Derek Franklin – Class Action Defense

September 22, 2023 by Gerald L. Maatman, Jr.

Conditional Certification Denied To Illinois Jail Guards Who Were Not Paid For Time Outside Work Engaging In COVID-19 Protocols

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

Duane Morris Takeaways: In Evans III, et al v. Dart, et al., No. 1:20-CV-02453 (N.D. Ill. Sept. 15, 2023), Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District Of Illinois denied Plaintiffs’ motion for conditional certification of a collective action of Cook County Jail Guards who were not compensated for time spent off-the-clock decontaminating their work gear to prevent the spread of COVID-19. In rejecting the jail correctional officers’ bid for conditional certification under 29 U.S.C. § 216(b), the Court ruled the Plaintiffs could not establish that they were victims of a common policy or plan that violated the law, as there was no evidence that the jail even had an off-the-clock decontamination policy. Thus, the Court concluded that Plaintiffs failed to establish that their cleaning efforts outside of work resulted from any requirement imposed by their employer. The ruling is a blueprint for corporate counsel in terms of a solid approach for opposing employment-related conditional certification motions.

Case Background

The factual origins of the case stem from a COVID-19 outbreak at the Cook County Department of Corrections (“Cook County Jail”) in April 2020. Plaintiffs allege that, amid the outbreak, the Cook County Jail required correctional officers to “engag[e] in decontamination/sanitation activities” before and/or after their shifts within the CCDOC, “including washing and sanitizing their uniforms, sanitizing their persons, sanitizing and maintaining personal protective equipment (‘PPE’), and showering.” Id. at 2.

According to Plaintiffs, they would spend approximately 20 to 30 minutes before and after shifts completing these protocols but were not paid for that time. As the Court noted, “each Plaintiff described slightly different activities that took slightly different amounts of time,” which formed “a consistent narrative of enhanced decontamination activities, significantly exceeding what they did prior to COVID.” Id. at 4.

In the same month that the April 2020 outbreak began, Plaintiffs filed this lawsuit on behalf of themselves and a proposed group of all persons who worked at the Cook County Jail between January 27, 2020 and June 11, 2021 who engaged in the purported COVID-19 decontamination protocols, but who were not paid for time spent on those activities. Id. at 3.

The Court’s Decision

The Court declined to certify the proposed collective action based on finding that Plaintiffs fell short in identifying a common policy requiring workers in the proposed collective action to engage in those [decontamination] activities as a condition of their employment.” Id. at 1. Importantly, the Court noted that the Plaintiffs themselves acknowledged that there was no express written policy requiring correctional officers to decontaminate outside of work, and that the only instructions that they received from supervisors about decontamination was during roll call meetings, when supervisors would merely “read and disseminate general advice from the CDC” and instruct guards to not bring items home from the jail. Id. at 4-5.

Another key finding by the Court was that Plaintiffs “did not report their off-duty decontamination activities to their supervisors, nor were they asked about those efforts or disciplined for failing to decontaminate proper.” Id. at 5. Further, the Court made important note of how “no named Plaintiff reported monitoring the time consumed by their daily decontamination activities, submitting any decontamination overtime, or asking their supervisors about decontamination overtime, although many testified that there was no clear way to submit an overtime claim for these activities in the CCDOC “Workforce” record system.” Id.

In reaching its determination, the Court also rejected the relevance of a Communicable Diseases Policy that Cook County had in place requiring workers to “use good judgment and follow training and procedures related to mitigating the risks associated with communicable disease,” and if exposed to one, to “begin decontamination procedures immediately, obtain medical attention if needed, and “notify a supervisor as soon as practical.” Id. at 7. According to the Court, because this policy specified that its aim was to “provide a safe work environment,” the Court found it “hard to imagine how a pre-shift shower or laundering one’s uniform after a drive home is consistent with that language” and concluded, in turn, that the policy did not require the Plaintiffs to engage in COVID-19 protocols at issue outside of work at the jail. Id. at 11.

Finally, the Court discussed how, even if the Communicable Diseases Policy applied to activities outside of work, an “insurmountable” problem for Plaintiffs was that “none of them seemed to know about the policy at the time they were undertaking those activities.” Id. at 12. As a result, the Court found that there was no evidence showing that the Defendants had actual or constructive knowledge of any de facto policy requiring the Plaintiffs to engage in decontamination activities away from the jail. Id. at 15.

For these reasons, the Court concluded that the Plaintiffs fell short of satisfying the requirements for conditional certification of their proposed collective action.

