Duane Morris Synopsis: In Genesis B., et al. v U.S. Environmental Protection Agency, et al., Case No. 2:23-CV-10345 (C.D. Cal. Feb. 11, 2025), Judge Michael Fitzgerald of the U.S. District Court for the Central District of California dismissed, without leave to amend, a putative class action for lack of standing due to a lack of traceability between plaintiffs’ alleged injury and challenged policies promulgated by defendants, the United States Environmental Protection Agency (“EPA”) and the Office of Management and Budget (“OMB”). The ruling is an important reminder on the importance of standing in class action litigation.
Case Background
Plaintiffs, a group of children living in California, filed a putative class action seeking declaratory relief premised on alleged violations of the Equal Protection Clause of the Fifth Amendment, the Due Process Clause of the Fifth Amendment, and the Take Care Clause of Article II of the U.S. Constitution. (Order Granting Motion to Dismiss Complaint (ECF No. 50.) at 1-2.) Plaintiffs allege they were “harmed by climate change due to increased pollution and emissions, rising temperatures, extreme weather patterns, and wildfire exposure.” Id. at 2.
Plaintiffs challenge Circular Order No. A-4, a “guidance document” issued by the OMB that “sets forth the Executive Branch policy on benefit-cost analysis” (“BCA”). Id. at 2. In accordance with Circular Order No. A-4, the EPA issued, “Guidelines for Preparing Economic Analyses” (the “EPA Guidelines”), that set forth the EPA’s “policy on performing BCA and other economic analyses of contemplated regulations in accordance with Circular Order No. A-4.” Id. Plaintiffs allege that, based on the EPA Guidelines, the EPA issued Regulatory Impact Analyses that “anticipate[ ] and evaluate[ ] the likely consequences of its regulatory actions allowing climate pollutions.” Id. These various policies, according to Plaintiffs, “require” the EPA to apply “discount rates” that “put their thumb on the scale against urgent and ambitious regulatory programs to reduce climate pollution, and in favor of taking less ambitious actions in the present.” Id. at 3.
Defendants, the EPA, Michael Regan, “in his official capacity as Administrator of the EPA,” the OMB, and Shalanda Young, “in her official capacity as Director of OMB” (together, “Defendants”), moved to dismiss the operative complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure for lack of subject-matter jurisdiction and failure to state a claim, respectively. Id. at 6. The Court granted Defendants’ motion to dismiss, without leave to amend, dismissing the complaint for lack of subject-matter jurisdiction finding that Plaintiffs lacked standing to pursue their complaint as the purported injuries were not “fairly traceable” to Defendants’ policies. Id. at 7.
Court’s Decision
The Court analyzed two theories of harm advanced by Plaintiffs, including: (1) “environmental harms” that Defendants’ policies allegedly “result in the under-regulations of greenhouse gas emissions, which burdens Plaintiffs by disrupting, inter alia, their education, recreation, and religious expression;” and (2) “harms from discrimination” because Defendants’ policies allegedly “[deny them] equal treatment under law.” Id.
First, the Court held that Plaintiffs lacked standing because they failed to demonstrate the alleged “environmental harms” were “fairly traceable” to any of the alleged “discriminatory” policies. Id. at 8. Critically, the Court reasoned that “Plaintiffs fail to allege that Circular No. A-4 or the EPA Guidelines set out binding discount rates or practices.” Id. (emphasis added). The Court noted that the OMB’s policies should be interpreted as “guidance documents” and that BCAs are “context-specific in nature, and [do] not mandate a particular [discount] rate.” Id. Thus, the EPA “may or may not” use discounting, and even it does apply discounting, it “is only a single guiding factor when used” in any promulgated policies. Id. Since Plaintiffs “theory of harm therefore bundles uncertainty on uncertainty,” the Court concluded that Plaintiffs failed to “demonstrate traceability as to their environmental harms.” Id.
The Court rejected Plaintiffs attempt to distinguish decisions from the Eighth and Fifth Circuits, finding that those courts’ reliance on a “draft update to Circular No. A-4” was immaterial to the decisions. Id. at 9. The Court also rejected Plaintiffs’ argument that it was premature to consider whether Defendants’ policies were “binding” at the responsive pleading stage of the litigation. Id. at 9-10.
Second, the Court held that Plaintiffs failed to establish they “suffered an injury-in-fact” that is traceable to the alleged discrimination caused by Defendants’ policies. Id. at 12. The Court noted that, “to find that there is traceability as to the alleged facial discrimination, the Court must find that unequal treatment under the law occurred.” Id. Here, the complaint failed to identify any “individual” harms suffered by Plaintiffs, and instead “anticipate[s] societal harms and benefits” that “will be experienced relatively equally by all people — both in the United States and around the world — who are alive at the time of their impacts.” Id. As such, the alleged harm “does not derive from any of the children in the [Defendants’ policies], but on the allegation that the [Defendants’ policies] result in a suboptimal rate of greenhouse gas emissions in the future, which will disproportionately impact present-day children.” Id. As an example, the Court noted the complaint fails to answer how the policies “work a discriminatory harm against an individual aged 17 years and 364 days and not an individual aged 18 years.” Id. Thus, the Court determined that Plaintiffs claims failed because they are “not about a stigmatic injury at all, but rather a displeasure with the EPA’s economic analyses in assessing the impacts of future harms.” Id. at 14.
Finally, the Court granted Defendants’ motion without leave to amend because, “no matter how many opportunities for amendment Plaintiffs receive, they cannot overcome the structural lack of injury-in-fact and traceability as to their claims.” Id. at 16. Since Defendants’ policies “do not prescribe a discount rate that the EPA must use and because Plaintiffs challenge no specific policies,” the Court found it “difficult to imagine how Plaintiffs could ever sufficiently allege standing on” the facts set forth in the complaint. Id.
Implications For Companies
Standing can be an effective tool to challenge putative class action complaints at the responsive pleading stage of the litigation. Although a court may be hesitant to dismiss a complaint without leave to amend, the G.B. decision underscores how effective challenging standing can be to secure a dismissal in the employer’s favor at the outset of the litigation.
By Gerald L. Maatman, Jr., Justin R. Donoho, and George Schaller
Duane Morris Takeaways: On February 10, 2025, Judge Aleta A. Trauger of the U.S. District Court for the Middle District of Tennessee deniedclass certification in a case involving breach of contract and a disputed element of mutual assent a/k/a meeting of the minds, in Hall v. Warner Music Group Corp., No. 22-CV-0047 (M.D. Tenn. Feb. 10, 2025). The ruling is significant as it shows that plaintiffs who file class action complaints alleging breach of contract cannot satisfy Rule 23’s commonality requirement where the issue of whether the parties agreed to a material term of contract requires individualized inquiry into the parties’ minds and whether they met.
Background
This case involving lack of mutual assent is one of the many since the famous case of Raffles v. Wichelhaus, 159 Eng.Rep 375 (1864), in which the defendant agreed to purchase cotton arriving in a ship named “Peerless” arriving while cotton prices were low, whereas the plaintiff seller had in mind a different ship by the same name arriving while cotton prices were high. (And where the English High Court found no binding contract).
In Hall, the plaintiffs, two musical artists, sued for breach of implied contract against a record label. The parties had entered into a written recording agreement providing for the payment of 8% royalties at a time before the invention of digital streaming and not expressly covering distribution through digital streaming. Hall, slip op. at 2. In 2005, when the label started streaming plaintiffs’ music digitally both domestically and internationally, it began to pay the plaintiffs at the higher rate appearing on their royalty statements of 50%. Id. at 3, 14. For foreign digital streaming, the 50% rate was applied after the deduction of a payment to the foreign distributor. Id. at 12-13. It was common in the industry and a consistent course of dealing of the defendant to apply royalty rates to digital streaming revenues received only after payment to the foreign distributor. Id. The plaintiffs accepted these digital streaming royalty payments for years without viewing the royalty statements or “attempting to identify the revenue base against which a royalty rate for foreign streaming was applied . . . until [one of the plaintiff’s] first discussion with one of his attorneys in this case.” Id. at 15.
