Gerald L. Maatman, Jr. – Page 14 – Class Action Defense

January 27, 2023January 30, 2023 by Gerald L. Maatman, Jr.

Introducing The Duane Morris EEOC Litigation Review – 2023

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

Duane Morris Takeaways: Given the importance of compliance with workplace anti-discrimination laws for our clients, we are pleased to present the inaugural edition of the Duane Morris EEOC Litigation Review – 2023. The EEOC Litigation Review – 2023 analyzes the EEOC’s enforcement lawsuit filings in 2022 and the significant legal decisions and trends impacting EEOC litigation for 2023. We hope that employers will benefit from this deep dive into how the EEOC’s priorities reveal themselves through litigation. Click here to download a copy of the EEOC Litigation Review – 2023 eBook.

The Review explains the impact of the EEOC’s six enforcement priorities as outlined in its Strategic Enforcement Plan on employers’ business planning and how the direction of the Commission’s Plan should influence key employer decisions. The Review also contains a compilation of significant rulings decided in 2022 that impacted EEOC-initiated litigation and a list of the most significant settlements in EEOC cases in 2022.

Government enforcement litigation is similar in many respects to class action litigation. Lawsuits brought by the U.S. Equal Employment Opportunity Commission (EEOC) typically present significant monetary exposure and involve numerous claimants. Most often the lawsuits pose reputational risks to companies.

The EEOC is one of the most aggressive federal agencies in terms of prosecuting government enforcement litigation. This book focuses on EEOC litigation in 2022 and the types of legal issues spawned by that litigation.

We hope readers will enjoy this new publication. We will continue to update blog readers on any important EEOC developments, and look forward to sharing further thoughts and analysis in 2023!

January 24, 2023 by Gerald L. Maatman, Jr.

DMCAR Trend # 2 – The U.S. Supreme Court’s Decisions In 2022 Continued To Define The Class Action Landscape Video

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

Duane Morris Takeaways: In 2022, the U.S. Supreme Court continued to define and shift the playing field for class action litigation. The Supreme Court issued three key rulings in 2022 that impact the plaintiffs’ bar’s ability to bring and maintain class actions. Watch our video analysis of these three key decisions below by Duane Morris partner and Class Action Review co-editor Jennifer Riley. Enjoy!

January 23, 2023 by Gerald L. Maatman, Jr.

DMCAR Trend # 2 – The U.S. Supreme Court’s Decisions In 2022 Continued To Define The Class Action Landscape

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

Duane Morris Takeaways: As the ultimate referee of law, the U.S. Supreme Court has continued to define and shift the playing field for class action litigation. The Supreme Court’s rulings in 2022 were no exception. Consistent with its approach over the past several years, the Supreme Court issued three key rulings that impact the plaintiffs’ bar’s ability to bring and maintain class actions. The rulings include Southwest Airlines Co. v. Saxon, et al., 142 S.Ct. 1783 (2022), Morgan, et al. v. Sundance, Inc., 142 S.Ct. 1708 (2022), and Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022).

The most effective tool for combating class actions may be the arbitration defense. Contrary to the tendency of its rulings in recent years to expand the arbitration defense, and thus make it more difficult for the plaintiffs’ bar to pursue claims on a class-wide basis, this past year the U.S. Supreme Court pulled back on the arbitration defense by narrowing its coverage. After expanding this defense for defendants over the past decade, for the first year we can recall, the Supreme Court issued two decisions that arguably pull back on and weaken the defense for defendants. In a third decision, the Supreme Court continued to protect the defense from state efforts to dilute its impact and limit its application to claims asserted under state law.

Arguably as important as the areas for which it offered guidance, the Supreme Court declined to take up cases in two key areas apt to continue to fuel defenses and, thus, to have a significant impact on class action litigation over the upcoming year, including defenses regarding personal jurisdiction and those that challenge a court’s ability to certify classes that include uninjured members.

A. Southwest Airlines Co. v. Saxon, et al., 142 S.Ct. 1783 (2022)

In the first and arguably the largest door-opener to the courthouse for the plaintiffs’ class action bar during 2022, the Supreme Court narrowed the application of the Federal Arbitration Act by expanding its so-called “transportation worker exemption.”

