject matter, and timing are all critical components in plaintiffs’ class certification strategy. So, with FLSA continuing to dominate, we’ll definitely be watching closely to see how courts respond in the second half of the year, and whether we see more shifting standards influencing where and when we’re seeing motions filed by the plaintiffs’ bar.

Jerry: Well, the scorecard is interesting through mid-year 2025. We’ll have the final numbers for our clients in the first week of January of 2026 upon publication of the Duane Morris Class Action Review. So, stay tuned and gain more insights in this area. Thanks Jen so much for your thought leadership as always in this particular space.

Jennifer: Thank you, Jerry, and thanks so much to our listeners for tuning in for this week’s edition.

July 3, 2025July 3, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 108: Mid-Year Class Action Settlement Report & Analysis

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley with their report on class action settlement trends at the halfway mark of 2025.

Read our detailed breakdown of 2025 class action settlements here.

Episode Transcript

Jerry Maatman: Hello, everyone, and welcome to the next episode of the Class Action Weekly Wire. I’m Jerry Maatman, and with me today for our special mid-year review of class action settlements is my partner, Jen Riley. Jen, welcome back to the podcast.

Jennifer Riley: Thanks so much, Jerry.

Jerry: Well, we’re halfway through 2025. What sort of developments do we see on the settlement front?

Jennifer: Thanks, Jerry. It’s been quite a ride. The data confirms what we’ve been tracking since 2022 – we’re in a new era of class action litigation, corporate defendants have been facing unprecedented settlement exposures. The total value of class action and government enforcement settlements hit $66 billion in 2022, $51.4 billion in 2023, and $42 billion in 2024. As of mid-2025, we have already reached $21.77 billion, keeping pace with those historic high numbers that I just mentioned.

Jerry: Those are enormous numbers, and obviously the snapshot for the first six months of 2025 only involved the top 5 settlements in each of these areas. So, we’re talking about over a $180 billion dollars in just three and a half years. That’s remarkable.

Jennifer: Exactly. It is the largest 3-year span of settlements in U.S. legal history. If the current trends hold, 2025 may end up right alongside those previous three years. It may not be a record breaker, but it’s definitely in that same upper tier.

Jerry: When you peel back the onion skin and dig down into the numbers, where are you seeing the highest settlement values so far in 2025?

Jennifer: That would probably be in the product liability and mass tort space. Those areas are leading by a long shot, $13.09 billion in just the first half of 2025. The next area is antitrust, which follows at $4.36 billion, and then, after that, securities fraud at $2.03 billion.

Jerry: I recall prior to Covid, one could count the number of $1 billion settlements on one or two fingers, sometimes in a 5-year period, although those are becoming more commonplace these days. Are there any standout billion-dollar settlements so far in 2025?

Jennifer: Great question. There are a few major ones, I would say the In Re College Athlete NIL Litigation – that one hit $2.78 billion. That’s the one that gave athletes retroactive compensation for missed name, image, and likeness opportunities. It’s really a historic shift. Also worth noting, Purdue Pharma’s $7.4 billion opioid-related settlement. Just last week, Purdue announced that it is preparing to send an updated bankruptcy plan and proposed settlement to a vote following a broad sign on by all U.S. states and territories.

Jerry: Way in and of themselves, those are landmark figures for those settlements. Are we seeing, as we did the last three years, increasing number of $1 billion settlements per case?

Jennifer: We are, there have been three billion-dollar settlements so far in 2025, that brings us to 37 total settlements over a $1 billion since 2022. It’s the most in any three-and-a-half-year period ever.

Jerry: Again, remarkable figures in terms of your analysis of that settlement activity. Are there particular sectors you would point out to our listeners that are worth looking at or to view as emerging areas of risk and exposure?

Jennifer: Data, breach and privacy settlements are increasingly prominent. For example, AT&T just agreed to pay $177 million dollars for a breach-related case. And Clearview AI settled for $51.75 million over biometric privacy violations. Also, discrimination and civil rights cases continue to generate large settlements, showing that the courts are still a viable forum for those systemic claims.

Jerry: Let’s talk about antitrust – that’s historically been an area where there have been very high settlements. What’s going on in that space thus far in 2025?

Jennifer: The antitrust sector is very active. The top 5 settlements in 2025 alone total more than $4 billion, with notable cases against the NCAA, CDK Global, and Perdue Farms. There’s a sustained focus on wage suppression and market manipulation. Those are key areas of concern for both the regulators and for the plaintiffs.

Jerry: The Duane Morris Class Action Review also tracks governmental enforcement settlement activity, insofar as those cases certainly have the feel look of a class action. What’s going on on that particular front with government enforcement litigation?

Jennifer: Even with the changes – still going strong. Government enforcement settlements reached over $77 million so far in 2025, covering everything from labor violations to deceptive marketing in the gaming industry. The DOJ, DOL, and state AGs have remained active, especially in sectors affecting workers and vulnerable consumers.

Jerry: If you take a holistic look at all the areas that are tracked that corporations are vulnerable to being sued over, are there any areas that are cooling down, or where the numbers are actually going down?

Jennifer: Great question, I would say securities fraud. Securities fraud is slightly down from the highs of 2023, and we’re also seeing some slowdown in TCPA-related cases, although Realogy Holdings $20 million robocall case is still making headlines over this past year, but overall, I would say most sectors are either holding steady or growing.

