Author: Class Action Defense

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and special counsel Justin Donoho with their analysis of key developments in RICO class actions, including a key ruling from the Ninth Circuit on class certification in the RICO context.

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

Jennifer Riley: Thank you for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley and joining me today is Justin Donoho. Thank you for being on the podcast, Justin. Today, we wanted to dive into the RICO Act. It’s a law that comes up a lot, but a lot of people probably don’t fully understand what it is. Justin, could you start by explaining to our listeners what RICO means?

Justin Donoho: Absolutely, Jen, and thank you for having me on the podcast today. The RICO Act, short for the Racketeer Influenced and Corrupt Organizations Act, is a federal law passed in 1970. It was originally aimed at tackling organized crime in the U.S., but over time it’s been applied to a much broader range of criminal activity. Essentially, it allows for extended criminal penalties, and even civil lawsuits, against individuals or groups involved in ongoing criminal enterprises.

Jennifer: So, you’re saying that RICO goes beyond just criminal prosecutions?

Justin: Exactly. It has both criminal and civil components. On the criminal side, someone found guilty under RICO can face up to 20 years in prison and fines up to $250,000. And on the civil side, it’s quite powerful, too – victims can recover treble damages, meaning three times the amount of actual damages, plus attorneys’ fees and the cost of the lawsuit.

Jennifer: Interesting. So, who can bring a civil RICO claim?

Justin: They can be brought by private individuals who’ve been harmed in their business or property as a result of a RICO violation. But they must meet certain requirements – often referred to as RICO’s statutory standing requirements. In other words, you have to prove causation and injury.

Jennifer: Interesting. So, what do plaintiffs have to prove to demonstrate a RICO violation?

Justin: So, there are three main elements. First, they have to prove racketeering activity. This includes a long list of criminal acts, everything from murder and kidnapping to mail fraud, wire fraud is a big one, we see a lot money laundering and securities fraud.

Jennifer: Wow, that’s quite a range.

Justin: Yeah, it really is. And that’s why RICO can be applied to so many different types of cases, especially fraud-related ones across various industries. Second, there must be a pattern of racketeering activity – at least two criminal acts – and they need to be related in some way, whether by method, victim, or timeframe.

Jennifer: Got it. What’s the third?

Justin: The third is the existence of an enterprise. Broadly, that includes individuals, partnerships, corporations, associations, or even groups that aren’t legally recognized as entities. What’s key here is the relationship between the defendant and the enterprise. The defendant can’t be the enterprise. Instead, they must be shown to have conducted the affairs of the enterprise through a pattern of racketeering activity.

Jennifer: Got it, that makes sense. So, what is the statute of limitations applicable to a RICO claim?

Justin: It’s four years from the date of discovery of the injury caused by the RICO violation.

Jennifer: So, now I understand that RICO class actions have become more significant recently, can you tell us about some of the key rulings from the past year?

Justin: Yes, the past year was a big one for RICO class actions. Courts granted class certification in about 33% of cases in 2024, while denying it in 67%. These decisions can have massive implications, especially because treble damages in class actions can pose serious risks for defendants.

Jennifer: Can you give us an example of a case where class certification was granted and the class was certified?

Justin: Sure, so one notable one was Sihler v. Global E-Trading, LLC. It involved alleged fraudulent charges for diet pills. The so-called “Keto Racket.” The court found that common legal and factual issues, like the alleged conspiracy to mislead consumers and artificially suppress chargebacks, outweighed individual differences. That was enough to certify a nationwide class under RICO. In that case, the court emphasized that the harm stemmed from the overall conduct of the enterprise. They also dismissed the idea that plaintiffs had to prove reliance in these RICO claims.

Jennifer: Do you have any examples where class certification was denied in the RICO context?

