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!
By Gerald L. Maatman, Jr., Alex W. Karasik, and Christian J. Palacios
Duane Morris Takeaways: In Thompson, et al., v. Matcor Metal Fabrication (Illinois), Inc., Case No. 2020-CH-00132 (Ill. Cir. Ct. 10th Dist. Dec. 8, 2023), a class of metal fabricators prevailed on a motion for summary judgment against their employer in what is believed to be the first summary judgment ruling for a certified class under the Illinois Biometric Information Privacy Act (BIPA). An Illinois state court, determining there was no dispute of material fact, entered the pre-trial liability judgment against the defendant employer for collecting employee biometric data through its timekeeping system in violation of BIPA.
This decision highlights the danger that companies face under state privacy “strict liability” statutes, and should serve as a warning for employers that lack robust policies governing the way they collect biometrics data from their employees.
Background
In September of 2019, Matcor Fabrication rolled out a new timekeeping policy whereby it collected its employees’ fingerprints using “biometric scanners” for the purposes of determining when employees clocked in and out of work. Id. at 3. 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 scanner their fingertips. The named Plaintiff and class representative William Thompson subsequently brought the 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” to employees that stated that the company’s vendors “may collect, retain, and use biometric data for the purposes of verifying employee identity and recording time” as well as describing Matcor’s policies for retaining and destroying employee data. Id. at 4. The Court previously had certified a class of Matcor employees who enrolled in the company’s finger-scan timekeeping system between May 13, 2015 and June 16, 2021, prior to the policy update. After a lengthy discovery period, both parties filed motions for summary judgement.
The Court’s Ruling
The Court held that there was no genuine dispute of material fact 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. It opined that the BIPA also applied when timeclocks collected biometric information “based on” a fingerprint. Id. at 7. Matcor further argued that there was a difference between the “fingertip” scans it took and the “fingerprint” scans covered by the BIPA, but it was unable to cite authority that showed a meaningful difference between the two. Finally, Matcor argued that the Court needed “expert testimony” to assess the type of information the company’s timeclocks collected. The Court rejected this contention. It observed that collecting employee’s 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 employee’s fingerprints in 2019, and the company did not implement a BIPA-compliant policy until one year after the Plaintiff commenced his suit. The record also clearly showed that Matcor failed to obtain its employees consent before collecting their fingerprints, and only obtained BIPA releases 2 years after the suit was initiated. Accordingly, the Court granted the Plaintiff’s motion for summary judgement and the lawsuit will now proceed to the damages stage.
Implications
As this ruling emphasizes, employers can be held strictly liable for any period of time in which they collect their employees’ biometric data without having a corresponding BIPA-compliant policy. State privacy statutes like the BIPA pose unique dangers for unwary employers who do not keep up-to-date with evolving legal requirements relating to the collection, retention, and use of biometric data. Although Illinois was one of the first early adopters of such stringent privacy laws, it will certainly not be the last, and companies should begin taking preventative measures to limit liability associated with such statutes.
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 an Illinois Supreme Court ruling that is welcome news for BIPA defendants and companies operating in the health care space.
Jerry Maatman: Thank you loyal blog readers and listeners, welcome to this week’s installment of the Class Action. Weekly Wire. Joining me today is my colleague, Tyler Zmick, here at Duane Morris.
Tyler Zmick: Thanks, Jerry. Great to be here.
Jerry: Today we’re discussing the most recent decision of the Illinois Supreme Court in Mosby v. Ingalls Memorial Hospital, a decision by the high court regarding exemptions under the BIPA statute – which is the source of so much class action litigation here in Illinois. Tyler, you’re one of the foremost thought leaders in this particular space – what’s your read on this particular decision?
Tyler: Sure, well I think it’s a significant and rare defendant-friendly ruling. And this exception at issue in the case could be potentially pretty broad and could be a basis for defendants to assert viable defenses in cases that are sort of less obviously involving or related to healthcare than this specific Mosby case.
