Duane Morris Takeaways: Privacy and data breach class action litigation are among the key issues that keep businesses and corporate counsel up at night. There was over $1 billion dollars procured in settlements and jury verdicts over the last year for these types of “bet-the-company” cases. At the ALM Law.com Legalweek 2024 conference in New York City, Partner Alex W. Karasik of the of the Duane Morris Class Action Defense Group was a panelist at the highly anticipated session, “Trends in US Data Privacy Laws and Enforcement.” The conference, which had over 6,000 attendees, produced excellent dialogues on how cutting-edge technologies can potentially lead to class action litigation. While A.I. took the main stage, along with an epic keynote speech from revered actor, Bryan Cranston, privacy and data-management issues were firmly on the radar of attendees.
Legalweek’s robust agenda covered a wide-range of global legal issues, with a prominent focus on the impact of technology and innovation. Some of the topics included artificial intelligence, data privacy, biometrics, automation, and cybersecurity. For businesses who deploy these technologies, or are thinking about doing so, this conference was informative in terms of both their utility and risk. The sessions provided valuable insight from a broad range of constituents, including in-house legal counsel, outside legal counsel, technology vendors, and other key players in the tech and legal industries.
I had the privilege of speaking about how data privacy laws and biometric technology have impacted the class action litigation space. Joining me on the panel was Christopher Wall (Special Counsel for Global Privacy and Forensics, and Data Protection Officer, HaystackID); Sonia Zeledon (Associate General Counsel Compliance, Risk, Ethics, and Privacy, The Hershey Company); and Pallab Chakraborty (Director of Compliance & Privacy, Xilinx). My esteemed fellow panelists and I discussed how the emerging patchwork of data privacy laws – both in the U.S. and globally – create compliance challenges for businesses. I provided insight on how high-stakes biometric privacy class action litigation in Illinois can serve as a roadmap for companies, as similar state statutes are emerging across the country. In addition, I explored how artificial intelligence tools used in the employee recruitment and hiring processes can further create potential legal risks. Finally, I shared my prediction of how the intersection of ESG and privacy litigation will continue to emerge as a hot area for class action litigation into 2024 and beyond.
Finally, and probably the most important update to many of you, Bryan Cranston’s keynote address was awesome! Covering the whole gamut of the emotional spectrum, Bryan was fascinating, inspirational, and hilarious. Some of the topics he discussed included the importance of family, the future impact of A.I. on the film industry, his mescal brand, and a passionate kiss during his first acting scene at 19. Bryan was a tough act follow!
Thank you to ALM Law.com, the Legalweek team, my fellow panelists, the inquisitive attendees, the media personnel, and all others who helped make this week special
Duane Morris Takeaways:On January 19, 2024, the Illinois Supreme Court unanimously held that the Illinois Antitrust Act does not allow staffing agencies to avoid allegations that they suppressed wages and agreed not to hire each other’s workers in The State of Illinois ex rel. Kwame Raoul v. Elite Staffing, Inc., et al., No. 2024 IL 128763 (Ill. Jan. 19, 2024). The Supreme Court rejected defense arguments that the complaint failed to state a cause of action because the Illinois Antitrust Act provides that services otherwise subject to the Act “shall not be deemed to include labor which is performed by natural persons as employees of others.” Id. at 3. The Supreme Court concluded that reading the Illinois Antitrust Act so broadly would contradict the entire purpose of the Act, i.e., promoting and protecting free and fair competition; therefore it found that the Act does not exclude all agreements concerning labor services, including the conduct alleged.
Illinois v. Elite Staffing is an important reminder that businesses must be mindful of state antitrust and competition laws, in addition to the federal antitrust laws, and is required reading for any corporate counsel handling antitrust class action litigation under state antitrust and competition laws involving wage-suppression issues.
Case Background
In July 2020, the Illinois Attorney General sued Elite Staffing Inc., Metro Staff Inc., Midway Staffing Inc. and their common customer, Colony Inc., on grounds that Colony required the staffing agencies not to poach each other’s employees and to agree to below-market wages for temporary workers at Colony. The three staffing firms provided a Colony facility with temporary workers beginning in 2018 where between 200 and 1,000 temporary workers would work at any given time. According to the allegations in the Complaint, Colony required the staffing agencies not to offer better wages or other benefits to any of each other’s workers and precluded the workers from trying to switch between the agencies. The Defendants moved to dismiss the complaint arguing that the alleged conduct was exempted from antitrust liability under the Illinois Antitrust Act. The circuit court denied the motion, and the Illinois Appellate Court concluded that the exemption in the Act did not extend to services provided by staffing agencies. The Illinois Supreme Court thereafter granted Defendants’ petition for leave to appeal.