Justin: Yes. So, the Ninth Circuit in White, et al. v. Symetra Assigned Benefits Services reversed the district court’s order granting class certification in a RICO lawsuit. The plaintiffs were approximately 2,000 individuals who had received structured settlement annuities, or SSAs, to resolve personal injury claims who thereafter entered into factoring transactions exchanging their future annuity payments for immediate but discounted lump sums. The plaintiffs alleged that the defendants, the issuer and obligor of the SSAs, wrongfully induced them into these factoring agreements through misleading representations, unfair business practices, and hidden conflicts of interest in violation of the RICO. The district court granted the plaintiffs’ motion for class certification. On appeal, though, the Ninth Circuit found that “individual issues of causation will predominate over common ones when evaluating whether defendants’ acts and omissions caused the plaintiffs to enter factoring transactions and to incur their alleged injuries.” The Ninth Circuit held that the “defendants’ allegedly uniform course of conduct was not as uniform as plaintiffs suggest,” including because although the defendants’ “initial communications were standardized, the process became more individualized to the annuitant as it went along.” Further, the Ninth Circuit held that “even assuming defendants engaged in uniform conduct, plaintiffs have not shown there is a common question of whether such conduct improperly induced plaintiffs to enter into factoring agreements to their detriment. Here, resolving the critical element of causation will require consideration of individualized issues that swamp the assertedly common ones.” Thus, the Ninth Circuit ruled that “any assessment of whether the defendants’ alleged acts and omissions caused the plaintiffs to enter the factoring transactions, or led them into accepting inferior factoring deals than they otherwise would have absent the alleged misconduct, would require an analysis of each plaintiff’s individual circumstances – including their understanding of the transaction and motivations. The result would be 2,000 mini-trials on causation.” Given the variety in interactions and state court processes, the Ninth Circuit concluded that individualized issues of causation would predominate, making class certification improper. For these reasons, the Ninth Circuit reversed the district court’s ruling granting the plaintiffs’ motion for class certification.

Jennifer: Got it. Thanks for that overview, Justin, what about settlements in these types of cases? Are they common in the RICO context?

Justin: Large settlements are not exceedingly common, however, there were several in 2024 that crossed that $1 million mark. The biggest one we saw was In Re Juul Labs, Inc., Marketing, Sales Practices, And Products Liability Litigation, in which the court granted final approval to a settlement of $45 million to resolve claims with defendant Altria Group alleging that the company created, marketed, and sold tobacco products by misleading the public about the addictiveness and risks of the product, and by trying to expand the market by capturing and addicting individuals who had not previously used tobacco or e-cigarette products, including in violation of the RICO.

Jennifer: Well, Justin, this has been incredibly informative. Thanks so much for breaking down such a complex topic in an understandable way for our listeners and thank you to our listeners for tuning in today.

Justin: My pleasure, Jen. Always happy to talk legal strategy, especially about class actions. Thanks to all the listeners.

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and senior associate Nelson Stewart with their analysis of key developments in securities fraud class actions, including a notable decision from the U.S. Supreme Court clarifying the standard for claims brought under the Securities Exchange Act alleging pure omissions of fact.

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: Thank you for being here again, loyal blog listeners and readers, for the next episode of our weekly podcast series, the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is Nelson Stewart from our New York office. Thanks so much, Nelson, for being on the podcast.

Nelson Stewart: Thank you. Great to be here, Jerry.

Jerry: Today we want to discuss trends and important developments in the securities fraud class action space. Certainly, securities fraud claims generally turn on alleged public misrepresentations by a security issuer and adjudication of these claims often are done on a class-wide basis. The plaintiffs’ bar obviously has made class action litigation in the securities fraud space a very active area, and 2024 was certainly no exception. Nelson, can you explain to our listeners a little bit of the background of how federal securities laws work in this context?

Nelson: Sure, the pillars of the federal securities law are the Securities Act of 1933, and the Securities Exchange Act of 1934, both of which were enacted in the wake of the stock market crash of 1929 to help regulate the securities markets and promote transparent disclosure to investors. The Securities Act generally regulates securities offerings, while the Securities Exchange Act governs the trading of existing securities and securities markets. The Securities Act allows private litigants to pursue claims against corporate issuers for material misrepresentations or omissions made in connections connection with the securities offering. Although the Securities Act expressly provides a private cause of action, for losses related to an offering a plaintiff must demonstrate the shares of the security at issue trace back to that offering. Because of this limitation, plaintiffs tend to look to the broader implied right of right of action under the Securities Exchange Act Section 10(b) and SEC Rule 10b-5, which prohibit fraudulent schemes and fraudulent misrepresentations in connection with any securities transaction.