But with respect to this case that went before the Illinois Supreme Court – the plaintiffs were nurses, and the hospitals they worked at required them to use a fingerprint-based medication dispensing system. So basically, the nurses had to scan their fingerprints to verify their identities, and the system would then give them access to controlled medicines which the nurses would then give to their patients. So, the plaintiffs sued the hospitals they worked for, in addition to the company that sold the medication dispensing device, and they alleged that all the defendants violated the BIPA by using the device to collect their biometric finger scan data without complying with the BIPA statute’s notice and consent requirements.
In the trial court, the defendants moved to dismiss, and they did so on the basis that the claims failed because plaintiff’s’ data was excluded from the scope of the BIPA. And specifically § 10 of the statute states that “biometric identifiers do not include information captured from a patient in the health care setting or information collected for healthcare treatment, payment, or operations under HIPAA.” And, as we all know, HIPAA is the federal health privacy statute that applies in many circumstances, and is often cross-referenced in state statutes. So defendants argued that the latter clause regarding HIPAA applied, and that plaintiffs’ fingerprints had been used so that the nurses could provide medicine to treatments, meaning the fingerprints were collected for healthcare treatment under HIPAA, but the trial court denied the motions to dismiss, which led to the appeal – first the Appellate Court, and then to the Illinois Supreme Court.
Jerry: I thought that the trial court’s disposition of the exemption, as well as the discussion by the Illinois Appellate Court regarding the either narrow or broadness of that particular exemption, was very interesting. I know, in handling these sorts of cases, plaintiffs always argue that exemptions to liability should be construed very narrowly. But it seems like in this particular case, the Illinois Supreme Court ruled in a very practical and straightforward way. With respect to the exemption, what did you find interesting between the trial court, Appellate Court, and Supreme Court’s treatment of the exemption?
Tyler: That’s a good question. I think primarily the Appellate Court’s reading of the healthcare exception in the BIPA statute was less based on the plain language of the statute, and as we know, the first rule of statutory interpretation is, go with the plain language of the statute, and read every word, so nothing is superfluous. And that is what the Illinois Supreme Court did here, and also interestingly, what one of the three appellate court justices did – specifically Appellate Court Justice Mikva thought that the exception should be applied more broadly in the way the Illinois Supreme Court did end up interpreting it.
Jerry: I went to law school with Justice Mikva, a good friend and very well respected in the bar. Did you think that the dissent in terms of its interpretation, somewhat carried the day and swayed the Illinois Supreme Court in terms of the result that we saw here from the high court?
Tyler: Yes, absolutely. I mean in pretty much every respect the Illinois Supreme Court agreed with Justice Mikva’s dissent. The high court unanimously held that as Justice Mikva opined that the BIPA’s exclusion for information collected for healthcare treatment, payment, or operations under HIPAA can apply to the biometric data of healthcare workers, and not only patients. And obviously here we have plaintiffs that were nurses and thus healthcare workers.
Going to the specific analysis that was adopted by the Supreme Court and Appellate Court’s justice, the high court determined that the relevant sentence of § 10 excludes from the definition of biometric identifier data that may be collected in 2 separate and distinct scenarios rather than overlapping scenarios. Specifically, biometric identifiers do not include (i) information captured from a patient in a healthcare setting or (ii) information collected, used, or stored for healthcare treatment, payment, or operations under HIPAA. And the Supreme Court again agreed with defendants that the two categories are different, because the information excluded under the first clause originates only from the patient, whereas information excluded under the second clause may originate really from any source. And regarding that second HIPAA clause, the Supreme Court observed that the Illinois Legislature borrowed the phrase ‘healthcare treatment, payment, and operations’ from the federal HIPAA regulations, and it’s important to note that the federal HIPAA regulations in turn provide relatively broad definitions for those terms. So it remains to be seen just how broad the BIPA’s healthcare exception will be when applied in other future BIPA cases.
Jerry: Well, it seems to me this is a gem of a ruling, and one that defendants – both in and outside of the healthcare industry – should put in their toolbox as an additional line of defense to oppose efforts to certify classes or for plaintiffs’ lawyers prosecuting BIPA cases. So thank you very much for your analysis, Tyler, and for being our guest on this week’s Class Action Weekly Wire.