Illinois Antitrust Act Does Not Exclude All Agreements Concerning Labor
Section 4 of the Illinois Antitrust Act exempts from coverage “labor which is performed by natural persons as employees of others.” See 740 ILCS § 10/4. This section is important because, among other reasons, § 3 of the Illinois Antitrust Act, which is expressly modeled after § 1 of the Sherman Act and federal court interpretations thereof, would otherwise proscribe the conduct alleged in the Complaint. The Supreme Court noted that just as reading §1 of the Sherman Act to prohibit every restraint on competition would be absurd, so too would be reading § 4 of the Illinois Antitrust Act in isolation. Specifically, the Supreme Court found that “service” cannot be read so broadly as to exempt all agreements concerning wages and conditions of employment from antitrust scrutiny regardless of their anticompetitive effects, which would be contrary to the entire purposes of the Illinois Antitrust Act. Id at 19. The Supreme Court concluded that agreements between employers that concern wages or hiring may violate the Illinois Antitrust Act unless it is part of a collective bargaining process.
Implications For Employers
Illinois v. Elite Staffing opens to door for workers in Illinois to use state antitrust law to tilt labor market dynamics in their favor and to increase their bargaining leverage for greater compensation and benefits. It serves as an important reminder for employers to also be mindful of state antitrust and competition laws when making labor market decisions.
Duane Morris Takeaways: On January 18, 2024, Judge Richard F. Boulware II of the U.S. District Court for the District of Nevada denied Defendant’s motion for summary judgment in a wage suppression antitrust class action and declined to exclude two of Plaintiffs’ key experts in Le v. Zuffa, LLC, No. 2:15-CV-01045 (D. Nev. Jan. 18, 2024). The Court rejected defense arguments that summary judgment was appropriate on largely the same grounds that it certified the class on August 9, 2023, including arguments that the statistical model of Plaintiffs’ expert was flawed because it failed to include everyone in the sport and failed to consider the ways promoters help fighters develop into bigger stars. Defendant also argued that there was no dispute that there are more UFC fighters, more fights, and better compensation than at the start of the class period; however, the Court found sufficient evidence that UFC may have used its market power to suppress wages in any event.
Le v. Zuffa is the first labor monopsony case ever, and the ruling in is required reading for any corporate counsel handling antitrust class action litigation involving wage-suppression issues.
Case Background
Plaintiffs are current or former UFC fighters. Defendant, Zuffa, LLC does business as UFC and is the preeminent MMA event promoter in the United States. Plaintiffs allege that UFC used exclusive contracts, market power, and a series of acquisitions to suppress wages paid to UFC fighters during the class period by up to $1.6 billion. Plaintiffs filed suit in December 2014 and defeated UFC’s motions for partial summary judgment in 2017. In February 2018, plaintiffs moved to certify two classes. A class consisting of all persons who competed in one or more live professional UFC-promoted MMA bouts taking place in the United States from December 16, 2010 to June 30, 2017 was certified last August (our prior post on that ruling is here).
In light of the class certification, Defendant renewed its motion for summary judgment and moved to exclude expert testimony. The Court struck two of Defendant’s motions to exclude and denied summary judgment. As a result, the case is scheduled to start trial on April 8, 2024.
Denial Of Summary Judgement
The Court rejected Defendant’s arguments for summary judgment on grounds that they were repetitive and unavailing.
Specifically, Zuffa argued that the total number of bouts, fighter compensation, and fighters all increased during the class period, that there are no barriers to enter the fight promotion market, and that it did not prevent competitors from signing and promoting fighters. The Court found that the fact that the raw numbers of fighters, bouts, and compensation increased is not dispositive and credited Plaintiffs’ evidence that their wages were still suppressed. The Court also noted that it expressly rejected Defendant’s arguments regarding barriers to entry and completion in the class certification decision.
Implications For Employers
Le v. Zuffa has the potential to be a landmark labor antitrust class action.
The Court credited evidence establishing that UFC has anticompetitive power on the buyer-side market of purchasing fighter services and that it used this power to harm all UFC fighters. Like other labor antitrust cases, Le v. Zuffa could be an important test of workers’ ability to use antitrust law to tilt labor market dynamics in their favor and to increase workers’ bargaining leverage for greater compensation and benefits.
Duane Morris Takeaway: As the ultimate referee of law, the U.S. Supreme Court traditionally has defined the playing field for class action litigation and, through its rulings, has impacted the class action landscape. The past year did not buck that trend. On June 29, 2023, the U.S. Supreme Court ruled in Students for Fair Admissions, Inc., et al. v. President & Fellows of Harvard College, 600 U.S. 181 (2023), that two colleges and universities that considered race as a factor in the admissions process violated the Equal Protection Clause of the U.S. Constitution and Title VI of the Civil Rights Act of 1964. The ruling is fueling controversy along with a wave of claims that is likely to expand.
Check out the video below to see Duane Morris partner Jennifer Riley discuss the impact of U.S. Supreme Court rulings on the class action landscape in 2023, and what is coming in 2024.
Trend #5 – U.S. Supreme Court Rulings Continue To Impact The Class Action Landscape
The U.S. Supreme Court’s Decision
Students for Fair Admissions, an advocacy group, brought two lawsuits alleging that the use of race as a factor in admissions by Harvard and the University of North Carolina, respectively, violated Title VI and the Equal Protective Clause of the Fourteenth Amendment. The U.S. Supreme Court agreed.