Implications For Employers

The Evans ruling underscores the importance of maintaining and utilizing well-organized clearly-delineated employee conduct policies for activities at and away from the workplace, in anticipation of arguing the absence of uniform policies and procedures in collective actions under 29 U.S.C. § 216(b). In dismissing all of Plaintiffs’ arguments after finding an absence of policy or plan for all proposed collective action members that violated the law, the Court signaled its steady reliance on the well-established standards for these types of claims, providing a valuable reaffirmation to employers’ reliable defense strategies.

September 15, 2023 by Gerald L. Maatman, Jr.

Colorado Supreme Court Applies Litigation Privilege To Attorney’s Allegedly Defamatory Statements About Class Action Defendant

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

Duane Morris Takeaways: In Killmer, Lane & Newman, LLP v. BKP, Inc., No. 21-SC-930, (Col. Sept. 11, 2023), the Colorado Supreme Court ruled that an attorney’s allegedly defamatory statements about a company’s wage-and-hour practices during a press conference to announce filing a class action against that same company were protected by the litigation privilege. The Supreme Court’s unanimous en banc opinion held that the Colorado Court of Appeals erred in concluding that there was an exception to the applicability of the litigation privilege where the size and contours of the proposed class were easily ascertainable from the employer’s records and undermined the need to identify and alert potential class members through the press. In reversing the appellate panel’s ruling, the Colorado Supreme Court determined that the attorney’s statements were shielded from defamation claims by the litigation privilege since the statements merely repeated wage-and-hour allegations made in the complaint and advanced the goals of the lawsuit. The decision in BKP serves as a reminder to companies of the potential pitfalls of bringing defamation claims against attorneys who disseminate information to the public about a party that they are suing in a class action.

Case Background

In 2018, two law firms, Killmer, Lane & Newman, LLP and Towards Justice (collectively, along with attorney Mari Newman of Killmer, Lane & Newman, “the Attorneys”), filed a federal class action lawsuit claiming that Ella Bliss Beauty Bar (“Ella Bliss”), an operator of beauty salons in the Denver metropolitan area, failed to properly pay its nail technicians for required custodial work under federal and Colorado state law. Id. at 5.

On the same day the federal lawsuit was filed, one the Attorneys, Mari Newman, held a press conference in which she stated that Ella Bliss nail technicians had to clean the businesses “for no pay whatsoever,” that the salons “only pay [employees] for the hours they feel like paying,” and that Ella Bliss “is simply too cheap to pay its workers the money they deserve.” Id. at 43. The Attorneys collectively also issued a press release that day asserting that “Ella Bliss Beauty Bar forced its service technicians to perform janitorial work without pay, refused to pay overtime, withheld tips, and shorted commissions.” Id. at 44.

Exactly one year later, Ella Bliss’ parent company, BKP, Inc. (“BKP”) filed a defamation lawsuit against the Attorneys in Colorado state court pertaining to five allegedly defamatory statements that the Attorneys made during their 2018 press remarks, including the ones quoted above. Id. at 13. The district court dismissed the defamation suit and found that the Attorneys’ statements were protected by the litigation privilege, which shields from defamation claims statements by an attorney that have “some reference to the subject matter of . . . proposed or pending litigation.” Id. at 22.

When the Plaintiffs appealed the dismissal to a three-judge panel of the Colorado Court of Appeals, the appellate panel partially reversed the district court’s decision and found that some of the statements at issue were not shielded by the litigation privilege. Id. at 49. While the Attorneys argued that the goals of the media statements were to promote their class action and publicize it to potential additional class members, the appellate panel rejected that notion since the Attorneys were set to receive employment records and payroll documents in discovery that could have easily identified the class members without needing to resort to harmful press statements. Id. at 14.

Following the appellate decision, the Colorado Supreme Court granted the petitioner’s writ for certiorari and analyzed on the question of “whether the common law litigation privilege for party-generated publicity in pending class action litigation excludes situations in which the identities of class members are ascertainable through discovery.” Id. at 1.

The Colorado Supreme Court’s Decision

On further appeal, the Colorado Supreme Court reversed the appellate panel’s ruling and determined that the litigation privilege applied to the allegedly defamatory attorney statements at issue. Id. at 49. The Supreme Court reasoned that the statements “merely repeated, summarized, or paraphrased allegations in the class action complaint” and, therefore, “served to notify the public, absent class members, and witnesses about, and therefore furthered the objective of, the litigation.” Id. at 42.

