Denis Yavorskiy – Class Action Defense

June 1, 2026June 1, 2026 by Gerald L. Maatman, Jr.

Doctor’s Orders: Michigan Data Breach Class Action Dismissed Due To The CAFA’s Home-State Exception

By Gerald L. Maatman, Jr., George J. Schaller, and Denis Yavorskiy

Duane Morris Takeaways: On May 26, 2026, in Berven v. Sturgis Hosp., Inc., 25-CV-1142 (W.D. Mich. May 26, 2026), Judge Robert J. Jonker of the U.S. District Court for the Western District of Michigan dismissed two related data breach class actions for lack of subject matter jurisdiction, finding that the Class Action Fairness Act’s (“CAFA”) home-state exception prevented the Court from exercising jurisdiction over the cases.

The Court found that the defendant, Sturgis Hospital, Inc., carried its burden of proving that the CAFA’s home-state exception applied by demonstrating that it is more likely than not that over two-thirds of the class members are Michigan citizens. Sturgis Hospital’s records suggested that roughly 90% of its employees and former patients, the two populations impacted by the alleged data breach, reside in Michigan. Companies facing data breach and other class actions should consider similar ways to challenge jurisdiction by invoking the home-state exception.

Case Background

Plaintiffs Lavonna Berven and Paul Minor filed two related class actions against Sturgis Hospital asserting multiple “state law claims — negligence, negligence per se, breach of implied contract, unjust enrichment, and violations of the Michigan Consumer’s Protection Act” arising from an alleged data breach. Id. at *3. Plaintiffs alleged that they had “subject-matter jurisdiction under 28 U.S.C. 1332(d)(2), the CAFA provisions of the diversity jurisdiction statute.” Id.

Sturgis Hospital is a nonprofit hospital with its principal place of business in Sturgis, Michigan, near the Indiana border, and primarily employs and serves Michigan residents. Id. at *2. Sturgis Hospital collects “a home address” from every employee and patient that uses its services. Id. at *2, n 1. According to its records, “[r]oughly 90% of Sturgis’ employees reside in Michigan” and “since 2010, at least 90% of all patient visits to Sturgis were from individuals with a Michigan home address.” Id. at *2.

In September 2025, after detecting unauthorized activity in its computer network, the hospital sent “approximately 21,379 notice letters” to former patients and employees with “known addresses that were affected by the data breach.” Id. Of those notice letters “19,412—or 90.80%—were sent to individuals with Michigan addresses.” Id. Plaintiffs alleged a breach resulting in “an unauthorized third party” acquiring “Personal Identifying Information (PII) and Private Health Information (PHI)” of approximately 77,771 employees and former patients and sought to represent a purported class of those impacted. Id. Sturgis Hospital moved to dismiss both cases under the CAFA’s home-state exception.

The Court’s Decision

Judge Jonker dismissed both complaints, determining that Sturgis Hospital demonstrated “by a preponderance of evidence that the home-state exception applies[.]” Generally, under the “CAFA, federal courts have jurisdiction over class actions where: (1) any member of the class of Plaintiffs is a citizen of a different state than any defendant; (2) the class includes more than 100 putative class members; and (3) the aggregate amount in controversy exceeds $5,000,000.” Id. at *3-4 (emphasis in original). However, under the CAFA’s home-state exception, federal courts must “decline jurisdiction if ‘two-thirds or more of the members of all proposed plaintiff classes in the aggregate,’ and the primary defendants, ‘are citizens of the State in which the action was originally filed.’” Id. at *4 (quoting 28 U.S.C. § 1332(d)(4)(B)).

Judge Jonker noted that Sturgis Hospital did not need to prove the “actual citizenship of the class members” and instead had to show domicile, which turns on proof of residence and an intent to remain. Id. at *4. Sturgis Hospital produced a declaration from its CFO and COO to demonstrate, along with “over ten thousand pages of hospital records” that suggested that “roughly 90% of its employees and former patients — the only two populations affected by the data breach—reside in Michigan.” Id. These records, along with testimony, showed that between 2010 to 2025, the percent of Sturgis employees and former patients that resided in Michigan ranged from 89.55% to 92.15%., and from 93.96% to 95.80%, respectively. Id. at *5-6.

Judge Jonker found that this evidence “strongly suggest[ed]” that the “two populations affected by the data breach — resided, and were therefore presumptively domiciled, in Michigan.” Id. at *6. Further, Sturgis Hospital’s notice letter process was “even more persuasive[]” support, as testimony showed that the hospital mailed “approximately 21,379 notice letters to potential class members[,]” 90.8% of which “were sent to individuals with Michigan home-addresses.” Id. Considering this evidence, it was “easy for the Court to find Sturgis has shown that it is more likely than not that over two-thirds of the proposed class members are residents, and therefore citizens, of Michigan.” Id. at *6-7.

Plaintiffs attempted to “poke holes” in the records, claiming they are “are unreliable indicators of residence and citizenship” and that “the addresses of former patients may be faulty.” Id. at *7. Plaintiffs also argued that “the patient-visit data . . . does not fairly represent the class because it includes ‘repeat patients’ that may have sought care . . . multiple times and other individuals that may have not been affected by the breach.” Id. Judge Jonker was unpersuaded by Plaintiffs’ “speculations[.]” Sturgis Hospital “required their employees to provide a home address” and “asked patients to provide a home address at every visit,” and for those patients with multiple visits, it used “the most recent address provided.” Id. at *8. Additionally, before sending notice letters, the hospital “used a third-party vendor to check for address changes for everyone that had been identified as involved in the data breach.” Id. (emphasis in original). Judge Jonker found that these procedures in verifying address residence data “ensure[d] that residence data [was] reasonably accurate.” Id.

Judge Jonker also found that potential “double counting had a negligible impact” since “the percentage of patient visits from individuals with a Michigan address” and “the percentage of notice letters that were sent to actual individuals” were both consistent at “roughly 90%.” Id. at *8-9. Further, Sturgis Hospital’s physical location nearing the Indiana border did not “rebut the presumption of domicile.” Id. at *9. Rather, the fact that Sturgis Hospital “is located ‘exclusively’ in Sturgis, Michigan, and markets itself as a ‘hometown’ medical service’” weighed in favor of applying the home-state exception. Id.

The Court concluded that “the consistency of the data suggests that Sturgis’ information easily meets the preponderance standard” and found “the home-state exception to [the] CAFA applies.” Id. at *10. Accordingly, the Court dismissed for lack of jurisdiction. Id.

Implications For Businesses

Berven illustrates that the CAFA is not an unbounded vehicle for litigating class actions in federal court, and when an exception applies, here the home-state exception, this defeats federal court jurisdiction and requires dismissal. Sturgis Hospital presented hospital records and notice letter statistics showing that the home-state exception applied because over two-thirds of the proposed class members are citizens of Michigan.

Jurisdictional challenges are strategic decisions that should be carefully considered when defending against class actions. Corporate counsel should weigh the pros and cons of proceeding in federal versus state court before asserting a jurisdictional exception to the CAFA. Corporate counsel should also consider the strength of the support and whether it proves by a preponderance of the evidence that an exception applies.

May 27, 2026May 27, 2026 by Gerald L. Maatman, Jr.

North Carolina Federal Court Highlights “Severe And Pervasive” Requirement Under Title VII In Denying Partial Motion To Dismiss A Pattern or Practice Claim Brought By The EEOC

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.

April 1, 2026April 1, 2026 by Gerald L. Maatman, Jr.

New York Federal Court Recommends Denial Of Class Certification In Gender Pay Discrimination Suit Against Bloomberg

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.