After reviewing the language of the Fourteenth Amendment (no State shall “deny to any person . . . the equal protection of the laws”), the Supreme Court began its analysis by recapping its early jurisprudence, including its decision in Brown v. Board of Education, 347 U. S. 483, 493 (1954), wherein it held that the right to a public education “must be made available to all on equal terms.” Students, 600 U.S. at 201, 204. The Supreme Court noted that these decisions, and others like them, reflect the broad “core purpose” of the Equal Protection Clause: “[D]o[ing] away with all governmentally imposed discrimination based on race.” Id. at 206.
The Supreme Court explained that, accordingly, any exceptions to the Equal Protection Clause’s guarantee must survive a daunting two-step examination known as “strict scrutiny,” which asks, first, whether the racial classification is used to “further compelling governmental interests” and, second, whether the government’s use of race is “narrowly tailored” or “necessary” to achieve that interest. Id. at 206-07. In Grutter v. Bollinger, 539 U.S. 306, 325 (2003), the Supreme Court endorsed the view that “student body diversity is a compelling state interest” but insisted on limits in how universities consider race. In particular, the Supreme Court sought to guard against two dangers: (i) the risk that the use of race will devolve into “illegitimate . . . stereotyp[ing]” and (ii) the risk that race will be used as a negative to discriminate against those racial groups that are not the beneficiaries of the race-based preference. To manage its concerns, Grutter imposed a third limit on race-based admissions programs. “At some point,” the Supreme Court held, “they must end.” Students, 600 U.S. at 212.
In Students for Fair Admissions, the U.S. Supreme Court held that the defendants’ race-conscious admissions systems failed each factor and, therefore, ran afoul of the Equal Protection Clause. As an initial matter, the U.S. Supreme Court found that defendants failed to operate their race-based admissions programs in a manner that is “sufficiently measurable to permit judicial [review].” Id. at 214-17. Second, the U.S. Supreme Court held that the race-based admissions systems failed to comply with the twin commands of the Equal Protection Clause that race may never be used as a “negative” and that it may not operate as a stereotype. Id. at 218-219. The U.S. Supreme Court explained that “college admissions are zero-sum. A benefit provided to some applicants but not to others necessarily advantages the former group at the expense of the latter.” Id. Third, the U.S. Supreme Court held that the admissions programs lack a “logical end point” as Grutter required. Id. at 221. As a result, the U.S. Supreme Court determined that the admissions programs “cannot be reconciled with the guarantees of the Equal Protection Clause.” Id. at 230.
The Ruling’s Early Impact
On July 19, 2023, in Ultima Services Corp., et al. v. U.S. Department of Agriculture, No. 20-CV-00041, 2023 WL 4633481 (E.D. Tenn. July 19, 2023), a district court extended Students for Fair Admissions to the government contracting context and held that the Small Business Association’s use of racial preferences to award government contracts likewise violates the Equal Protection Clause.
Section 8(a) of the Small Business Act instructs the Small Business Administration (the SBA) to contract with other agencies “to furnish articles, equipment, supplies, services, or materials to the Government,” 15 U.S.C. § 637(a)(1)(A), and to “arrange for the performance of such procurement contracts by [subcontracting with] socially and economically disadvantaged small business concerns,” 15 U.S.C. § 637(a)(1)(B). The SBA adopted a regulation creating a “rebuttable presumption” that “Black Americans; Hispanic Americans; Native Americans; Asian Pacific Americans [; and] Subcontinent Asian Americans” are “socially disadvantaged.” 13 C.F.R. § 124.103(b)(1).
The district court held that the § 8(a) program does not satisfy strict scrutiny. First, the Administration did not assert a compelling interest. The district court reasoned that while the government “has a compelling interest in remediating specific, identified instances of past discrimination,” the program lacked any such stated goals. Id. at *11. Second, the district court held that, even if the SBA had a compelling interest in remediating specific past discrimination, the § 8(a) program was not narrowly tailored to serve that alleged compelling interest. Id. at *14. The § 8(a) program had no logical end point or termination date, was both underinclusive and overinclusive relative to its “imprecise” racial categories, and failed to review race-neutral alternatives.
The district court concluded that the defendants’ use of the rebuttable presumption violated Ultima’s Fifth Amendment right to equal protection, and it enjoined defendants from using the rebuttable presumption of social disadvantage in administering the program. Id. at *18.
Although the district court in Ultima limited its holding to the use of a “rebuttable presumption” in administration of § 8(a) programs, in addressing the requirement that racially conscious government programs must have a “logical end point,” it cited Students for Fair Admissions and noted that “its reasoning is not limited to just [college admissions programs].” Id. at *15 n.8. Thus, the first opinion considering the impact of Students for Fair Admissions extended it beyond college admissions, reflecting the decision’s potential to fuel claims asserted under 42 U.S.C. § 1981, Title VII, and other anti-discrimination statutes.
Implications For Class Action Litigation
The Supreme Court’s decision has also caused private sector employers to question whether the ruling impacts their diversity, equity, and inclusion (DEI) initiatives. While politicians moved quickly to stake out positions on the issue, the plaintiffs’ class action bar and advocacy groups moved to take advantage of the uncertainty to line up a deluge of claims.