The plaintiff, a ramp supervisor, brought a collective action lawsuit against Southwest for alleged failure to pay overtime. Id. at 1787. Southwest moved to enforce its workplace arbitration agreement under the Federal Arbitration Act (FAA). In response, the plaintiff claimed that she belonged to a class of workers engaged in foreign or interstate commerce and, therefore, fell within §1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Id. The plaintiff filed an “uncontroverted declaration” stating that, as a ramp supervisor, she “frequently” stepped in to load and unload cargo on and off airplanes traveling across state lines. Id. at 1787-88.

The district court rejected the plaintiff’s argument and granted Southwest’s motion. It held that only those involved in “actual transportation,” and not those merely “handling goods” fall within the exemption. Id. at 1787. The U.S. Court of Appeals for the Seventh Circuit reversed and the U.S. Supreme Court granted review. As an initial matter, the Supreme Court noted that Southwest did not “meaningfully contest” that ramp supervisors like the plaintiff “frequently load and unload cargo.” Thus, it accepted the premise that the plaintiff “belongs to a class of workers who physically load and unload cargo on and off airplanes on a frequent basis.” Id. at 1788.

The Supreme Court went on to hold that “any class of workers directly involved in transporting goods across state or international borders” falls within the exemption. Id. at 1789. It had no problem finding the plaintiff part of such a class: “We have said that it is ‘too plain to require discussion that the loading or unloading of an interstate shipment by the employees of a carrier is so closely related to interstate transportation as to be practically a part of it.’ . . . We think it equally plain that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods.” Id. (citation omitted).

The Supreme Court interpreted the §1 exemption in a way such that contracts with workers who engage in the process of transportation across state lines are not enforceable under the FAA. Thus, employers will need to turn to state law to attempt to enforce those agreements.

B. Morgan, et al. v. Sundance Inc., 142 S.Ct. 1708 (2022)

In a second door-opener for the plaintiffs’ class action bar during 2022, the U.S. Supreme Court broadened the circumstances that may give rise to a defendant’s waiver of the arbitration defense.

The plaintiff, an hourly employee at a Taco Bell franchise, brought a nationwide collective action lawsuit alleging that Sundance violated the FLSA by failing to pay overtime. When applying for her job, the plaintiff signed an agreement to use “arbitration, instead of going to court” to resolve any employment dispute. Id. at 1711. Sundance defended the lawsuit by moving to dismiss the suit as duplicative of another collective action previously brought by other employees, by subsequently answering the complaint, and by asserting 14 affirmative defenses, none of which included arbitration. Nearly eight months after the plaintiff filed the lawsuit, Sundance moved to stay the litigation and to compel arbitration under the FAA. The plaintiff opposed the motion and argued that, by litigating for eight months, Sundance waived enforcement of the arbitration agreement.

Applying Eighth Circuit precedent, the district court held that a party waives its right to arbitration only if it knows of the right, acts inconsistently with the right, and prejudices the other party by its inconsistent actions. Id. at 1711-12. The U.S. Court of Appeals for the Eighth Circuit agreed. It reasoned that, although the prejudice requirement is not a feature of federal waiver law generally, the requirement should apply because of the “federal policy favoring arbitration.” Id. at 1712. The U.S. Supreme Court subsequently granted review.

Although the parties disagreed about the role of state law in resolving questions as to when a party’s litigation conduct results in the loss of a contractual right to arbitrate, the Supreme Court observed that appellate courts, including the Eighth Circuit, generally have resolved such issues as a matter of federal law. Assuming the correctness of such decision, the Supreme Court considered only whether it was correct to “create arbitration-specific variants of federal procedural rules, like those concerning waiver, based on the FAA’s ‘policy favoring arbitration.’” Id. The Supreme Court decided the issue in the negative. It observed that, outside the arbitration context, federal courts assessing waiver do not generally ask about prejudice and, instead, focus on the actions of the person who held the right. Id. at 1713.

The Supreme Court noted that the Eighth Circuit’s rule in this case derives from a decades-old Second Circuit decision that grounded the rule in the FAA’s policy. Id. The Supreme Court, however, held that the FAA’s “policy favoring arbitration” does not authorize federal courts to “invent special, arbitration-preferring procedural rules.” Id. at 1713. Rather, the policy “is merely an acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding refusal to enforce agreements to arbitrate and to place such agreements upon the same footing as other contracts.” Id. In other words, the Supreme Court clarified that “[t]he policy is to make ‘arbitration agreements as enforceable as other contracts, but not more so.’” Id. Accordingly, it concluded that a court must hold a party to its arbitration contract just like any other contract but may not devise novel rules to favor arbitration over litigation.

