The Duane Morris Class Action Review – 2024 Receives Major Accolades From Readers


By Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaway: In its review of the Duane Morris Class Action Review – 2024, EPLiC Magazine called it the “the Bible” on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.

We are humbled and honored by the recent review of the Duane Morris Class Action Review – 2024 by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here.

EPLiC said that “The Review must-have resource for in-depth analysis of class actions in general and workplace litigation in particular.”

EPLiC continued that “The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting corporate America and provides insight as to what companies and corporate counsel can expect to see in 2023 in terms of filings by the plaintiffs’ class action bar and governmental enforcement agencies likes the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”

So how do we do it?

The answer is pretty simple – we live, eat, and breathe class action law 24/7/365.

Every day, morning, and evening, we check the previous day’s filings of class action rulings relative to antitrust class actions, appeals in class actions, arbitration issues in class actions, Class Action Fairness Act issues in class actions, civil rights class actions, consumer fraud class actions, data breach class actions, EEOC-initiated litigation, employment discrimination class actions, Employee Retirement Income Security Act class actions, Fair Credit Reporting Act class actions, wage & hour class actions, labor class actions, privacy class actions, procedural issues in class actions, product liability & mass tort class actions, Racketeer Influenced and Corrupt Organization Act class actions, securities fraud class actions, settlement issues in class actions, state court class actions, Telephone Consumer Protection Act class actions, and Worker Adjustment and Retraining Act class actions. The Review also has focused appendices on significant sanctions in class actions, the largest attorneys’ fee awards, major settlements across all areas of litigation, the Illinois Biometric Information Privacy Act and the California Private Attorneys General Act.

We conduct due diligence reviews on a national basis for all of these areas, in both federal courts and in the courts of all 50 states. Then we read and analyze every ruling on Rule 23 certification motions and subsidiary issues throughout federal and state trial and appellate courts. The information is organized in our customized database, which is used to provide the Review’s one-of-a-kind analysis and commentary.

The result is a compendium of class action law unlike any other. Thanks for the kudos EPLiC – we sincerely appreciate it!

We look forward to providing the 2025 Review to all of our loyal readers in early January. In the meantime, check out our first-ever 2024 1st Quarter Class Action Settlement Review blog post here!

U.S. Supreme Court Holds That Judges, And Not Arbitrators, Must Decide Whether Contracting Parties Agreed To Delegate Arbitrability Issues To An Arbitrator

By Eden E. Anderson, Rebecca S. Bjork, and Gerald L. Maatman, Jr.

Duane Morris Takeaways:  On May 23, 2024, the U.S. Supreme Court issued its decision in Coinbase, Inc. v. Suski, Case No. 23-3 (2024).  The Supreme Court held that, where parties have agreed to two contracts — one sending arbitrability disputes to arbitration, and the other sending arbitrability disputes to the courts — a judge (and not an arbitrator) must decide which contract governs.  Thus, if a company rolls out successive contracts containing inconsistent terms regarding the forum for dispute resolution, a court will decide which of the two contracts applies.  Companies with arbitration programs should take heed of the decision, and make sure that the wording of later issued contracts do not impair previously existing contractual rights to compel disputes to arbitration.  

Case Background

Coinbase operates a cryptocurrency exchange platform where users can buy and sell cryptocurrency.  Coinbase offered a sweepstakes that users could enter for a chance to win cryptocurrency.  In connection with the sweepstakes, users filed a class action complaint alleging that the sweepstakes violated various California consumer protection statues.

Citing an arbitration clause in the User Agreement, Coinbase moved to compel arbitration and to dismiss the class claims based on a class action waiver contained therein.  The arbitration clause in the User Agreement included a delegation clause and, per that provision, an arbitrator was to decide whether a given dispute was arbitrable.  The users argued that the court, and not an arbitrator, should decide the arbitrability issue.

In support, the users cited a second contract — the Official Rules — they had agreed to in connection with the sweepstakes.  In contrast to the earlier executed User Agreement, the Official Rules contained a forum selection clause providing that all disputes related to the sweepstakes had to be decided in California courts.  The users also argued that the Official Rules superseded the User Agreement and its arbitration and class action waiver provision.  Coinbase responded that the delegation clause in the User Agreement was meant to govern all agreements moving forward and that the issue of arbitrability should be left in the hands of an arbitrator, and not the court.

The district court denied Coinbase’s motion to compel arbitration and the Ninth Circuit affirmed.  Both reasoned that deciding which contract governed was a question for the court, and not an arbitrator, to answer; that the User Agreement’s arbitration provision conflicted with the forum selection clause in the Official Rules; and that the Official Rules superseded the User Agreement.

The U.S. Supreme Court then granted review to answer the question of who — a judge or an arbitrator — should decide whether a subsequent contract supersedes an earlier arbitration agreement that contains a delegation clause.

The Supreme Court’s Decision

The Supreme Court held that, where parties have agreed to two contracts — one sending arbitrability disputes to arbitration, and the other sending arbitrability disputes to the courts — a court must decide which contract governs.  By contrast, in cases where only one contract is at issue, and that contract contains an arbitration clause with a delegation provision, courts must send all arbitrability disputes to arbitration, absent a successful challenge to the delegation clause.

Thus, the Supreme Court determined that it was correct for the district court (and the Ninth Circuit) to have determined which contract governed the claims concerning the sweepstakes.  Although Coinbase sought to challenge the Ninth Circuit’s ruling that the Official Rules superseded the User Agreement, the Supreme Court declined to consider that issue.

Implications Of The Decision

The Suski decision serves as a cautionary reminder to companies that roll-out successive contracts that bear on the forum for dispute resolution.  A court’s task is to determine what the parties’ agreement was or if a contract was not formed.  If an earlier contract contains an arbitration clause with a delegation provision, but a later contract does not and refers disputes to the courts, it will be up to a judge to decide which contract governs.

Anytime a company issues successive contracts addressing topics such as the forum for disputes, it is important to ensure there is consistency in the forum selected or else the right to arbitration and dismissal of class claims (based on a class action waiver) may be lost.

 

The Class Action Weekly Wire – Episode 56: Appeals In Class Action Litigation: Key Rulings In 2023 & 2024


Duane Morris Takeaway:
This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Tyler Zmick with their discussion of significant appellate decisions issued by courts throughout 2023 and 2024.