In the wake of Students for Fair Admissions, the Office for Federal Contractor Compliance Programs (OFCCP), the office responsible for overseeing affirmative action programs for federal contractors, promptly updated its website to state that its affirmative action programs are separate from those that educational institutions implemented to increase racial diversity in their student bodies. The OFCCP stated that “[t]here continue to be lawful and appropriate ways to foster equitable and inclusive work environments and recruit qualified workers of all backgrounds.”
Likewise, in response to the decision, EEOC Chair Charlotte Burrows, a Democratic appointee, promptly issued a statement declaring that the decision “does not address employer efforts to foster diverse and inclusive workforces or to engage the talents of all qualified workers, regardless of their background. It remains lawful for employers to implement diversity, equity, inclusion, and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace.”
By contrast, Andrea Lucas, a Republican-appointed EEOC Commissioner, emphasized a different sentiment in a Fox News interview regarding the impact of Students for Fair Admissions: “I think this [decision] is going to be a wake-up call for employers. . . . Even though many lawyers don’t use the word affirmative action, it’s rampant today. . . . Pretty much everywhere there is a ton of pressure . . . across corporate America to take race-conscious . . . actions in employment law. That’s been illegal and it is still illegal.” As to potential challenges, she added: “I have noticed an increasing number of challenges to corporate DEI programs and I would expect that this decision is going to shine even more of a spotlight about how out of alignment some of those programs are. . . I expect that you are going to have a rising amount of challenges.”
Consistent with predictions, in the wake of the U.S. Supreme Court’s ruling, Republican Attorneys General from 13 states and Senator Tom Common of Arkansas sent a letter to the CEOs of Fortune 100 companies stating: “[T]oday’s major companies adopt explicitly . . . discriminatory practices [including], among other things, explicit racial quotas and preferences in hiring, recruiting, retention, promotion, and advancement.” They urged the companies to cease unlawful hiring practices. In response, 21 Democratic Attorneys General sent a letter condemning the Republican Attorneys General’s “attempt at intimidation”: “While we agree with our colleagues that “companies that engage in racial discrimination should and will face serious legal consequences…[w]e write to reassure you that corporate efforts to recruit diverse workforces and create inclusive work environments are legal and reduce corporate risk for claims of discrimination.”
On September 19, 2023, Students for Fair Admissions filed a lawsuit in the U.S. District Court for the Southern District of New York seeking to end race-conscious admissions at the U.S. Military Academy. . See Students for Fair Admissions v. U.S. Military Academy at West Point, et al., No. 7:23 Civ. 08262 (S.D.N.Y.). The group alleged that the admissions program at West Point, which takes race into account in its admissions process for future Army officers, is unconstitutional and unnecessary for a service that relies on soldiers following orders regardless of skin color.
The group filed a similar action against the U.S. Naval Academy on October 5, 2023, in the U.S. District Court for the District of Maryland. See Students for Fair Admissions v. U.S. Naval Academy, et al., No. 23-CV-2699 (D. Md.). The group seeks to prevent the Naval Academy in Annapolis, Maryland from taking race into account in the selection of an entering class of midshipmen. After filing suit, the group promptly sought a preliminary injunction.
On December 20, 2023, a federal judge denied a request to temporarily bar the Naval Academy from using race in its admissions process while the parties litigate the case. Students for Fair Admissions v. U.S. Naval Academy, No. 23-CV-2699, 2023 WL 8806668, at *1 (D. Md. Dec. 20, 2023) (noting that plaintiff’s requested injunctive relief “would undoubtedly alter the status quo,” and, at this stage, the parties have not developed a factual record from which the court can determine whether the Naval Academy’s admissions practices will survive strict scrutiny).
On October 4, 2023, another advocacy group, the America First Legal Foundation asked the EEOC to launch an investigation into Salesforce’s allegedly “unlawful employment practices” claiming that, through its programs promoting diversity and equality, it engaged in unlawful race-based and sex-based discrimination. The group has lodged similar accusations against than a dozen other companies alleging that they maintain programs that aim to increase workplace representation of women and minorities at the expense of White, heterosexual men. The American Alliance for Equal Rights filed lawsuits against additional companies, including law firms, claiming that their grants and programs excluded individuals based on their race.
Finally, on December 19, 2023, a Wisconsin attorney represented by the Wisconsin Institute for Law & Liberty filed suit alleging that a clerkship program maintained by the Wisconsin State Bar is unconstitutional because its eligibility requirements and selection processes discriminate among students based on various protected traits, primarily race. SeeSuhr v. Dietrich, et al., Case No. 23-CV-01697 (E.D. Wis.). He claims that members of Bar leadership are violating his First Amendment rights because they are using his mandatory dues as a practicing attorney to fund the program.
As these questions continue to percolate, and courts start to weave a patchwork quilt of rulings, such uncertainty is likely to fuel class action filings and settlements in the workplace class action space at an increasing rate. Companies should expect to see more governmental enforcement activity, litigation focused on alleged “reverse” discrimination, and claims challenging DEI initiatives.