Jerry: Well, thanks so much for that context. In the class action space, securing class certification is the Holy Grail for the plaintiffs’ bar because it’s very dangerous to try a certified class action. And so, the parties put lots of effort into either prosecuting or opposing a motion for class certification. And that in turn requires that questions of law or fact predominate over those that are pertinent to individuals, and that a class action is superior to all of their methods to adjudicate the dispute. In the securities fraud context, what are some of the challenges and litigations in terms of securing or defending against class certification?

Nelson: For a large and varied group of plaintiffs, proving reliance on a misstatement of material fact – which is one of the prerequisites of a securities fraud action – often creates individual fact issues among investors that could overwhelm common fact issues and present an insurmountable hurdle to class certification. This challenge was substantially mitigated when the U.S. Supreme Court adopted the “fraud on the market theory” of reliance in Basic v. Levinson. This theory avoids the need to show individual alliance by employing the presumption that, when a stock trades in an efficient market, investors “rely on the market as an intermediary for setting the stock price in light of all publicly available information; accordingly, when an investor buys or sells the stock at the market price, the investor has, in effect, relied on all publicly available information, regardless of whether the investor was aware of that information personally.”

Jerry: How does the plaintiff’s bar invoke the Basic presumption to be able to litigate securities fraud class actions?

Nelson: To invoke the Basic presumption, plaintiffs must demonstrate that a misrepresentation was publicly known; that it was material; that the stock traded in an efficient market; and that the plaintiffs traded the stock between the time the misrepresentation was made and the date the misrepresentation was revealed to be untrue.

Jerry: Well, I know a lot of cases and rulings in 2024 pivoted on that presumption. In your mind, what were some of the key rulings in the past 12 months?

Nelson: In 2024, the U.S. Supreme Court clarified the standards for claims brought under the Exchange Act that allege a pure omission of fact. In Macquarie Infrastructure Corp., et al. v. Moab Partners, L.P., plaintiffs alleged Macquarie omitted material facts and public statements, but did not identify any material misleading statements of fact made by Macquarie. Under the Securities Act, a pure omission of fact is expressly prohibited if it makes the statement in an offering document misleading. The Supreme Court held that Macquarie’s pure omission did not impose liability under Rule 10b-5, even when there is a duty to disclose, unless they render the affirmative statement misleading. In this case, plaintiffs had not alleged any affirmative misstatement. The decision also resolved a split among the courts of appeal concerning private right of action, arising from an Item 303 statement issued pursuant to SEC Regulation S-K. Item 303 statements require a publicly held company to disclose trends and uncertainties that affect the company’s financial condition. The Supreme Court ruled that, half-truths, in which a defendant discloses some, but not all, material facts that render the statement misleading can create liability for an Item 303 statement. However, a pure omission, as in this case, in an Item 303 statement does not create a private right of action. Other notable decisions discuss the reasonable investor standard established by the Supreme Court in Omnicare, Inc. v. Laborers District Council Construction Industries Pension Fund and the presumption for omissions under Rule 23 set forth in the Supreme Court’s decision in Affiliated UTE Citizens v. United States.These cases were addressed in In Re Ocugen, Inc. Securities Litigation, and in Crews, et al. v. Rivian Automotive, Inc.

Jerry: It’s like the plaintiffs’ bar in the securities fraud class action area is constantly pushing the legal envelope and innovating with new theories. How successful was the plaintiffs’ bar in 2024 in securing certification of motions for class certification?

Nelson: In 2024, 70% or 19 out of 27 class certification motions in securities fraud actions were successful. Defendants fared better on motions to dismiss, motions to strike, and motions for summary judgment, which were granted in whole or in part at a fairly high rate.

Jerry: That is a high rate. Do you have a sample, in terms of your thinking, of what class certification ruling kind of crystallizes all this, and is representative of victories on the plaintiff side?