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

Episode Transcript

Jerry Maatman: Loyal blog readers, thank you for being here again for our next episode of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today is my colleague Tyler Zmick. And we’re here to talk about appeals. Thanks so much, Tyler, for being on the podcast.

Tyler Zmick: Thanks very much for having me, Jerry.

Jerry: Today we wanted to discuss trends and important rulings in the area of appeals in class action litigation in general, and class certification orders in particular. Parties obviously have very limited options to seek interlocutory appeal in litigation. But class action litigation is a little different. Tyler, could you share with us some of the ways in which parties can move for interlocutory appeal on class action related issues?

Tyler: Sure. So there are basically two potential avenues that a party has for seeking interlocutory appeal of a class certification ruling. The primary mechanism is Rule 23(f) of the Federal Rules, and that rule states that a party must ask for permission to appeal with the clerk of the appellate court within 14 days of the district court order being entered. And as the backup option, the second one parties can also seek interlocutory appellate review under Federal Statute 28 U.S.C. § 1292(b). And both of these avenues together, Rule 23(f) and Section 1292(b), they’re important in that early appeals help correct early errors on questions of law that, if left until final judgment, could potentially require parties to spend years engaging in needless and expensive litigation.

Jerry: I’ve always thought that the stakes are high in class action litigation, especially if there’s a certification order and the discovery that file follows it, it can be a million dollar kind of issue. When you’re advising your clients, what are the kind of the primary options or differences between those two methods for appeal?

Tyler: Sure that’s a great question. There’s multiple different standards applied by the courts, but I think one of the primary differences is that, unlike an interlocutory appeal under section 1292(b), Rule 23(f) does not require that the district court certify an issue for appeal. So Rule 23(f) is a one step process where only the appellate court needs to allow the appeal to go forward. Under Section 1292(b), on the other hand, a party needs permission from both the district court and the appellate court to move forward with the appeal. So you have basically two gatekeepers instead of one, and hence it’s higher burden that you face if you want to seek an appeal through that route.

Jerry: Since they’re discretionary, what kind of success factors do you see from year to year in the appellate courts?

Tyler: Success rates are generally not great. The data shows that appellate courts deny roughly 75% of Rule 23(f) petitions, and most of those denials are accomplished via summary orders, meaning the order just says the petition for permission to appeal is denied without any explanation or reasoning on part of the court.

Jerry: I know you’ve been involved in many appeals in class action situations and co-authored the chapter in the Duane Morris Class Action Review on appeals. Were there any particular decisions that you think are important to share with our listeners in terms of what occurred in the appellate courts in 2023?

Tyler: Sure, absolutely, I think one notable case was issued in July of 2023. The case was In National ATM Council, Inc., et al. v. Visa Inc., and in that case the D.C. Circuit actually offered a rare explanation of its decision. And the decision was to grant a petition to appeal a class certification order under Rule 23(f). And so by way of background, in that case the district court certified a class of ATM operators and ATM customers who alleged that defendants Visa and Mastercard’s rules regarding ATM fees violated federal antitrust laws. And the D.C. Circuit granted Visa and Mastercard’s Rule 23(f) petition to appeal. In doing so, the D.C. Circuit noted sort of strangely that the trial court’s class certification order did not pose an important legal question that needed to be resolved, which is unusual because usually that is the case when an appellate court will accept a Rule 23(f) petition to appeal. Instead, the D.C. Circuit noted that the trial courts order contained statements of law that were unclear, the court citations were not current, and it’s “record analysis” was notably terse. So, in other words, the district court’s explanation was inadequate. If you’re a trial court judge, this is not the kind of order you want to see from the appellate court that is directly above you, and the D.C. Circuit also commented that the district court’s order failed to cite the Supreme Court’s most recent case law analyzing whether common issues predominate over individualized ones in the class action context. So taken together, the appellate court concluded that questionable accuracy of the district court’s unclear language, combined with the settlement pressure that would result from a class certification ruling in favor of plaintiffs, warranted a Rule 23(f) appeal.

Jerry: That seems to be a really interesting decision, and one that practitioners can learn from. Now that we’re almost midway through 2024, have there been any similar rulings or interesting appellate decisions on these sorts of petitions so far this year?

Tyler: Yes, absolutely. I think there’s been at least one notable ruling in 2024 thus far, and the case is Dale, et al. v. Deutsche Telekom AG, where the plaintiffs filed a class action on behalf of AT&T and Verizon customers, and the plaintiffs alleged that a merger between T-Mobile and Sprint resulted in the reduction of competition, causing these customers to have to pay billions of dollars more for their wireless services than they would have otherwise had to pay. And so, in response to the complaint, T-Mobile filed a motion to dismiss, arguing that antitrust standing was lacking, and the district court denied that motion, after which T-Mobile moved to certify the issue for appeal under Section 1292(b). And specifically T-Mobile sought to certify the question whether the plaintiffs, who were customers of AT&T and Verizon, plausibly alleged antitrust standing to challenge the merger of T-Mobile and Sprint. And so the issue is, do these plaintiffs have standing given that they are not customers of either of the parties to the merger, but rather non-parties AT&T and Verizon, who whose cell phone rates basically are going to be impacted by this merger. In deciding to certify the question for appeal, the district court held that this standing question is a contestable question of pure law, not a mixed question of fact and law. And so when it’s a pure legal issue, it’s more likely to meet the interlocutory appeal test. And specifically the court reasoned that there were substantial grounds for a difference of opinion on whether the plaintiffs plausibly alleged antitrust standing. And the court stated that the complaint set forth a plausible theory that AT&T and Verizon customers were injured at the first step as direct consumers in the market, where the merger allegedly restrained competition and raised prices. And so, as a result, the court certified the question for interlocutory appeal to the Seventh Circuit, and it remains to be seen if the Seventh Circuit will also let the appeal go forward.

Jerry: That’ll be a good one to mark to see when the future ruling comes out. I’ve always thought Rule 23, in terms of allowing that appeal was kind of an exception to the general rule, that interlocutory appeals are just so difficult – a big uphill climb. Conversely, in terms of your study in this area and your practice, have there been any relevant court rulings involving appeals under the interlocutory appeal route, which is 28 U.S.C. § 1292(b), in 2023 or in 2024?