C. Viking River Cruises Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022)

In the largest door-closer to the courthouse to representative proceedings, the U.S. Supreme Court reacted to a state’s attempt to render alleged violations of its laws immune from arbitration.

The plaintiff filed an action under California’s Private Attorneys General Act of 2004 (PAGA) alleging that her former employer violated the California Labor Code. The PAGA purports to authorize any “aggrieved employee” to initiate an action “on behalf of himself or herself and other current or former employees” to obtain civil penalties recoverable by the State. Id. at 1914. The PAGA contains what the Supreme Court recognized as “effectively a rule of claim joinder” in that it allows a party to unite multiple claims against an opposing party in a single action. Id. at 1915.

The plaintiff’s employment contract with Viking contained a mandatory arbitration agreement and a class action waiver that prohibited any party from bringing a class, collective, or representative action under the PAGA. Viking moved to compel arbitration of the plaintiff’s individual PAGA claim and to dismiss her other PAGA claims. The trial court denied the motion, reasoning that, according to California precedent, courts cannot split claims into arbitrable “individual” claims and non-arbitrable “representative” claims. After the California Supreme Court affirmed, the U.S. Supreme Court granted review. Id. at 1917.

The Supreme Court ruled that the FAA preempts California precedent insofar as such precedent precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. The Supreme Court reasoned that, according to its precedents, the imposition of class procedures leaves unwilling parties with an unacceptable choice between being compelled to arbitrate using such procedures and foregoing arbitration altogether. While a rule that prohibits a court from enforcing a plaintiff’s waiver of standing to assert claims on behalf of absent principals does not conflict with the FAA, a rule prohibiting a court from enforcing a plaintiff’s waiver of the PAGA’s built-in claim joinder mechanism does conflict with the FAA because it unduly circumscribes the freedom of the parties to determine “the issues subject to arbitration” and “the rules by which they will arbitrate.” Id. at 1923.

The Supreme Court concluded that state law cannot condition the enforceability of an agreement to arbitrate on the availability of a procedural mechanism that permits an expansive rule of joinder. Id. at 1924. Because, as interpreted by California precedent, the PAGA’s joinder rule would function in such a way, it effectively would coerce parties into opting for a judicial forum rather than realizing the benefits of private dispute resolution. Thus, while the FAA does not preempt a wholesale waiver of PAGA claims, it does preempt a rule that prevents the PAGA claims from being divided into their individual and non-individual claims. Id. at 1925. The Supreme Court also noted that, because the PAGA does not contain a mechanism that enables a court to adjudicate non-individual claims after compelling individual claims to a separate proceeding, the lower court should have granted Viking’s motion to compel arbitration and dismissed the remaining claims. Id.

In the meantime, despite the U.S. Supreme Court’s ruling in Viking River, many plaintiff’s attorneys have requested, and many California courts have granted, stays of representative claims, rather than dismissals, likely in order to preserve tolling in the event that the California Supreme Court fashions a rule that permits them to proceed with representative claims.

January 20, 2023 by Gerald L. Maatman, Jr.

DMCAR 2023 Trend # 1 – Class Action Settlements In 2022 Redistributed Wealth At An Unprecedented Level Video

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

Duane Morris Takeaway: In today’s video blog, Duane Morris partner Jerry Maatman discusses how the aggregate monetary value of class action settlements exploded to an all-time high in 2022, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims into enormous settlement values. In 2022, the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels than any recent year. Tune in below to hear all about this 2022:

January 19, 2023July 5, 2023 by Gerald L. Maatman, Jr.

Fifth Circuit Affirms Striking Class Allegations From The Face Of A Complaint

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Michael DeMarino

Duane Morris Takeaways – In Elson v. Black, No. 21-20349, 2023 WL 111317, at *1 (5th Cir. Jan. 5, 2023), the U.S. Court of Appeals for the Fifth Circuit affirmed the District Court’s decision to strike the class allegations in a nationwide class action alleging false and deceptive marketing practices. The decision in Elson is an important one for companies because it serves as reminder that, although sometimes discouraged, motions to strike class allegations are still a key weapon for defeating a class action lawsuit and cutting off class-wide discovery.

Background Of The Case

Plaintiffs were a group of women who alleged that Defendants falsely advertised the benefits and effectiveness of Defendants’ beauty product. In their complaint, Plaintiffs asserted claims under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 and multiple state statutes on behalf of a nationwide class and seven sub-classes representing the seven states in which Plaintiffs resided. Id. at *1.

