Denis Yavorskiy – Class Action Defense

By Gerald L. Maatman, Jr., Denis I. Yavorskiy, and Andrew P. Quay

Duane Morris Takeaways: On May 19, 2026, in EEOC v. Recovery Innovations, Inc. d/b/a RI Int’l, No. 25-CV-767, 2026 U.S. Dist. LEXIS 110782 (E.D.N.C. May 19, 2026), Judge Terrence W. Boyle of the U.S. District Court for the Eastern District of North Carolina denied a partial motion to dismiss a Title VII pattern or practice claims after finding that the EEOC’s complaint properly pled “severe or pervasive” harassment and sufficiently described a group of similarly aggrieved female employees. Id. at *4, 5. Judge Boyle held that alleged unwelcome conduct from a supervisor who supervised “at least some of the” allegedly injured workers was “sufficiently severe or pervasive” and that the universe of alleged victims was sufficiently described without identifying the alleged victims. Id.

The decision reinforces the importance of authoritative conduct and the leniency afforded to plaintiffs and the EEOC in bringing pattern or practice claims on behalf of alleged victims of discrimination.

Case Background

Defendant Recovery Innovations operates the Dix Crisis Intervention Center in Jacksonville, North Carolina. Id. at *1, 2. The Jacksonville center provides outpatient services for mental health disorders and substance abuse. Id. at *2. Recovery Innovations hired Chiara Munna as a “Peer Support Specialist” at the Jacksonville center. Id. Munna’s shift supervisor allegedly made “repeated sexual comments to the women under his supervision, touched them sexually, and sent at least two of them unwelcome sexual text messages and photos.” Id.

The EEOC filed suit on behalf of Munna and a group of similarly aggrieved female employees, asserting claims for: (1) sex harassment and hostile work environment under Title VII; (2) failure to accommodate under the ADA; (3) discriminatory discharge under the ADA; and (4) ADA record keeping violation under the ADA. Id. The Title VII claim is brought on behalf of Munna and “similarly aggrieved women.” Id. Recovery Innovations moved to dismiss the Title VII claims on behalf of the group of workers but not those brought on Munna’s behalf individually. Id.

The complaint alleges that Munna’s shift supervisor “engaged in unwelcome and offensive conduct ‘on nearly every occasion’ the [workers] encountered him,” including repeatedly insisting on “hugging them, elicit[ing] physical contact by impeding their paths or cornering and intimidating them, mak[ing] unwelcome sexual comments,” and sending sexually explicit photos of himself to at least two class members, among other misconduct. Id. at *4.

The Court’s Analysis

Recovery Innovations raised two arguments in its motion to dismiss. Its “chief argument” in support of dismissal was that the complaint failed to allege “severe and pervasive” harassment. Id. Recovery Innovations’ second argument was that the complaint “insufficiently describes” the group of allegedly injured workers, as it did not provide sufficient notice of “when the harassment occurred or precisely what unwelcome conduct each [worker] suffered.” Id. Judge Boyle rejected both of these arguments and denied Recovery Innovations’ partial motion to dismiss the Title VII pattern or practice claims.

First, as to Defendant’s “severe and pervasive” argument, Judge Boyle held that the alleged conduct was “sufficiently severe or pervasive to alter the class members’ conditions of employment” because “‘a supervisor’s power and authority invests his or her harassing conduct with a particularly threatening character.’” Id. at *4, 5 (quoting Boyer-Liberto v. Fontainebleau Corp., 786 F.3d 264, 278 (4th Cir. 2015)).

Second, as to Defendant’s argument that the complaint insufficiently describes the group of alleged victims, Judge Boyle found that “[a]n EEOC complaint brought on behalf of a [group of victims] is not . . . ‘deficient for failing to identify the numerous alleged victims of discrimination.’” Id. at *5 (quoting EEOC v. PBM Graphics Inc., 877 F. Supp. 2d 334, 347 (M.D.N.C. 2012)). In addition, because the complaint alleged that the alleged victims reported the supervisor’s conduct to the facility’s program supervisor, Recovery Innovations received “fair notice” of the “time frame and scope” of the workers at issue. Id.

Having found that the complaint adequately pled “severe or pervasive” harassment and sufficiently described the group of aggrieved female employees, Judge Boyle denied Recovery Innovations’ partial motion to dismiss. Id.

Implications For Employers

Recovery Innovations shines light on the “severe or pervasive” standard under Title VII when applied to a supervisor’s alleged conduct, as well as the pleading leniency surrounding claims that encompass alleged victims of discrimination. Corporate counsel should implement and update training for managerial employees regarding sexual misconduct to make every effort to avoid Title VII pattern or practice claims.

By Gerald L. Maatman, Jr., Denis Yavorskiy, and Elizabeth Underwood

Duane Morris Takeaways: On March 24, 2026, in Ndugga v. Bloomberg L.P., No. 20 Civ. 7464, 2026 WL 828730 (S.D.N.Y. Mar. 24, 2026), Magistrate Judge Gabriel W. Gorenstein in the U.S. District Court for the Southern District of New York issued a Report and Recommendation recommending that class certification be denied in a gender-based pay discrimination case brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”) and the New York State Human Rights Law, N.Y. Exec. Law §§ 290-301 (“NYSHRL”). The Magistrate Judge determined that Plaintiff’s statistical evidence was not significant and flawed and that Plaintiff failed to show that any pay disparity was traceable to a particular senior executive at Bloomberg L.P. (“Bloomberg”).