Tyler: Yup. So defendants succeeded in obtaining interlocutory appellate review under Section 1292(b) in multiple decisions in 2023, including on one critical issue relative to the class and collective action context. And that issue is how to apply the U.S. Supreme Court’s decision in Bristol-Myers Squibb regarding personal jurisdiction and how that sort of intersects with the claims of potential out-of-state opt-ins in FLSA collective actions as opposed to Rule 23 class actions. So in the case at issue, Vanegas, et al. v. Signet Builders, Inc., it was filed in federal court in Wisconsin, and the plaintiff filed an FLSA collective action, claiming that the defendant failed to pay him, owed overtime, and the plaintiff sought to represent a collective action of mostly non-U.S. citizens, including only 30 who worked in Wisconsin, which is where the case was pending, and almost 600 who performed work in other states. The defendant argued that personal jurisdiction was lacking with respect to those out-of-state potential opt-ins. But the court rejected that argument and proceeded to conditionally certify the proposed collective action and basically pushed to the future the issue of whether the court could exercise personal jurisdiction over those out-of-state potential opt-ins. And so, as a result of that order, defendant sought to certify an appeal under Section 1292(b), and specifically defendant sought to certify this question – whether in an FLSA collective action, if it is proper to defer the personal jurisdiction inquiry until after notice has been sent to potential opt-ins. The court granted defendant’s petition, basically because that question is important enough to warrant interlocutory review. While the court concluded that the jurisdictional principles in Bristol-Myers Squibb did not apply in the FLSA collective action context, the court ruled that the decision was still certifiable for review, because other courts have held that Bristol-Myers Squibb does apply to FLSA collective actions. In addition, it’s a pure question of law that would not require the appellate court to sift through the factual record and obviously the decision here would have a dramatic impact on the future scope of the litigation.

Jerry: Well, that’s a great result for the defendant in that case, somewhat of a unicorn to get an appeal like that up there. So two big appellate rulings to watch for then in the next quarter to several months away in the Seventh Circuit. Well, it seems like novel approaches are the ones that seem to get the courts’ attention as appellate issues begin to percolate through the court.

Well, thanks so much for this great analysis of a very complex area, Tyler, and thank you for being with us today. Listeners, thank you for tuning in.

Tyler: Thanks for having me, Jerry.

Wisconsin Appellate Court Vacates Class Certification Order And Finds That Department Of Corrections Employees Are Not Entitled To Additional Pay

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

Duane Morris Takeaways:  On May 15, 2024, in McDaniel, et al. v. Wisconsin Department of Corrections, No. 22-AP-1759, 2024 WL 2168148 (Wis. App. May 15, 2024), the Wisconsin Court of Appeals of held that the Wisconsin Department of Corrections (“WDOC”) employees were not entitled to compensation for time spent waiting in line to get to security checkpoints; passing those security checkpoints; getting their daily assignments and equipment; and walking to their job stations.  This decision further illuminates the scope of compensable time under the Fair Labor Standards Act (“FLSA”) and its state law analogs.

Case Background

Plaintiffs Nicole McDaniel and David Smith (“Plaintiffs”), both hourly employees, sued the WDOC for an alleged failure to provide them with compensation for their pre-shift and post-shift activities.  These activities included waiting in line for and passing through security checkpoints; getting their daily assignments and equipment; and walking to their job stations.  These activities took the employees anywhere between three and 30 minutes per day.  Plaintiffs, believing they were entitled to additional paid time as a result of these activities, sued under the Wisconsin state wage and hour laws and the FLSA. After discovery, they moved to certify their purported class.

In response, the WDOC argued that each of these pre-shift and post-shift activities were non-compensable under the Portal-to-Portal Act and its state law equivalents.  Their rationale was that “the principal activities for which an employee was hired, such as time spent commuting, time spent walking from the entrance of a workplace to one’s assigned post, and other similar activities” are excluded from the scope of compensable work activities.  Id. at *3. The WDOC, therefore, argued that the class should not be certified because the purported class members could not recover as a matter of law.

The trial court disagreed with the WDOC.  It held that it was “sufficiently plausible” that the employees time was compensable and it certified a class comprised of “[a]ll current and former non-exempt, hourly-paid [WDOC] employees who worked as security personnel in a correctional institution . . . in the State of Wisconsin.”  Id. at *2.  The WDOC appealed that ruling.

Court of Appeals Opinion

The Wisconsin Court of Appeals reversed the trial court’s decision. It held that the trial court abused its discretion to certify the class.  In so doing, the Court of Appeals relied heavily on the U.S. Supreme Court decision in Integrity Staffing Solutions, Inc. v. Busk, 574 U.S. 27 (2014), which sets forth the legislative intent for the Portal-to-Portal Act and its case law progeny.  The Court of Appeals explained that “the Portal-to-Portal Act was created by Congress in direct response to a series of ‘expansive definitions’ of a ‘workweek’ under the FLSA.”  Id. at *3.  There, the Supreme Court in Busk unanimously concluded that participation in security screenings were not compensable activities that the employer hired their employees to perform.

The Wisconsin Court of Appeals adopted the U.S. Supreme Court’s reasoning and reached the same conclusion.  Indeed, none of the activities for which Plaintiffs sued were “integral and indispensable” activities that the employees were hired to perform for the WDOC.  Id.  Instead, the Court of Appeals reasoned that these activities were merely ancillary to Plaintiffs’ job functions.

In short, the Court of Appeals concluded that Plaintiffs could “point to no questions of law or fact common to the class regarding activities at the start and end of the compensable work day” and the trial court erred by certifying the class because the class could not recover as a matter of law.  Id. at *4 (internal citations omitted).

Implications For Employers

The holding in McDaniel, et al. v. Wisconsin Department of Corrections has far broader implications than just the practices within the Wisconsin state correctional system.  Employers, particularly those in Wisconsin, will often not be required to compensate employees for similar activities on the basis that those pre-shift and post-shift activities are exempt from the FLSA’s reach.

It is worthy of note, however, that corporate counsel must be confident in its determinations with respect to the FLSA, because a willful violation of the statute may result in increased liability for employers.