The plaintiffs moved for class certification under Rule 23. The plaintiffs maintained that they met the commonality requirement because they and other artists with legacy contracts received royalty payments for foreign streaming sales with statements indicating an unqualified 50% royalty. Id. at 10-11. In contrast, the record label maintained that a claim for breach of implied contract requires the plaintiffs to prove that a valid and enforceable contract was formed between the label and “each class member, which will require an individualized inquiry into the knowledge, understanding, and intent of the artists, including whether the artist even looked at the royalty statements, whether the artists construed them to offer an implied amendment, what exactly the artist believed those implied terms to be, whether the artist had a good-faith belief about a possible rescission claim, whether the artist would have rescinded unless paid at the source, whether the artist intended to forbear, and when (if ever) these events occurred.” Id. at 11 (emphasis in original). In other words, according to the record label, the common question, “was an implied contract formed?” could not be answered by a simple yes or no without such an individualized inquiry. Id.
The Court’s Decision
The Court agreed with defendants and held that plaintiffs did not carry their burden of showing commonality.
Central to Court’s holding was the “problematic question of mutual assent.” Id. at 18. As the Court explained, “even if the court presumes that other putative class members’ royalty statements look like the plaintiffs’ and that there are common questions regarding the defendants’ conduct that may yield common answers (i.e., that the royalty statements do not expressly reflect that the royalties are calculated based [after paying the foreign distributor]), it is clear that the threshold question of whether an implied contract between [the label] and each putative class member was formed does not yield a common answer but, instead, will depend entirely on the particularized circumstances of each artist whose contract, like the plaintiffs’, does not expressly provide for royalties on foreign digital streaming.” Id.
In short, the Court reasoned that “the named plaintiffs’ particularized circumstances show that they simply never thought about whether an implied contract had been formed or its terms until approached by lawyers. Other artists may have paid closer attention to their business arrangements.” Id.
In conclusion, the Court noted that, “to the extent there are questions of fact or law common to the plaintiffs and all putative class members, the relative importance of these common questions pales in comparison to the importance of those that do not yield a common answer — primarily the question of whether implied contracts were formed at all.” Id. at 23.
Implications For Companies
The Hall decison is a win for defendants of breach of contract class actions involving the issue of whether the parties had a meeting of the minds on a material term of contract. In such cases, the Hall decision can be cited as useful precedent for showing that the commonality requirement is not met because individualized inquiries predominate when it comes to analyzing evidence regarding a meeting of the minds.
The Court’s reasoning in Hall applies not only in cases involving: (1) commercial form contracts, like in Hall, but also (2) alleged employment contracts, see Cutler v. Wal-Mart Stores, Inc., 927 A.2d 1 (Md. Ct. App. 2007) (affirming denial of motion for class certification, stating, “Any determination concerning a ‘meeting of the minds’ necessarily requires an individual inquiry into what each class member, as well as the [employer’s] employee who allegedly made the offer, said and did”); In re Wal-Mart Wage & Hour Emp. Pracs. Litig., 2008 WL 3179315, at *19 (D. Nev. June 20, 2008) (denying motion for class certification, stating, “Plaintiffs’ breach of contract claims would involve particularized inquiry into contract formation, including such issues as meeting of the minds”); (3) form real estate contracts, see Haines v. Fid. Nat’l Title of Fla., Inc., 2022 WL 1095961, at *17 (M.D. Fla. Feb. 17, 2022) (denying motion for class certification, stating, “If a buyer and seller interpreted [the agreement] the way [seller] interprets the provision, their meeting of the minds would have a significant impact upon any potential liability for [seller]. In that regard, the buyer’s and seller’s state of mind for each transaction are relevant . . . individualized discovery and factfinding regarding each buyer’s and seller’s intent and understanding would be required”); and (4) alleged contracts regarding the use of AI, see Lokken v. UnitedHealth Group, Inc., 2025 WL 491148, at *8 (D. Minn. Feb. 13, 2025) (finding insureds’ claim against health insurer for breach of contract regarding insurer’s use of AI-based automated decision making technologies not preempted by the Medicare Act and therefore allowed to proceed to discovery, raising the question of whether parties’ minds met via the insurer’s explicit descriptions of its “claim decisions as being made by ‘clinical services staff’ and ‘physicians,’ without mention of any artificial intelligence”).
Duane Morris Takeaway:This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley, special counsel Justin Donoho, and associate Ryan Garippo with their discussion of the key trends analyzed in the 2025 edition of the Duane Morris Data Breach Class Action Review, including the contributing factors in the exponential growth of data breach class action filings, the sophistication of the plaintiffs’ bar litigation theories, and the chart-topping settlements in this area.
Bookmark or download the Data Breach Class Action Review e-book here, which is fully searchable and accessible from any device.
Jerry Maatman: Welcome all our loyal listeners and blog readers. Thank you for being here on our weekly podcast, the Class Action Weekly Wire. I’m, Jerry Maatman of Duane Morris, and joining me today are my colleagues, Jen, Justin, and Ryan. Thanks so much for being on this particular podcast.
Jennifer Riley: Thank you, Jerry. Happy to be part of the podcast today.
Justin Donoho: Thanks, Jerry. Glad to be here.
Ryan Garippo: Thanks for having me, Jerry.
Jerry: Today in the podcast we’re discussing the publication of this year’s Duane Morris Data Breach Class Action Review and desk reference designed for our clients to give them the latest, greatest information on the cutting-edge issues in the world of data breach class action. Listeners can find the e-book publication on our blog, the Duane Morris Class Action Defense blog. Jen, can you share with our listeners a bit about this desk reference and publication?
Jennifer: Absolutely, Jerry. The volume of data breach class actions exploded in 2024. Data breach has emerged as one of the fastest growing areas of class action litigation. The Review contains an overview of these filing numbers as well as settlements as well as some of the key decisions in this area. So, in sum, courts continue to reach inconsistent outcomes on issues such as standing and uninjured class members, those issues that are uniquely challenging in the data breach space. The Review has dozens of contributors, and it reflects really the collective experience and expertise of our class action defense group.
Jerry: I think it used to be, people thought whenever there was a drop in the stock following a company announcement, as sure as the sun rises in the east and sets in the west every day, there’d be a securities fraud class action lawsuit being filed. That seems to be the case now, when there’s a data breach incident, a data breach class action follows in its wake. Justin, can you shed some light on why this particular cause of action in this particular space has been growing incrementally over the last 36 months?
Justin: Absolutely. I mean, the frequency of the data breaches have been increasing, which is a huge part, and of course, with that comes heightened attention from both consumers and the plaintiffs’ bar. High profile cases, such as that multidistrict litigation arising from the Marriott International breach that affected over 133 million people, for example. There’s the MOVEIt MDL, which is another big one that got going last year. These have all put companies on notice that failure to secure personal data can lead to costly litigation. Cost lawsuits are not just about the breach itself, it’s also about the aftermath. So, consumers are now more aware of the risks and more inclined to seek legal recourse when their data is compromised.
Jerry: I think this is a great area where the notion that the law is trailing behind technology and can’t keep up with it – may well explain some of the developments in this particular space from a cybersecurity perspective. How do you think the increasing frequency of these sorts of events, and the sophistication of cyber criminals, is playing out in the class action space?
Ryan: Well, the rise in cyberattacks is definitely a huge factor. We’re seeing more sophisticated tactics from cybercriminals. Ransomware is at least one prime example – hackers demand payments in exchange for not publishing or further exploiting stolen data. The issue is that paying the ransom doesn’t necessarily guarantee the safe return or the deletion of the data, which makes these incidents devastating for companies. Additionally, I think we’ve seen as there’s been a shift to remote work and cloud-based infrastructure, that more vulnerabilities are exposed which ultimately increases the frequency of breaches. As a result, I think we’re seeing more lawsuits following these incidents and plaintiffs’ attorneys are more eager to capitalize on the growing number of affected individuals.