Defendants moved to strike Plaintiffs’ class allegations and, after a hearing and some limited discovery, the District Court agreed with that position and struck the class allegations. The District Court concluded that “[b]ecause the basis for the claims are misrepresentations, reliance on them will be a key factor with every potential plaintiff” and it was “not convinced that commonality is present as each potential plaintiff would have to show that their reliance was justified.” Id. at *2. The District Court also dismissed Plaintiffs’ individual claims for failure to state a claim. Plaintiffs then appealed the order striking the class allegations, as well as the dismissal of their individual claims. Id.

The Fifth Circuit’s Ruling

On appeal, Plaintiffs mainly argued that the District Court failed to conduct the “rigorous analysis” required by Rule 23 of the Federal Rules of Civil Procedure and, in turn, overlooked the fact that reliance is not an element of many of the state statutes at issue. Id. The Fifth Circuit disagreed. Applying an abuse of discretion standard, the Fifth Circuit concluded that Plaintiffs were unable to establish Rule 23(b)(3)’s requirement that “questions common to the class predominate over other questions.” Id.

Specifically, the Fifth Circuit noted that the burden was on Plaintiff to show that the differences in state law would not predominate over issues individual to each plaintiff in the litigation. The Fifth Circuit therefore concluded that, by failing to present a sufficient choice of law analysis, Plaintiffs failed to meet their burden of showing that common questions of law predominate and, in fact “variations in state law . . . swamp any common issues and defeat predominance.” Id. at *3.

Just as important, the Fifth Circuit also held that Plaintiffs could not establish predominance because “Plaintiffs’ allegations introduce numerous factual differences that in no way comprise a coherent class.” Id. In reaching that holding, the Fifth Circuit observed that the named plaintiffs did not complain “about the same alleged misrepresentations.” Id. As a result, the Fifth Circuit opined that “discerning the truth or falsity of each representation would require a group-by-group analysis, complicated by the fact that the members of each group are from different states.” Id.

In response, Plaintiffs proposed seven state-specific sub-classes under Rule 23(c)(5). However, the Fifth Circuit rejected that solution. ‘‘Sub-class,” the Fifth Circuit opined, “is not a magic word that remedies defects of predominance. The burden is on Plaintiffs to demonstrate to the district court how certain proposed sub-classes would alleviate existing obstacles to certification.” Id. at *4. Ultimately, the Fifth Circuit held that Plaintiffs failed make that showing.

At the end of the day, the Fifth Circuit ruled that “[d]espite the brevity of the . . . order, we see no reason to reverse the district court formalistically for its further elaboration on what is clear from the face of the pleadings” and concluded that it did not abuse its discretion in striking the class allegations.

Implications For Companies Facing Class Actions

The ruling in Elson underscores the importance that a motion to strike can play in defeating class action claims as a first strike response and is a reminder that sub-classes are not a cure-all for predominance problems. Although some jurisdictions have viewed such motions with a bit of skepticism, corporate defendants are well-advised to consider whether to bring such a motion at the outset of the case, as an order striking class allegations is functionally equivalent to an order denying class certification and thus could put an early end to what otherwise might be tedious and lengthy litigation.

January 17, 2023 by Gerald L. Maatman, Jr.

DMCAR 2023: Trend # 1 – Class Action Settlements In 2022 Redistributed Wealth At An Unprecedented Level

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

Duane Morris Takeaway: As authors and editors of our firm’s our Class Action Review, we identified ten (10) key trends in class action litigation over the past year. Trend # 1 focuses on the unprecedented number of massive class action settlements reached in the last 12 months. Aside from the Big Tobacco settlements nearly two decades ago, 2022 marked the most extensive set of billion-dollar class action settlements in the history of the American court system.

In 2022, there were 15 class actions that resolved cases for $1 billion or more in settlements.

In the aggregate, the value of these settlements totaled $63.66 billion. The members of the billion-dollar settlement club include the following:

The largest 20 settlements during 2022 included the following:

Many of these settlements arose from opioid litigation against the pharmaceutical industry.

On an aggregate basis, class actions and government enforcement lawsuits against opioid manufactures, retailers, and distributors garnered more than $50 billion in settlements.

Much like the era of Big Tobacco settlements that transformed that industry, the opioid settlements are transforming the pharmaceutical industry and its distribution chain.