Jerry: Jen, I know you recently won an award and you were selected the number one most quoted and followed class action lawyer in the United States in terms of your thought leadership. Tell us about inside baseball in terms of your thoughts and insights in this particular space of what corporations can expect for the remainder of 2025.

Jennifer: Thanks, Jerry. I would say the bottom line is really that corporate defendants are operating in a legal environment where these large-scale class actions – whether driven by consumers, employees, investors, regulators – these are a constant and very costly risk. We’re really in a high-stakes phase of class action litigation right now, and there’s no indication that it’s going to slow down.

Jerry: Jen, thanks, as always, for those insights and thanks for our listeners for joining us for this week’s installment of the Class Action Weekly Wire. We’ll be sure to keep you updated on all the settlement numbers throughout the remainder of 2025, and when we debut the Duane Morris Class Action Review for 2026. I’m sure what we’re going to point out to are the enormous settlement numbers now for four years in a row. So thanks so much.

Jennifer: Absolutely. The 2026 version is going to be a must-read. Thank you, Jerry, and thank you to our listeners.

June 27, 2025June 27, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 107: Key State Court Rulings In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and senior associate Ciara Dineen with their analysis of key developments in class action litigation in state courts, including significant rulings on the PAGA front in California.

Episode Transcript

Jennifer Riley: Thank you, listeners for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is Ciara Dineen. Thank you for being on the podcast, Ciara.

Ciara Dineen: It’s great to be here, Jen. Thanks for having me.

Jennifer: So today, we wanted to discuss some trends and important developments in state court class action litigation, since the decision on where to file a class action will always be an important strategic decision for plaintiffs’ lawyers seeking to maximize their odds for class certification as well as maximize their opportunity for larger verdicts and settlements. And as well as for defense lawyers in considering whether to remove a case from state court to federal court. Whether it is between state or federal court or deciding in which particular state to file, many factors impact this decision. Ciara, what are some of those factors?

Ciara: Yeah. Although almost all state law procedural requirements for class certification mirror Rule 23 of the Federal Rules, the plaintiffs’ bar often perceives state courts as having a more positive predisposition towards their clients’ interests, particularly where putative class members have connections to the state, and the events at issue occurred in the state where the action is filed. Beyond forum-shopping between state and federal court, the plaintiffs’ bar also seeks out individual states that are believed to be plaintiff-friendly. These courts are thought to have more relaxed procedural rules related to discovery, consolidation, and class certification, a lower bar for evidentiary standards, and higher than average jury awards, among other considerations, all of which incentivize forum-shopping related to state class actions.

Jennifer: In reviewing key state court class action decisions and analyzing class certification rulings, although state courts tend to apply a fairly typical Rule 23-like analysis, many state decisions focus on the underlying claims at issue in addressing whether a class action should proceed. Nonetheless, understanding how state courts apply their respective Rule 23 analyses really is crucial toward effectively navigating the complexities of these types of lawsuits.

Ciara: Another important topic for companies is state private attorney general laws, in particular California’s Private Attorneys General Act or PAGA. The PAGA authorizes workers to file lawsuits to recover civil penalties on behalf of themselves, other employees, and the State of California for state labor code violations. Although California is the only state to have enacted this type of law so far, several other states are considering their own similar private attorney general laws, including New York, Washington, Oregon, New Jersey, and Connecticut. It will be crucial to monitor state legislation on this topic given the impact such laws will have on classification strategy.

Jennifer: As we discussed in the 2025 edition of the Duane Morris Class Action Review, PAGA filings are surging. According to the California Department of Industrial Relations, plaintiffs filed more than 9,400 PAGA notices in 2024. That’s a near 22% increase over 2023 and a whopping 86,000% increase over the 11 PAGA notices filed in 2006.

Jennifer: So, the so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to curb interest in these cases, which continue to present one of the most viable workarounds to workplace arbitration agreements.

Ciara: That’s right. In 2024, Governor Newsom in California 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, Assembly Bill 2288 and Senate Bill 92. The alterations include reforms to the penalty structure, new defenses for employers, changes to the PAGA standing requirements, and a new “cure” process for small and large employers, among other changes. These reforms affect all PAGA notices filed on or after June 19, 2024, with some exceptions.

As is clear from the PAGA reform and activity, California is the epicenter of class actions filed in state courts. It has more class action litigation than any other state.

Jennifer: Thanks, Ciara. We have talked a lot about PAGA cases on the Weekly Wire, and we’ve previously discussed a couple of high-profile rulings from 2024. Have there been any significant PAGA rulings so far in 2025?