Jerry: In the last two weeks, the U.S. Supreme Court has accepted a case for review on the issue of uninjured class members, and whether or not their presence is something that can be used by a defendant to stop class certification. And one of the things we’ve seen in the last few years in the data breach area is the lack of injury or no injury-in-fact, as the Supreme Court has articulated that in TransUnion v. Ramirez. Jen, what do you see in terms of what plaintiffs are doing to try and come up with theories, at least from a financial damage or injury standpoint, that companies are now facing in what I would call data breach litigation 2.0?
Jennifer: Well, Jerry, I think several factors are really contributing to the rise of the popularity of these lawsuits. First, I think the sheer volume of people affected by these breaches has ballooned. Especially with breaches impacting millions of consumers or employees. As the size of these cases increases, I think it naturally leads to higher settlement amounts which in turn are attracting more plaintiffs’ lawyers to this area. Additionally, I think the type of data being compromised is becoming more sensitive – financial and healthcare information, for example – are leading to additional claims and higher potential damages and are leading plaintiffs’ attorneys to become more creative in looking for ways to monetize, capitalize on these breaches in terms of converting them into settlement dollars.
Justin: Yes, absolutely. And some courts are also becoming more sympathetic to plaintiffs in these cases, and to the potential long-term consequences of data breaches to plaintiffs, even where immediate harm is not apparent. So, it’ll be interesting to see where that Supreme Court case plays out. And let’s not forget about the legal fees and the expert fees also contributing to some of these large settlement dollars. As these cases become more complex with issues like class certification and determining damages, and the reasonableness of the cybersecurity, the costs involved in litigating these lawsuits are skyrocketing.
Jerry: You mentioned class certification – certainly the plaintiffs’ bar their theory is file the case, certify the case, then monetize the case, and the statistical study within the desk reference talks about the rise in class certification to 40%. Still a low number, but significantly up from 16% in calendar year 2023. What do you attribute to the trend that’s showing an upward number and a more of a chance for the plaintiffs’ bar to certify their data breach class actions?
Ryan: Well, like we mentioned before, I think it’s reflective of the fact that plaintiffs’ counsel has gotten more sophisticated in this space, and courts are getting more sympathetic to the plaintiffs at issue. But that said, class certification is still a major hurdle in any class action. And it’s particularly challenging in data breach cases. The increased success rate for class certification in the data breach space is 40% in 2024, reflecting that evolving legal precedent. Courts are now more inclined to accept the argument that consumers have suffered harm, even if their data hasn’t been directly misused, and that the mere recognition of an indirect harm, such as the increased risk of identity, theft, or emotional dispute or emotional distress, is enough to allow plaintiffs to get into court and overcome this clear obstacle.
Jerry: Jen, what were some of the major data breach litigation markers in the federal courts this year, by your way of thinking?
Jennifer: Well, Jerry, great question. We discuss in the Review some of the largest ones. Certainly, one of the prime examples is the ongoing MOVEIt Customer Data Breach Litigation. That litigation that began back in 2023 continued throughout 2024, and is ongoing. In that one, the Judicial Panel on Multidistrict Litigation consolidated more than 200 class action lawsuits. Those lawsuits resulted from a Russian cybergang hacking the file transfer software MOVEIt. The Judicial Panel on Multidistrict Litigation transferred those proceedings after consolidating them to the U.S. District Court for the District of Massachusetts. The plaintiffs in that case, as I mentioned, alleged that this vulnerability in the Massachusetts-based company MOVEIt, a transfer file software, was exploited. That data breach is considered to be the largest hack of 2023. According to the Panel’s initial transfer order, it exposed personally identifiable information of more than 55 million people. So, as I mentioned, that proceeding is ongoing. In July 2024, the Transferee Court issued an order adopting a modified bellwether structure in which it ordered the plaintiffs to file up to six consolidated amended complaints, and it ordered the parties to meet confer on the defendants to be named in each of those. The plaintiffs are going to file their motions for class certification, according to the schedule at least, in the summer of 2025. So, lots to be done in those cases yet.
Jerry: Well, it seems to me that data breach litigation, especially in the class action arena, is a problem or a fear that keeps corporate counsel up at night, and some of the top settlements in this space in 2024 maybe fuel that fear. What were some of the key and highest class action settlements in the data breach case, despite the fact that certification hovered around 40%?
The largest data breach class action settlement in 2024 was $350 million in In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal. Sept. 30, 2024), in which the court granted final settlement approval in a class action alleging that a software glitch led to a data breach in which Google+ users’ personal data was exposed for three years.
Justin: Yes, Jerry. Plaintiffs did very well in securing high dollar settlements last year, with the top 10 settlements totaling $593.2 million dollars. This was a significant increase over 2023 when the top 10 totaled $515 million – so they keep going up, too.
Jerry: Well, my prognostication is the 2025 numbers are going to go up and even exceed those chart-toppers in the next 12 months. In terms of final parting thoughts for our loyal listeners, what are some of the takeaways and key points that our listeners and readers should keep in mind for data breach issues in 2025?
Ryan: Invest in strong cybersecurity measures – it’s essential to stay out of the game in this space and constantly involve your cybersecurity infrastructure against these emerging threats. But beyond that, companies should also have a well-designated incident response plan in place and make sure that it’s regularly tested. This helps ensure not only quicker recovery, but also a stronger defense in court if a breach ever occurs. This legal landscape is evolving, and data breaches are no longer niche; they’re becoming an expected part of the litigation landscape, and so, having a proactive and comprehensive approach can help mitigate the immediate and long-term costs, and help keep you out of those $500 million numbers that Jerry and Justin mentioned before.
Jerry: Well, thanks, Jen, Justin, and Ryan, for your thought leadership and your analysis of this particular area. Loyal listeners, please stop by our blog and website to download for free our e-book, Data Breach Class Action Review – 2025. Thanks so much everyone for lending your expertise today on our Class Action Weekly Wire podcast.
Ryan: Thanks, Jerry.
Justin: Thanks for having me and thank you, listeners.
Jennifer: Thanks so much, everyone. See you next week.
By Eden E. Anderson, Rebecca S. Bjork, Jennifer A. Riley, and Gerald L. Maatman, Jr.
The Federal Arbitration Act (FAA) turns 100 years old today.
In enacting the FAA on February 12, 1925, Congress eliminated the power of the states to require that claims be resolved in court when contracting parties instead agree to resolve their claims in arbitration. The FAA’s purpose was to reverse longstanding judicial hostility to arbitration agreements, and to place arbitration agreements on equal footing with other contracts under the law.
As we celebrate the FAA’s 100th birthday, we highlight three key areas in which the FAA’s scope and application have come under scrutiny in recent years.
The Scope Of The Transportation Worker Exemption Remains Unclear
The FAA does not apply to employment contracts of seamen, railroad employees, and workers engaged in foreign or interstate commerce. The scope of this so-called transportation worker exemption has been a hotbed for litigation in recent years, with the U.S. Supreme Court addressing the issue in multiple decisions. The high court’s decisions in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), Domino’s Pizza, LLC v. Carmona, et al., 143 S. Ct. 361 (2022), and Bissonnette v. LePage Bakeries Park St., LLC, 61 U.S. 246 (2024), emphasized that the transportation worker exemption is to be narrowly construed and that, for the exemption to apply, a worker must play a direct and necessary role in the free flow of goods across borders.
In the wake of these decisions, state and federal courts are now grappling with what that means and whether warehouse workers, last-mile delivery drivers, ride-hailing drivers, and fueling technicians meet the “direct and necessary role” test. While such classes of workers bear little resemblance to the seamen and railroad employees expressly excluded from the FAA’s scope, in jurisdictions hostile to arbitration, including California courts and the Ninth Circuit, the transportation worker exemption has been found to apply. It is therefore important for employers to include language in arbitration agreements that permits alternative enforcement of the agreement under state law if the FAA is found not to apply.
Does EFASHA Exempt Entire Cases From Arbitration?
