Elizabeth Underwood – Page 2 – Class Action Defense

By Gerald L. Maatman, Jr., Adam D. Brown, and Elizabeth G. Underwood

Duane Morris Takeaways: On November 25, 2025, in Cross v. EEOC, No. 1:25-CV-3702, 2025 WL 3280764 (D.D.C. Nov. 25, 2025), Judge Trevor N. McFadden of the U.S. District Court for the District of Columbia dismissed an Amazon delivery driver’s lawsuit against the EEOC. The lawsuit alleged that the EEOC illegally halted investigations of disparate impact claims following an executive order from President Trump. The district court’s ruling is at least a short-term win for employers, demonstrating that a plaintiff who is not the subject of an EEOC action cannot easily resort to the federal courts to challenge the internal investigation and enforcement policies that caused the EEOC not to pursue theories of employer liability. The “win” is likely the first in a series of challenges to the EEOC’s stance on disparate impact litigation.

Case Background

The plaintiff in this case, Leah Cross, who worked as Amazon delivery driver for several months in 2022, was fired after she failed to satisfy Amazon’s delivery quota requirements. In May 2023, Cross filed a sex-based charge of discrimination against Amazon with the Colorado Civil Rights Division, asserting violations of Title VII and Colorado state law.

Cross contended that Amazon’s delivery quotas and resulting bathroom limitations had a disparate impact on female Amazon employees. Specifically, she alleged, Amazon enforced excessively high delivery quotas, which forced delivery drivers to forgo bathroom breaks. According to Cross, this disparately impacted female delivery drivers because of their differing personal needs relative to male drivers.

In January 2024, the EEOC’s Denver office began investigating the charge. But in April 2025, President Trump issued Executive Order 14281 titled “Restoring Equality of Opportunity and Meritocracy,” which instructed federal agencies to deprioritize enforcement of antidiscrimination laws based on disparate impact theories of liability. That Executive Order also specifically directed the EEOC to examine all pending investigations of such claims and take appropriate action consistent with the new enforcement priorities.

In September 2025, the EEOC issued a memorandum requiring staff to close all investigations of disparate impact claims, which included Cross’s claims. Thereafter, Cross filed a lawsuit against the EEOC, alleging that she “ha[d] been denied the benefit of a full investigation” by the Commission. Cross v. EEOC, No. 1:25-CV-3702, 2025 WL 3280764, at *3 (D.D.C. Nov. 25, 2025).

Cross claimed the EEOC’s memorandum violated § 706(2) of the Administrative Procedure Act, arguing that: (1) the Commission acted contrary to Title VII and the Age Discrimination in Employment Act by “selectively exclud[ing] categories of discrimination from the charge-investigation process;” (2) the Commission acted arbitrarily and capriciously in abruptly changing its policy; (3) the Commission’s memorandum constituted a substantive rule that was “in excess of statutory jurisdiction, authority, or limitations”; and (4) the Commission should have promulgated its memorandum through proper notice-and-comment rulemaking procedures. Id. Therefore, Cross sought a preliminary injunction requesting, among others, for her investigation to be reopened.

The Court’s Opinion

The Court held Cross failed to establish that she had standing to bring her claims and thus dismissed Cross’s claims for lack of subject-matter jurisdiction, without addressing them on the merits. To remedy Cross’s alleged injuries, the Court suggested that Cross could pursue a Title VII action directly against Amazon.

The Court determined that Cross did not show any judicially cognizable injury from the EEOC’s closure of her investigation. Moreover, the Court opined that “even if that were the kind of injury capable of judicial resolution, Cross has not shown that a favorable ruling by this Court would redress that injury.” Id. at *1.

The Court explained that “federal courts are ‘not the proper forum for resolving claims that the Executive branch’ should ‘bring more’ investigations and enforcement actions.” Id. at *4 (quoting United States v. Texas, 599 U.S. 670, 680 (2023)). Under applicable case law recognizing this principle, the Court held, because Cross was not the subject of an EEOC enforcement action, she lacked standing to challenge the agency’s investigation and enforcement decisions.

Implications For Companies

The Court’s ruling is a win for companies, confirming that federal courts currently are not willing to interfere with the EEOC’s internal investigation and enforcement policies regarding disparate impact claims. Even more broadly, the Court’s order reinforces the substantial deference federal courts grant the EEOC in its internal decision-making processes, which could cut in different directions depending on the enforcement priorities and policies of a particular executive branch or EEOC leadership regime.

Crucially, however, employers are not in the clear. Companies still should be proactive and continue to audit regularly their hiring and employment practices for potential disparate impact, which remains unlawful under both federal and state laws notwithstanding any vacillation in EEOC policy. While the EEOC may choose to deprioritize pursuing disparate impact claims, a charging party who receives a Notice of Right to Sue letter still can file a private lawsuit in reliance on longstanding precedent regarding disparate impact.