Ciara: Absolutely, Jen. So far, in 2025, there has been a new ruling on “headless” actions — those actions that only allege representative, or non- individual, PAGA claims and therefore cannot be ordered to arbitration. In Parra Rodriguez, et al. v. Packers Sanitation Services LTD, the plaintiff filed a lawsuit under the PAGA against the defendant, his former employer, seeking civil penalties for alleged labor code violations. The defendant moved to compel arbitration, pointing to an agreement the plaintiff signed at the commencement of his employment which mandated individual arbitration for employment related disputes. The defendant argued that under the U.S. Supreme Court decision Viking River Cruises, Inc. v. Moriana, the plaintiff’s individual PAGA claim must be arbitrated and the remainder of the case dismissed. The plaintiff contended he was not asserting any individual PAGA claims, only representative ones, and thus nothing in his complaint was subject to arbitration. The trial court denied the defendant’s motion, stating that at the time the arbitration agreement was signed, California law prohibited arbitration of any PAGA claims. The defendant appealed, arguing that the plaintiff’s complaint necessarily included an individual component. The California Court of Appeal, Fourth Appellate District affirmed the trial court’s ruling. The Court of Appeal ruled that the plaintiff’s complaint clearly stated he was not seeking individual relief and had deliberately drafted his complaint to omit such claims. Though the defendant argued that simply identifying the plaintiff as an aggrieved employee proved the presence of an individual claim, the Court of Appeal opined that this identification was only necessary for standing, and did not mean that the plaintiff was pursuing individual penalties. The Court of Appeal stated that whether a complaint includes an individual claim must be determined by examining the complaint itself, not by legal assumptions about what a PAGA action should include, and that courts cannot impose claims the plaintiffs have chosen not to assert.

Jennifer: Thanks so much for that overview, Ciara. That decision is incredibly interesting, among other reasons, because it runs counter to a ruling from late December from the Second Appellate District in Leeper v. Shipt, Inc. That ruling stated that all PAGA actions necessarily have “individual” and “representative” components, regardless of whether the plaintiff pleads those individual claims. Under Leeper, then an employer could compel arbitration of the absent individual PAGA claims, and request that the trial court stay the pending representative action pending the completion of that arbitration.

Ciara: Exactly, and that’s why the Parra Rodriguez ruling was so meaningful. Since that decision early this year, the California Supreme Court has granted review of both rulings. In Leeper, the Supreme Court has limited the review to two questions: (i) does every PAGA action necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint specifically alleges individual claims; and (ii) can a plaintiff choose to bring only a non-individual PAGA action? After granting review in Parra Rodriguez, the Supreme Court noted that any ruling in this case will be deferred pending “consideration and disposition of related issues” in Leeper.

Jennifer: Well, we will be sure to keep our listeners updated on those upcoming California Supreme Court rulings, to resolve that split among the Courts of Appeal on whether these “headless” PAGA actions are permissible and can continue. Thank you so much for your insights and analysis, Ciara, and thank you to our listeners for tuning in.

Ciara: Thanks so much, Jen.

June 27, 2025June 27, 2025 by Class Action Defense

Chicago Skyway Toll Collector Dismissed From Illinois Consumer Fraud Class Action Lawsuit

By Gerald L. Maatman, Jr., George J. Schaller, and Jeremy H. Salinger

Duane Morris Takeaways: On June 23, 2025, in Rowe, et al. v. Skyway Concession Company LLC, et al., No. 24-CV-6313, 2025 U.S. Dist. LEXIS 118449 (N.D. Ill. June 23, 2025), Judge Mary M. Rowland of the U.S. District Court for the Northern District of Illinois dismissed a putative class action based on allegations of increased toll charges and instances of double-billing by Defendants who controlled and collected revenue from the Chicago Skyway’s tolls.

The ruling in Rowe illustrates consumers alleging consumer fraud claims stemming from an asserted breach of contract must first show they are beneficiaries to the underlying contract. And even if the consumers are beneficiaries, then they must plead specific facts demonstrating deceptive acts or unfair practices to survive dismissal for Illinois Consumer Fraud Act claims.

Case Background

In January 2025, the City of Chicago transferred control of the Chicago Skyway (a toll road that connects the Indiana Toll Road to the Dan Ryan Expressway in Chicago) to Skyway Concession Company LLC (“Skyway Concession”) under the Chicago Skyway Concession and Lease Agreement (“Agreement”). Id. at 2. The Agreement granted Skyway Concession the right to set tolls and collect all toll revenue from the Chicago Skyway. Id. The Agreement also contained a provision that “nothing contained in the Agreement . . . [shall] be construed in any way to grant, convey or create any rights or interests in any Person not a Party to this Agreement.” Id.

Plaintiffs Rockwell Rowe, Jr., and Michelle Rowe (“Plaintiffs”) brought a putative class action against Skyway Concession and its indirect equity holder Calumet Concession Partners, Inc. (“Calumet Concession”) (collectively “Defendants”).

Plaintiffs alleged that Defendants charged more for certain tolls than allowed under the Agreement, charged a $0.03 surcharge above the maximum tolls to drivers who use the electronic tolling E‑ZPass system, and double-billed some drivers for the E-ZPass surcharge. Id. at 3.

Plaintiffs asserted multiple causes of action, including (i) deceptive acts and unfair practices in violation of the Illinois Consumer Fraud Act (“ICFA”) (Counts I and II); (ii) breach of contract (Count III); and (iii) unjust enrichment (Count IV). Id. at 4. Defendants moved to dismiss.

The District Court’s Order

The Court granted Defendants Motion to Dismiss on all Counts.

The Court began its analysis with Plaintiffs’ breach of contract claim because it was “relevant to all remaining claims.” Id. at 4. The Court explained that “only a party to a contract, or one in privity with a party, may enforce a contract, except that a third party beneficiary may sue for breach of a contract made for his benefit.” Id. at 5. Because Plaintiffs were “not parties to the Agreement and the Agreement expressly provides that it does not benefit non-parties to the agreement,” id., and “Plaintiffs have not identified any provision of the [Agreement] that provides rights or specific benefits to putative class members,” id. at 6, the Court dismissed Count III. For clarity, the Court added “[the fact] that Skyway users may indirectly benefit from [Skyway Concession’s] compliance — or indeed be indirectly harmed by [Skyway Concession’s] non-compliance—does not give them the right to enforce the contract.” Id.