On March 3, 2022, President Biden signed into law the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASHA). Under the EFASHA, an employee alleging sexual harassment or assault, whether individually or as a class representative, may pursue their claims in court rather than in arbitration, regardless of whether they agreed with their employer to arbitrate their claims.
But what happens when a plaintiff alleges such claims, but also alleges claims that permissibly can be arbitrated? Courts too have begun answering that question. Some courts have concluded that the EFASHA’s statutory language requires that the employee’s entire case remain in court, reasoning that the EFASHA makes a pre-dispute arbitration agreement invalid and unenforceable “with respect to a case” which means the entire case. (9 U.S.C. § 402(a) (emphasis added).) The court so concluded in Johnson v. Everyrealm, Inc., 657 F. Supp. 3d 535 (S.D.N.Y. 2023), in denying the employer’s motion to compel the plaintiff’s sex harassment, race discrimination, and retaliation claims to arbitration.
The outcome, however, differed in Mera v. SA Hosp. Grp., LLC, 675 F. Supp. 3d 442 (S.D.N.Y. 2023), wherein the plaintiff alleged claims that he experienced a hostile work environment on account of his sexual orientation and that he and other employees suffered state and federal wage and hour infractions. The court there determined that, because the wage and hour claims did not “relate to” the hostile work environment claim, the wage and hour claims could be compelled to arbitration. Id. at 447.
If a plaintiff can allege a plausible claim that triggers the EFASHA’s application, they may be successful in keeping all their claims in court, or possibly only some of them.
We anticipate continued litigation in this area, and an uptick in the assertion of tenuous sex-based harassment claims that might not otherwise have been plead.
Appellate Issues Raised By Recent Case And Legislative Developments
What happens to the trial court proceedings after a decision on a motion to compel arbitration has also been a hotly litigated issue.
In Smith v. Spizzirri, 601 U.S. 472 (2024), the U.S. Supreme Court held that, when a federal court finds that a dispute is subject to arbitration and a party has requested a stay of the court proceeding pending arbitration, the FAA compels the court to stay, and to not dismiss, the proceeding. Consequently, if a plaintiff’s claims are compelled to arbitration and the district court proceedings stayed, there will be no judgment with an associated right to appeal. Thus, the plaintiff’s only recourse—if they dispute the arbitration ruling—will be to seek permission to pursue an interlocutory appeal or to pursue an appeal of the forum issue long after the fact if and when they lose in arbitration.
Another stay issue that will surely be litigated concerns a 2024 amendment to California’s Code of Civil Procedure. In California, if a motion to compel arbitration is denied and that decision is appealed, there is now no longer an automatic stay of the court proceedings during the pendency of an appeal. As a result, plaintiffs can seemingly proceed with their claims in court while the employer seeks a reversal of the forum issue on appeal, unless the appellant seeks and obtains a stay from the trial court. As this law on its face disfavors arbitrate, we anticipate it will be challenged.
For a more comprehensive summary of FAA-related litigation issues, Duane Morris’s 2025 Wage & Hour Class and Collective Action Review, available here, features an entire Chapter on this topic.
By Rebecca S. Bjork, Gerald L. Maatman, Jr., and Anna Sheridan
Duane Morris Takeaways: A Federal Judge in Kansas recently refused a request for reconsideration of summary judgment and a request for interlocutory appeal on the correct legal standard for hostile work environment claims post-Muldrow v. City of St. Louis, Mo. In EEOC v. Chipotle Services, LLC, Case No. 23-CV-2439 (D. Kan. Feb. 10, 2025) (linked here), Judge Kathryn H. Vratil of the U.S. District Court for the District of Kansas found that appellate review of the Muldrow standard used at summary judgment likely would not affect the case substantially, but rather lead to delay before the case would proceed in the same manner regardless of a decision by the Tenth Circuit. The opinion also rejected the employer’s motion for reconsideration to rehash arguments it should have made on summary judgment – in the Court’s view, an inappropriate use of a motion for reconsideration. This decision not only highlights the importance of timely arguments made at the appropriate stage of litigation, but also counsels employers to analyze and balance the potential outcomes of motions with the time and costs associated with non-dispositive or only partially dispositive motions.
Case Background
Areej Saifan, a Muslim woman, and former Chipotle crew member, alleged in a Charge of Discrimination that she experienced religious harassment from a co-worker during her employment. Saifan alleges that a co-worker repeatedly asked to see Saifan’s hair, which was covered by hijab, and on at least one occasion, the co-worker physically pulled on the hijab, partially uncovering Saifan’s hair. Saifan resigned the next day. After investigating the Charge, the EEOC filed suit on behalf of Ms. Saifan against Chipotle alleging that Chipotle (1) subjected Saifan to unlawful religious harassment, (2) constructively discharged her, and (3) retaliated against her for reporting religious harassment.
Chipotle filed a motion for summary judgment on all three of the EEOC’s Title VII claims but was unsuccessful on all counts.
On December 17, 2024, defendant filed two motions, asking the Court to (1) reconsider its order on defendant’s summary judgment motion, and (2) certify an interlocutory appeal.
The Court’s Ruling
Judge Vratil dismissed defendant’s motion for reconsideration as “simply a rehash of arguments that it made or could have made on summary judgment.” Slip Op. at 5. The Court rejected each of Defendant’s positions as an argument that “it [Defendant] could have raised in summary judgment briefing and chose not to.” Id. at 8. The Court found that Chipotle had not met its burden of showing an intervening change in the controlling law, availability of new evidence, or the need to correct clear error or prevent manifest injustice as is required by the local Kansas rules.
Judicial economy also took center stage in this ruling when the Court denied the motion to certify its Memorandum and Order for immediate appeal, finding that an interlocutory appeal would not materially advance the ultimate termination of the litigation. While the question of whether Muldrow changed the legal standard for hostile work environment is a controlling question of law, the Court determined that Chipotle failed to establish that the Tenth Circuit would likely dispose or affect the EEOC’s claims for trial. As such, an interlocutory appeal would only delay, rather than expedite or eliminate trial.
Implications For Employers
Employers often may want to fight a non-dispositive decision that feels unfair. However, this decision counsels employers to consider the implications of motions practice before proceeding if the requested outcome would not materially change the future of the case.
Duane Morris Takeaway:This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman, Jennifer Riley, and Greg Tsonis with their discussion of the key trends analyzed in the third edition of the Duane Morris Wage & Hour Class And Collective Action Review, including courts’ interpretation of the conditional certification process, a circuit-by-circuit scorecard, and best practices for employers in 2025.
Bookmark or download the Wage & Hour Class And Collective Action Review e-book here, which is fully searchable and accessible from any device.
Jerry Maatman: Welcome back, podcast listeners, to our first session of the Class Action Weekly Wire for calendar year 2025. Thank you for being here. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are my partners, Jen Riley and Greg Tsonis. Welcome back.
Jennifer Riley: Thank you, Jerry, happy to be on the first week of Weekly Wire podcast of 2025.
Greg Tsonis: Thanks, Jerry. Glad to be here.
Jerry: Today on our podcast we’re going to be discussing the most recent publication of the Duane Morris Class Action Defense group regarding the 2025 Wage & Hour Class And Collective Action Review. Listeners can find the e-book version of this publication on our blog, the Duane Morris Class Action Defense Blog. Jen, can you share with our listeners some of the ins and outs of this executive summary and e-book?
Jennifer: Absolutely, Jerry. In the Duane Morris Wage & Hour Class and Collective Action Review, we provide an overview of the trends, the key decisions, and the key settlements impacting the wage and hour space over the past year. The purpose of the Review is really multifaceted. First, we hope that it will demystify some of the complexities of class and collective action litigation in the wage and hour space. Second, we really hope the book will keep corporate counsel updated on the ever-evolving landscape of Rule 23 and FLSA collective actions and enable them to really make informed decisions in dealing with these complex litigation risks.
Jerry: Well, I know that wage and hour litigation is one of the hallmarks of our practice with our team collectively having over 225 years of experience in defending these sorts of cases. The review was edited by the three of us on this podcast and we have dozens of additional contributors that analyzed all of the wage and hour class and collective action certification rulings and settlements over the past 12 months. Greg, from your standpoint in terms of dealing with general counsel, what do you think are some of the benefits of this resource?