Nelson : In Pampena v. Musk, plaintiffs filed a class action under 10(b) of the Exchange Act alleging Elon Musk made misleading statements to artificially depress the share price of Twitter, after Musk announced his intention to acquire the company. In April 2022, Twitter agreed to be acquired by an entity that was wholly owned by Musk for $54.20 per share. From May 14, 2022, to May 17, 2022, Musk made three public statements concerning the anticipated acquisition. First, Musk stated that the merger was on hold because the presence of fake accounts and spam on the Twitter platform would prevent him from completing the acquisition. Musk followed that comment by stating that these accounts comprise more than 20% of Twitter users. Finally, Musk announced that the merger could not move forward until Twitter’s CEO issued accurate SEC statements after the CEO declined to publicly disprove Musk’s claims about the fake accounts. Plaintiffs alleged that the share price dropped from $45.08 on May 12 to $35.76 by May 24. In opposition to the motion for class certification, Musk did not dispute the numerosity requirement or the commonality requirements of Rule 23. His opposition focused primarily on the predominance requirement of Rule 23(b)(3). Musk argued that the sophisticated investors would have understood that his statements were false and would not have relied on them. Accordingly, the class could not show individual reliance among the sophisticated investors and the other investors in the class. The court noted that the plaintiffs asserted their claims under the fraud on the market theory of reliance adopted by the Supreme Court in Basic. In challenging the fraud on the market theory, Musk argued the difference between sophisticated investors and other investors in the class rendered the market for Twitter shares inefficient. The court found that this argument misplaced the emphasis on investors. The fraud on the market theory presumes that in an efficient market, all publicly available information, not an investor’s interpretation of that information,  is deemed to be reflected in the share price. Once the Basic presumption is established, predominance is satisfied, absent a rebuttal of the price impact caused by the misrepresentation. The court found that Musk had not presented any evidence that would sever the link between his misrepresentations and the decline in share price that is required to rebut the basic presumption. Musk also argued that the lead plaintiffs were not typical of those in other of other class members, because there were certain class members who did not rely on his statements. The court found this argument similar to the predominance defense and held that the lead plaintiff’s experience reflected common issues among the plaintiffs, and that the claims were sufficiently typical. Finally, Musk argued that the class was overbroad because it would include individuals who either did not realize a loss or profited from the trades within the class period. The court ruled that a subset of class members who did not incur damages does not defeat a class action at the certification stage. It reasoned that injured parties and non-injured parties should be sorted out in the damages phase of the litigation, and the court granted the plaintiff’s motion for a class certification.

Jerry: That last point is interesting. Yesterday morning, the U.S. Supreme Court issued an 8-to-1 ruling in LabCorp v. Davis and indicated that certiorari had been improvidently granted. But Justice Kavanaugh issued a dissent – and this is a class action case that many people were following – where he indicated that if a class contains uninjured class members, a district court cannot certify it, and it’s not something in the damages phase. Obviously, it’s just one vote. It’s in a dissent. But, when a Supreme Court Justice dissents like that, it’s very important. So, it will be interesting to see if there’s a motion for reconsideration brought or the defense in that case continues to assert the defense that to the extent an uninjured class member is in the four corners of the class definition – that’s a reason why the class can’t be certified. But separate and apart from that, obviously, when cases get certified, settlements typically follow. How did the plaintiffs’ bar do on the settlement front in the securities fraud class action space?

Nelson: The plaintiffs’ class action bar successfully converted class certification rulings into class-wide settlements at a brisk pace in securities fraud litigation.  The top 10 securities fraud class action settlements totaled $2.65 billion in the past year. By comparison, the top 10 securities fraud class action settlements totaled $5.4 billion in 2023.

Jerry: Well, that’s certainly a drop, but it’s still an incredible amount of money that was collected by the plaintiffs’ securities fraud class action bar. So, it will be interesting to see if 2025 replicates that sort of success that the plaintiffs enjoyed in 2024. Well, great analysis, Nelson, and thanks so much for joining this week’s Class Action Weekly Wire.

Nelson: Thank you.

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman, senior associate Elizabeth Mincer, and associate Niyah Dantzler with their analysis of the key developments in labor class actions, including claims sparked by the impact of the COVID-19 pandemic on the workforce.

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 thank you for being here again for our next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are Niyah Dantzler and Elizabeth Mincer. Thanks so much for being on our podcast.

Elizabeth Mincer: Great to be here, Jerry.

Niyah Dantzler: Thanks for having me on the podcast, Jerry.

Jerry: Today, we wanted to discuss trends and important developments in the area of labor-related class action litigation. Liz, I know this is an area of special interest in your practice – tell us about the highlights of the past year.