The Court then similarly concluded that the purported ICFA claims were insufficient to survive dismissal. The Court determined that “Plaintiffs failed to allege an actionable deceptive act” because “Plaintiffs nowhere allege that Defendants charged any toll greater than Defendants posted or otherwise communicated to the public the toll prices would be” and “putative class [members] paid the tolls that Defendants communicated they would charge.” Id. at 9. In sum, the Court determined, “Defendants advertised the cost to drive on the Skyway, and armed with that knowledge, Plaintiffs paid the advertised price to drive on the Skyway.” Id. at 10. Furthermore, the Court held that Plaintiffs double-billed EZ-Pass allegations failed to establish any deceptive act because Plaintiffs did “not allege that the charges occurred as a result of any deception.” Id. The Court therefore dismissed Plaintiffs’ Count I deceptive acts ICFA claim.

The Court next determined Plaintiffs “fail[ed] to allege any unfair practice that violate the ICFA.” Id. First, Plaintiffs argued that “the charges violated 815 ILCS 510/2(a)(11) concerning misleading statements regarding price reductions,” but the Court disagreed because “the underlying alleged misconduct has nothing to do with price reductions.” Id. at *11. Second, plaintiffs point to a “well-established public policy that parties uphold their [contractual] obligations,” but the Court opined Plaintiffs cited no case law standing for such a policy under the ICFA. Id. Third, the Court reasoned Plaintiffs’ double-billed EZ-Pass surcharge allegations “likewise fail because it is not immoral, oppressive, unethical, or unscrupulous to mistakenly charge a fee.” Id. at 12. Accordingly, the Court dismissed Plaintiffs’ Count II unfair practices ICFA claim as well.

Given Plaintiffs’ unjust enrichment allegations involved “the same conduct underlying Counts I and II,” the Court also dismissed Count IV concerning unjust enrichment. Id. at 12.

Accordingly, the Court granted Defendants’ Motion to Dismiss and terminated Plaintiffs’ case.

Implications For Companies

With Rowe, Illinois-based companies can rest easier knowing that consumers cannot sustain breach-of-contract claims on the theory that they are indirectly benefitted by a contract. Moreover, the decision reaffirms that consumer discontent does not amount to a deceptive act or unfair practice required to state a claim under the Illinois Consumer Fraud Act.

June 22, 2025June 22, 2025 by Class Action Defense

Sunglasses Manufacturer Cannot Settle Class Claims In Federal Court After Seven Years Of Litigation

By Gerald L. Maatman, Jr., Kevin E. Vance, and Ryan T. Garippo

Duane Morris Takeaways: On June 17, 2025, in Smith, et al. v. Costa Del Mar, Inc., No. 18-CV-1011, 2025 WL 1697161 (M.D. Fla. June 17, 2025), Judge Timothy Corrigan of the U.S. District Court for the Middle District of Florida dismissed a Magnuson-Moss Warranty Act (“MMWA”) class claim following a multi-million-dollar settlement between the parties due to lack of subject matter jurisdiction. Although the opinion may seem like a win for the company on its face, this decision only places further limitations on corporate defendants’ ability to access the federal forum and makes it more difficult for such defendants to get a fair trial where class-wide relief is alleged.

Background

Costa Del Mar, Inc. (“Costa”) “is a sunglasses manufacturer that represented to buyers that sunglasses were backed by lifetime warranties.” Smith v. Miorelli, 93 F.4th 1206, 1209 (11th Cir. 2024). Plaintiffs, who were Costa customers, filed three separate class action lawsuits alleging that the “lifetime warranties required Costa to repair their sunglasses either free-of-charge or for a nominal fee.” Id. Rather than repairing the sunglasses for a nominal fee, the plaintiffs alleged that Costa charged them, in some cases, up to $105.18 to repair their sunglasses which was paid by the plaintiffs.

After years of litigation, the plaintiffs ultimately filed an amended complaint “to facilitate a settlement agreement that would resolve the claims in all three cases” based on a MMWA class claim. Id. at 1210. To that end, the parties moved for approval of a class action settlement that would have provided “over $60 million of value to the class in the form of product vouchers and attorneys’ fees” as well as injunctive relief. Id. (quotations omitted). The district court preliminarily approved the parties’ settlement agreement pursuant to Federal Rule of Civil Procedure 23(e). But, the preliminary approval order was not the end of the story.

Several objectors challenged the district court’s order on the basis that “any award of attorneys’ fees to class counsel must be based on the value of product vouchers that are actually redeemed, not the value of vouchers that would be distributed.” Miorelli, 93 F.4th at 1211. The district court, however, overruled these objections and awarded class counsel $8 million dollars in attorneys’ fees.