When the final tally is completed over the next several years, the aggregate settlements may top $100 billion.

These settlements have redistributed wealth at an unprecedented rate.

The plaintiffs’ class action bar scored rich settlements in virtually every area of class action litigation. The following provides the overall total of the top 10 most lucrative settlements in each of these areas:

$50.32 billion – Products liability class actions and mass tort
$8.596 billion – Consumer fraud class actions
$3.729 billion – Antitrust class actions
$3.254 billion – Securities fraud class actions
$1.31 billion – Civil Rights class actions
$896.7 million – Privacy class actions
$597 million – Employment discrimination class actions
$574.55 million – Wage & hour class and collective actions
$404.5 million – Government enforcement actions
$399.6 million – ERISA class actions
$719.21 million – Data breach class actions
$210.11 million – Fair Credit Reporting Act class actions

Suffice to say, 2022 was unlike any other year on the class action settlement front. As success often begets copy-cats, corporations can expect the plaintiffs’ class action bar will be equally if not more aggressive in their case filings and settlement positions in 2023.

January 13, 2023January 13, 2023 by Gerald L. Maatman, Jr.

Key Takeaways From The EEOC’s Draft Strategic Enforcement Plan For 2023-2027

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Duane Morris Takeaways: On January 10, 2023, the EEOC published a draft of its proposed Strategic Enforcement Plan (“SEP”) for Fiscal Years 2023-2027. While the draft SEP was only released for public comment and is not yet final, a reading of the tea leaves suggests that a handful of subjects will be squarely on the EEOC’s radar for the next four years, including: (1) discrimination stemming from the use of artificial intelligence in hiring; (2) preventing and remedying systemic harassment; (3) equal pay obligations; and (4) various categories relating to emerging areas where protections are needed, protecting vulnerable workers, and providing access to justice.

The EEOC’s Strategic Priorities

Artificial Intelligence

While the EEOC’s focus on eliminating barriers in recruitment and hiring is not a new phenomenon, employers’ increasing use of artificial intelligence in hiring has added a new wrinkle in this space. The SEP specifically notes that the EEOC will focus “on the use of automated systems, including artificial intelligence or machine learning, to target job advertisements, recruit applicants, or make or assist in hiring decisions where such systems intentionally exclude or adversely impact protected group.” Id. at 9. The Commission adds that it will monitor screening tools or requirements that disproportionately impact workers based on their protected status, including those facilitated by artificial intelligence or other automated systems, pre-employment tests, and background checks. Finally, the EEOC notes that it will keep an eye on restrictive application processes or systems, including online systems that are difficult for individuals with disabilities or other protected groups to access.

Employers who utilize artificial intelligence in the hiring process should take heed. The EEOC listed this category first in terms of subject matter priorities. Given the Commission’s implied skepticism in regards to the impact of automated hiring software, now is the time for employers to vet their systems and make sure they are legally compliant.

Systemic Harassment

Preventing and remedying systemic discrimination has long been a cornerstone priority for the EEOC. The EEOC Commissioners appointed by different presidential administrations have taken varying approaches to tackling discrimination on a systemic level, but regardless, the EEOC always has its eyes open for instances where there is widespread discriminatory practices at a company. The SEP makes clear that “[h]arassment remains a serious workplace problem,” noting that over 34% of the charges of employment discrimination the EEOC received between FY 2017 and FY 2021 included an allegation of harassment. Id. at 14. The SEP labels this a potential systemic issue, noting that a claim by an individual or small group may fall within this priority if it is related to a widespread pattern or practice of harassment. The EEOC indicates it will combat this problem by focusing on strong enforcement with appropriate monetary relief and targeted equitable relief to prevent future harassment.

While isolated incidents of harassment at largescale organizations may seem inevitable, the SEP’s declaration of this priority suggests employers need to pay closer attention to claims of harassment. If the EEOC senses that harassment is part of the fabric of an organization’s culture, such a situation could be ripe for a systemic discrimination claim. Accordingly, employers should take each individual claim of harassment seriously, and should consistently work to eradicate such behavior from the workplace.

Equal Pay

The SEP makes clear that equal pay, and gender pay differences in particular, will continue to be a focus for the EEOC. The SEP notes that “[b]ecause many workers do not know how their pay compares to their coworkers’ and, therefore, are less likely to discover and report pay discrimination, the Commission will continue to use directed investigations and Commissioner Charges, as appropriate, to facilitate enforcement.” Id. at *13. Transparency appears to be a key component of this strategic priority, as the EEOC opines that pay secrecy policies, retaliating against workers for asking about pay or sharing their pay with coworkers, reliance on past salary history to set pay, and requiring applicants to specify their desired or expected salary at the application stage will all be areas of concern.