Indiana Federal Court Certifies Issue Of Collective Certification Standard For Seventh Circuit Review

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin

Duane Morris Takeaways: On May 10, 2024, in Richards v. Eli Lilly & Co., et al., No. 1:23-CV-00242 (S.D. Ind. May 10, 2024), Chief Judge Tanya Walton Pratt of the U.S. District Court For The Southern District Of Indiana granted Eli Lilly’s motion asking the Court to certify for interlocutory appeal the question of whether a plaintiff must show more than a “modest factual showing of similarity” in order to issue notice in a collective action.  The Court certified for review by the Seventh Circuit the specific question of “[w]hether notice in a collective action can issue based on a modest factual showing of similarity, rather than upon a showing by a preponderance of the evidence that requires the Court to find that commonality across the collective [action] is more likely than not.” The ruling and the future appellate decision should be required reading for companies involved in wage & hour litigation.

Case Background

Named Plaintiff Monica Richards brought a proposed collective action against Defendants Eli Lilly & Company and Lilly USA, LLC’s (collectively, “Eli Lilly”) under the Age Discrimination in Employment Act (ADEA) alleging that Eli Lilly knowingly and willfully denied promotions to qualified employees who were older than 40, including herself and all other similarly situated employees.  Id. at 1.

Plaintiff moved for conditional certification of a proposed ADEA collective action of “[a]ll Eli Lilly employees who were 40 or older when they were denied promotions for which they were qualified, since February 12, 2022.”  Id. at 2.  Plaintiff’s motion urged the Court to utilize a “two-step” legal standard to evaluate collective action certification established in 1987 by Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987).  Id. at 2.  Under the Lusardi framework, plaintiffs need only present what some judges have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step, i.e., certification of a collective action on a conditional basis.  Id.  In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court makes a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order.  Id. at 3.

Eli Lilly responded that the Court should follow the recent Fifth Circuit decision in Swales v. KLLM Transp. Servs., LLC, 985 F.4th 430 (5th Cir. 2021), and/or Sixth Circuit decision in Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023), which both rejected the longstanding two-step approach developed in Lusardi in favor of more rigorous one-step processes.  Id.

On March 25, 2024, the Court granted Plaintiff’s motion for conditional certification of the ADEA collective action using the two-step Lusardi framework that Plaintiff urged the Court to adopt.  Thereafter, Eli Lilly filed a motion asking the Court to certify an immediate appeal on the question of which legal standard courts in the Seventh Circuit should use to evaluate conditional certification of a collective action. Plaintiffs sought review pursuant to 28 U.S.C. § 1292(b). Id. at 2.

Certification Of Interlocutory Appeal

On May 10, 2024, the Court granted Eli Lilly’s motion and certified for interlocutory appeal the specific question of: “Whether notice in a collective action can issue based on a modest factual showing of similarity, rather than upon a showing by a preponderance of the evidence that requires the Court to find that commonality across the collective [action] is more likely than not.” Id. at 12.

In doing so, the Court explained that the certified question met the criteria for an interlocutory appeal under 28 U.S.C. § 1292(b) because it “involves a controlling question of law to which there is substantial ground for difference of opinion and an immediate appeal from the order may materially advance the ultimate termination of litigation.”  Id. at 12.  The Court further reasoned that “Eli Lilly simply seeks clarity on the proper legal standard for collective certification, not whether the Court appropriately applied the facts to a particular standard,” and that “[t]he Seventh Circuit should be given the opportunity to clarify the standard, should it so choose.”  Id. at 6.

Along with certifying the this legal question for appellate review, the Court stayed the issuance of notice to members of the proposed collective action pending the outcome of the Seventh Circuit’s ruling.  Id. at 12.

Implications For Employers

The Richards decision is consequential because it will prompt the Seventh Circuit to weigh in for the first time on the applicable legal standard governing what a plaintiff must establish for a court to grant conditional certification of a collective action.  While the proposed collective action in Richards concerns claims under the ADEA, the ADEA incorporates the FLSA’s collective action procedures, meaning that the certified question will also impact collective action lawsuits under the FLSA.

As any employer who has been sued by a named plaintiff seeking to represent an FLSA collective action knows, the discovery burden imposed by application of the two-step Lusardi decision is far more onerous than what the Fifth Circuit established in Swales or the Sixth Circuit established in Clark.

On top of the discovery implications, employers litigating FLSA cases in the Seventh Circuit will want to keep a close eye on how it rules in Richards, since it will significantly impact how heavy of a burden plaintiffs will face in order to show they are similarly situated to the individuals they seek to notify of a collective action.

Plaintiffs Win Conditional Certification In Gender Bias Lawsuit Against AstraZeneca

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Christian J. Palacios

Duane Morris Takeaways:  On May 15, 2024, U.S. District Judge Sara Ellis of the U.S. District Court for the Northern District of Illinois conditionally certified a collective action of female workers employed by AstraZeneca, and approved notice to be sent to female sales representatives who have worked at the pharmaceutical company since December 30, 2018.  The case, captioned Jirek, et al., v. AstraZeneca Pharmaceuticals LP, Case No. 1:21-CV-6929 (N.D. Ill., May 14, 2024), represents another significant win for the plaintiffs’ bar, and serves as a reminder of the low legal threshold that plaintiffs have to satisfy in order to conditionally certify a collective action at the initial stage of a lawsuit. This ruling is particularly noteworthy given the fact that collective action definition that has been approved by the Court will include notice to likely thousands of AstraZeneca’s female sales representatives on a nationwide basis (as AstraZeneca employs over 3,500 sales representatives to market its pharmaceutical products, as noted in the beginning of the Court’s order).

Background

The Named Plaintiffs Natalie Jirek, Judy Teske, and Natalie Ledinsky brought suit against their former employer, global biopharmaceutical company, AstraZeneca, alleging violations of the Equal Pay Act of 1963 (the “EPA”) for failure to pay a purported collective action of female employees less than their male counterparts for the same or substantially similar work in sales positions within the same pay scale levels. Jirek et al., v. AstraZeneca Pharmaceuticals LP, Case No. 1:21-CV-06929, ECF No. 88 at p. 2 (N.D. Ill. Jan. 26, 2024) (the “Conditional Certification Motion”).