The Supreme Court also held that the appellate panel erred by basing its litigation privilege analysis on whether the identities of class members were easily ascertainable through discovery. Id. at 2. According to the Supreme Court, two reasons led to that conclusion: “(1) ascertainability is generally a requirement in class action litigation, and imposing such a condition would unduly limit the privilege in this kind of case;” and (2) “the eventual identification of class members by way of documents obtained during discovery is not a substitute for reaching absent class members and witnesses in the beginning stages of litigation.” Id.

Implications For Employers

The Colorado Supreme Court’s decision in BKP, Inc. is notable in that it may serve to embolden the inclination of some class action plaintiffs’ attorneys to use strategic communication techniques to air their clients’ claims in the ‘court of public opinion’ in an attempt to gain leverage, as well as using mass communication tools to grow the reach of their lawsuit to more potential class members. While employers understandably may want to fight back against weaponized misinformation by asserting defamation claims, employers should exercise caution and pick their battles when it comes to such claims, given the high potential for variance in judicial outcomes in states where the case law on this issue remains unsettled and the jurisdictional variables also at play. Ultimately, corporate counsel should carefully consider the potential risks of pursuing a defamation claim against an attorney based on statements that a court may find shielded by privilege regardless of their truthfulness.

September 14, 2023 by Gerald L. Maatman, Jr.

Illinois Federal Court Orders Defendant To Pay Over $4 Million In Arbitration Fees In Mass Arbitration Alleging Violation Of The BIPA

By Gerald L. Maatman, Jr., Rebecca S. Bjork and Derek Franklin

Duane Morris Takeaways: Mass arbitration continues to be a formidable tool for plaintiffs’ attorneys seeking to deal with class action waivers in arbitration agreements. This trend is aptly demonstrated by a new ruling in Wallrich, et al. v. Samsung, Case No. 22-CV-5506 (N.D. Ill. Sept. 12, 2023), where Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois ordered the defendants – who had been served with just shy of 50,000 arbitration demands – to pay the arbitration fees and submit to arbitrating consumers’ claims that the defendants had committed violations of the Illinois privacy laws. Those fees had been waived by the arbitration authority, as allowed by a provision in its’ supplemental rules, but the Court sided with the plaintiffs, who had moved to compel arbitration after the fees were waived, and seeking also to require the defendants to pay them.

Case Background

The Named Plaintiffs filed 49,986 arbitration claims with the American Arbitration Association (“AAA”) on September 7, 2022 on behalf of consumers who are users of Samsung mobile devices. Id. at 2, 5. They alleged that the defendants had unlawfully collected their biometric information in violation of the Illinois Biometric Information Privacy Act. The user agreement required all disputes be resolved in final, binding arbitration and it prohibited class actions. Id. at 3.

The agreement also required use of the services of the AAA and explicitly invoked the AAA’s rules, including its supplemental rules relating to arbitration fees. Id. On September 27, 2022, Samsung refused to pay its portion of the initial arbitration fees to the AAA because it believed the claimants included deceased individuals and others who did not reside in Illinois. Id. at 6. Plaintiffs responded by moving to compel arbitration on October 7, 2022. Id. at 7.

The Court’s Decision

Judge Leinenweber compelled arbitration of the claims of living, Illinois resident petitioners and ordered the respondents to pay the AAA arbitration fees. He first concluded that the arbitration agreements are valid between Samsung and those who actually are its consumers. Id. at 21-22. Second, he noted that as to the petitioners that respondents suspected were either deceased or not Illinois residents, he explained that petitioners’ counsel used Samsung’s own customer list to remove ineligible petitioners. Id. Third, he determined that the arbitration agreement left questions of arbitrability to the arbitrator, thereby declining to rule on respondents’ argument that the collective action waiver in the agreement applies to mass arbitrations, which would bar petitioners’ claims with the AAA. Id. at 25. Finally he ruled that he had the authority to construe and enforce the AAA’s rules about arbitration fees, and determined that respondents are required to pay approximately $4.13 million in fees. Id. at 30, 33-34.

Implications For Employers

As corporations who employ large numbers of individuals in their workforces know, agreements to arbitrate claims related to employment-related disputes are common. They serve the important strategic function of minimizing class action litigation risks. But corporate counsel also are aware that increasingly, plaintiffs’ attorneys have come to understand that arbitration agreements can be used to create leverage points for their clients. Mass arbitrations seek to put pressure on respondents to settle claims on behalf of large numbers of people, even though not via the procedural vehicle of filing a class or collective action lawsuit. As a result, corporate counsel should carefully review arbitration agreement language with an eye towards mitigating the risks of mass arbitrations as well as class actions.