Pay audits should be a consistent practice for employers. If they are not, the EEOC’s inclusion of this priority in its SEP suggests that the Commission will aggressively investigate such claims and ask employers to produce data. Employers can best avoid the time and cost-draining exercises of producing pay data by proactively examining their compensation practices up front.

Additional Priorities

The remaining three subject matter priorities include: (1) addressing emerging and developing issues; (2) protecting vulnerable workers; and (3) providing access to justice. In regards to emerging issues, the SEP seeks to address discrimination that is influenced by local, national and global events, such as pandemic-related discrimination and incidents of targeting various racial and religious groups. The SEP also seeks enhanced protections for vulnerable workers, such as migrant workers, disabled people, older workers, teenaged workers, and LGBTQ+ individuals. Finally, the SEP seeks to focus on policies and practices that limit substantive rights, discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or impede the EEOC’s investigative or enforcement efforts. For example, this priority includes practices that deter or prohibit filing charges with the EEOC or cooperating freely in EEOC investigations or litigation.

In sum, these additional priorities are geared towards flexibly adopting to the evolving needs of the workforce, to make sure all individuals have uninhibited access to justice.

Implications For Employers

The EEOC’s SEP is an important publication for employers since it previews areas where companies may be targeted for investigations. While the 2023-2027 SEP is currently in draft form, we do not anticipate that there will be any significant overhaul, particularly in regards to the strategic priorities that are analyzed in this blog post. Accordingly, prudent employers should be mindful of these strategic priorities, and get a head-start on compliance if they have not already done so.

January 13, 2023 by Gerald L. Maatman, Jr.

Presenting A Duane Morris Exclusive Event: Top Trends In Class Action Litigation In-Person Panel And Webinar Discussion For Book Launch

Duane Morris Takeaways: You are invited to join Duane Morris Partners Gerald L. Maatman, Jr. and Jennifer Riley for a panel discussion marking the release of the Duane Morris Class Action Review. The DMCAR has received rave reviews (here and here) since its publication, and this event will provide expert insights into the top 10 class action trends of 2022, and perspectives on what corporate counsel and business leaders can expect in 2023. Prominent plaintiffs’ class action lawyer of Joe Sellers of Cohen Milstein will join the discussion to provide thoughts on what the plaintiffs’ bar is expected to focus on in 2023.

Please register here to attend in person or by zoom to reserve your seat!

In Person Event: Thursday, January 26, 2023
Registration: 1:30 p.m. to 2:00 p.m. Eastern
Book Launch and Discussion: 2:00 p.m. to 3:00 p.m. Eastern
Reception: 3:00 p.m. to 5:00 p.m. Eastern

Location:
Convene CityView
Duane Morris Plaza | 13th Floor
30 South 17th Street
Philadelphia, PA 19103

Speakers:

Gerald L. Maatman, Jr., Partner and Chair Workplace Class Action Group, Duane Morris LLP

Jennifer A. Riley, Partner and Vice-Chair Workplace Class Action Group, Duane Morris LLP

Joseph M. Sellers, Partner Cohen Milstein

Opening Remarks:

Matthew A. Taylor, Chairman and CEO, Duane Morris LLP

Thomas G. Servodidio, Vice-Chairman, Duane Morris LLP

January 12, 2023January 12, 2023 by Gerald L. Maatman, Jr.

Duane Morris Class Action Review – 2023 Overview Video

Duane Morris Takeaways: As our Duane Morris Class Action Review outlines, 2022 was a year of history making developments in the class action world. The Review is the preeminent resource for discussing the trends of 2022 and what to expect in 2023. 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. Check it out below:

January 9, 2023 by Gerald L. Maatman, Jr.

Illinois Appellate Court Affirms Dismissal Of BIPA Class Action Lawsuit

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Duane Morris Takeaways: In Barnett v. Apple Inc., Case No. 1-22-0187, 2022 Ill. App. LEXIS 556 (Ill. App. 1st Dist. Dec. 23, 2022), after a trial court dismissed a biometric privacy class action lawsuit involving the use of facial and fingerprint recognition features, the Illinois Appellate Court affirmed the dismissal order. In an important decision defining the parameters of liability under the Illinois Biometric Information Privacy Act (“BIPA”), the Illinois Appellate Court held that the users of the technology themselves were responsible for possessing, capturing, and collecting their biometric data

For businesses that are confronted with biometric privacy class action allegations in the context of recognition software, this monumental victory for Apple provides an excellent roadmap to attack such claims at the pleading stage.