Plaintiffs’ evidence in support of this sex-based wage discrimination claim included 10 online job postings from different locations, a declaration from each of the named-plaintiffs, AstraZeneca’s “Career Ladder Program Guide” (an internal evaluation guide from July 2010, which, according the AstraZeneca’s declarant, hadn’t been used since 2015), and two unequal pay violations issued by the U.S. Department of Labor’s Office of Federal Contract Compliance Program’s (“OFCCP”) following the OFCCP’s evaluation and analysis of AstraZeneca’s payment structure.  According to the conditional certification motion, the OFCCP found that, beginning in September 2016, AstraZeneca failed to comply with Executive Order 11246, which prohibits companies that do over $10,000 in U.S. government business from discriminating against employees on the basis of gender. Id.  Specifically, the OFCCP found that AstraZeneca discriminated against female employees in “Specialty Care Sales Representative Level 4 positions” in violation of the Executive Order, after comparing random samplings of men and women and finding that there was a difference in $2,182.07 between the sexes in sales representative positions. As a result of the OFCCP Conciliation Agreement, all the women in the OFCCP’s sampling were entitled to back pay plus interest. The Complaint alleges that despite this, Defendant did not change its discriminatory pay practices until at least 2021.

The Court’s Decision

On May 14, 2024, Judge Ellis entered an order conditionally certifying the collective action and allowing Plaintiffs to send notice to “females employed by AstraZeneca in sales positions as of December 30, 2018.”

By all accounts, this is a sweeping collective action definition that likely will result in notice to thousands of current and former AstraZeneca female employees within the collective action period.  Of the evidence submitted by Plaintiffs’ counsel, the Court noted that it found the similarity in language amongst job postings to be a compelling reason to support Plaintiffs’ assertion that the sales representatives were similarly situated, regardless of location. See ECF No. 114, at 12.  Although the Court noted that Defendant’s proffered declaration from AstraZeneca’s Vice President of Human Resources attempted to “diffuse” some of the similarities, the Court reasoned that these factual questions were inappropriate for resolution at the conditional certification stage. Id.  The Court declined to engage in other “credibility determinations” that AstraZeneca presented to respond to the evidence Plaintiffs submitted.  The Court also observed that the “OFCCP Agreement [gave] Plaintiffs the hook they need[ed] to tie the nationwide body of sales representatives to alleged widespread gender-based pay discrimination.”  Id. at 14.

The Court concluded its analysis of Plaintiffs’ conditional certification motion by noting the weakness of Plaintiffs’ declarations, stating, “Frankly, Plaintiffs’ declarations do not say much, primarily regurgitating allegations contained in their already thin amended complaint. But another word for ‘allegations lifted from a complaint and a repeated verbatim in a declaration’ is ‘evidence’ and arguably weak evidence is still evidence that the Court – again – may not weigh at this stage.”  Id. at 16.  In the same order, the Court asked the parties to continue engaging in negotiations regarding the proposed form of notice, and tolled the statute of limitations for the time period that elapsed between the Court’s decision and the Court’s approval of the notice form.

Implications

The conditional certification stage of a collective action is a universally recognized lenient standard for plaintiffs to meet. Nevertheless, Judge Ellis’s approval of such a massive collective action at the conditional certification stage is a blow to the defense, and is a reminder of how lenient the evidentiary standard is for the first stage of collective actions. Although it remains to be seen if Plaintiffs will be able to prevail at stage two of the Court’s analysis (after notice has been sent to collective members and discovery has been conducted), for now, Plaintiffs will be able to proceed with their collective action in a significant Equal Pay Act lawsuit.

Eleventh Circuit Vacates Approval Of GoDaddy TCPA Class Action Settlement

By Gerald L. Maatman, Jr., Jennifer A. Riley, Emilee Crowther, and Zachary J. McCormack

Duane Morris Takeaways: In Drazen v. Pinto, No. 21-10199, 2024 U.S. App. 2024 LEXIS 11590 (11th Cir. May 13, 2024), the Eleventh Circuit vacated a district court’s final approval of a settlement of a class action alleging GoDaddy, Inc. violated the Telephone Consumer Protection Act (“TCPA”) by sending unwanted marketing texts and phone calls through a prohibited automatic telephone dialing system (“ATDS”). The Eleventh Circuit held the district court abused its discretion by approving the class-wide settlement, which would have provided up to $35 million to pay class members’ claims and up to $10.5 million to class counsel in attorneys’ fees. The Eleventh Circuit opined that the district court erred by overlooking evidence of collusion between class counsel and GoDaddy’s attorneys.

The Eleventh Circuit concluded that the district court inappropriately certified the class, and should not have approved the proposed settlement agreement and granted class counsel’s motion for attorneys’ fees. In doing so, the district court overlooked evidence of collusion between class counsel and GoDaddy’s attorneys, treated the settlement as a common fund instead of a claims-made resulution, and improperly calculated attorney fees after erroneously concluding it was not a coupon settlement. The Eleventh Circuit remanded the case back to the district court for further proceedings.

The Eleventh Circuit’s 123-page opinion offers a treasure trove of insights regarding the need for constant vigilance when it comes to TCPA compliance — particularly for employers involved in these types of class actions.

Case Background

GoDaddy, Inc., a publicly traded multi-billion-dollar U.S. corporation, provides services – including domain registration, website hosting, payment processing, and marketing support – to entrepreneurs around the globe. Id. at *2. The Drazen litigation consisted of three consolidated TCPA class action lawsuits brought against GoDaddy alleging the company sent unwanted marketing texts and phone calls through ATDS. Id. at *13. The parties eventually negotiated a settlement agreement where GoDaddy would provide up to $35 million to pay class members’ claims and up to $10.5 million to class counsel in attorneys’ fees. Id. at *41. The plaintiffs moved the district court to certify a Rule 23(b)(3) class for settlement purposes, to preliminarily approve the negotiated settlement agreement, and to approve the draft notice of proposed settlement to class members. Id. at *21. The district court granted preliminary approval of the settlement and directed that notice of the proposed settlement be given to the class. Id. at *22.

Shortly after counsel emailed the notice to the class, the Supreme Court granted certiorari in Facebook, Inc. v. Duguid, 592 U.S. 395, 401-02 (2021), which took up the same principal issue in the plaintiffs’ consolidated actions: whether a device must have certain capabilities to constitute an auto dialer under the TCPA. Class counsel, anticipating an impending Supreme Court ruling in Facebook that could impact a settlement, urged the district court to enter a final judgment approving the settlement and grant its attorneys’ fees motion. Id. at *7.