By Gerald L. Maatman, Jr., Ryan T. Garippo, and Elizabeth G. Underwood

Duane Morris Takeaways: On October 28, 2025, Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York granted the People of the State of New York’s (the “State”) motion to remand in New York v. Nat’l Gen. Holdings Corp., No. 25 Civ. 03608, 2025 U.S. Dist. LEXIS 212731 (S.D.N.Y. Oct. 28, 2025). The State alleged that National General Holdings Corporation violated various state laws related to data protection programs and notifications to affected individuals when data breaches in 2020 and 2021 exposed the corporation’s customer information. This case reinforces the concept that a plaintiff is indeed the master of the complaint and can strategically craft their complaint to ensure that a case is litigated in state court.

Case Background

The State sued Allstate Insurance Company when one of its units, National General Holdings Corporation (the “Defendants”), was involved in two data breaches in 2020 and 2021, exposing nearly 200,000 consumers’ drivers’ license numbers to hackers. The State alleged that the Defendants failed to protect customers’ sensitive information and did not inform customers that their data was stolen.

Importantly, the complaint did not assert any cause of action under federal law. Instead, the complaint alleged that the Defendants violated three federal statutes, including the Gramm-Leach-Bliley Act (“GLBA”), the Health Insurance Portability and Accountability Act (“HIPAA”), and the Health Information Technology for Economic and Clinical Health Act (“HITECH”). The State brought the action against the defendants pursuant to New York State General Business Law (“GBL”) §§ 349, 350, 899-aa, and 899-bb, and New York Executive Law § 63(12).

Based on the inclusion of allegations that they violated federal law, the Defendants removed the action to the U.S. District Court for the Southern District of New York pursuant to 28 U.S.C. §§ 1331 and 1441, invoking the Court’s ability to decide a federal question. The State, however, moved to remand the case and for attorney’s fees incurred due to the removal.

Magistrate Judge Robert Lehrburger concluded in a report and recommendation that the Court lacked federal subject matter jurisdiction to hear the case because the causes of action (1) were not created by federal law and (2) did not satisfy the standard set forth in Gunn v. Minton, 568 U.S. 251 (2013), and Grable & Songs Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005) (the “Gunn-Grable” test). ECF 55. Under the Gunn-Grable test, federal question jurisdiction exists only when a federal issue is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn, 568 U.S. at 258.

In his report and recommendation, Magistrate Judge Lehrburger determined that the third element as to whether a federal issue was “substantial” was not satisfied. This inquiry looks to “the importance of the issue to the federal system as a whole,” not just the issues of one case. Id. at 260. In this case, the Defendants argued that the substantiality requirement was met because of the substantial federal interests in data privacy and national security; however, Magistrate Judge Lehrburger found these arguments were unpersuasive and recommended that the Court remand the case but not award attorney’s fees to the State.

The Court’s Opinion

In an opinion written by Judge Lewis Kaplan, the Court agreed with Magistrate Judge Lehrburger’s reasoning and held that the case did not pass the Gunn-Grable test.

The Court determined that Magistrate Judge Lehrburger correctly rejected the Defendants’ argument that the State’s claims satisfy the Gunn-Grable test as to the “substantiality” element. First, the Court found that the Defendants’ argument as to whether the New York State Attorney General had the authority to enforce the federal GLBA was “entirely inapt” because the complaint did not allege any GLBA claims. Nat’l Gen. Holdings Corp., 2025 U.S. Dist. LEXIS 212731, at *3. Second, the Court held that the federal government’s interest in data privacy was insufficient to meet the Gunn-Grable test. Third, the Court determined that the federal law questions implicated by the state law claims, including whether defendants are insulated from liability under state law if the defendants’ data protection programs and data breach notification procedures were in compliance with federal law, “are inherently fact-intensive and therefore likely would not provide guidance in future cases.” Id. at *4.

Moreover, the Court also rejected the Defendants’ argument that whether the GLBA preempts the New York Attorney General from bringing the state law claims is a substantial federal question, reasoning that the question was not “necessarily raised” and that preemption is an affirmative defense that may not serve as the basis for subject-matter jurisdiction. Id. at 4–5. Finally, the Court held that none of the three exceptions to the well-pleaded complaint rule applied because the Defendants did not assert the first two exceptions, and the third exception would have had to pass the Gunn-Grable test, which it did not.

Implications For Companies

Nat’l Gen. Holdings Corp. serves as a cautionary reminder of the uphill battles that corporate defendants often face to remove to and then keep bet-the-company litigation in federal court.

Although it is not uncommon for a corporation to prefer “federal courts because it fears a corporate defendant . . . will not get a fair trial in state court,” the road to get there is not always guaranteed. See, e.g., Hosein v. CDL West 45th Street, LLC, No. 12 Civ. 06903, 2013 WL 4780051, at *3 (S.D.N.Y. June 12, 2013). As on display here, the Nat’l Gen. Holdings Corp. opinion shows that corporate defendants may not even get to litigate in a federal forum even when there are allegations that they violated federal law.

As a result, corporate counsel should be aware that relying on a state law claim involving an embedded federal issue, as the basis for federal subject-matter jurisdiction, may not be successful in 100% of cases, but it may be worth a chance to attempt to remove the case to federal court if it is the company’s only opportunity to obtain a fair trial.