Gerald L. Maatman, Jr. – Page 7 – Class Action Defense

October 11, 2023 by Gerald L. Maatman, Jr.

Report From London: What A Comparative Analysis Of International Class Action Litigation May Teach USA-Based Companies

By Gerald L. Maatman, Jr.

Duane Morris Takeaways: USA-based companies are experiencing a deluge of class action litigation. At the Thought Leaders Global Class Action Conference in London, Jerry Maatman of the Duane Morris Class Action Defense Group gave a keynote address on the state of U.S. class action litigation and how Asian, European, Australian, and African-based corporations should be “looking around the corner” to ready themselves for new class action theories spreading to their respective jurisdictions. Class and collective-based litigation is likewise growing at a precipitous rate in non-U.S. jurisdictions, and corporations operating in the global economy are subject to a patchwork quilt of procedural and substantive differences in how the plaintiffs’ class action bar is suing defendants and seeking large-scale recoveries.

The London Thought Leaders Global Class Action Conference – with a robust two day agenda and roster of speakers from Europe and Asia – examined diverse issues on cutting-edge class actions on a global basis. Subjects included the phenomenon of the “continuous evolution” of class action theories; the surge of crypto class actions claims; collective, opt-in and opt-out representative actions in England; the dawn of ESG class actions filed by NGO’s, consumers, workers, and advocacy groups; data privacy litigation on a class and collective action basis; and cross-border consumer fraud class action theories.

I had the privilege of speaking on how U.S. class action litigation impacts the global economy and litigation in non-U.S. jurisdictions. For a comparative law panel discussion, I presented along with Professor Miguel Sousa Ferro of the University of Lisbon Law School, and the Managing Partner of Milberg Sousa Ferro, a leading class action firm based in Portugal. We discussed – and debated – a comparison of the procedural differences between USA-style opt-out class action mechanisms and European Union-style opt-in / opt-out procedures. We used the recent opioid class action products liability class actions and European mass tort lawsuits as a case study to compare and contrasts the pros and cons of each judicial system and the array of mechanisms to protect consumers, injured parties, and corporate defendants.

Against that backdrop, Professor Ferro and I analyzed the future of global class actions, especially in light of the record-breaking class action settlement numbers in the USA in 2022 and 2023, which is fueling the explosive growth of class and collective litigation. We agreed that as to various substantive areas, privacy litigation is posed to remain “white hot” and grow over the next few years, as the pace of technology continues to underlie all aspects of the economy.

October 5, 2023 by Gerald L. Maatman, Jr.

Class Action Defense Blog – Next Week Live From London!

By Gerald L. Maatman, Jr.

Duane Morris Takeaway: On October 10-11, 2023, Jerry Maatman will blog live from London as he travels across the pond to present on global class action issues at the Thought Leaders 4 Dispute’s event called Group Litigation and Class Actions 2023 – The 3rd Annual Forum. This global event will feature thought leaders from a variety of legal backgrounds in Europe, Asia, Africa, and the Americas to discuss hot topics in the global class action world.

Jerry will present key trends from the Duane Morris Class Action Review – 2023, and discuss the current state of class action litigation in the United States.

Check in to the blog next week to learn more and get information directly from the London event about what employers and corporations need to know.

Click here to learn more about the event.

October 4, 2023 by Gerald L. Maatman, Jr.

Alabama Federal Court Rejects ADA Lawsuit By The EEOC In Part Because Requiring Employees To Stop Taking Prescription Medications Is Not An Adverse Employment Action Under The ADA

By Gerald L. Maatman, Jr., Derek Franklin, and Emilee N. Crowther

Duane Morris Takeaways: In EEOC v. Army Sustainment, LLC, No. 1:20-CV-234 (M.D. Ala. Sept. 26, 2023), Judge R. Austin Huffaker, Jr. of the U.S. District Court for the Middle District of Alabama granted in part and denied in part Defendant’s Motion for Summary Judgment. The Court dismissed the EEOC’s “failure-to-accommodate” and “screening-out” claims against Defendant, in addition to holding that only four of the EEOC’s seventeen claimants could support the EEOC’s disability bias claim. The Court also found that the Defendant employer’s policy barring employees from taking various prescribed medications was not, by itself, an adverse employment action. For employers facing EEOC-initiated lawsuits involving ADA claims alleging discrimination and failure-to-accommodate, this decision is instructive in terms of what evidence courts are apt to consider in determining whether an employee suffered an adverse employment action, as well as what is required to trigger an employer’s duty to provide a reasonable accommodation.