Greg: Great question, Jerry. So, wage and hour litigation has long been a focus of the plaintiffs’ class action bar. Part of our purpose in putting this together is really to assist our clients by helping them identify developing trends in the case law and offering practical approaches and dealing with these types of cases and class and collective action litigation.
Jerry: As you had mentioned – in 2024, this was a very active space for the plaintiffs’ class action bar, and I think one of the things that clients have remarked to me about is the statistical analysis contained in the Review in terms of looking at circuits’ success rates for both the plaintiff side and the defense side. I know in calendar year 2024, there were approximately 160 motions that were decided and actually plaintiffs had a high degree of success at close to 80%. Jen, what’s your take on why the plaintiffs’ bar is able to certify in essence 4 out of 5 cases?
Of the 157 total motions for conditional certification filed in federal courts in 2024, the plaintiffs won conditional certification 125 times, or at a success rate of 80%, while 32 motions were denied.
Jennifer: Great question, Jerry. So, the threshold for conditional certification tends to be very low. In many cases, plaintiffs are submitting declarations – sometimes only one or two declarations, sometimes with payroll or time records – and courts are routinely accepting this minimal showing. It’s really not about proving the case, at this stage just about showing there’s a plausible basis for contending that the same allegations apply across a defined group. So, given that the plaintiffs’ bar knows this process so well, it’s really no surprise that they are continuing to have a high rate of success here.
Greg: Exactly, and plaintiffs are often able to leverage the conditional certification process and the subsequent notice that issues to bring in more employees to build their case. The fact that it’s relatively easy to get certified gives them a significant advantage right from the start.
Jerry: At least in all circuits except two, both the Fifth and Ninth Circuits, there’s a standard two-part test. A first stage called the lenient stage of conditional certification, and then a second stage called decertification. What occurred in 2024 in terms of how decertification motions came down, especially with respect to the changes or flux in the case law based on what’s coming out of the Fifth and Sixth Circuits?
Greg: That’s right, Jerry. So, after conditional certification, there’s a decertification phase where the court looks closer at the actual claims, the actual evidence that the plaintiffs have been able to marshal, and determine whether those employees are actually similarly situated. Now, historically, federal courts were almost universally following a two-stage process, but as of 2021, the Fifth Circuit threw a wrench in that with its decision in Swales v. KLLM Transport Services. There, the Fifth Circuit essentially abandoned the two-stage process and instituted a more rigorous approach where they required plaintiffs to present stronger evidence upfront. The Sixth Circuit followed suit in a case in 2023, but took a different approach by imposing even stricter standards.
Jerry: It’s very interesting to me that a piece of New Deal legislation passed in 1938, even close to 100 years later, has three different standards – a virtual patchwork quilt of case law depending on where an employer is sued, and what particular circuit’s law is applicable to the certification motion. What’s that like, Jen, in terms of what employers face in trying to defend themselves in these sorts of cases?
Jennifer: Absolutely, Jerry. In a word, it’s creating inconsistency. And that inconsistency could be problematic because it makes predicting outcomes more difficult. And with these now 3 distinct standards, there is a growing chance that the Supreme Court eventually will step in to provide some clarity here.
Jerry: I think it also has something to do with case architecture and venue selection. In 2023, we saw two dozen rulings in the Sixth Circuit. Yet last year, only a dozen, basically a 50% drop in the number of cases filed and then went to certification there. What do you think are the long-term implications in terms of FLSA litigation and venue selection?
Given the Sixth Circuit’s abandonment of the traditional two-step certification process, we expected a material decrease in FLSA cases filed in that in 2024. Indeed, there were only 12 rulings on certification and decertification motions in 2024 in the Sixth Circuit, down from 22 total rulings in 2023. In 2024, the Second Circuit issued the most certification rulings (27 granted; 6 denied), followed by the Fourth Circuit (20 granted; 1 denied); and the Ninth Circuit (13 granted; 7 denied).
Jennifer: Well, Jerry, it’s hard to say for sure. On the one hand, the stricter certification process could deter some plaintiffs from filing in the Sixth Circuit. That certainly seems to have been the case over the past year. On the other hand, employers could face a tougher time getting cases decertified after they’ve been conditionally certified which could lead to larger settlements, or more cases being litigated in other jurisdictions. So, we may see a shift in how and where the cases are filed going forward.
Jerry: Well, certainly anyone who is awake and watching TV on January 20th saw that change is inevitable, and change is now upon us, at least at the governmental sector. Greg, what do you think 2025 bodes for employers in terms of the types of things that the private plaintiffs’ bar will do, especially in the context of FLSA class and collective action litigation?
Greg: The overall trend is clear, Jerry. Employers should be aware that wage and hour litigation isn’t going away anytime soon. Given the plaintiffs’ bar’s ongoing success in these types of cases, and the ease with which they’re able to secure conditional certification, employers really need to be proactive. That means making sure that their pay practices are fully compliant, making sure that they’re reviewing employee classifications, and being ready to respond quickly to potential lawsuits. If they don’t, they might face costly litigation even in those jurisdictions where the plaintiffs’ bar is seeing more pushback.
Jennifer: And to add to that, employers also should be mindful of jurisdictions that are considered plaintiff-friendly, such as the Second Circuit, Fourth Circuit, Ninth Circuit. These are areas where a lot of FLSA litigation is concentrated and they tend to have even higher success rates for the plaintiffs.
Jerry: Success is all about filing the lawsuit, certifying it, and monetizing it. The Review spends a lot of pages delving into key settlements in the wage and hour space – what were the results in 2024 and what does it tell us for 2025?
Greg: Well, Jerry, plaintiffs did very well in securing high-dollar settlements in 2024 in this space, although not quite as well as they did in 2023. In 2024, the top 10 wage and hour settlements totaled just shy of $615 million. That was a decrease from 2023, when the top 10 wage and hour settlements totaled $742.5 million, but relatively in line with recent years.
The top 10 wage & hour class and collective action settlements totaled $614.55 million in 2024, down from $742.5 million in 2023, and up from $574.55 million in 2022.
Jerry: Well, my prognostications are the numbers in 2025 are going to go through the roof, and I think we’re apt to see even higher numbers than we’ve seen ever before. But obviously the jury’s still out on that. Well, thank you, Jen, and thank you, Greg, for your thought leadership and analysis in this area, and thank you to our loyal blog readers for tuning in to our first podcast of 2025. Please order your free copy of the Duane Morris Wage & Hour Class And Collective Action Review e-book right off of our blog.
Greg: Thank you for having me, Jerry, and thank you, listeners.
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory Tsonis
Duane Morris Takeaways: Complex wage & hour litigation has long been a focus of the plaintiffs’ class action bar. The relatively low standard by which plaintiffs can achieve conditional certification under the Fair Labor Standards Act (FLSA), often paired with state law wage & hour class claims, offers a potent combination by which plaintiffs can pursue myriad employment claims. To that end, the class action team at Duane Morris is pleased to present the second edition of the Wage & Hour Class And Collective Action Review – 2025. This new publication analyzes the key wage & hour-related rulings and developments in 2024 and the significant legal decisions and trends impacting wage & hour class and collective action litigation for 2025. We hope that companies and employers will benefit from this resource and that it will assist them with their compliance with these evolving laws and standards.
Click here to download a copy of the Wage & Hour Class And Collective Action Review – 2025 eBook.
Stay tuned for more wage & hour class and collective action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.
By Gerald L. Maatman, Jr., Justin Donoho, and George J. Schaller
Duane Morris Takeaways: On January 24, 2025, in Petta v. Christie Bus. Holdings Co., P.C., 2025 IL 130337, the Illinois Supreme Court ruled that a plaintiff lacked standing under Illinois law to bring her class action complaint alleging that her social security number and insurance information may have been accessed in connection with a data incident where a medical provider discovered unauthorized access to one of its business email accounts. The ruling is significant because it shows that data breach claims cannot be brought in Illinois court without specifying actual injury that is fairly traceable to the breach.