Duane Morris Takeaways: A California Superior Court recently granted class certification relative to a class of hundreds of employees against a group of dispensary defendants where the Plaintiffs presented sufficient evidence that the off-the-clock work claims, meal and rest period claims, and reimbursement of necessary business expenses claims predominated over individual inquiries and were typical of the class. The Court did not rule on the merits of the integrated enterprise, alter ego, or joint employer arguments, nor did the Court agree with the Defendant’s arguments that the claims were not typical because the Plaintiffs were not employed by each Defendant. Nonetheless, the ruling is important for employers in general and cannabis dispensaries in particular.
Case Background and the Court’s Ruling
A group of dispensary and retail store employees at four different dispensaries owned by different entities asserted that they should be treated as a single enterprise. The Plaintiffs moved to certify a class of all current and former non-exempt, hourly employees of the Defendants from January 13, 2017 through the present. The Plaintiffs alleged that the putative class members were expected to work off-the-clock in order to set up their timekeeping program and their payroll program as well as review materials on the timekeeping program, before clocking-in on their personal cell phone. The Plaintiffs additionally contended that the Defendants failed to provide meal and rest periods, timely pay all wages on termination, or provide accurate itemized wage statements. The Plaintiffs also argued that because the four Defendants should be considered a single enterprise, they failed to comply with the higher minimum wage found in the City of Los Angeles Minimum Wage Ordinance.
The Court granted the Plaintiffs’ motion for class certification. The Court noted that the Plaintiffs’ arguments regarding the Defendants being an integrated enterprise could be established by common proof. At the class certification stage, the Court determined that the Defendants’ arguments went to the merits of the Plaintiffs’ claims and did not compel denial of the Plaintiffs’ motion. The Court found that each of the Plaintiffs’ class claims were subject to common proof, that the Plaintiffs’ injuries were typical of the class, and that the Plaintiffs and their counsel were adequate to serve as class representative and class counsel. Importantly, the Court reached this conclusion despite Defendants’ introduction of compliant policies and procedures relating to these wage & hour claims.
Key Takeaways
There are thousands of state-licensed cannabis operators in California, a state known for its ubiquitious wage & hour litigation, and thousands more across the 38 states in the US that have legalized cannabis for medical and/or adult-use purposes. As the cannabis industry continues to mature and evolve, wage & hour class actions are likely to become more frequent in the cannabis industry, just as they have grown in other industries. It is crucial that employers ensure that they follow federal and state wage & hour laws and provide their employees with complaint policies and procedures. Arbitration agreements with class waivers also should be provided to each employee in states where applicable. This becomes even more crucial in the cannabis space, where brands are expanding due to a high volume of M&A transactions and market consolidation. Cannabis companies should continue to be cognizant of the strict wage & hour regulations in their states as the industry continues to grow.
By Gerald L. Maatman, Jr. and Christian J. Palacios
Duane Morris Takeaways: U.S. Magistrate Judge Joseph Marutollo’s recent report and recommendation – a novel order in the context of class action settlements – in the proceeding captioned In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 1:05-MD-01720, Doc. No. 9009 (E.D.N.Y. Nov. 28, 2023), highlights the risks associated with class action claims websites and the potential for bad actors to create fraudulent web pages to mislead claimants. Corporate defendants should take care to monitor online activity following the creation of a court-authorized settlement website in order to protect any class-wide settlement and claimants against potential fraudsters. Indeed, in a world where scammers are becoming increasingly more sophisticated through the use of technology, class action settlement websites may be the next frontier in the battle against cybercrime.
Background
After 15 years of contentious litigation, Visa and MasterCard settled a putative class action for $5.6 billion to resolve allegations that the credit card companies violated federal and state antitrust laws resulting in over 12 million merchants allegedly paying excessive fees to Visa and MasterCard. As is typical in class actions of this size, a court-authorized settlement website was created to accept claim submissions and provide claimants with details regarding the settlement agreement.