Case Background

Defendant Army Sustainment LLC a/k/a Army Fleet Support (“AFS”) is a helicopter maintenance contractor which, from 2003 to 2018, employed aircraft mechanicals, technicians, and other aviation specialists at Fort Novosel (previously known as Fort Rucker). Id. at 1. AFS implemented a drug testing policy (the “Policy”) in 2012 requiring employees in “safety-sensitive positions” to submit to drug testing for opioids, amphetamines, and benzodiazepines. Id. Individuals who were legally prescribed these medications were cleared to work so long as they agreed not to take their medication within 6-to-8 hours before their shift. Id. at 1-2.

In 2016, AFS eliminated the “6-to-8-hour rule,” and instead required employees to undergo a medical evaluation “to determine whether an employee’s prescription medication was appropriate for use during work hours.” Id. at 2. As part of the medical evaluation, the employee’s original prescribing doctor was asked “whether the employee was stable on their safety-sensitive medication or whether alternative medications were available that were as effective.” Id. If no alternative medications were available, and the employee was determined unable to safely work while taking the medication, the employee was deemed “disabled.” Id.

In 2016, two AFS employees affected by the Policy filed discrimination charges with the EEOC. The Commission found reasonable cause that AFS violated the ADA by “not allowing a class of individuals ‘to continue to work or return to work while taking their disability-related medications.’” Id. at 2-3. Further, the EEOC held that AFS’ Policy itself had “the effect of discrimination on the basis of disability” and violated the ADA. Id. at 3.

The EEOC filed suit against AFS on behalf of 17 AFS employees who suffered from different disabilities, but were legally prescribed medications and required to undergo medical evaluations to return to work. Id. The EEOC brought four claims against AFS, including: (1) Discrimination on the Basis of Disability; (2) Failure to Accommodate; (3) Impermissible Qualification Standard; and (4) Interference. Id.

The Court’s Decision

Timeliness Of The EEOC’s Enforcement Action

In Alabama, an employee bringing claims under Section 706 of Title VII “must file a charge with the EEOC within 180 days of the date of the alleged discrimination.” Id. at 4. Any claims filed with the EEOC after the 180-day period are time-barred. Id. AFS asserted that eight of the 17 claimants were time-barred, as their claims arose more than 180 days before the “representative charge” was filed with the EEOC. Id.

The Court found that Section 706(e)(1) precluded the EEOC “from pursuing claims that arose outside the charging period, even when those untimely claims are related to otherwise timely claims.” Id. at 5. While the parties disagreed as to what date the “representative charge” was filed with the EEOC, the Court held that any claims that arose prior to May 23, 2016 (180 days before one of the representative charges were filed), were time-barred. Id. at 6. As such, the Court dismissed seven of the claimants from the EEOC’s lawsuit. Id.

Whether Prohibiting Use Of A Medication Can Constitute An Adverse Employment Action

The Court’s first step in analyzing the EEOC’s disability discrimination claim was determining whether the claimants with timely claims experienced adverse employment actions. The Court rejected the EEOC’s argument that requiring the claimants to stop using their prescription medications was an adverse action, and held that merely being required to stop using certain prescription medications, without more, did not have a tangible adverse effect on employment of the claimants. Id. at 23. In making this determination, the Court explained that “[w]hether the employer’s conduct constitutes an actionable adverse employment action under the ADA is determined by whether a reasonable person in the plaintiff’s position would view the employment action in question as adverse.” Id. at 23.

The Court noted that while AFS required the claimants to sign a document acknowledging that their medications were “inappropriate for use in a safety sensitive work environment” and could result in discipline for employees if caught taking the medications, the Court held that “neither signing a form nor fear of termination are sufficient to constitute an adverse employment action.” Id. at 24.

The Court’s Rejection Of Unpaid Leave As A Reasonable Accommodation

The Court also considered whether AFS, as a means of providing a disability accommodation, could place employees on unpaid leave until they either received medical clearance to return to work or agreed to stop taking their medications. Id. at 25.

The Court rejected the notion that temporary leave is an accommodation rather than an adverse action. It reasoned that AFS “unilaterally forced the claimants on unpaid leave and did so without an accommodation request by the claimants or without any showing that the claimants could not actually perform their job duties either with or without their prescription medications.” Id. at 27. Thus, the Court denied summary judgment as to the claims of four AFS employees who alleged they suffered an adverse employment action after being placed on unpaid leave, and granted summary judgment in favor of AFS as to the remaining employees on this claim. Id. at 28.