By Gerald L. Maatman, Jr., Brittany M. Wunderlich, and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. Drivers Management, LLC et al., Case No. 8:18-CV-462 (D. Neb. Jan. 10, 2024), U.S. District Judge John M. Gerrard rejected the EEOC’s proposed injunctive relief — ordering the company to comply with the Americans with Disabilities Act (the “ADA”) — and instead ordered defendants to report to the EEOC all job applications it receives from deaf truck drivers and whether the applicants are hired, among other information, on a semi-annual basis over a three-year period. This case illustrates how federal judges may use their discretion to fashion case-specific injunctive relief designed to prevent similar discrimination in the future.
Background
Victor Robinson, a deaf commercial truck driver, applied to work for Drivers Management, LLC and Werner Enterprises, Inc. (collectively, “Werner”) in January of 2016. He was denied employment, despite having a commercial driver’s license and an exemption for his hearing disability from the Federal Motor Carrier Safety Administration (the “FMCSA”), the federal agency responsible for regulating and providing safety oversight to commercial motor vehicles. The EEOC subsequently brought an enforcement lawsuit on the grounds that Werner discriminated against Robinson on the basis of his deafness.
The Jury Trial
Werner claimed that it rejected Robinson’s application for employment because it could not train inexperienced deaf drivers, like Robinson. Despite the federal government’s approval and despite evidence that other trucking companies were able to train deaf drivers, Werner argued that Robinson, and other FMCSA hearing exemption holders, could not complete Werner’s training program, which required drivers with less than 6 months of experience to drive alongside a trainer on a real over-the-road trucking route, due to safety concerns. Id. at 2.
In September 2023, the jury returned a verdict in favor of the EEOC after a trial. The jury rejected Werner’s position finding that Robison was qualified and could have performed the essential functions of the job, if provided with a reasonable accommodation. Id. at 3. The jury also determined that Werner acted with malice or reckless indifference towards Robinson’s right not to be discriminated against on the basis of his deafness, and awarded substantial damages intended to punish Werner for its misconduct. Id.
The Court’s Order
In the Court’s Order, Judge Gerrard considered whether the EEOC’s requested injunctive relief was sufficient. In doing so, the Court concluded that the EEOC’s request for an order that the defendants to end their discriminatory practices, provide reasonable accommodations to workers, and train employees on the ADA, did little more than “order Werner to obey the law.” Id. at 11. Rather, the Court observed, “the scope of injunctive relief against continued discrimination should be designed to prevent similar misconduct, and must be related to the violation with which the defendants were originally charged.” Id. Accordingly, the Court imposed semi-annual recording and reporting requirements on Werner (and its subsidiaries), requiring that they keep records of every hearing-impaired applicant that applied for an over-the-road truck driving position, the date of the application, whether the applicant was hired, when the employment decision was communicated to the applicant, the basis for declining to hire the applicant, and whether the applicant remained employed with Werner for six months and, if not, the reason for the separation. The reporting obligation was imposed for a term of three years, after which the Court would convene a hearing to determine whether Werner complied with the order, and whether the injunction should be modified, extended, or terminated.
Implications For Employers
As this decision illustrates, federal judges have a wide degree of discretion to modify the relief sought by the EEOC, specifically with respect to injunctive relief. If a judge does not believe that the requested injunctive relief effectively prevents future discriminatory conduct, that judge is free to require the defendant employer comply with additional requirements, up-to and including mandatory reporting obligations to the EEOC.
Duane Morris Takeaways: Coming today is the Duane Morris Class Action Review – 2024! Hot off the presses, our Duane Morris Class Action Review outlines how 2023 was a year of history making developments in the class action world. The Review is the preeminent resource for discussing the trends of 2023 and what to expect in 2024. Below is a video exploring the origin of the Review, presented by Jerry Maatman and Jennifer Riley, partners at Duane Morris, Co-Chairs of the Firm’s class action defense group, and the Review editors.
Duane Morris Takeaways:On December 28, 2023, Judge Elizabeth A. Wolford of the U.S. District Court for the Western District of New York denied a motion by Plaintiffs – purchasers of caustic soda – for class certification under Rule 23(b)(3) in Miami Products & Chemical Co., et al., v. Olin Corp., et al., No. 1:19-CV-385 (W.D.N.Y. Dec. 28, 2023). Judge Wolford refused to certify the putative class of caustic soda purchasers because individual issues predominated over questions common to the class and because the proposed class was not objectively ascertainable. As one of the final class certification rulings of the year, the decision is instructive reading for corporate defendants facing class-wide claims of alleged price-fixing.
Case Background
Plaintiffs alleged that they purchased caustic soda, a chemical co-produced with chlorine that is used in a variety of industries, from Defendants between October 1, 2015 and December 31, 2018. Defendants are the five largest producers of caustic soda sold in the United States. Plaintiffs asserted that Defendants unlawfully conspired to raise prices of caustic soda. Specifically, Plaintiffs claimed that Defendants violated antitrust laws by engaging in parallel conduct of announcing and implementing over a dozen price increases during the class period that resulted in prices of caustic soda rising by nearly 10% more than prices would have otherwise existed absent the alleged cartel.