The district court granted class counsel’s motion over the objection of Juan Pinto, an individual class member, who argued (i) the district court prematurely ruled on attorneys’ fees before the deadline for objections, and (ii) the fees awarded were far in excess of what class members would receive, making the settlement unfair, unreasonable, and inadequate. Id. at *8. Over the objections of this individual class member, the district court approved the settlement, and Juan Pinto appealed. Id. at *9.

The Eleventh Circuit’s Decision

The Eleventh Circuit concluded the district court abused its discretion in approving the class-wide settlement agreement. Among other oversight, the district court failed to account for the 2018 amendments to Rule 23(e)(2), it overlooked evidence indicating that the settlement agreement was the product of collusion, and that the notice of the proposed settlement failed to inform the absent class members of the claims, issues, or defenses in plaintiff’s cases as required by Rule 23(c)(2)(B)(iii), fundamental due process, and the district court’s fiduciary obligation to the absent class members. Id. at *9. The Eleventh Circuit highlighted various errors committed by the district court in its 123-page opinion, but focused primarily on three areas.

First, the Eleventh Circuit concluded that it was improper for the district court to determine the settlement as fair, reasonable, and adequate without considering Rule 23(e)(2)(A). Id. at *59. The district court also overlooked evidence indicating that the settlement agreement was the product of collusion, such as the overbroad, sweeping release provision and inadequate relief provided to the class relative to what class counsel and GoDaddy received. Id. at *60. Rule 23 and due process require that, in finalizing a class settlement, the parties and the district court must give absent class members a meaningful opportunity to opt-out or challenge the class settlement. Id. at * 66.

Second, the Eleventh Circuit determined that the notice of the proposed settlement failed to inform the absent class members of the “claims, issues, or defenses” in the plaintiffs’ cases as required by Rule 23(c)(2)(B)(iii), fundamental due process, and the district court’s fiduciary obligation to the absent class members. Id. at *71. The Eleventh Circuit adopted the interpretation of Rule 23(c)(2)(B)(iii) as “conjunctive”, and that class members must be informed not only of the claims asserted, but also of the dispositive issue in Facebook and how its decision would affect the case. Id. at *77. The Eleventh Circuit’s opinion further suggested that additional notice should have been provided regarding this development.

Third, the Eleventh Circuit found that the district court erred in three ways when it calculated attorney’s fees considering it: (1) misapplied Rule 23(h), (2) treated the settlement as a common fund when it was claims-made, and (3) determined that this was not a settlement involving coupons under the Class Action Fairness Act (“CAFA”) and thus declined to examine class counsel’s motion for attorney’s fees with CAFA-mandated scrutiny and procedures. Id. at *9. First, the district court failed to give absent class members advance notice of class counsel’s fee motion, which disregarded the manifest intent of Rule 23(h). Id. at *79. The schedule proposed by the parties and adopted by the district court provided class members with only 7 days to review the attorney’s fees motion before the objection deadline, and the notice did not specify when that motion would be filed, which the Eleventh Circuit strongly criticized. Id. at *80. Second, although labeled a “common fund,” the settlement really involved a “claims made” structure where class counsel may recover the full amount of the attorneys’ fees sought; the class members, however, recover only if they submit claims. Id. at *79. Finally, the district court declined to apply class CAFA-mandated scrutiny and procedures, which was an error as the settlement allowed the class members to choose a cash award instead of a voucher. Id. at *89.

For these reasons, the Eleventh Circuit vacated the judgment, and remanded to the district court for further proceedings.

Implications Of The Decision

The Eleventh Circuit’s opinion depicts the latest legal developments in the constantly changing TCPA landscape, and the need to structure class settlement agreements in a way that obtains peace and withstands judicial scrutiny. In an effort to avoid expensive repercussions, employers and corporate counsel must exercise caution when drafting settlement documents in class-wide resolutions. Corporate counsel should take note of the dangers of the TCPA, as well as the potential pitfalls in faulty class action settlement agreements, and continue to monitor this space for future developments.

 

South Carolina Federal Court Denies Class Certification In Massive Data Breach Class Action

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther

Duane Morris Takeaways: In a data breach lawsuit entitled In Re Blackbaud, Inc., Customer Data Breach Litigation, MDL No.2972, Case No. 3:20-MN-02972, 2024 WL 2155221 (D.S.C. May 14, 2024), Judge Joseph F. Anderson, Jr. of the U.S. District Court for the District of South Carolina denied Plaintiff’s motion for class certification. The Court found that the Plaintiffs failed to meet their burden of proof as to ascertainability since they could not demonstrate an administratively reasonable method by which to ascertain the estimated 1.5 billion putative class members. This case serves as an important reminder that a plaintiff’s failure to provide a court with an administratively reasonable way to ascertain a class can be an effective tool when combatting class certification motions.

Case Background

Defendant Blackbaud, Inc. provides data collection and storage services to a wide variety of organizations (“customers”). Id. at 2. Defendant collects and stores personally identifiable information and protected health information of individuals on behalf of its clients. Id.

Between February and May 2020, a cybercriminal breached Defendant’s systems, capturing 90,000 backup files containing data belonging to 13,000 of Defendant’s customers, and data belonging to approximately 1.5 billion individuals worldwide. Id. at 3-4.

Various plaintiffs filed suits nationwide, and on December 15, 2020, all of the lawsuits were combined into a multidistrict litigation in the District of South Carolina. Id. at 5. Thereafter, the Plaintiffs moved to certify one main nationwide class, and four other sub-classes, including two in California, one in New York, and one in Florida. Id. at 5-6.

The Court’s Decision

The Court denied Plaintiffs’ motion for class certification. It held that Plaintiffs failed to meet their burden of proof as to Rule 23’s ascertainability requirement. Id. at 1. As a threshold requirement to any class certification, a plaintiff must demonstrate that a class is “ascertainable”, i.e., “that there will be an administratively feasible way for the court to determine whether a particular individual is a class member.” Id. at 16.

Plaintiffs argued four primary points in support of ascertainability, including: (i) the method proposed by their expert; (ii) Defendant’s ability to create a fact sheet about the named Plaintiffs; (iii) Defendant’s ability to give notice to its customers; and (iv) Defendant’s use of a program called Wirewheel. Id. at 17.