Summary Judgment Universally Granted On Claims of Failure-To-Accommodate And Screening Out Employees Under The ADA

The Court further held that AFS was entitled to summary judgment against all claimants based on their failure to establish a prima facie case for the EEOC’s failure-to-accommodate claim. Id. at 37. For example, the Court found the EEOC did not show that two of the claimants made accommodation requests to AFS or how any such requests would accommodate the limitations presented by their disabilities. Id. at 36.

The Court’s penultimate holding concerned the EEOC’s claim that AFS’s drug policy constituted an impermissible qualification standard in violation of Sections 12112(b)(3) and 12112(b)(6) of the ADA by screening out qualified individuals with a disability. Id. 41-42. The Court granted summary judgment as to all claimants on the screening-out claim based on the EEOC’s failure to support its claim with statistical evidence or by showing that any of the claimants were actually terminated and “screened out” from their jobs. Id.

Finally, the Court refused to consider or grant summary judgment on the EEOC’s interference claim because AFS failed to acknowledge it as a standalone cause of action and thus did not formally move for summary judgment on that claim. Id. at 44-45.

Implications For Employers

Employers confronted with EEOC-initiated litigation involving restrictions on employee conduct outside the workplace should take note that the Court relied heavily on its assessment of whether “a reasonable person” in the claimants’ position would view the restriction in question as adverse. Further, from a practical standpoint, the Court’s refusal to grant summary judgment on the EEOC’s failure-to-accommodate claims illustrates the potential risk of trying to use unpaid leave as an attempted means of reasonably accommodating an employee’s disability.

October 3, 2023 by Gerald L. Maatman, Jr.

In The Latest Application of the Sixth Circuit’s Novel “Strong Likelihood” Standard, Ohio District Court Denies Plaintiffs’ Motion to Issue Notice of FLSA Overtime Lawsuit

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

Duane Morris Takeaways: On September 27, 2023, District Court Judge Charles E. Fleming in Woods et al. v. First Transit, Inc., et al., 21-cv-739 (N.D. Ohio Sept. 27, 2023) denied plaintiffs’ motion for court-authorized notice of bus drivers’ claims of alleged unpaid overtime wages under the Fair Labor Standards Act (FLSA). The district court applied the Sixth Circuit’s newly-minted standard to conclude the plaintiffs failed to demonstrate a “strong likelihood” exists that they are similarly situated in relevant respects to other employees of the defendant transportation company. The court’s rejection of the plaintiffs’ “self-serving declarations” and consideration of the defendants’ competing evidence illustrates how the Sixth Circuit’s new standard is a game changer for FLSA litigants in Ohio, Michigan, Tennessee and Kentucky.

Case Background

On April 6, 2021, three named plaintiffs filed a class and collective action lawsuit asserting claims of unpaid overtime in violation of the FLSA and Ohio, California and New York state laws. The plaintiffs alleged that the defendant failed to pay overtime wages to fixed-route bus drivers for work performed before and after their shifts. The plaintiffs also alleged the defendant deducted 30 minutes’ worth of time from their pay for unpaid meal breaks even when they did not receive uninterrupted break time. After the district granted the defendant’s partial motion to dismiss the New York and California state law claims, only the Ohio state law claims survived. Additionally, only two named plaintiffs remained after one of the named plaintiff s was shown never to have worked as a fixed-route bus driver.

Two individuals filed consents to join the lawsuit as opt-in plaintiffs in October 2021 and a third joined the lawsuit in February 2022.

After approximately six months of fact discovery solely on the issue of conditional certification, the named plaintiffs moved for conditional certification of their claims under the FLSA on June 29, 2022. If granted, the plaintiffs would have authority to issue notice to a collective including any person who drove a fixed bus route for the defendant in any week during the prior three years.

In support of their motion, the plaintiffs submitted sworn declarations of the two named plaintiffs and three putative opt-in plaintiffs, job descriptions, an employee handbook and a user guide for time entry. In opposition to the motion, the defendant submitted sworn declarations of managers at the locations at which the named or opt-in plaintiffs had worked, declarations of corporate human resources and payroll staff and collective bargaining agreements governing fixed-route bus drivers at various locations.

After the parties fully briefed the motion, the district court deferred ruling on the motion until the Sixth Circuit Court of Appeals issued its anticipated decision on the standard for conditional certification in FLSA cases.