Case Background
This case is one of the thousands of data breach class actions filed in the last three years. In Petta, Plaintiff brought suit against a medical provider. According to Plaintiff, she received a letter from the provider titled “Notice of Data Incident” explaining that an unknown third party gained unauthorized access to one of its business email accounts for about a month, in an attempt to intercept a business transaction between the provider and a third-party vendor. Id. ¶¶ 1, 6. The letter also stated that “the impacted account MAY have contained certain information related” to Plaintiff’s social security number and medical insurance information but “[t]he unauthorized actor did not have access to [the provider’s] electronic medical record” and there was no “evidence of identity theft or misuse of [Plaintiff’s] personal information.” Id. ¶ 6 (emphasis in letter).The letter concluded by offering Plaintiff 12 months of credit monitoring and identity protection services at no cost if she wished to enroll. Id., ¶ 7.
Plaintiff also alleged her “phone number, city, and state [were] used in connection with a loan application … in someone else’s name” and she received multiple calls regarding “loan applications she did not initiate.” Id., ¶ 9.
Based on these allegations, Plaintiff alleged claims for negligence and violation of Illinois’ Personal Information Protection Act.
The trial court dismissed the complaint for lack of a viable legal theory and a bar by the economic loss doctrine. The Illinois Appellate Court affirmed, but on the basis that the Plaintiff lacked standing to bring the action on behalf of herself and the putative class.
Plaintiff thereafter appealed to the Illinois Supreme Court.
The Illinois Supreme Court’s Opinion
The Illinois Supreme Court affirmed and ruled Plaintiff lacked standing and affirmed the dismissal of her complaint on that basis. Id., ¶ 25.
In Illinois, standing requires an injury in-fact. As a result, the Illinois Supreme Court reasoned that a plaintiff alleging only “a ‘purely speculative’ future injury” and “no ‘immediate danger of sustaining a direct injury’ lacks sufficient interest to have standing.” Id. ¶ 18 (quoting Chi. Teachers Union, Local 1 v. Bd. of Ed. of Chi., 189 Ill. 2d 200, 206-07 (2000)).
The Illinois Supreme Court affirmed Plaintiffs’ lack of standing, reasoning that she, and the putative class, faced “only an increased risk that their private personal data was accessed by an unauthorized third party” and that “an increased risk of harm is insufficient to confer standing” in a complaint seeking money damages. Id., ¶ 21. The Illinois Supreme Court opined nothing “in the letter suggest[ed] that it is likely the third party did, in fact, take the [private personal] data” and the provider’s investigation revealed that the unauthorized third party was “attempting to intercept a financial transaction, not steal patients’ private personal information.” Id, ¶ 20.
The Illinois Supreme Court also noted that Plaintiff’s unauthorized loan application related solely to Plaintiff and her complaint did not present any allegations that putative class members had a similar experience regarding a loan application. Id., ¶ 23. However, the Illinois Supreme Court declined to answer the question of whether standing must be shown at the outset for the entire putative class and instead focused “solely on [Plaintiff] individually,” finding that “Plaintiff’s allegation regarding the loan application is insufficient to confer standing.” Id.
In short, the Illinois Supreme Court concluded that the unsuccessful loan application allegations were not “fairly traceable” to any of the provider’s alleged misconduct and instead were “purely speculative” given there was “no apparent connection between the purported fraudulent loan attempt and the data breach at issue” as the phone number and city information used in the loan application was “readily available” to the public. Id., ¶ 25(citing 2023 IL App (5th) 220742, ¶ 23). Therefore, Plaintiff lacked standing to bring her claims.
Implications For Companies
The Illinois Supreme Court’s decision in Petta is a win for companies that suffered a data breach only possibly affecting customers, informed the customers of the breach, and offered to pay for their credit monitoring. Petta shows that to confer standing under Illinois law, more is required. Specifically, data breach plaintiffs need to identify actual injury fairly traceable to the breach.
Duane Morris Takeaway: Government enforcement litigation is similar in many respects to class action litigation. In lawsuits brought by the U.S. Equal Employment Opportunity Commission (EEOC), as well as the U.S. Department of Labor (DOL), government enforcement claims typically involve significant monetary exposure, numerous claimants, and complex procedures. These types of lawsuits most often pose reputational risks to companies.
Watch the video below to hear all about this trend with partner and DMCAR editor Jerry Maatman:
As the White House shifts from blue back to red, the incoming Trump Administration has promised less government oversight of business and less regulation, thereby signaling less government enforcement litigation. Change, therefore, is inevitable.
Although agencies like the EEOC will retain their democratic majorities until 2026, President Trump ran on a platform that runs counter to many of the “emerging issues” on the EEOC’s current priority list, signaling a future realignment if not an “about face” on the horizon. Consistent with the precedent established by the Biden Administration, President Trump will appoint new general counsel of the EEOC as well as the NLRB as the new administration settles into place, thus having an immediate influence on the enforcement trajectory of the agencies.
Historically, the EEOC and DOL are among the most aggressive federal agencies in terms of prosecuting government enforcement litigation. In the face of change and a reduction in such enforcement litigation, companies can expect the private plaintiffs’ bar “to fill the litigation void.”
Litigation And Settlement Trends
In FY 2024 (October 1, 2023, to September 30, 2024), the EEOC’s litigation enforcement activity showed a notable decrease in filings in a year of transition for America.
Although the total number of lawsuits filed by the EEOC decreased from 144 in 2023 to 110 in FY 2024, the EEOC’s targeted efforts involve a bevy of September filings concerning discrimination allegations against employers across myriad industries.
Each year, the EEOC’s fiscal year ends on September 30, and the final sprint for EEOC-initiated litigation in September 2024 aligned with prior “last-month” enforcement efforts.
This past year, 67 lawsuits were filed in September, equal to the 67 filed in September of FY 2023.
As with other fiscal years, the EEOC’s filing patterns remained consistent through June 2024, with a slight increase in July 2024, another slight increase in August 2024, and significant jump in September 2024.
Of the 110 total filings this year, more than half – 67 total – were filed in September. The following chart shows the EEOC’s filing pattern over FY 2024:
Comparing these fiscal filings in FY 2024 to previous years, a significant decrease exists from FY 2023 (144 lawsuits), which was an outlier in terms of EEOC litigation in the post-COVID era. The following graph shows the EEOC’s year-over-year fiscal year filings beginning in FY 2017 through FY 2024:
Lawsuit Filings Based On EEOC District Office
In addition to tracking the total number of filings, the litigation filing patterns of the EEOC’s 15 district offices are telling. Some districts tend to be more aggressive than others, and some focus on different case filing priorities. The following chart shows the number of lawsuit filings by EEOC district offices over the course of FY 2024.
In FY 2024, Philadelphia had the most filings with 14, followed by Atlanta, Chicago, and Indianapolis with 11 each, followed by Phoenix with 9 filings, Charlotte, Houston, and New York with 7 each, and Birmingham, Miami, and San Francisco with 6 filings each. Dallas, Memphis, and St. Louis had 5 filings. Notably, Los Angeles had no filings.
While filings across the board were down, the most noticeable trend of FY 2024 was the filing jump in Atlanta (11 lawsuits), compared to FY 2023 where Atlanta had 9 fillings.
In contrast, Philadelphia had a significant decrease in filings (14 lawsuits), compared to FY 2023 where Philadelphia amassed 19 filings.
Like FY 2023, Chicago and Indianapolis remained steady near the top of the list again with 11 filings each, down from the 13 filings both districts launched in FY 2023.
On the opposite end of the spectrum, New York filings (7 lawsuits) fell slightly compared to its 10 filings in FY 2023, and Los Angeles (0 lawsuits) significantly fell compared to its 10 filings in FY 2023.
Although filing trends were down for all Districts, the 110 total filings demonstrate the EEOC maintained its litigation strength, both at the national and regional level.