Elizabeth: So, labor law issues often result in class action litigation either brought by advocacy groups, including unions, or by private plaintiffs asserting violations of labor-related statutes. In turn, labor-related class actions can arise in many contexts as the consequence of alleged mistreatment or abuse of workers can give rise to various statutory or constitutional claims. In 2024, courts addressed a number of labor issues in class action litigation. Historically, class action rulings have been brought under statutes such as the Migrant and Seasonal Agricultural Workers Protection Act, the Victims of Trafficking and Violence Protection Act, the Labor Management Relations Act, as well as under various constitutional based theories, and then the state law equivalents. Significantly, the majority of the key labor-related class action litigation decided in 2024 involved claims relating to COVID-19 vaccination requirements.

Jerry: Thanks very much for that overview. Let’s talk about COVID-related rulings then in 2024. Niyah, could you give us a brief overview of the key rulings covered in the 2025 Class Action Review in this space?

Niyah: Absolutely. There were several important rulings, particularly in cases stemming from claims relating to COVID-19 vaccines. For example, the U.S. Court of Appeals for the Ninth Circuit weighed in on a case, Bacon v. Woodward, and that case was brought by a group of firefighters from Spokane, Washington, alleging that the city unlawfully discharged them while they refuse to receive COVID-19 vaccinations in accordance with the governor’s Proclamation that all healthcare providers be fully vaccinated against COVID-19. Although the Proclamation was intended to accommodate sincerely held religious beliefs, the plaintiffs alleged that Spokane did not provide religious accommodations to any city firefighters. They instead claimed that the Proclamation, as applied to them, violated their Free Exercise rights under the U.S. Constitution. The state joined the action as an intervener to defend the Proclamation, and move for a judgment on the pleadings under Rule 12(c). The district court granted the motion, finding that Spokane lawfully applied the proclamation, but on appeal, the Ninth Circuit reversed it, determined that the firefighters had plausibly alleged that the city applied the Proclamation arbitrarily and capriciously, and showed callous disregard to the firefighters’ religious rights, and so the Ninth Circuit highlighted the fact that the fire departments outside of Spokane had permitted religious accommodations and actually sent non-vaccinated firefighters to provide services in Spokane pursuant to mutual aid agreements. Accepting the plaintiffs’ allegations as true, the Ninth Circuit held that firefighters’ claims should move forward because it was possible that they could establish that the Proclamation, as it applied to them, was not narrowly tailored to achieve the goal of stopping COVID-19 spread, as it failed to account for less restrictive alternatives, such as testing, masking, or considering natural immunity.

Jerry: Upon reading that decision, it sure seems to me the Ninth Circuit decision provided some good guideposts for employers trying to accommodate religious exemptions in terms of dealing with public health mandates and underscores the importance of ensuring that these policies are generally applicable but flexible, insofar as they don’t discriminate on the basis of religious practices. Liz, were there significant rulings under the Trafficking Victims Protection Act in 2024 that companies should know about in this space?

Elizabeth: Yes, there was a very interesting case that involved the global supply chain that is important for employers to know about. So, in a case called Doe, et al. v. Apple Inc., the plaintiffs, a group of former child miners who were injured in accidents and their representatives filed a class action against the defendants under the Trafficking Victims Protection Reauthorization Act of 2008, we’ll call TVPRA, which essentially makes it illegal to participate in a venture that uses forced labor. The plaintiffs argued that the defendants participated in a venture by purchasing cobalt through the global supply chain, which included cobalt that had been mined under forced labor conditions. The defendants had purchased this cobalt from large international suppliers, but those suppliers had subsidiaries in the Democratic Republic of the Congo involved in both mechanized, industrial mining, but also informal mining – and informal mining is really a less sophisticated, more crude operation, where the plaintiffs asserted that sort of operation posed severe safety risks and forced labor. The defendants filed a motion to dismiss, and the district court granted the motion. So, a positive outcome there. The district court had determined that the plaintiffs failed to sufficiently prove a direct connection between their injuries and the defendants’ actions, which was just merely buying that cobalt. The district court stated that purchasing cobalt through a supply chain without more direct involvement or control over the mining operations, did not constitute “participation in a venture” under the TVPRA. The case was appealed, and the DC. Circuit affirmed that ruling. It agreed that the plaintiffs failed to prove that the defendant’s participation in that venture actually violated the TVPRA. The D.C. Circuit found that the plaintiffs failed to show how an injunction against the defendants would remedy their injuries, as they were no longer involved in the mining, and the effectiveness of such an injunction was too speculative. The D.C. Circuit also reasoned that the plaintiffs failed to establish that the defendants had a sufficient degree of control or shared purpose with the suppliers to be considered participants in a venture, and that the relationship was that of a buyer and seller.