On May 19, 2023, the Sixth Circuit in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), announced a new standard for determining whether FLSA plaintiffs may issue court-sanctioned notice to other employees. Rejecting the prior standard in which a plaintiff need only make a “modest factual showing” to win court-authorized notice, the Sixth Circuit held that plaintiffs must put forth sufficient evidence to demonstrate a “strong likelihood” exists that they are similarly situated to other employees. Factors relevant to the analysis include whether the potential other plaintiffs performed the same tasks and were subject to the same timekeeping and pay policies as the named plaintiffs. After Clark, the parties submitted supplemental briefs arguing how the new standard applied to the plaintiffs’ pending motion.

The Court’s Decision

Upon weighing the parties’ competing evidence, the district court answered “no” to the question whether a strong likelihood exists that the named plaintiffs experienced the same policies of unpaid overtime wages as other employees of the defendant.

The district court concluded that the plaintiffs did not introduce any evidence of a “company-wide policy” binding on all fixed-route bus drivers that potentially violates the FLSA. The court stated that the only evidence of the alleged unlawful overtime pay practices came in the form of “self-serving declarations” of doubtful credibility. For example, an opt-in plaintiff declared that she worked as a fixed-route bus driver until December 2020. However, the manager who oversaw the opt-in plaintiff’s location declared that no driver at that location drove a fixed bus route. The court reasoned no “strong likelihood” exists that the opt-in plaintiff is similarly situated to the named plaintiffs given that the opt-in plaintiff could not be in the proposed collective of fixed-route bus drivers.

The court also considered the evidence of written policies regarding meal breaks, or the lack thereof, for fixed-route bus drivers. Contrary to the plaintiffs’ allegation of company-wide automatic pay deductions for meal break time, the manager of the location at which one of the named plaintiffs had worked declared that drivers at that location did not even receive meal breaks.

The collective bargaining agreements in evidence showed that different locations of work had different policies governing time entry and breaks for fixed-route bus drivers. For example, a collective bargaining agreement for one location stated that the defendant paid drivers for 15 minutes of time prior to their route to perform pre-shift work. A collective bargaining agreement for another location said the defendant paid drivers 20 minutes for pre-shift work.

In sum, the court reasoned that the evidence revealed dissimilarity in policies and practices concerning compensation for the company’s fixed-route bus drivers. Because the evidence showed employees were subject to different policies concerning key issues such as how they report time, how schedules are set, what period of time is compensable, whether they receive a meal break and how meal breaks are paid, the court concluded the plaintiffs did not satisfy the “strong likelihood” standard announced in Clark to obtain court-authorized notice of their FLSA claims.

Implications For Employers

The district court’s ruling in Woods leaves no doubt that FLSA plaintiffs in the Sixth Circuit face a heightened evidentiary burden to obtain court-authorized notice in the wake of the Sixth Circuit’s new standard in Clark. The district court clarified that the “strong likelihood” standard in Clark is an evidentiary standard, not a pleading standard. The court’s analysis in Woods shows defendants have a genuine opportunity to present evidence to attack the plaintiffs’ efforts to show a common policy of FLSA-violating conduct and thereby block notice to other employees who may expand the scope of the lawsuit exponentially. Employers with operations in the Sixth Circuit ought to use Clark as an opportunity to look anew at their wage and hour policies and practices to guard against the risk of costly and time-consuming FLSA litigation.

October 2, 2023December 1, 2023 by Gerald L. Maatman, Jr.

Texas Federal Court Shoots Down Executive Order 14,026

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

Duane Morris Takeaways: On September 26, 2023, in Texas v. Biden, No. 6:22-CV-00004 (S.D. Tex. Sept. 26, 2023), Judge Drew B. Tipton of the U.S. District Court for the Southern District of Texas granted in part and denied in part the States’ Motion for Summary Judgment and enjoined the federal government from enforcing Executive Order 14,026 and the Final Rule against the States of Texas, Louisiana, and Mississippi and their agencies. Judge Tipton found that the President acted exceeded his authority by issuing Executive Order 14,026 and unilaterally requiring federal contractors to increase their employees’ minimum wage from $10.10 to $15 per hour. Other district courts have considered the President’s authority in issuing Executive Order 14,026, but Judge Tipton is the first federal judge to find that the President exceeded his authority. This ruling hits only the surface of what is yet to come. The parties in other cases have already filed appeals in the Ninth and Tenth Circuits challenging district court opinions that have issued contrary rulings, and the government in this case is bound to appeal this decision to the Fifth Circuit.