The Court’s Order Denying Class Certification
Plaintiffs moved for class certification under Rule 23(b)(3). Defendants mostly focused their opposition on grounds that the Plaintiffs did not adequately represent the proposed class, that the claims were not typical of the proposed class, and that individual issues would predominate. Plaintiffs’ proposed class excluded purchases of caustic soda during the class period pursuant to contracts because the alleged anticompetitive price increases would not have impacted the contract prices.
The Court issued a 51-page ruling in denying Plaintiffs’ motion. To determine whether there has been class-wide injury, the Court noted that there must to be a reliable methodology for whether particular caustic soda purchases should be included or excluded from the class. The Court concluded that the methodology of Plaintiffs’ expert could not accurately determine whether a particular purchase fell within the class or not. The Court also opined that Plaintiffs could not establish an alternative common proof of class-wide impact because of the complexities of determining the prices paid for caustic soda during the class period; therefore, individual questions would predominate over common questions.
The Court also concluded that three of the proposed class members did not use the same price negotiation strategy as Plaintiffs; therefore, the Court held that Plaintiffs failed to demonstrate typicality. Finally, the Court determined that Plaintiffs failed to meet the ascertainability requirement because Plaintiffs failed to adequately define the contract purchases that were to be excluded from the proposed class.
Implications Of The Ruling
The Court’s ruling is important for antitrust class action defendants accused of price-fixing. The decision highlights the difficulties of earning class certification in antitrust cases where putative class members may not have always paid supracompetitive prices, in particular in markets characterized by complex pricing methodologies.
Duane Morris Takeaways: 2023 was a busy year for the Duane Morris Class Action Defense blog – it just recorded its 200th post of the year!!!!
Since our kick-off post, our data analytics show there have been over 34,000 views to blog posts, with thousands of our loyal subscribers reading about class action litigation developments. There are many highlights from this year’s posts, but we wanted to provide just a few for you here. Click on the links below to see all the hot trends in class action litigation!
Overview Of The 200 Posts In 2023
We launched the first edition of the Duane Morris Class Action Review, which is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America. The Review has been prominently featured in the media and is a must-have for all human resources professionals, business leaders, and corporate counsel.
We will be publishing the 2024 Edition of the Review in January.
Thank you loyal followers for making the Class Action Defense blog your pick for class action litigation related information, trends, and analysis. We truly appreciate it! Please keep coming back, we promise to keep the content fresh!
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Christian Palacios with their discussion of what is believed to be the first summary judgment ruling for a certified class under the Illinois BIPA. The Illinois trial court’s decision in this case underscores the danger that companies face under state privacy “strict liability” statutes.
Jerry Maatman: Thank you for being here, our loyal blog listeners. Welcome to this week’s edition of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and I’m joined today by my colleague, Christian Palacios. Thank you for being on the podcast today.
Christian Palacios: Thanks, Jerry. I’m really happy to be here
Jerry: Today we’re talking about BIPA ruling – the Illinois Biometric Information Privacy Act, in a case called Thompson, et al. v. Matcor Metal Fabrication (Illinois), Inc., something that we blogged about – a very important opinion. Christian, can you give our listeners kind of an overview of why this case is significant and one they ought to take notice of?
Christian: Absolutely, Jerry. In September of 2019, Matcor Fabrication rolled out a new timekeeping policy, whereby it collected employees, fingerprints using “biometric scanners” for the purposes of determining when employees clocked in and out of work. The scanners that collected this information were connected to Matcor’s timekeeping vendor – ADP – and the company sent finger scan data to ADP every time an employee scanned their fingertips. The plaintiff and class representative, William Thompson, subsequently brought a lawsuit in May of 2020, alleging the company’s timekeeping policy violated the Illinois BIPA. Nearly one year after the lawsuit had commenced, Matcor implemented BIPA-compliant policies, which included distributing a “Biometric Consent Form” outlining Matcor’s policies collecting, retaining, and destroying employee data.
Jerry: Thanks. Now, in this case the plaintiffs early on in the litigation filed a motion for class certification, which was granted. Then there was class-wide discovery, and, as I understand, the record dueling motions, or cross motions for summary judgment were filed, both by the plaintiff on behalf of the class and the defendant. Both in essence saying there was no material issue of fact and liability was either established, if you believe the plaintiff – or there was no liability, if you believe the papers of the defendant. What did the trial court do in ruling upon those cross motions?
Christian: So the court held that there was no dispute of material facts that Matcor’s timekeeping policies during the class-wide time period violated the BIPA. In its ruling, the court dismissed a series of defenses offered by the company, including that in order for the BIPA to apply, Matcor’s timeclocks needed to “collect” and store its employees’ fingerprints, rather than just transmit it to a third-party vendor. The court was unconvinced with this argument. It opined that the BIPA also applied when timeclocks collected biometric information “based on” a fingerprint. Matcor further argued that there was a difference between the “fingertip” scans that it took and the “fingerprint” scans covered by the BIPA, but it was unable to cite authority that showed any meaningful difference between the two. Finally, Matcor argued that the court needed “expert testimony” to assess the type of information the company’s time clocks collected. The court rejected this contention. It observed that collecting employees’ fingertip information clearly fell under the BIPA’s definition of biometric information.