As to Plaintiffs’ first point, the Court granted Defendant’s motion to exclude the Plaintiffs’ expert’s testimony on the grounds that the expert failed to sufficiently test his method, was unable to replicate his method, failed to sufficiently document his method, and could not provide the Court with an error rate consistent with generally accepted statistical practices. Id. at 18.

As to Plaintiffs’ second point, the Court found that the Defendant’s ability to create a fact sheet containing information about 34 named Plaintiffs did not weigh in favor of ascertainability, as the Defendant’s process was “not proof that Plaintiffs [could] undertake the larger task of ascertaining the proposed classes and sub-classes” for 1.5 billion individuals. Id. at 45-46. In its decision, the Court placed particular emphasis on the fact that Plaintiffs had not “tested, briefed, or otherwise demonstrated how they would collect information from putative plaintiffs to conduct a process similar to the process Defendant undertook” in creating its fact sheet.  Id. at 40-41.

As to Plaintiff’s third point, the Court similarly found that the Defendant’s ability to give notice of the breach did not weigh in favor of ascertainability, because “[t]he steps Defendant took to give notice to its customers [is] not comparable to the steps Plaintiffs would need to take to ascertain a class.”  Id. at 48-49. The Court emphasized the distinction between Defendant’s task to provide notice to its 13,000 customers versus Plaintiffs’ task to identify all of the 1.5 billion individual constituents of Defendant’s customers.  Id. at 46, 49.

As to Plaintiff’s fourth and final point, the Court again held that it did not weigh in favor of ascertainability, as “the Defendant’s ability to utilize a singular, live database that it maintains for the sole purpose of responding to [certain] requests does not in any way indicate that Defendant is necessarily able to restore and query 90,000 backup files of databases that were customized, maintained, and controlled by 13,000 separate customers.”  Id. at 49-50.

In sum, the Court found that the Plaintiffs failed to demonstrate that their “proposed classes and sub-classes” were able to be ascertained “without significant individualized inquiry at a scale that [was] not administratively feasible for Plaintiffs, th[e] Court, Defendant, or any individuals or entities acting at their direction to undertake.”  Id.

Implications For Companies

The Court’s ruling in In Re Blackbaud, Inc., Customer Data Breach Litigation underscores the importance of ascertainability in large-scale data breach class actions. The reality is that companies across the world face threats of large scale cyber-attacks to capture their data daily, whether it be through their own servers or through the technologies and tools they utilize. Since a majority of these cyber threats focus on personally identifiable information or personal health information, each data breach could now potentially affect millions (or billions) of individuals.

It is natural for a company to experience trepidation in light of these threats and the likelihood of a class action that could follow. However, it is important to remember that in any class action, Rule 23 requires a plaintiff to demonstrate that putative class members are identifiable without extensive and individualized fact-finding. The broader the swath Plaintiff wants to brush, the harder it will be for that Plaintiff to demonstrate and plausibly claim to the Court that their class is ascertainable.

U.S. Supreme Court Settles Circuit Split And Holds That District Courts Granting Motions To Compel Arbitration Do Not Have Discretion To Dismiss Underlying Lawsuits And Must Stay Them

By Eden E. Anderson, Rebecca Bjork, and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On May 16, 2024, the U.S. Supreme Court issued a unanimous decision holding that when a district court determines that the claims in a lawsuit are arbitrable and a party has requested a stay of litigation, the district court does not have discretion to dismiss the lawsuit.  The decision resolves a split amongst the federal circuit courts over whether Section 3 of the Federal Arbitration Act (“FAA”) mandates a stay in such circumstances by use of the word “shall” in that provision.  The Supreme Court reasoned from established canons of statutory interpretation as well as the structure and purpose of the FAA compelled the result in the case. The decision will likely result in a situation where disputes between parties in an arbitral proceeding will more often be brought to the attention of the district court to resolve. 

Case Background

The case arrived at the Supreme Court via the Ninth Circuit which considered in Forrest v. Spizzirri, 62 F.4th 1201 (9th Cir. 2023), whether, under the FAA, a lawsuit should be dismissed or stayed after all the plaintiff’s claims are compelled to arbitration.

The plaintiffs were delivery drivers who sought to maintain wage-and-hour claims against their former employer for allegedly misclassifying them as independent contractors.  Although the plaintiffs agreed their claims were subject to arbitration, they disagreed that their lawsuit should be dismissed and asked the district court to instead stay the case pending arbitration.  According to the plaintiffs, the FAA mandates a stay to protect rights in the existing lawsuit and preserve judicial supervision while an arbitration is ongoing.  The district court disagreed. It dismissed the lawsuit without prejudice, and the Ninth Circuit affirmed.  Although Section 3 of FAA states that the court “shall” stay the trial of an action pending arbitration, the Ninth Circuit held that district courts have discretion to instead dismiss a lawsuit after all claims have been ordered to arbitration.

The U.S. Supreme Court’s Decision

The Supreme Court unanimously reversed the Ninth Circuit and embraced the position the plaintiff delivery drivers took in the district court – that their lawsuit should be stayed and not dismissed pending arbitration.  Justice Sotomayor wrote the opinion for the Supreme Court.

The Opinion is concise, tightly reasoned, and less than six pages long.  The Supreme Court begins its analysis – after describing the parties and how the case arrived on their docket – with a straightforward statement of the conclusion that “[i]n this statutory interpretation case, text, structure, and propose all point to the same conclusion,” which is that “a district court does not have discretion to dismiss a suit on the basis that all the claims are subject to arbitration.”  (Slip Op. at 3.)  Then, the Opinion explores each of those sources of interpretation and explains why they lead to the outcome reached.

The text of the FAA on this issue appears in Section 3, and it states that when any issue in a lawsuit is subject to arbitration, the district court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.”  (Slip Op. at 4.)  The Supreme Court concluded that “shall” is “plain statutory text [that] requires a court to stay the proceeding.”  (Id.)  The Supreme Court noted that the word “shall” also appears “in neighboring sections of the FAA” and it previously found those sections “created a mandatory obligation that left no place for the exercise of discretion by a district court.” (Id.)  The Supreme Court concluded that “The same is true here.”  (Id.)