Procedural Background

The Federal Property and Administrative Services Act (“Procurement Act” or the “Act”) applies to federal and contractor employees. Congress implemented the Act to centralize the process by which various good and services are purchased by agencies on behalf of the government.

On April 21, 2021, President Biden, relying solely on the Act, issued Executive Order 14,026 (“EO 14,026”) to require federal contractors and subcontractors to pay certain employees $15 per hour. EO 14,026 was scheduled to begin on January 30, 2023, with annual increases thereafter. Specifically, in issuing EO 14,026, President Biden invoked his authority to “promote economy and efficiency in procurement by contracting with sources that adequately compensate their workers.” Id. at 5. After engaging in notice-and-comment rulemaking, the U.S. Department of Labor published its Final Rule, Increasing the Minimum Wage for Federal Contractors, on November 24, 2021, implementing EO 14,026 (the Final Rule and EO 14,026 are the “Wage Mandate”). Id.

Three months later, three states – Texas, Louisiana, and Mississippi (the “States”) – sued President Biden, the U.S. Department of Labor (“DOL”), and certain DOL executives (collectively the “federal government”) challenging the validity of the Wage Mandate. Id. at 2-3.

The parties cross-filed cross-motions to dismiss and motions for summary judgment. The federal government argued generally that two of the Act’s provisions, read together, provide the President with a broad grant of authority to implement policies “that the President considers necessary to foster an economical and efficient system for procuring and supplying goods and services for using property,” including the Wage Mandate. Id. at 13. The States argued that the Act is far more narrow and that it is primarily meant as a means to “centralize and introduce flexibility into government contracting to remedy duplicative contracts and inefficiencies,” which does not include setting the minimum wage for federal contractors. Id.

The District Court’s Decision

The District Court granted in part and denied in part the States’ cross-motion for summary judgment. It found that the States proved that that the President acted “ultra vires,” or beyond his authority in issuing EO 14,026. Judge Tipton enjoined the federal government from enforcing EO 14,026 and the Final Rule against Texas, Louisiana, and Mississippi and their agencies.

The District Court agreed with the States and held that Sections 101 and 102 of the Act “read together, unambiguously limit the President’s power to the supervisory role of buying and selling goods.” Id. The District Court found that the Act’s historical context further supported its holding that the President’s authority “does not include a unilateral policy-making power to increase the minimum wage of employees of federal contractors.” Id. at 15.

Judge Tipton further found that the purpose of the Act purpose conflicts with the Wage Mandate. He explained that the Act’s purpose is to provide “a relatively hands-off framework that enables agencies to determine for themselves the quantity and quality of items to procure on behalf of the federal government. It does not confer authority for the President to decree broad employment rules.” Id. at 20. As an example, the District Court compared the Act to two other permissible federal wage statutes – the Davis Bacon Act and the Walsh-Healey Public Contracts Act. Id. at 20-21. Judge Tipton opined that unlike those two permissible federal wage-statutes, in which Congress expressly gave the Secretary of Labor limited power to tailor the minimum wage of certain classes of federal contractors, the Procurement Act did not permit the President unlimited wage-setting authority. Id. at 21. The District Court concluded that the “Procurement Act’s text, history, purpose and structure limit the President to a supervisory role in policy implementation rather than a unilateral, broad policy-making power to set a minimum wage.” Id. at 22.

The federal government will likely appeal the decision, and the Fifth Circuit will join the Ninth and Tenth Circuits in deciding whether the President exceeded his authority in issuing EO 14,026.

Implications for Employers

The District Court’s decision is a huge win for employers in Texas, Louisiana, and Mississippi as the federal government is prohibited from enforcing EO 14,026. Companies should stay tuned for the imminent showdown in the Fifth, Ninth, and Tenth Circuit’s on the President’s Authority over increasing the minimum wage for federal contractors and subcontractors.

September 29, 2023October 2, 2023 by Gerald L. Maatman, Jr.

EEOC’s September Spree Of Filings Caps Off Landmark Year In FY 2023

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

Duane Morris Takeaways: In FY 2023, the EEOC’s litigation enforcement activity showed that any previous slowdown due to the COVID-19 pandemic is well in the rearview mirror, as the total number of lawsuits filed by the EEOC increased from 97 in 2020 to a whopping total of 144 in FY 2023. Per tradition, September 2023 was a busy month for EEOC-Initiated litigation, as this month marks the end of the EEOC’s fiscal year. This year, 67 lawsuits were filed September, up from the 39 filed in September of FY 2022.