The objectors appealed and argued, inter alia, that the district court abused its discretion to approve a settlement for injunctive relief because the plaintiffs lacked Article III standing under the U.S. Constitution. As the objectors saw it, the plaintiffs did not have an ongoing injury-in-fact, sufficient to support injunctive relief, where they had already paid the fees for their sunglasses. The Eleventh Circuit agreed with the objectors and reversed the district court’s preliminary approval order. In so doing, it also noted that “[t]he parties have raised other jurisdictional issues that the district court should consider in the first instance” because the Class Action Fairness Act of 2005 (“CAFA”) potentially “does not provide an alternative basis for a federal court to exercise subject matter jurisdiction over a case brought under the MMWA.“ Id. at 1213, n. 8. So, the case was remanded to the district court for further consideration of that question.

The Court’s Opinion

On remand, the district court had the “unenviable task of advising the parties that, notwithstanding the nearly seven years of litigation that have transpired since this case was filed, it is due to be dismissed for lack of subject matter jurisdiction.” Smith, 2025 WL 1697161, at *1.

The district court noted that “[t]he MMWA vests federal district courts with subject matter jurisdiction to hear claims brought under the Act.” Id. at *2. But, a district court only has federal question jurisdiction under the MMWA if there are more than 100 named plaintiffs. Id. at *2 (citing 15 U.S.C. § 2310(d)(3)). Because plaintiffs could not satisfy this requirement, they relied solely on the federal court’s ability to hear the case under CAFA.

Ordinarily, a plaintiff can a bring a class action in federal court, that otherwise must be heard in state court, where the requirements of CAFA are met. Subject to some exceptions, these requirements are that there must be: (a) at least 100 class members; (b) that there is minimal diversity between the parties; and (c) the amount in controversy exceeds $5 million dollars. 28 U.S.C. § 1332(d)(2).

The MMWA often presents a rare exception to that rule. As the district court explained, the Third and Ninth Circuits, as well as numerous federal district courts, have “determined that CAFA does not provide an independent basis for jurisdiction for an MMWA claim.” Smith, 2025 WL 1697161, *2. The district court noted that this opinion is not shared unanimously by its sister districts, but nonetheless agreed “that CAFA does not provide an independent basis for subject matter jurisdiction.” Id.

As a result, the district court held that “because there are fewer than 100 named plaintiffs” and the CAFA was not an independent basis for federal subject matter jurisdiction “plaintiff fails to meet the federal court jurisdictional requirements.” Id. at *3. Accordingly, after seven years of litigation and after a settlement agreement had been reached, the district court simply dismissed the case outright.

Implications For Companies

On its face, the Smith decision may seem like a great result for the company in this litigation because, after all, the lawsuit was dismissed in its entirety which is presumably what the company wanted all along. But, a more nuanced analysis reveals hidden traps for companies faced with class action litigation.

The result of this decision is not that this claim will never be heard at all, but rather that the case will not proceed in federal court. Indeed, the Smith plaintiff explicitly “stated he intended to refile this suit in state court if the Court determined it did not have subject matter jurisdiction.” Id. at *3, n. 6.

In general, it is not uncommon for a company to “prefer[] the federal courts because it fears a corporate defendant . . . will not get a fair trial in state court.” See, e.g., Hosein v. CDL West 45th Street, LLC, No. 12 Civ. 06903, 2013 WL 4780051, at *3 (S.D.N.Y. June 12, 2013). The Smith opinion adds a barrier to corporate defendants to avail themselves of the federal forum, and even goes so far as to place additional barriers on a defendant’s ability to settle claims against it.

If corporate counsel is concerned about their organizations being dragged into a class action, in a less-than-favorable state forum, then they should continue to monitor this blog for potential options or contact experienced outside counsel to discuss such matters.

June 19, 2025June 19, 2025 by Class Action Defense

The Class Action Weekly Wire – Episode 106: Settlement Approval Issues In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and senior associate Betty Luu with their analysis of settlement approval issues in class action litigation addressed by courts over the past year.

Episode Transcript

Jerry Maatman: Thank you so much for being here again, loyal blog readers and listeners, for the next episode of our weekly podcast entitled the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is my colleague Betty Luu of our Los Angeles office. Thanks so much for being on today’s podcast.

Betty Luu: Great to be here, Jerry. Thanks for having me.

Jerry: Today, we’re going to discuss settlement issues in class action litigation over the last 12 months. As I assume everyone knows, you can’t settle a class action unless a court approves it as fair and reasonable. So, Betty, how often does this sort of issue percolate in the federal courts?

Betty: Well, class actions typically are dismissed, settled, or tried to verdict. Trials are rare as a financial exposure in most class action cases is vast, and the possibility of an adverse verdict may present unacceptable risk. Most potential class actions are resolved before or on the heels of a class certification order. Rule 23 not only provides a process for certification of a class action, but also a procedure for settlement of such claims. Rule 23(e) lays out a three-part settlement approval process. It includes a preliminary approval described as approval to provide notice to the class, notice to class members, and final settlement approval.

Jerry: Betty, what are the pros and cons in terms of settling or not settling a class action that a company is facing?

Betty: Well, Jerry, there are benefits on both sides. Early settlements offer individual plaintiffs relatively quick payments. They allow defendants the opportunity to end cases early without the need to pay the high costs, including often burdensome discovery related costs. Early settlements benefit the court system, too, by avoiding needless litigation that can clog the court’s dockets. When permitted by law, parties frequently choose to settle on a confidential basis, thereby avoiding a risk of adverse publicity which is a dynamic that benefits both defendants and plaintiffs.