On November 28, 2023, Magistrate Judge Marutollo recommended that the Court order the website “settlement2023.org” (and any affiliate website) be taken down, as the operators of the Settlement2023.org entity, who remain unknown, were attempting to deceive putative class members into using the site through various schemes, including using fake voicemails from rap artist Snoop Dogg to convince users of its validity. According to Magistrate Judge Marutollo’s report, although the scam website ceased operation on November 21, 2023, it was unclear if other webpages remained open under different domain names that were also operated by the Settlement2023.org entity.
The Magistrate Judge’s Recommendation And Report
In addition to recommending the Court issue an order to take down of any and all remaining webpages that attempt to mimic the court-authorized settlement website, Magistrate Judge Marutollo also recommended that the owners and operators of the Settlement2023.org entity be required to identify themselves, and provide a list of all class members that signed up for its services, as well as give notice to would-be customers that any contract they entered into with the entity was now void. Finally, the Magistrate Judge requested that the Court be notified of any newly-detected websites and recommended that the court-authorized website be updated to alert those who may have been deceived by the settlement2023.org website.
Implications
Cybercriminals continue to capitalize on advances in technology to launch misinformation campaigns, and large class action settlements are in the cross-hairs of this emerging threat. Therefore, it is imperative that plaintiff and defendant-side representatives alike remain vigilant to protect class members from deception and safeguard the integrity of the class action settlement process.
U.S. And U.K. Cybersecurity Agencies Announce International Agreement Addressing AI Safety
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Brandon Spurlock with their discussion of the latest developments on the regulatory front of artificial intelligence.
Jerry Maatman: Hello, loyal blog readers! Welcome to the Class Action Weekly Wire. Today our guest is my colleague, Brandon Spurlock.
Brandon Spurlock: Hey Jerry, it’s great to be here. Thanks.
Jerry: Today, we’re talking about the most recent developments on a global basis for regulatory endeavors insofar as artificial intelligence is concerned. I know that, Brandon, you’re a thought leader in that space, so wanted to get your feedback on what corporations should know about the global move towards regulation of artificial intelligence.
Brandon: Absolutely, Jerry. Well, this agreement was unveiled to the public just this past weekend – November 26 to be exact. It’s titled “Guidelines for Secure AI System Development.” This initiative was led by the U.K.’s National Cyber Security Centre, and it was developed in conjunction with the U.S.’ Cybersecurity and Infrastructure Security Agency. These guidelines focus on how to keep artificial intelligence safe from rogue actors. The U.S., Britain, Germany, are among 18 countries that signed on to the new guidelines laid out in this 20-page document. Now, this is a non-binding agreement that lays out general recommendations, such as monitoring AI systems for abuse, elevating data protection and vetting software suppliers. One thing to note is that the framework does not address the challenging questions around data sources for AI models or appropriate use of AI tools.
Jerry: Well it certainly seems to be a milestone on the road to regulation of AI from a comparative standpoint. Where is the United States when it comes to regulation of artificial intelligence, as compared to other countries or major jurisdictions?
Brandon: Really good question, Jerry. Many countries are putting their resources together, as well as independently positioning themselves to demonstrate leadership when it comes to embracing AI – while also cautioning its security, privacy, and market risk. So countries like France, Germany, Italy – they recently reached an agreement on how artificial intelligence regulations should be structured around “mandatory self-regulation through codes of conduct.” So what does this mean? It’s focused on how these AI systems are designed to produce a broad range of outputs. The European Commission, the European Parliament, and the EU Council are negotiating how the bloc should position itself on this particular topic.
Even last month, when we examined President Biden’s executive order on artificial intelligence, that publication from the White House further provides businesses with the in-depth roadmap of how the U.S. federal government’s regulatory goals regarding AI are developing.
Jerry: The evolution of artificial intelligence is certainly uppermost in the mind of most corporate counsel, and its impact on litigation – and in particular, the class action world – is real and palpable and with us. So thank you for your thoughts and analysis, Brandon, and we’ll see you next week on the Class Action Weekly Wire.
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.