Jerry: Thanks very much for that overview, that’s a really important case. And those led to some substantial settlements in the labor class action space in 2024. How did the settlement numbers this past year compare to 2023?

Niyah: So, we saw a significant increase in the numbers from 2023 to 2024. In 2023, the top 10 labor settlements totaled about $139 million, whereas in 2024, we got up to $237 million.

Jerry: Well, that’s a big jump. The top settlement areas are something we track every year in the Duane Morris Class Action Review, and we’ll want to keep our eyes on these numbers in 2025 in terms of labor-related class action settlements. Well, Liz and Niyah, thank you very much for lending your thought leadership in this area and being with us today on our podcast. Listeners, thank you for tuning in. And if you have any questions or comments on today’s podcast, please send us a direct message on Twitter @DMClassAction.

Niyah: Thanks, everyone. Great to be here.

Elizabeth: Thanks for having me and thank you to the listeners for being here today.

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Nathan Norimoto discussing the key developments in civil rights class actions, including a notable ruling from the U.S. Supreme Court.  

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

Jennifer Riley: Hello, everyone, and thank you 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 Nathan Norimoto. Thank you, Nathan, for being on the podcast today.

Nathan Norimoto: Thank you, Jen. Great to be here.

Jennifer: Today, we wanted to discuss some trends and important developments in the area of civil rights class action litigation. Nathan, do you want to talk a bit about this area before we get into the recent developments?

Nathan: Sure. Yeah, so for over 70 years, class actions have been amongst the most powerful tools to secure civil rights in America. This began with the class action of Brown, et al. v. Board Of Education, in which the United States Supreme Court declared school segregation unlawful and arguably set the stage for the civil rights movement. In 1966, Congress and the judicial rule-making authorities crafted Federal Rule of Civil Procedure Rule 23 with the express goal of empowering litigants, challenging systematic discrimination – particularly segregation – to force courts to order widespread injunctive relief that would protect members of the class as a whole. And ever since, this provision remains as salient to the enforcement of federal civil rights statutes and constitutional claims as it was at its inception.

So, for a multitude of reasons, class actions are often a tool of first resort by advocacy groups to remedy civil rights violations – which we certainly saw in 2024.

Jennifer: Thanks, Nathan. What were some of those major developments in 2024 in this area of civil rights class action litigation?

Nathan: So, class actions in the civil rights context span numerous issues. Last year, given this breadth of subject area, there are well over 100 decisions in this space. However, the percentage of times courts granted a plaintiff’s or plaintiffs’ motion for class certification was down significantly last year, with courts granting certification about 40% of the time – in contrast to 2023, where courts granted class certification around 62% of the time. And so last year we saw a bit of a downtrend as to when these classes were being certified.

Jennifer: Are there any key rulings that our listeners need to know about in this area?

Nathan: So, among all civil rights cases, the United States Supreme Court issued an important ruling in the City Of Grants Pass, Oregon, et al. v. Johnson. In that case, the Supreme Court addressed whether a city’s public camping laws violated the Eighth Amendment’s prohibition against cruel and unusual punishment. Grants Pass, Oregon had ordinances banning camping on public property which can lead to fines and imprisonment. The Ninth Circuit had previously ruled that such laws could not be enforced against homelessness if there were not enough shelter beds available. The plaintiffs, two individuals experiencing homelessness, had filed a class action alleging that Grants Pass’ enforcement of these laws was unconstitutional under the Eighth Amendment. The district court agreed with the plaintiffs and issued an injunction against the city’s enforcement of the public camping laws, and then the Ninth Circuit affirmed the district court’s ruling. The United States Supreme Court then granted certiorari, and it overruled the Ninth Circuit’s decision. The Supreme Court determined that enforcing general public camping laws does not violate the Eighth Amendment. The court opined that the Eighth Amendment’s cruel and unusual punishment clause focuses on the nature of the punishments and not the criminalization of certain behaviors. And so, the court found that the punishments of fines and brief jail time terms imposed by grants passed were not cruel or unusual under the Eighth Amendment. The court also rejected arguments that the enforcement of these laws against individuals who are involuntarily homeless should be considered cruel and unusual, and in the end the court concluded that issues like homelessness and how to address homelessness involved complex policy decisions that were best left for elected representatives and not federal courts to address. So, in conclusion, the court overruled the Ninth Circuit’s ruling, finding that the enforcement of public camping laws by Grants Pass did not violate the Eighth Amendment.