Jerry: I know there’s always kind of a debate in the mind of general counsel: “Should I settle this on an individual basis, where I can do so confidentially, or should I get a settlement bar through a class action settlement?” What are some of the obstacles that general counsel should be aware of in this process?

Betty: Well, in order to secure the court’s approval to send notice to the class, the parties must provide sufficient information for the court to determine whether it will likely be able to approve the settlement and certify the class for purposes of entry of a judgment. Rule 23(e) Includes a detailed list of factors for consideration before final approval of a class settlement, including the quality of class representation, whether the negotiation took place at arm’s length, the adequacy of class relief, and equitable treatment of class members. Class notice is also governed by the rule and outlines the proper process for providing notice to class members.

Jerry: Thanks for that overview, Betty. I’ve often heard that sometimes settlement approvals are rubber stamped, but in my experience, especially in the last decade, it’s anything but a rubber-stamping process. Courts depend on the presentation of facts, case law, argument of counsel, and judges don’t always apply those standards equally from state to state or federal court to federal court. And some jurisdictions hardly deal with settlement issues, whereas in other jurisdictions, it’s a daily occurrence in the courthouse. I would say, for preliminary approval, where notice is to be sent to class members, there is a less rigorous standard for certification, and this is evident with respect to the Rule 23(b)(3) requirement for predominance. In terms of practice pointers, what does this mean for defense counsel? What does it mean for companies when they approach the settlement drafting process to anticipate these issues and the sorts of questions that judges will ask in terms of either preliminary approval or final settlement approval?

Betty: Well, settlement on a class-wide basis often poses strategic dilemmas for plaintiffs and defendants alike. Issues include how much can the defendant concede without compromising its ability to defend the case if the settlement falls through and is not approved? Can a settlement-only class be too cheap, and therefore deemed inadequate or unfair when reviewed by the court? And how extensive and broad can a release be in covering the settling parties and class members?

Jerry: In my experience, that release and its parameters are a very, very set of important data points for a judge, and the notion that you can’t settle a class action with a release that’s broader than the claims actually alleged. In terms of the spectrum of issues that courts ruled upon in the settlement approval process over the last 12 months, to your mind, what are some of the key rulings in 2024 that would give guidance to general counsel?

Betty: Well, class-wide settlements often require that plaintiffs show that all applicable requirements of Rule 23 are met. Courts will deny approval to proposed class-wide settlement where the Rule 23 requirements are not established. As an example, in Galvan, et al. v. First Student Management, LLC, the plaintiffs filed a class action alleging various wage and hour violations. The parties ultimately settled the matter, and the plaintiffs filed a motion seeking preliminary approval for a class action settlement. The court denied that motion. The proposed settlement divided a $3.5 million fund into two sub-classes, including a “Driver Class” and a “Non-Driver Class” with specific periods and conditions for each. The court found that the plaintiffs’ proposed settlement agreement failed to address issues with predominance of common questions required for class certification. The court also stated that the plaintiffs failed to adequately estimate the defendants’ maximum potential exposure, making it difficult to assess the fairness of the settlement. Additionally, the court determined that the proposed settlement distribution formula might unfairly treat class different class members, particularly those who are current employees versus those who have left the company. For these reasons, the court determined that the plaintiffs’ counsel failed to meet the adequacy requirement, the class failed to meet the predominance requirement, the parties failed to provide evidence that the settlement was fair and adequate, and the plaintiffs’ lawyers did not establish that class members would be treated equitably by the settlement terms.

Jerry: In my experience over the last decade, another development in this space is the rise of objectors. Sometimes professional objectors, or sometimes members of the class who actually object to the court granting preliminary or final approval to the settlement. How often in your experience does that happen, and what are some of the key rulings over the last year with respect to objectors?

Betty: Well, there are objections all the time to class action settlements, and objectors are sometimes successful in overturning the settlement or getting it vacated on appeal. An interesting example from last year was in the case of In Re Roundup Products Liability Litigation. The parties reached a nationwide class settlement agreement, resolving the plaintiffs’ claims that Monsanto omitted information on the labeling of its roundup products. Two class members objected, alleging that the settlement process involved collusion, and that the settlement would extinguish higher value claims in their class action in Missouri. The district court rejected the Objectors’ concern and granted the plaintiffs’ motion for final approval and for certification of the nationwide class for purposes of settlement. On the Objectors’ appeal, the Ninth Circuit affirmed the district court’s ruling. The Objectors contended that the district court abused its discretion in approving the class action settlement given the warning signs of collusion and because the settlement extinguished higher value claims in the Objectors’ Missouri action and erred by relying on the parties’ use of a mediator. The Ninth Circuit determined that the district court made reasonable factual findings, including that the settlement amount and compensation rates appeared fair and adequate and that there was no evidence of collusion or inadequate representation. The Ninth Circuit also ruled that the district court did not abuse its discretion by rejecting the Objectors’ argument that the nationwide class action settlement would extinguish higher value claims in the Objectors’ Missouri class action. Finally, the Ninth Circuit found that the district court’s decision to approve the settlement did not rely on the parties’ use of a mediator, and there were no signs of collusion during the mediation itself.

Jerry: I think that Ninth Circuit decision is a great example of the sort of range of fairness considerations where an appellate court thinks that district court should focus on when they pass on objections, or with respect to the propriety of whether or not to approve a class action settlement.