For employers defending against pattern-or-practice pay discrimination class actions, this decision provides a roadmap for defeating commonality and is a reminder that statistical evidence must be both methodologically sound and causally connected to an identified employment practice.

Case Background

Naula Ndugga, a Black female news producer formerly employed at Bloomberg News, sued Bloomberg alleging gender-based pay discrimination. Ndugga began working as a paid intern at Bloomberg News in September 2017. Ndugga alleged that she was paid a starting salary of $65,000 while male producers hired out of the same internship program received $75,000 and that she was repeatedly overlooked for raises, promotions, and favorable assignments. Her operative complaint, filed in July 2024, sought certification a “U.S. Class” and a “New York Class,” each of which included female reporters, producers, and editors who “(1) were not Team Leaders or in other supervisory positions, and (2) were subjected to [Bloomberg’s] compensation systems.” Id. at *2-3. According to Bloomberg, members of the putative classes worked in nearly 30 cities, in more than 30 different business units, held more than 30 different job profiles, and were assigned to more than 40 different peer groups. Id. at *5.

Central to Ndugga’s theory was that compensation at Bloomberg News was controlled by a “single decisionmaker:” Reto Gregori, Bloomberg News’ deputy editor and a member of its Editorial and Research Management Committee. Id. at *4. Ndugga maintained that Gregori “micromanaged, at both systemic and individual levels, every stage of [Bloomberg News’] multipart evaluation and compensation systems,” resulting in lower pay for women. Id. at *5. Bloomberg countered that performance ratings and compensation decisions were made by hundreds of different managers across the organization. Id.

Ndugga retained labor economist Dr. David Neumark, who performed a regression analysis comparing compensation between female and male employees while controlling for variables such as race, experience, education, job profile, performance ratings, business unit, and an accounting category referred to as “Cost Center.” Id. at *19. For the proposed U.S. Class, Neumark found that female employees’ total compensation was 3.1% below that of similarly situated male employees, which was a difference of 1.64 standard deviations. Id. at *20. For the proposed New York Class, Neumark found a 4.4% disparity, amounting to a difference of 2.29 standard deviations. Id.

The Court’s Analysis

Magistrate Judge Gorenstein’s recommended denying class certification on the grounds that Ndugga failed to put forward sufficient evidence of discrimination to satisfy the commonality requirement of Rule 23(a)(2).

First, the Magistrate Judge determined that Neumark’s 1.64 standard deviation result as to the proposed U.S. Class was, by Neumark’s own admission, not statistically significant. Citing Ottaviani v. State Univ. of New York at New Paltz, 875 F.2d 365, 371 (2d Cir. 1989), the court explained that “[a] finding of two standard deviations corresponds approximately to a one in twenty, or five percent, chance that a disparity is merely a random deviation from the norm.” Id. at *15. While some courts have relaxed this threshold for small samples sizes, the Magistrate Judge found no basis for disregarding this rule because Neumark’s analysis was based on a large dataset of 750 compensation records. Id. at *31.

Second, for both proposed classes, the Magistrate Judge found that Neumark’s inclusion of “Cost Center” as a control variable in his regression analysis was improper. Cost Center is an organizational accounting category to which costs are charged, and Neumark even acknowledged that it “does not play a role in compensation guidelines.” Id. at *35. Bloomberg’s expert, Dr. Denise Neumann Martin, demonstrated that when Cost Center was excluded from the analysis, any observed pay differences between men and women were no longer statistically significant at either the 5% or 10% levels. Id. at *38. Accordingly, the Magistrate Judge found that the inclusion of this variable “obfuscate[d] the principal explanatory variable” and created a mere “appearance of difference.” Id.

Finally, the Magistrate Judge agreed with Bloomberg that Ndugga did not provide adequate evidence to show that any disparity in pay was traceable to Gregori. Id. Specifically, the court noted that even if Gregori may have been involved in all aspects of compensation, this does not in itself establish that he was responsible for any pay disparity. Id. at *39.

Implications For Employers

This Report and Recommendation in the Ndugga case is a win for employers defending against pattern-or-practice gender pay discrimination class actions and provides guidance on how to defeat a showing of commonality. Employers should scrutinize a plaintiff expert’s findings and assumptions, including whether they fall below the two-standard-deviation threshold, the size of the data set considered, and whether certain control variables are irrelevant like the Cost Center variable was here.

The court’s analysis also illustrates that where lower-level managers exercise substantial discretion over performance ratings and compensation, the involvement of a senior executive in a final review capacity does not automatically transform the process into a class-wide common policy. Even if a plaintiff can show a common mode of exercising discretion through a decisionmaker’s influence, she still must establish a causal relationship between this practice and the pay discrimination alleged.