Overall, the FY 2023 lawsuit filing data confirms that EEOC litigation is back in full throttle, with no signs of slowing down. Employers should take heed. Amplifying that activism, the Commission issued a press release at the end of the fiscal year touting its increased enforcement litigation activity, a somewhat unprecedented media statement that the EEOC has never issued in previous years.

Lawsuit Filings Based On EEOC District Offices

In addition to tracking the total number of filings, we closely monitor which of the EEOC’s 15 district offices are most actively filing new cases over the year and throughout September. 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.

In FY 2023, Philadelphia District Office had by far the most lawsuit filings with 19, followed by Indianapolis and Chicago with 13 filings, and New York and Los Angeles each with 10 filings. Charlotte, Atlanta, Dallas, Phoenix, and Memphis had 9 each, Houston had 8, Miami, Birmingham, and St. Louis had 7 each, and San Francisco had 5 filings.

The most noticeable trend of FY 2023 is the filing deluge in Philadelphia (19 lawsuits), compared to FY 2022 where Philadelphia District Office filed 7 lawsuits. Similarly, Indianapolis ramped up its filings compared to the 7 filings from FY 2022. Like FY 2022, Chicago remained steady near the top of the list again with 13 filings. Los Angeles, had a slight increase, based on the 8 filings it had in FY 2022. Going another direction, Miami filings slightly fell compared to its 8 filings in FY 2022. Finally, both New York and Charlotte increased their filings from FY 2022, with New York substantially increasing from 7, and Charlotte moderately increasing from 7 filings.

The balance across various District Offices throughout the country confirms that the EEOC’s aggressiveness is in peak form, both at the national and regional level.

Lawsuit Filings Based On Type Of Discrimination

We also analyzed the types of lawsuits the EEOC filed, in terms of the statutes and theories of discrimination alleged, in order 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 compared to FY 2023 and FY 2022. Title VII cases once again made up the majority of cases filed, making up 68% of all filings (down from the 69% filings in FY 2022, and significantly above 61% in FY 2021). ADA cases also made up a significant percentage of the EEOC’s September filings, totaling 34%, in line with 29.7% in FY 2022, although down from the 37% in FY 2021. There were also 12 ADEA cases filed in FY 2023, after 7 age discrimination cases filed in FY 2022.

The graphs below 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, and Age Discrimination in Employment Act) and, for Title VII cases, the theory of discrimination alleged.

Lawsuits Filings Based On Industry

The graphs below show the number of lawsuits filed by industry. Three industries were the primary targets of lawsuit filings in FY 2023: Restaurants with 28 filings, Retail with 24 filings, and Healthcare with 24 filings. Not far off those industries are Manufacturing with 15 filings; Construction with 7 filings; Automotive, Security, and Transportation with 6 filings each; and Technology with 5 filings.

Hospitality and Healthcare employers should be keenly aware of the EEOC’s enforcement of alleged discriminatory practices in these sectors. But in reality, employers in nearly any industry are vulnerable to EEOC-initiated litigation., as detailed by the below graph.

Looking Ahead To Fiscal Year 2024

Moving into FY 2024, the EEOC’s budget includes a $26.069 million increase from 2023, and focuses on six key areas including advancing racial justice and combatting systemic discrimination on all protected bases; protecting pay equity; supporting diversity, equity, inclusion, and accessibility (DEIA); addressing the use of artificial intelligence in employment decisions and preventing unlawful retaliation.

The EEOC also announced goals for its own Diversity, Equity, Inclusion, and Accesibility (DEIA) program where it seeks to achieve four goals, including workplace diversity, employee equity, inclusive practices, and accessibility. Additionally, the EEOC continues to polish its FY 2021 software initiatives addressing artificial intelligence, machine learning, and other emerging technologies in continued efforts to provide guidance. Finally, the joint anti-retaliation initiative among the EEOC, the U.S. Department of Labor, and the National Labor Relations Board will continue to address retaliation in American workplaces.

Key Employer Takeaways

In sum, FY 2023 was a year of new leadership and structural changes at the EEOC. With a significantly increased proposed budget, it is more crucial than ever for employers pay close attentions in regards to the EEOC’s strategic priorities and enforcement agendas. We anticipate these figures will grow by next year’s report, so it is more crucial than ever for employers to comply with discrimination laws.

September 22, 2023 by Gerald L. Maatman, Jr.