Thanks so much, Betty. I think we’re out of time. Thanks so much for lending your thought leadership and expertise with respect to explaining these considerations to our audience today, and thank you everyone for tuning in. Please be reading the Duane Morris Class Action Defense Blog for further updates with respect to settlement considerations and class action litigation.

Betty: Thanks, Jerry, happy to be here.

Jerry: Thanks so much, everyone.

June 12, 2025June 12, 2025 by Class Action Defense

Federal Court Approves Landmark NCAA Settlement, Reshaping College Athletics In The Era Of NIL

By Sean McConnell and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On June 6, 2025, Judge Claudia Wilken issued a highly anticipated 76-page order approving the proposed settlement in House v. NCAA, Oliver v. NCAA and Hubbard v. NCAA (collectively, the House settlement). As discussed in a prior Alert, the settlement—between the NCAA and its Power Five conferences (Atlantic Coast, Big Ten, Big 12, Pac-12 and Southeastern) and a class of current and former NCAA athletes—provides for approximately $2.8 billion in back-pay damages and sets forth the initial revenue share framework that will allow colleges and universities to offer direct payment to their student-athletes.

Judge Wilken’s approval of the settlement follows her directive for multiple revisions to the agreement initially presented at the April 7, 2025, final approval hearing. During that hearing and in the ensuing two months, Judge Wilken expressed significant concerns, particularly regarding whether the NCAA would agree to grandfather in current athletes to protect them from potentially losing scholarships under the new House settlement framework. The judge was ultimately satisfied with the modifications made, and the revised settlement is set to become effective on July 1, 2025.

While the settlement is certain to face additional legal challenges and scrutiny, the NCAA’s new compensation model will mirror elements of professional sports leagues, marking the official end of the “amateurism” era in college athletics.

Key Settlement Provisions

Back Pay

As finalized, the House settlement requires the NCAA and its Power Five conference members to pay approximately $2.8 billion in damages, characterized as “back pay,” to compensate student-athletes for the denial of name, image and likeness (NIL) opportunities under prior NCAA eligibility rules. This component of the settlement was not contested during the approval process. The settlement class—subject to certain exclusions—includes all Division I student-athletes who competed from 2016 to the present, reflecting the applicable statute of limitations. Compensation will be distributed to eligible athletes to account for lost NIL, video game and broadcast-related opportunities that were previously restricted under NCAA rules.

Permissive Revenue Sharing

With Judge Wilken’s approval, the House settlement ushers in a more professionalized era of college sports, effective July 1, 2025. Participating NCAA Division I institutions will be permitted to directly compensate student-athletes with up to 22 percent of the school’s average annual athletic revenue derived from media rights, ticket sales and sponsorships. This amount is capped at $20.5 million per school in the first year of the agreement, with the cap projected to increase by approximately 4 percent annually over the 10-year term of the settlement.

Importantly, the court-imposed “salary cap” excludes contributions from boosters or alumni groups, third-party NIL deals, traditional scholarships and any payments made prior to July 1, 2025.

Participation in the revenue-sharing framework is entirely voluntary. Institutions are not obligated to adopt the model, nor are those that do required to pay student-athletes the full $20.5 million annual cap. The Ivy League, for example, has opted out entirely, citing its recent antitrust victory affirming its policy against athletic scholarships. As such, Ivy League schools will continue to operate under traditional amateurism principles and will not participate in the new compensation structure.

For schools that elect to opt in, the settlement permits direct athlete payments from institutional revenues, subject to the cap. While the model introduces a regulated mechanism for athlete compensation, it also has the potential to create competitive disparities. Institutions with larger alumni bases and robust booster support may continue to offer additional NIL compensation outside the cap, which could significantly enhance their recruiting advantage.

Moreover, few institutions may be in a financial position to fully utilize the cap. Outside the Big Ten and SEC—whose media contracts generate substantial revenue—most Division I schools lack the revenue base to allocate $20.5 million (or more in future years) to athlete compensation. Data indicates that approximately 75 percent of athletic revenue at many institutions comes from football, with an additional 17 percent from men’s and women’s basketball. This structure disproportionately benefits programs with strong football revenues and places smaller or football-absent schools (e.g., Big East basketball programs) at a disadvantage, as their 22 percent revenue share may fall well below the cap.

As such, institutions must conduct a thorough financial and legal assessment to determine whether opting into the revenue-sharing model is feasible. Those that opt in must also ensure that their distribution plans are compliant with the settlement’s terms and applicable legal requirements. In many cases, a significant portion of compensation is expected to flow to revenue-generating sports, potentially pressuring athletic departments to reevaluate their support for nonrevenue sports. This could lead to budget cuts, program reductions or reclassification of certain sports to club-level status.

Institutions adopting the revenue-sharing model should take care to develop clear and compliant agreements and implementation plans. Legal counsel, if engaged early, can help ensure compliance with Title IX, labor laws and evolving NCAA regulations.

Scholarship Limits

A key component of the House settlement is the elimination of NCAA-imposed scholarship limits, allowing institutions to offer a greater number of full or partial scholarships to student-athletes. This shift grants schools increased flexibility in structuring team rosters and allocating financial aid, aligning more closely with professional team management models.