Moreover, “just as ‘shall’ means ‘shall,’ ‘stay’ means ‘stay,” according to the Court.  (Id.)  Therefore, it rejected the argument of the employer that stopping the parallel in-court proceedings during the arbitration is what matters, and it is equally achieved by an order of dismissal without prejudice.  The Supreme Court noted that in 1910, when Congress passed the FAA, Black’s Law Dictionary defined a “stay” as a temporary suspension of legal proceedings, which is at odds with an outright dismissal.  (Id. at 4-5.)

As for the structure and purpose of the FAA, the Supreme Court found that they also supported interpreting Section 3 as mandating stays in this situation.  The fact that Congress chose to provide an automatic interlocutory appeal of a denial of a motion to compel arbitration in Section 16, but did not do so for grants of motions to compel arbitration supports the conclusion that Congress intended to move arbitrable disputes out of courts and into arbitration as quickly and easily as possible.  (Id. at 5-6.)  But a dismissal triggers the right to an immediate appeal, which Congress clearly sought to avoid in drafting Section 16 of the FAA.

Finally, the Supreme Court explained that stays are preferable to dismissal orders in arbitration cases because they will allow federal courts to maintain jurisdiction to resolve disputes between the parties that may arise more smoothly. (Id.)

Implications Of The Decision

This decision by the U.S. Supreme Court precluding district courts from dismissing suits without prejudice after granting motions to compel arbitration will have the benefit of providing a uniform national standard in this ever important area of the law.  It also may well have the effect the Court seems to desire, e.g., ensuring that arbitrations are able to proceed quickly and smoothly by ensuring the district judge remains in the background to resolve disputes as they arise.  But that same virtue could amount to a vice, in that it may create an incentive for participants in arbitration to attempt to avoid the arbitrator by going to the court.  The following months should provide a hint of whether the Court’s predictions come true.

State AGs Sue EEOC For Abortion-Related Accommodation Requirements In PWFA Final Rule

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

Duane Morris Takeaways:  On April 25, 2024, a group of seventeen (17) state attorneys’ general sued the EEOC for its April 19, 2024 Final Rule (the “Final Rule”) outlining the Commission’s regulations regarding the newly enacted Pregnant Workers Fairness Act of 2022 (“PWFA”).  The case – captioned States of Tennessee et al. v. Equal Employment Opportunity Commission, Case No. 2:24-CV-00084 (E.D. Ark. Apr. 25, 2024) – is filed in the U.S. District Court for the Eastern District of Arkansas and alleges the EEOC’s Final Rule violates the Administrative Procedure Act (the “APA”) and the U.S. Constitution based on the fact that it defines a “related medical condition” to include an abortion.  This new lawsuit may shape up to be a significant challenge to the EEOC’s authority to enforce its newest federal anti-discrimination statute in its enforcement toolkit.

Background

The PWFA requires employers to provide a reasonable accommodation to qualified employees or applicants that have known limitations related to, affected by, or arising out of pregnancy, childbirth, or “related medical conditions,” unless the accommodations will cause the employer undue hardship.  See 42 U.SC. § 2000gg(4). Modeled after the Americans with Disabilities Act (the “ADA”), the PWFA contains the familiar language of requiring “reasonable accommodations” absent a showing of “undue hardship” and the law officially went into effect on June 27, 2023. On April 19, 2024, the EEOC issued its four hundred and eight (408) page Final Rule and guidance implementing the PWFA. The Commission voted 3-2, along party lines, to pass the Final Rule and the regulation officially goes into effect on June 18, 2024.

Under the Final Rule, the Commission describes “related medical conditions” to include “lactation, miscarriage, stillbirth, having or choosing not to have an abortion, preeclampsia, gestational diabetes, and HELLP (hemolysis, elevated liver enzymes and low platelets syndrome).”  29 C.F.R. 1636 at 17. The Final Rule expressly states that “it does not regulate the provision of abortion services or affect whether and under what circumstances an abortion should be permitted. The PWFA does not require any employee to have—or not to have—an abortion, does not require taxpayers to pay for any abortions, and does not compel health care providers to provide any abortions.”  Id. at 29.

The Complaint

On April 25, 2024, ten (10) days after the EEOC issued its final regulations, a coalition of states with Republican-led attorneys general, including the AG’s of Tennessee, Arkansas, Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Utah and West Virginia commenced a lawsuit in the Eastern District of Arkansas against the EEOC on the basis that its Final Rule included abortion to be a related medical condition.  The complaint begins with declaring that although the PWFA passed with bipartisan support, “in a new rule, a bare 3-2 majority of unelected commissioners at the Equal Employment Opportunity Commission (EEOC) seeks to hijack these new protections for pregnancies by requiring employers to accommodate workers’ abortions-something Congress did not authorize.” Compl. at 1. The Complaint further claims that if the Rule stands, plaintiff states, and others, would be compelled to “facilitate workers’ abortions or face federal suit-even those elective abortions of healthy pregnancies that are illegal under state law.” Id.

The fifty-one (51) page Complaint alleges a variety of violations of the APA and the U.S. Constitution. With respect to the APA violations, the attorneys general assert, amongst other things, that the EEOC’s final rule contravenes the text of the PWFA, conflicts with federal statutory prohibitions on abortion funding, and is arbitrary and capricious.  The Complaint’s constitutional objections to the EEOC’s final rule include allegations that that the Final Rule violates principles of federalism, state sovereignty, the First Amendment, Article II and the separation of powers doctrine.  The Complaint concludes by asking the Court, amongst other requested relief, to enter a preliminary injunction against the Commission, or any other agency or federal employee, from enforcing or implementing the Final Rule’s abortion-accommodation, pending the Court’s final judgement on the plaintiffs’ claims, and vacating and setting aside the Final rule as unlawful. Id. at 46.

Implications

In the last several years, the APA has been a popular vehicle for states to challenge rules promulgated by administrative agencies. The EEOC in particular is no stranger to having its enforcement authority challenged by both private and public entities.  Nevertheless, it remains to be seen whether the state AGs will ultimately be successful in requiring the Commission to roll back its own guidance with respect to the abortion-related accommodations currently present within its Final Rule.  If the plaintiffs are successful, it could serve as a basis for challenging the Commission’s ability to enforce and promulgate future rules relating to the other federal antidiscrimination statutes the EEOC enforces.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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