Conditional Certification Denied To Illinois Jail Guards Who Were Not Paid For Time Outside Work Engaging In COVID-19 Protocols

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

Duane Morris Takeaways: In Evans III, et al v. Dart, et al., No. 1:20-CV-02453 (N.D. Ill. Sept. 15, 2023), Judge Rebecca R. Pallmeyer of the U.S. District Court for the Northern District Of Illinois denied Plaintiffs’ motion for conditional certification of a collective action of Cook County Jail Guards who were not compensated for time spent off-the-clock decontaminating their work gear to prevent the spread of COVID-19. In rejecting the jail correctional officers’ bid for conditional certification under 29 U.S.C. § 216(b), the Court ruled the Plaintiffs could not establish that they were victims of a common policy or plan that violated the law, as there was no evidence that the jail even had an off-the-clock decontamination policy. Thus, the Court concluded that Plaintiffs failed to establish that their cleaning efforts outside of work resulted from any requirement imposed by their employer. The ruling is a blueprint for corporate counsel in terms of a solid approach for opposing employment-related conditional certification motions.

Case Background

The factual origins of the case stem from a COVID-19 outbreak at the Cook County Department of Corrections (“Cook County Jail”) in April 2020. Plaintiffs allege that, amid the outbreak, the Cook County Jail required correctional officers to “engag[e] in decontamination/sanitation activities” before and/or after their shifts within the CCDOC, “including washing and sanitizing their uniforms, sanitizing their persons, sanitizing and maintaining personal protective equipment (‘PPE’), and showering.” Id. at 2.

According to Plaintiffs, they would spend approximately 20 to 30 minutes before and after shifts completing these protocols but were not paid for that time. As the Court noted, “each Plaintiff described slightly different activities that took slightly different amounts of time,” which formed “a consistent narrative of enhanced decontamination activities, significantly exceeding what they did prior to COVID.” Id. at 4.

In the same month that the April 2020 outbreak began, Plaintiffs filed this lawsuit on behalf of themselves and a proposed group of all persons who worked at the Cook County Jail between January 27, 2020 and June 11, 2021 who engaged in the purported COVID-19 decontamination protocols, but who were not paid for time spent on those activities. Id. at 3.

The Court’s Decision

The Court declined to certify the proposed collective action based on finding that Plaintiffs fell short in identifying a common policy requiring workers in the proposed collective action to engage in those [decontamination] activities as a condition of their employment.” Id. at 1. Importantly, the Court noted that the Plaintiffs themselves acknowledged that there was no express written policy requiring correctional officers to decontaminate outside of work, and that the only instructions that they received from supervisors about decontamination was during roll call meetings, when supervisors would merely “read and disseminate general advice from the CDC” and instruct guards to not bring items home from the jail. Id. at 4-5.

Another key finding by the Court was that Plaintiffs “did not report their off-duty decontamination activities to their supervisors, nor were they asked about those efforts or disciplined for failing to decontaminate proper.” Id. at 5. Further, the Court made important note of how “no named Plaintiff reported monitoring the time consumed by their daily decontamination activities, submitting any decontamination overtime, or asking their supervisors about decontamination overtime, although many testified that there was no clear way to submit an overtime claim for these activities in the CCDOC “Workforce” record system.” Id.

In reaching its determination, the Court also rejected the relevance of a Communicable Diseases Policy that Cook County had in place requiring workers to “use good judgment and follow training and procedures related to mitigating the risks associated with communicable disease,” and if exposed to one, to “begin decontamination procedures immediately, obtain medical attention if needed, and “notify a supervisor as soon as practical.” Id. at 7. According to the Court, because this policy specified that its aim was to “provide a safe work environment,” the Court found it “hard to imagine how a pre-shift shower or laundering one’s uniform after a drive home is consistent with that language” and concluded, in turn, that the policy did not require the Plaintiffs to engage in COVID-19 protocols at issue outside of work at the jail. Id. at 11.

Finally, the Court discussed how, even if the Communicable Diseases Policy applied to activities outside of work, an “insurmountable” problem for Plaintiffs was that “none of them seemed to know about the policy at the time they were undertaking those activities.” Id. at 12. As a result, the Court found that there was no evidence showing that the Defendants had actual or constructive knowledge of any de facto policy requiring the Plaintiffs to engage in decontamination activities away from the jail. Id. at 15.

For these reasons, the Court concluded that the Plaintiffs fell short of satisfying the requirements for conditional certification of their proposed collective action.