Case Background

Plaintiffs alleged that Apple violated the Biometric Information Privacy Act, 740 ILCS 14/1 et seq., by offering users of its phones and computers the option of utilizing face and fingerprint recognition features without first instituting a written policy regarding the retention and destruction of the users’ biometric information; and without first obtaining the users’ written consent. Id. at *1-2. Plaintiffs claimed Apple was “in possession of,” “collected,” and “captured,” the users’ biometric information, since Apple designed, owned, and had the ability to remotely update the software. Id. at *2.

On January 3, 2022, the trial court granted Apple’s motion to dismiss. Id. at *9. First, the trial court held that Plaintiffs failed to allege that their biometric information was sent to Apple’s servers or any third party server. Rather, Plaintiffs expressly alleged that the information was stored locally on Plaintiffs’ own devices. Second, the trial court held that Plaintiffs did not allege that Apple stored any of Plaintiffs’ biometric data in Apple databases. Third, the trial court held that it was clear Plaintiffs voluntarily chose to use Face ID and Touch ID features, and could delete their biometric information from their devices if they chose. On February 2, 2022, Plaintiffs filed a timely notice of appeal. Id. at *11.

The Illinois Appellate Court’s Decision

The Illinois Appellate Court affirmed the trial court’s dismissal of Plaintiffs’ complaint. Addressing the issue of “possession,” the Appellate Court explained that the term was not defined in the BIPA statute. Id. at *16. Plaintiffs argued that Apple ‘possesse[d]” their information because Apple software collected and analyzed their information. Id. at *17. Rejecting Plaintiffs’ argument, the Appellate Court opined that based on the facts alleged by Plaintiffs, it seemed as though Apple designed these features with the express purpose of handing control to the user. Id. at *17-18. The Appellate Court also noted that these features were completely elective, explaining that the user must undertake a series of affirmative steps in order to use them. Id. Finally, the Appellate Court found that Plaintiffs’ arguments were not persuasive since Plaintiffs alleged that the information is stored on the users’ own individual devices, and that users may delete the information and disable the features at their convenience. Accordingly, the Appellate Court held that Plaintiffs failed to properly allege that Apple possessed their biometric information.

Turning to the issue of whether Apple collected and captured Plaintiffs’ biometric information, the Appellate Court explained that these terms were also not defined in the BIPA statute. Id. at *20. In support of their proposed definitions, Plaintiffs cited a BIPA class action in the employment context, where the employee plaintiff was required to use the biometric scanner or lose her job. Id. at *22-23 (citations omitted). Rejecting Plaintiffs’ argument, the Court noted that the biometric features in this care were wholly optional, the information was stored exclusively on Plaintiffs’ devices, and Plaintiffs could delete the information at will. Further, the Court noted that Plaintiffs specifically alleged that the information is stored only on their devices. Accordingly, the Appellate Court held that Plaintiffs failed to properly allege that Apple captured and collected their biometric information.

In conclusion, the Appellate Court summarized its findings as follows: “[P]laintiffs do not dispute that the user’s biometric information is stored on the user’s own device; that Apple does not collect or store this information on a separate server or device; that these features are completely optional; that the user is the sole entity deciding whether or not to use these features; that, to enable the features, the user employs his or her own device to capture and collect his or her own biometric information on that device; that, to utilize these features, the user must undertake a number of steps, which are all documented in photos in plaintiffs’ complaint; and that the user has the power to delete this biometric information from the device, at any time, without negatively impacting the device.” Id. at *22-23. Accordingly, the Appellate Court affirmed the trial court’s dismissal of Plaintiffs’ BIPA class action.

Implications For Employers

Facial recognition technology is rapidly becoming more prevalent in both the employment and consumer contexts. This decision underscores the importance of carefully analyzing the allegations in biometric privacy class action pleadings. In situations where users maintain control over their own biometric data, this may be a helpful decision to seek an early exit from the lawsuit. Finally, Apple’s victory further provides some optimism for companies defending biometric privacy class actions, as the recent tide of key decisions has largely been adverse to defendants.