August 28, 2023August 28, 2023 by Gerald L. Maatman, Jr.

Michigan Federal Court Declines To Compel Arbitration Of ERISA Claims Due To An Unenforceable Class Action Waiver

By Gerald L. Maatman, Jr. and Derek Franklin

Duane Morris Takeaways: In Parker, et al. v. Tenneco Inc., et al., Case No. 2:23-CV-10816 (E.D. Mich. Aug. 21, 2023), Judge George Steeh of the U.S. District Court for the Eastern District of Michigan denieda motion to compel arbitration based on finding an ERISA class action waiver in an arbitration agreement unenforceable. The Court determined that Plaintiffs’ breach-of-fiduciary-duty claim under the ERISA “seeks relief for the [Benefits] plan as a whole,” and that “the harm (and the recovery) is to the Plan, rather than to plaintiffs specifically.” Id. at 14-15. In turn, the Court concluded that compelling arbitration and enforcing the class action waiver would prevent plan participants from seeking plan-wide remedies conferred by the ERISA statute. For these reasons, the Parker decision is instructive for employers seeking to implement an enforceable class action wavier and configure arbitration agreements that are best suited to account for the possibility of a class action waiver being nullified.

Case Background

The group of Plaintiffs in the Parker lawsuit were led by Tanika Parker, a current employee of DRiV Automotive Inc. (“DRiV”), and Andrew Farrier, a former worker for Tenneco Inc. (“Tenneco”). DRiV and Tenneco were two of several affiliated entities named as Defendants in the case. Parker and Farrier, participants in ERISA-covered 401(k) plans (the “Plans”) sponsored by their respective employers, alleged that Defendants breached their fiduciary duties under the ERISA by failing to prudently monitor and control the Plans’ investments and expenses. Defendants moved to compel arbitration of Plaintiffs’ claims on an individual basis, pursuant to an Arbitration Procedure adopted by the Plans containing language barring participants from bringing ERISA claims as a group or class. The Arbitration Procedure also provided that, if the class action waiver was found unenforceable or invalid by a court, the entire arbitration procedures would become null and void.

Eastern District of Michigan Opinion

In denying Plaintiffs’ motion to compel arbitration, Judge Steeth ruled that the class action waiver within the Arbitration Procedure was unenforceable because it “limits a participant’s substantive right under ERISA by prohibiting plan participants from bringing suit.” Id. at 15.

The Court’s reasoning cited an April 2022 Sixth Circuit decision in Hawkins v. Cintas Corp., 32 F.4th 625, 630 (6th Cir. 2022), which held that breach-of-fiduciary-duty claims under the ERISA are “brought in a representative capacity on behalf of the plan as a whole.” Id. at 10. The Court also quoted the explanation in the Hawkins decision that, although an ERISA breach-of-fiduciary-duty claim is typically brought by individual plaintiffs, “it is the plan that takes legal claim to the recovery, suggesting that the claim really ‘belongs’ to the Plan,” and that “an arbitration agreement that binds only individual participants cannot bring such claims into arbitration.” Id. at 12.

Consistent with that rationale, the Court in Parker held that the ERISA class action waiver in the Arbitration Procedure at issue was unenforceable because it would preclude Plan participants from pursuing “plan-wide remedies” provided for under the ERISA statute that cannot be waived by an agreement. Id. at 15. According to the Court, this would occur by the class action waiver “(1) prohibiting participants from bringing suit in a representative capacity on behalf of the plan, and (2) limiting relief to losses attributable to individual participant accounts, as opposed to plan-wide remedies.” Id.

Given that the Arbitration Procedure provided that it “shall be rendered null and void in all respects” if the class action waiver were to be “found unenforceable or invalid by the court,” the Court declared the entire Arbitration Procedure null and void and denied Defendants’ motion to compel arbitration. Id. at 15-16.

Implications for Class Action Defendants

As federal courts continue to issue decisions limiting the application of class action waivers relative to claims under the ERISA, it remains critical for businesses and employers to regularly review their arbitration agreements and class action waiver language to ensure legal compliance. Any business trying to implement an enforceable class action waiver should carefully consider the potential risks of extending that language to cover plan mismanagement claims under the ERISA. Businesses should also review their arbitration procedures to ensure they are best positioned to function independently of a potentially unenforceable class action waiver.