Lawsuit Filings Based On Type Of Discrimination
In terms of the statutes and theories of discrimination alleged by the EEOC over the past year, several trends emerged, so as to determine how the EEOC is shifting its strategic priorities.
When considered on a percentage basis, the distribution of cases filed by statute remained roughly consistent in comparing FY 2024 and FY 2023. As can be seen from the graph, Title VII cases once again made up the majority of cases filed, as they constituted 61% of all filings in FY 2024 (significantly down from 68% of all filings FY 2023, down from the 69% filings in FY 2022, and equal to 61% in FY 2021).
Overall, ADA cases also made up a significant percentage of the EEOC’s FY 2024 filings – totaling 41%. This is an overall increase in previous years where ADA filings amounted to 34% in FY 2023, 29.7% in FY 2022, and just below the 37% in FY 2021.
There was also a downward trend in ADEA filings, as 7 ADEA cases were filed in FY 2024, after 12 age discrimination cases were filed in FY 2023 and 7 age discrimination cases filed in FY 2022. However, unlike FY 2023, this past year the EEOC filed four Pregnant Worker’s Fairness Act cases (PWFA) after the PWFA went into effect on June 27, 2023.
These graphs show the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, Age Discrimination in Employment Act, Pregnant Worker’s Fairness Act, and Genetic Information Nondiscrimination Act) and, the graph above shows the basis of discriminatory allegations.
Lawsuits Filings Based On Industry
In monitoring the EEOC’s filings by industry, FY 2024 mirrored EEOC-initiated lawsuits in the top three industries compared to FY 2023, thereby demonstrating the Commission’s focus on a few major industries.
Three industries were the primary targets of lawsuit filings in FY 2024, including Hospitality (Restaurants / Hotels / Entertainment) with 23 filings, Healthcare with 22 filings, and Retail with 21 filings.
The next set of industries did not amount to double-digit filings, but are still well within the EEOC’s sights, including Manufacturing with 11 filings; Logistics with 7 filings; Construction with 4 filings; and Property Management with 3 filings.
This aligns with FY 2023, where Hospitality (primarily Restaurants) was the industry at large with 28 filings. In second and third place were Retail and Healthcare, respectively, with 24 filings. Absent from FY 2024’s industry-based filings, however, were Automotive, Security, and Technology.
Systemic Lawsuits
The EEOC exhibited a renewed focus on systemic discrimination lawsuits this past year. “Systemic” discrimination, according to the EEOC, involves an alleged “pattern or practice, policy and/or class … where the discrimination has broad impact on an industry, profession, company, or geographic location.” These sorts of lawsuits are the most challenging and serious type of government enforcement litigation that companies face.
The EEOC filed 13 systemic lawsuits in FY 2024. By comparison, it brought 25 systemic lawsuits in FY 2023, nearly double the number it filed in each of the prior four years.
The 25 systemic lawsuits filed by the EEOC in FY 2023 likewise constituted the largest number of systemic filings in the past five years.
The graphic shows this year-over-year filing trend:
While these numbers continue to climb, they do not yet reflect the activity that employers observed prior to FY 2018. By the end of FY 2018, the EEOC had 71 systemic cases on its active docket, two of which included over 1,000 victims, and systemic cases accounted for 23.5% of its active docket in that year.
Strategic Priorities
Every few years the EEOC prepares a Strategic Enforcement Plan to focus and coordinate the agency’s work and identify subject matter priorities. This past year, the EEOC released its Strategic Enforcement Plan for Fiscal Years 2024-2028.
In the 2024-2028 Strategic Enforcement Plan, the EEOC identified three guiding principles. First, the Commission states that to maximize the EEOC’s effectiveness, it will focus on those activities that have the greatest strategic impact, including systemic investigations, resolutions, and lawsuits. The EEOC thus “reaffirms its commitment to a nationwide, strategic, and coordinated systemic program as one of the EEOC’s top priorities.”
Second, the EEOC states that it will take an integrated approach at the agency that promotes collaboration, coordination, and information sharing throughout the agency. It explains that “[e]ffective systemic enforcement requires communication and collaboration between the EEOC’s legal and enforcement units, between headquarters and the field, and across EEOC districts.”
Third, the EEOC states that it will ensure that it achieves results “in accordance with the priorities set forth in the [Strategic Enforcement Plan].” This signals that the Commission will continue to emphasize and prioritize the use of systemic, pattern or practice lawsuits to accomplish its agenda.
As in years past, the Strategic Enforcement Plan also sets out the EEOC’s six substantive priorities.
#1 – Eliminating Barriers In Recruitment and Hiring – The EEOC will focus on recruiting and hiring practices that discriminate, including, among other things the use of technology, including artificial intelligence and machine learning, to target job advertisements or assist in hiring decisions; job advertisements that exclude or discourage certain protected groups from applying; and the use of screening tools or requirements that disproportionately impact workers on a protected basis, including those facilitated by artificial intelligence or other automated systems.
#2 – Protecting Vulnerable Workers – The EEOC will focus on harassment, retaliation, job segregation, discriminatory pay, disparate working conditions, among other things, that impact “particularly vulnerable workers,” which include immigrant and migrant workers; people with developmental or intellectual disabilities; individuals with arrest or conviction records; LGBTQI+ individuals; temporary workers; older workers; individuals employed in low wage jobs, including teenage workers; among others.
#3 – Addressing Selected Emerging And Developing Issues – The EEOC will continue to prioritize issues that may be emerging or developing, which includes qualification standards and inflexible policies or practices that discriminate against individuals with disabilities; protecting workers affected by pregnancy, childbirth, or related medical conditions; and addressing discrimination influenced by or arising as backlash in response to local, national, or global events.
#4 – Advancing Equal Pay Protections for All Workers – The EEOC will continue to focus on combatting pay discrimination in all forms. It notes that, because many workers do not know how their pay compares to their co-workers’ pay and, therefore, are less likely to discover and report pay discrimination, the EEOC will continue to use directed investigations and Commissioner Charges to facilitate enforcement.
#5 – Preserving Access to the Legal System – The EEOC will focus on policies and practices that discourage or prohibit individuals from exercising their rights or impede the EEOC’s enforcement efforts, including, among other things, overly broad waivers, releases, or non-disclosure agreements; and unlawful, unenforceable, or otherwise improper mandatory arbitration provisions.
#6 – Preventing and Remedying Systemic Harassment – The EEOC will continue to focus on combatting systemic harassment in all forms. It notes that, with respect to charges and litigation, 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.
Some – but certainly not all – of the EEOC’s lawsuits initiated over the past year fall into one or more of these six categories. The EEOC’s focus on systemic litigation underlies many of these enforcement priorities. Because the EEOC views systemic cases as having a particular strategic impact, insofar as they affect how the law influences a particular community, entity, or industry, companies should brace for the expansion of these cases.
What’s Next For The EEOC?
Now that the EEOC has a majority of Democratic-appointed Commissioners firmly in place, along with a significantly increased proposed budget, we expect that the Commission is posed for continued expansion of enforcement activity in 2024.
Moving into FY 2025, the EEOC’s budget includes a $33.221 million increase from 2024, and prioritizes five key areas, including advancing racial justice and combatting systemic discrimination on all protected bases, particularly with respect to vulnerable workers; advancing pay equity; addressing the use of artificial intelligence in employment decisions; providing information to assist employers that chose to undertake lawful approaches to fostering diversity, equity, inclusion, and accessibility (DEIA) in their workplaces; and preventing unlawful retaliation and harassment.
The EEOC also maintained its FY 2024 goals for its own Diversity, Equity, Inclusion, and Accessibility (DEIA) program where it seeks to achieve four goals, including workplace diversity, employee equity, inclusive practices, and accessibility. Additionally, the EEOC continues to emphasize and build upon its FY 2021 software initiatives addressing artificial intelligence (AI), machine learning, and other emerging technologies in continued efforts to provide guidance. The EEOC notably recognized that AI systems may offer new opportunities for employers but cautioned AI’s potential to facilitate discrimination. Finally, the joint anti-retaliation initiative among the EEOC, the DOL, and the National Labor Relations Board (NLRB) will continue to address retaliation in American workplaces.