Jennifer: Wow, what an interesting decision. So, you mentioned that there were over a hundred rulings in this area last year. How are things progressing so far in 2025 – have there been any interesting cases, interesting rulings where class certification was granted?

Nathan: Definitely, yeah. So, one example is Rossow, et al. v. Jeppesen. In that case, the plaintiff filed a punitive class action against the defendant, the Director of the Idaho Department of Health and Welfare, challenging a regulation that designated the prenatal use of controlled substances as child abuse, neglect, or abandonment – with the exception, of course, being that any substances that were prescribed by medical professional would not fall under this regulation. The regulation also included a clause that mandated individuals who use controlled substances be listed on the Central Registry for a minimum of ten years, and the plaintiff in this case was placed on the registry in December of 2021 after she tested positive for THC following the birth of her child. The plaintiff filed a class action, alleging violations of due process and equal protection under the United States Constitution on behalf of herself and others in similarly situated positions. Plaintiff filed a motion for class certification, and the court granted the motion. The court had found that the class met the numerosity requirement, as there were over 1,000 women on the registry for a similar reason as the plaintiff. The court also determined that the plaintiff’s claim raised common questions of law and fact, including whether the placement on the Central Registry affected a class member’s access to employment and their other personal rights, substantive rights, and whether there was a discriminatory intent, and how reports of child abuse were substantiated based on prenatal drug use. There were some procedural details and statute of limitations differences between the class members. But despite these differences, the court found that commonality was met because the class shared at least one significant common issue, including being placed on the registry. The court determined that the plaintiff’s claims for declaratory and injunctive relief met the requirements under Rule 23, and ultimately certified the class.

Jennifer: Well, it certainly seems like we will be continuing to see courts granting these motions in 2025, and the plaintiffs’ bar aggressively pursuing certification on behalf of plaintiffs. We know that successful certification often leads to settlements between the parties rather than a continuation of the litigation and ultimately a trial. So, how successful were plaintiffs in securing settlement dollars in 2024?

Nathan: So, settlement dollars in civil rights class actions in 2024 were significant. The top 10 settlements totaled $313.8 million. However, this was a significant decrease from the prior year, when the top 10 civil rights class action settlements in 2023 topped $643.15 million.

Jennifer: Wow, what a difference! So, the top settlement amounts in each area of law have been massive in recent years. And that’s a major trend that we track in the Duane Morris Class Action Review. We will continue to track those numbers in 2025 and keep our listeners aware of developments. Nathan, is there anything else corporate counsel and employers should be on the lookout for over the upcoming year?

Nathan: Definitely. Given the volume of litigation in the civil rights area, as well as the frequency with which these classes are granted, and also burgeoning issues that percolate, for example, claims regarding COVID-19, claims regarding increased issues with homelessness, and others, it’s anticipated that the plaintiffs’ bar will continue to be creative and inventive in this space for the coming year.

Jennifer: Well, thank you so much for all of your great analysis, Nathan – thank you for being here with me today. Listeners, thank you for tuning in. And if you have any questions or comments on today’s podcast, please send us a DM on Twitter @DMClassAction.

Nathan: Thanks, Jen. Thanks for having me on this morning!

Duane Morris Takeaway: Our 100th episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Zev Grumet-Morris discussing the key developments under the Class Action Fairness Act (“CAFA”).

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: Thank you, loyal blog listeners for being here for our 100th episode of our weekly podcast the class Action Weekly Wire. It’s a privilege today to have Zev Grumet-Morris with me to do our 100th podcast. Welcome, Zev.

Zev Grumet-Morris: Great to be here, Jerry. Thanks for having me on the 100th episode.

Jerry: Today, we’re diving into something that has a big impact on litigation in general and class action litigation in particular, the Class Action Fairness Act of 2005. It’s discussed in much detail in our annual Duane Morris Class Action Review. Zev, can you start explaining to our listeners what the CAFA is and why it’s significant?