An earlier draft of the settlement included roster limits that would have gone into immediate effect and, in some cases, would have resulted in current athletes losing their roster spots or scholarships. Judge Wilken raised significant concerns about this approach, particularly because affected athletes would have had no opportunity to opt out of the settlement to preserve their eligibility or position.

In response to the court’s concerns, the NCAA and plaintiffs’ counsel revised the agreement to include a “grandfathering” mechanism. Under the final settlement terms, schools may elect to retain current student-athletes and recruits on their rosters for the duration of their NCAA eligibility without those individuals counting toward any new roster or scholarship limits. This adjustment is intended to ensure continuity and fairness for athletes already enrolled or committed.

Despite this revision, certain objectors challenged the adequacy of the provision, arguing that it fails to protect athletes at institutions that choose not to implement the grandfathering option. In rebuttal, the NCAA and plaintiffs’ counsel noted that roster spots in college athletics have never been guaranteed and are traditionally subject to coaching decisions and program needs.

Judge Wilken ultimately approved the revised provision, concluding that it provided a reasonable and sufficient remedy under the circumstances.

Pay-for-Play and Evaluation & Conditional Approval of NIL Deals

Although the settlement creates a path for more direct compensation of student-athletes, it includes significant oversight mechanisms. Any NIL deal exceeding $600 must be reported to and reviewed by the NCAA. This relatively low threshold ensures ongoing NCAA involvement in most NIL arrangements.

The NCAA retains the authority to approve NIL agreements only if they meet two criteria:

The deal must serve a valid business purpose, meaning it must promote or endorse goods or services offered to the general public for profit; and
Compensation must be commensurate with the value of similarly situated individuals, including nonathletes.

To facilitate fair compensation, Deloitte has been appointed to assess the market value of NIL agreements based on 12 evaluative factors, including the athlete’s social media reach, athletic performance, geographic market, deal duration and scope, and potential red flags indicating impropriety. These criteria, however, leave considerable room for litigation over their precise interpretation, requiring schools to invest significant resources in research to accurately determine fair market values ahead of Deloitte’s assessments. Meanwhile, the NCAA retains oversight by mandating that all NIL agreements serve a “valid business purpose,” defined broadly as promotion or endorsement of goods or services offered to the general public for profit, and that compensation be “commensurate with the NIL value of similarly situated individuals.” This framework grants the NCAA substantial discretion to approve or reject NIL agreements, ensuring that payments align with rates and terms paid to comparable individuals outside the institution who possess similar NIL value.

Despite this framework, it remains unclear how the NCAA will define “similarly situated individuals” and apply this standard consistently—leaving open the possibility of further legal disputes.

Does This Settlement Solve All Outstanding Legal Issues?

Although Judge Wilken’s approval was expected, it is not the end of this story. There are still many open legal questions and issues that this settlement did not address and that will be the subject of ongoing litigation for years to come:

Ongoing Litigation for Opt-Out Plaintiffs

Student-athletes who opted out of the settlement continue to pursue their claims (e.g., Fontenot v. NCAA), which will now proceed on an individual basis.

Transfer Portal Rules

The House settlement agreement does not establish specific guidelines regarding the transfer portal or how the “fair market value” analysis will apply to transferring athletes. The process for assessing a player’s fair market value in the fast-moving transfer portal environment remains undefined and is likely to create challenges and potential disputes. Additionally, some institutions have already developed or implemented buyout provisions for athletes who leave early or transfer, particularly those subject to third-party NIL agreements.

Impact on Nonrevenue Sports

The salary cap structure may lead institutions to cut costs associated with nonrevenue sports, potentially reducing participation opportunities in these programs.

Title IX Concerns

Judge Wilken acknowledged that the settlement may raise significant gender equity concerns. Although Title IX compliance was not addressed within the scope of the settlement, the order notes that affected athletes may need to pursue separate legal remedies if violations occur. As Judge Wilken emphasized, potential challenges related to Title IX, state NIL statutes and federal or state employment and labor laws fall outside the court’s jurisdiction. It is widely anticipated that the revenue-sharing framework will face Title IX litigation, given that participating schools are expected to allocate substantially more revenue to male athletes—particularly football players—than to female athletes.

Federal Government Intervention

Congress and President Donald Trump could also consider legislation that alters the legal landscape of various college sports issues, and the president is weighing an executive order on college athlete compensation that might spawn new legal challenges

Conclusion

The House settlement represents a seismic shift in the regulation of college athletics, formalizing a compensation model for student-athletes and introducing robust oversight of NIL activity. While it provides much-needed clarity and structure, it also opens the door to new legal challenges—particularly around compliance, enforcement and equitable treatment across sports and gender lines.

Colleges, collectives and student-athletes must now carefully navigate this evolving regulatory environment. Institutions should consult with counsel to address these considerations and develop strategies, including draft template agreements, that adequately address all of these considerations to optimally position institutions to comply with and profit from this new opportunity.

For More Information

If you have any questions, please contact Sean P. McConnell, Andrew John (AJ) Rudowitz, Bryan Shapiro, any of the attorneys in our Antitrust and Competition Group, Daniel R. Walworth, any of the attorneys in our Education Industry Group, Gerald L. Maatman, Jr., any of the attorneys in our Class Action Defense Group, any of the attorneys in our Sports Group or the attorney in the firm with whom you are regularly in contact.our Sports Group or the attorney in the firm with whom you are regularly in contact.