Based on the facts, the court determined that it was undisputed that Matcor began using biometric timeclocks to collect employees’ fingerprints in 2019, and the company didn’t implement a BIPA-compliant policy until one year after the plaintiff commenced his suit. The record also clearly shows that Matcor failed to obtain its employees consent before collecting their fingerprints, and only obtained BIPA releases two years after the suit was initiated. Accordingly, the court granted the plaintiff’s motion for summary judgment and the lawsuit will now proceed to the damages stage.
Jerry: It’s a pretty devastating ruling insofar as basically, there’s no question right now other than damages. And at least in my experience, that’s a very high-stakes maneuver to file a motion for summary judgment on a class-wide basis. And so you can kind of count on one hand the number of times that a plaintiff or defendant ever wins summary judgment when it involves all issues in a case with respect to liability on a class-wide basis. It does show the devastating nature of a failure of compliance by an employer with the requirements of BIPA and kind of is a call to other employers to make sure that they have their employment law house in order to take care of these things.
Christian: Exactly, Jerry. Although Illinois was one of the early adopters of such a stringent privacy laws, it’s certainly not going to be the last, and companies should take preventative measures to limit liability associated with such privacy statutes.
Jerry: Well, thanks so much, Christian, for devoting your thought leadership in this area, great having you on the show and having you part of the podcast. And to our loyal blog listeners, have a happy holiday season!
Christian: Thanks for having me, Jerry. Happy holidays to you and all your listeners.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Alex Karasik with their discussion of the American Tort Reform Association’s 2023-2024 Judicial Hellholes Report and what it signifies for corporate defendants in the coming year.
Jerry Maatman: Thank you for being here. I’m Jerry Maatman of Duane Morris, and welcome to our regular weekly Friday podcast, the Class Action Weekly Wire. I’m joined by my partner, Alex Karasik, who’s going to talk about the recent American Tort Reform Association Judicial Hellholes report.
Alex Karasik: Thank you, Jerry. Very happy to be here.
Jerry: Alex, we followed this report over the last decade. It’s always published in the second week of December, and it’s purpose is to identify jurisdictions, venues where corporate defendants have a difficult time defending themselves, either due to liberal judges, liberal discovery or class certification rules, or juries that tend to favor plaintiffs over defendants. What did you find interesting with this year’s Judicial Hellholes report?
Alex: Great question, Jerry. This is the first year ever that the ATRA ranked two jurisdictions at the top of the list, Georgia and Pennsylvania, and these are two very interesting states, and that major corporations do business in both of these states quite frequently. In fact, most major corporations in America have some sort of operation in each.
In Pennsylvania, the Pennsylvania Supreme Court and the Philadelphia Court of Common Pleas have proven to be two of the most challenging courts for defendants. In 2022, the Supreme Court of Pennsylvania eliminated the state’s venue rule for medical liability litigation which opened up the flood gates for personal injury lawyers to file medical liability claims in courts that they view as favorable. Pennsylvania also demonstrated there’s some eyebrow raising gigantic verdicts to plaintiffs, including a billion dollar reward against Mitsubishi in a product liability case. There have also been some problematic punitive damages rulings which can again lead to the plaintiffs’ counsel filing more and more in these courts. So Pennsylvania is definitely one of the eye popping states, especially being at the top of this list.
Georgia, which is the defending champion from 2022 report, made this list largely in part due to its massive $1.7 billion punitive damages award in a products liability case containing ethically questionable events and alleged bias court orders. The report noted that not much has changed in Georgia in 2023, and the courts are awarding massive verdicts and issuing liability expanding decisions left and right. So for employers who have business operations in Pennsylvania and Georgia, even though they might not traditionally think of these as bad courts to be in they definitely need to be paying attention to the huge verdicts that are coming out of those locales.
Jerry: I thought the inclusion of Georgia and Pennsylvania were quite interesting. Obviously, in our class action practice those are known as two epicenters where plaintiffs’ lawyers are apt to file cases, and most corporate defendants are doing business in those major jurisdictions. I know, Alex, that you practice on a nationwide basis and tend to go to those epicenters. What were some of the other jurisdictions that rounded out the top 10 this year in the ATRA’s Judicial Hellholes report?
Alex: The first noticeable jurisdiction that I saw on there was right here in our home turf Jerry, in Cook County, Illinois, in Chicago. You and I and our team routinely practices in biometric privacy defense actions here in cases brought under the Illinois Biometric Information Privacy Act, or the BIPA. and a few years ago, after the Illinois Supreme Court issued a ruling about no injury being required to proceed with these lawsuits and saying technical violations are enough. The plaintiffs’ bar has been particularly zealous in pursuing these BIPA class actions, and Cook County seems to be the home of those cases.