Zev: Absolutely. So, the Class Action Fairness Act, or CAFA, was signed into law by President George W. Bush on February 18, 2005, and it’s a key statute that expanded federal jurisdiction over large class actions and mass actions. And essentially, it just shifted most of these lawsuits from state courts to the federal courts, which has had major implications for both plaintiffs and for defendants.

Jerry: So how does CAFA function in practice for corporations?

Zev: So, functionally, CAFA provides a tool for defendants, especially big businesses, big employers, to remove class actions from state court to federal court, and that’s a big deal, because federal courts are often viewed as more neutral forums for corporate defendants. And so, this ability to forum shop, if you will, has influenced how both plaintiffs’ lawyers and defense attorneys plan their litigation strategies.

Jerry: I’ve always thought that CAFA underscores the notion that location is everything, just like buying real estate – location, location, location. And those who have defended class actions know it sometimes can be very different in state court as compared to federal court. How easy is it, after CAFA, for a plaintiff to keep a class action in state court as opposed to resisting removal to federal court?

Zev: Well, post-CAFA, it’s gotten very difficult, or at least more difficult. But before CAFA it was pretty easy, actually, for plaintiffs to keep cases in state court. Federal jurisdiction requires that every plaintiff meet a $75,000 amount in controversy threshold, and for complete diversity to exist between the plaintiffs and the defendants. So, that meant that plaintiffs’ lawyers before CAFA could often craft cases to stay in state court, especially in jurisdictions with elected judges who might be less sympathetic to out-of-state corporate defendants.

Jerry: So how did CAFA change that dynamic?

Zev: Well, it changed it fairly significantly. So, under CAFA, just one class member being from a different state than a defendant is enough to create diversity. In addition, the total amount in controversy only needs to exceed $5 million, and the class must have at least 100 members. So, this lower threshold made it much easier for corporate defendants to move cases into federal court.

Jerry: Well, we all know that California, New York, and states of that ilk are epicenters for class action litigation, and their defendants invoke CAFA more often than in other areas of the country, and therefore the jurisprudence on the interpretation of CAFA is probably more advanced in the Second and Ninth Circuit, and especially in the Ninth Circuit, than in other areas of the country. In terms of the last 12 months, what, in your opinion, would be the key decisions that have interpreted CAFA?

Zev: Yeah, and you’re absolutely right with the comment you make about the Ninth Circuit. But, as you point out, it’s not the only circuit that comes out with key decisions. So just this past January, the D.C. Circuit issued a rare CAFA ruling in National Consumers League v. Starbucks. So, the National Consumers League, which is a nonprofit focused on consumer protection, they filed a lawsuit in D.C. Superior Court against Starbucks, alleging that the company had misled customers by claiming to ethically source its coffee and tea, when in reality they were actually sourcing allegedly from farms that were involved in labor abuses and that violated the D.C.’s Consumer Protection Procedures Act, or the CPPA. And they filed this lawsuit on behalf of both NCL and the general public. Now, Starbucks attempted to remove the case to federal court under the CAFA. NCL opposed that removal, arguing that the case didn’t meet the criteria for federal jurisdiction, and then, as it turns out, the court agreed with them. They held that the CAFA did not apply because NCL’s lawsuit was not a class action under Rule 23 or any similar rule. So, although the complaint referenced damages and public interest, NCL explicitly stated that it was not seeking representative damages on behalf of the public which undermined Starbucks’ claim that the amount in controversy exceeded the $5 million threshold. And the court also found that diversity jurisdiction failed, because, even though the parties were from different states, the damages NCL sought amounted to just about $34, more or less, few cups of coffee, and that fell short far short of the $75,000 threshold. So, in the end Starbucks’ argument that potential attorneys’ fees could push the amount over the limit was deemed to be far too speculative, and courts have repeatedly held such fees cannot be aggravated in CPPA cases. So, at the end of the day, the court remanded the action back to the state court.

Jerry: That’s a great analysis. I’ve always thought that CAFA is like a mini trial within a trial in terms of figuring out what procedurally ought to be the venue where a class action is litigated. Well, thanks so much for giving us your insights and thought leadership on CAFA litigation, and how it impacts corporate defendants over 2024 and what we can expect in 2025. Thanks so much for joining us on our 100th podcast.

Zev: Happy to be here, Jerry. Thanks.