But then came the election results of November of this past year.
Employers can expect that the EEOC will be in flux through 2025. The Trump Administration is apt to move to replace policymakers, decrease the Commission’s budget, and deemphasize government enforcement litigation.
In sum, it is expected the Trump Administration will pivot the focus of the EEOC to a more business-friendly posture. Budget cuts instead of increases may be the order of the day.
The U.S. Department of Labor’s Wage and Hour Division recovered approximately $202.6 million in back wages in FY 2024 and conducted 17,300 compliance actions. By comparison, the DOL secured $212.3 million in back wages in FY 2023 and concluded 20,215 compliance actions. These numbers align with the numbers we saw in FY 2022, in which the WHD recovered $213.2 million in back wages and concluded 20,422 compliance actions. The number of compliance actions, and the subsequent back wages recoveries in FY 2022-23 was measurably lower than in FY 2021 and FY 2020. In FY 2021, the WHD concluded 24,746 compliance actions and recovered $232.4 million in back wages and in 2020 it concluded 26,096 compliance actions and recovered $257.8 million in back wages.
The agency imposed civil money penalties to employers at a 10-year-high of $25.8 million for violations of federal labor laws in FY 2023. This was the highest number in a decade and was significantly higher than the penalties assessed in 2022 ($21.6 million), 2021 ($20.4 million), and 2020 ($17.9 million).
In FY 2024, civil money penalties exploded to $35.92 million (as specified at Civil Money Penalties Assessed) for violations of federal labor laws. Although FY 2023 was an outlier yielding the highest number for penalties assessed in a decade, FY 2024 exceed the penalties assessed by nearly an additional $10 million. This stark rise in assessed penalties for violations of federal labor laws can partially be attributed to the DOL’s Civil Penalties Inflation Adjustment Act Annual Adjustment for 2024 final rule that was published in January 11, 2024. FY 2024 and FY 2023 civil money penalties contrast with previous penalty assessments previously seen in 2022 ($21.6 million), 2021 ($20.4 million), and 2020 ($17.9 million).
Duane Morris Takeaway: PFAS class actions inspired some of the most attention-grabbing headlines this past year across the legal landscape. PFAS, or per- and polyfluoroalkyl substances, are a group of manmade chemicals that are resistant to oil, water, and heat. They are used in many consumer and industrial products and are commonly called “forever chemicals” because of their persistence, meaning they do not break down easily in the environment.
See the video below with Duane Morris partner and DMCAR editor Jerry Maatman to learn more about this trend:
PFAS generated the largest class action settlement in 2024, which came in at more than twice the next highest settlement, which also involved PFAS, and generated an attorneys’ fee award of nearly one billion dollars. These numbers are going to inspire a continued wave of PFAS class actions, as the plaintiffs’ class action bar targets more companies with claims that their products or packaging contained PFAS, and those companies, in turn, search for claims against their material suppliers.
Numbering in the thousands, PFAS are found in consumer, commercial, and industrial products, and due to their presence in so many products, it is challenging to assess the health impact of PFAS. In recent years, the U.S. Environmental Protection Agency (EPA) has issued a number of guidelines regarding PFAS in drinking water. Meanwhile, the EPA has undertaken efforts to understand how to remediate, manage, and dispose of PFAS present in drinking water supplies more efficiently.
In 2024, PFAS regulations from another six states went into effect and will continue in 2025, including Colorado, Maryland, Connecticut, Minnesota, Hawaii, and New York. The graphic outlines these regulations.
The discovery of PFAS in drinking water has spurred states attorneys general to bring lawsuits on behalf of their constituents seeking to impose liability relating to drinking water contamination on the PFAS manufacturers and asserting claims under various products liability and negligence laws.
In April 2024, the EPA finalized a rule setting the first-ever limits for PFAS in drinking water. The rule already is subject to multiple legal challenges. In October 2024, the White House Office of Science and Technology Policy said in a report that it will continue to look for new technologies to remove so-called forever chemicals from the environment and find safe alternatives for the substances.
Since 2018, more than 300 lawsuits have been filed over PFAS contamination, with many suits being consolidated in the South Carolina-based MDL focused on the chemicals in aqueous film-forming foam used in firefighting applications. On March 29, 2024, the court granted final settlement approval of $10.3 billion in In Re Aqueous Film-Forming Foams Product Liability Litigation, MDL 2873 (D.S.C. Mar. 29, 2024), to resolve claims for the damage allegedly incurred from using PFAS for decades in specialized fire suppressants, called aqueous film-forming foams, that were sprayed directly into the environment and reached drinking water.
These numbers are likely to inspire a continued wave of PFAS class actions, as the plaintiffs’ class action bar targets more companies with claims that their products or packaging contained PFAS, and those companies, in turn, search for claims against their material suppliers. In November 2024, for example, Mohawk, the world’s largest flooring manufacturer sued 3M Co., E.I. de Pont de Nemours and Co., The Chemours Co., and Daikin America alleging that these chemical manufacturers lied about the dangers of forever chemicals in their products. Mohawk alleges that it purchased oil-resistant carpet treatment products from the chemical manufacturers for decades without the manufacturers disclosing that the products contained PFAS and that the manufacturers wrongly concealed internal studies regarding the dangers of PFAS. Mohawk alleges that it has been named in a series of lawsuits, already has paid over $100 million to settle some of the claims, and seeks to pass the cost of those settlements onto the defendants.
While the plaintiffs’ bar has been filing lawsuits for over two decades over alleged health and environmental consequences associated with PFAS, as of late the types of plaintiffs and defendants, as well as the types of claims, have multiplied and evolved. Many recent PFAS plaintiffs have filed their class actions against consumer product manufacturers under consumer fraud statutes and other misrepresentation theories. Most of these PFAS class actions have not yet advanced to the class certification stage. Class certification theories remain a work in progress for plaintiffs, as most PFAS class actions to date have involved settlements and motions to dismiss.
In 2024, we saw numerous rulings on motions to dismiss, with the plausibility of plaintiffs’ claims often turning on the nature of defendants’ alleged misrepresentations, specificity and content of plaintiffs’ allegations regarding the nature of the testing they performed on the alleged products, temporal proximity of purchases to testing, and test results. Rulings in this area of the law have been numerous and mixed. Compare, e.g., Lowe, et al. v. Edgewell Personal Care Co., 2024 U.S. Dist. LEXIS 7238(N.D. Cal. Jan. 12, 2024) (dismissing PFAS class action because plaintiffs’ allegations regarding their independent testing for presence of PFAS in consumer product lacked specificity); Bounthon, et al. v. Procter & Gamble Co., 2024 WL 4495501, at *2-3, 7-10 (N.D. Cal. Oct. 15, 2024) (dismissing PFAS class action, finding the alleged reliability of plaintiffs’ total organic flourine analysis refuted by plaintiffs’ own allegations and finding implausible plaintiffs’ allegations that 30 parts per million of PFA are harmful); Onaka, et al. v. Shiseido Americas Corp., 2024 WL 1177976, at *3 (S.D.N.Y. Mar. 19, 2024) (dismissing PFAS class action because plaintiffs failed to allege their testing was near in time to their purchases); with Winans, et al. v. Ornua Foods Inc., 2024 WL 1741079, at *5 (E.D.N.Y. Apr. 23, 2024) (finding that whether FDA regulations exempting insignificant levels of incidental food additives from disclosure preempted consumer’s omission-based claims regarding PFAS was question of fact not amenable to motion to dismiss), Hicks, et al. v. L’Oreal U.S.A., Inc., 2024 WL 4252498, at *11 (S.D.N.Y. Sept. 19, 2024) (denying in part and granting in part motion to dismiss and finding plaintiffs’ alleged testing sufficient to “allow for the plausible inference at this stage that there was a pervasive PFAS presence in the Products”).
Given the settlement numbers to date, companies can expect PFAS to generate more filings in the coming year as plaintiffs seek a share of the PFAS treasure chest and their targets, in turn, seek to pass costs down the chain.