#3: Beyond Cook County and beyond Illinois, predictably California is on this list. California is a regular on this report. In California of course, the Private Attorneys General Act, or PAGA, litigation has resulted in a huge flow of lawsuits against employers. Also Prop 65 lawsuits, and just the overall volume of cases in California, including environmental and ESG cases, are also noteworthy. It’s not a surprise that it’s on this list.
#4: Another state that we routinely see on this list is New York. Most recently New York has some no injury consumer class action lawsuits and some massive verdicts that have caught the attention of the ATRA.
#5: South Carolina, which has had a robust asbestos litigation docket.
#6: Lansing, Michigan, particularly due to liability expanding decisions by the Michigan Supreme Court and some pro-plaintiff rulings out there.
#7: Louisiana – lots of insurance claim fraud litigation as well as some coastal litigation there. Louisiana is another one to keep an eye on.
#8: St. Louis, Missouri. Some interesting verdicts coming out there, including verdicts in the nuclear energy space.
So lots of different courts around the country as we see this and even some landlocked states in the middle of the country. So it’s very interesting to see where these courts are emerging as tough places for employers to be.
Jerry: I’ve always thought that class action litigation is a little bit like real estate – location, location, location is everything – and this report confirms anecdotal information that plaintiffs’ bar seeks favorable jurisdictions in areas where judges, juries, or the case laws aligned to make their cases certification friendly.
The American Tort Reform Association also characterized several jurisdictions as what it calls being on a ‘watch list.’ Are there some other jurisdictions that corporate counsel should be aware of and look to in 2024 as sometimes being problematic in terms of where the plaintiffs’ bar files more cases?
Alex: Yeah, Jerry, one of the new jurisdictions on the watch list that I thought was particularly surprising is Kentucky. The ATRA noted that Kentucky, which is again a newcomer to this list, had some issues with lawyers resorting to unique measures to secure wins, and the mention of Kentucky on here is somewhat of a surprise given that it’s not the typical courts we see – such as California and New York. New Jersey has a powerful trial bar, and New Jersey is increasingly becoming a place where employers need to pay attention if they get sued there, and even Texas, which is, you know, oftentimes thought to be an employer-friendly jurisdiction courts within Texas. But now the Court of Appeals in the Fifth District and the ATRA has opined that certain other courts in Texas are starting to become more pro-plaintiff, more product liability in more expansion of verdicts there. So we’re keeping an eye on Texas too, even though it typically tends to be an employer-friendly state for various state and federal jurisdictions.
But despite the gloom and doom, there are some jurisdictions that are improving according to the ATRA, are at least improving in terms of the prospects of employers being able to succeed in these places. For example, the New Hampshire and Delaware Supreme Courts rejected some no injury medical monitoring claims. So that’s a positive development for defendants there. The New Jersey appellate court in particular also had a notable case of discarding and proper expert testimony.
And I know we mentioned Texas had some other courts leading pro claim, if but the Texas Supreme Court rejected claims involving the manipulation of juries. So I think there’s certainly some hope in those places. And finally, the West Virginia Supreme Court recently placed reasonable limits on employer liability. So while a lot of the courts that are on this annual report are mainstays, there are a few new ones that are kind of catching our eye, but there’s also a few that are seemingly becoming a little bit more friendly for employers and defendants to defend cases in. So, as you mentioned Jerry, location, location, location and the keys to these locations ebbs and flows depending on various factors within those courts.
Jerry: Well, thank you Alex for your thoughts and analysis in this area. I definitely believe the report is a required read and an essential desk reference for corporate counsel and knowing the playing field where you’re sued, your judge, the case law – critical components to crafting essential defense strategies to defeat and defend these large cases. Well, thank you very much for joining us on this week’s Class Action Weekly Wire.
Alex: Thank you, Jerry. It was a pleasure to be here and thank you to all of our listeners. Stay tuned!
I had the privilege of speaking about how data privacy laws and biometric technology have impacted the class action litigation space. Joining me on the panel was Christopher Wall (Special Counsel for Global Privacy and Forensics, and Data Protection Officer, HaystackID); Sonia Zeledon (Associate General Counsel Compliance, Risk, Ethics, and Privacy, The Hershey Company); and Pallab Chakraborty (Director of Compliance & Privacy, Xilinx). My esteemed fellow panelists and I discussed how the emerging patchwork of data privacy laws – both in the U.S. and globally – create compliance challenges for businesses. I provided insight on how high-stakes biometric privacy class action litigation in Illinois can serve as a roadmap for companies, as similar state statutes are emerging across the country. In addition, I explored how artificial intelligence tools used in the employee recruitment and hiring processes can further create potential legal risks. Finally, I shared my prediction of how the intersection of ESG and privacy litigation will continue to emerge as a hot area for class action litigation into 2024 and beyond.
Finally, and probably the most important update to many of you, Bryan Cranston’s keynote address was awesome! Covering the whole gamut of the emotional spectrum, Bryan was fascinating, inspirational, and hilarious. Some of the topics he discussed included the importance of family, the future impact of A.I. on the film industry, his mescal brand, and a passionate kiss during his first acting scene at 19. Bryan was a tough act follow!