Implications For Employers

The Evans ruling underscores the importance of maintaining and utilizing well-organized clearly-delineated employee conduct policies for activities at and away from the workplace, in anticipation of arguing the absence of uniform policies and procedures in collective actions under 29 U.S.C. § 216(b). In dismissing all of Plaintiffs’ arguments after finding an absence of policy or plan for all proposed collective action members that violated the law, the Court signaled its steady reliance on the well-established standards for these types of claims, providing a valuable reaffirmation to employers’ reliable defense strategies.

September 15, 2023 by Gerald L. Maatman, Jr.

Colorado Supreme Court Applies Litigation Privilege To Attorney’s Allegedly Defamatory Statements About Class Action Defendant

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

Duane Morris Takeaways: In Killmer, Lane & Newman, LLP v. BKP, Inc., No. 21-SC-930, (Col. Sept. 11, 2023), the Colorado Supreme Court ruled that an attorney’s allegedly defamatory statements about a company’s wage-and-hour practices during a press conference to announce filing a class action against that same company were protected by the litigation privilege. The Supreme Court’s unanimous en banc opinion held that the Colorado Court of Appeals erred in concluding that there was an exception to the applicability of the litigation privilege where the size and contours of the proposed class were easily ascertainable from the employer’s records and undermined the need to identify and alert potential class members through the press. In reversing the appellate panel’s ruling, the Colorado Supreme Court determined that the attorney’s statements were shielded from defamation claims by the litigation privilege since the statements merely repeated wage-and-hour allegations made in the complaint and advanced the goals of the lawsuit. The decision in BKP serves as a reminder to companies of the potential pitfalls of bringing defamation claims against attorneys who disseminate information to the public about a party that they are suing in a class action.

Case Background

In 2018, two law firms, Killmer, Lane & Newman, LLP and Towards Justice (collectively, along with attorney Mari Newman of Killmer, Lane & Newman, “the Attorneys”), filed a federal class action lawsuit claiming that Ella Bliss Beauty Bar (“Ella Bliss”), an operator of beauty salons in the Denver metropolitan area, failed to properly pay its nail technicians for required custodial work under federal and Colorado state law. Id. at 5.

On the same day the federal lawsuit was filed, one the Attorneys, Mari Newman, held a press conference in which she stated that Ella Bliss nail technicians had to clean the businesses “for no pay whatsoever,” that the salons “only pay [employees] for the hours they feel like paying,” and that Ella Bliss “is simply too cheap to pay its workers the money they deserve.” Id. at 43. The Attorneys collectively also issued a press release that day asserting that “Ella Bliss Beauty Bar forced its service technicians to perform janitorial work without pay, refused to pay overtime, withheld tips, and shorted commissions.” Id. at 44.

Exactly one year later, Ella Bliss’ parent company, BKP, Inc. (“BKP”) filed a defamation lawsuit against the Attorneys in Colorado state court pertaining to five allegedly defamatory statements that the Attorneys made during their 2018 press remarks, including the ones quoted above. Id. at 13. The district court dismissed the defamation suit and found that the Attorneys’ statements were protected by the litigation privilege, which shields from defamation claims statements by an attorney that have “some reference to the subject matter of . . . proposed or pending litigation.” Id. at 22.

When the Plaintiffs appealed the dismissal to a three-judge panel of the Colorado Court of Appeals, the appellate panel partially reversed the district court’s decision and found that some of the statements at issue were not shielded by the litigation privilege. Id. at 49. While the Attorneys argued that the goals of the media statements were to promote their class action and publicize it to potential additional class members, the appellate panel rejected that notion since the Attorneys were set to receive employment records and payroll documents in discovery that could have easily identified the class members without needing to resort to harmful press statements. Id. at 14.

Following the appellate decision, the Colorado Supreme Court granted the petitioner’s writ for certiorari and analyzed on the question of “whether the common law litigation privilege for party-generated publicity in pending class action litigation excludes situations in which the identities of class members are ascertainable through discovery.” Id. at 1.

The Colorado Supreme Court’s Decision

On further appeal, the Colorado Supreme Court reversed the appellate panel’s ruling and determined that the litigation privilege applied to the allegedly defamatory attorney statements at issue. Id. at 49. The Supreme Court reasoned that the statements “merely repeated, summarized, or paraphrased allegations in the class action complaint” and, therefore, “served to notify the public, absent class members, and witnesses about, and therefore furthered the objective of, the litigation.” Id. at 42.

The Supreme Court also held that the appellate panel erred by basing its litigation privilege analysis on whether the identities of class members were easily ascertainable through discovery. Id. at 2. According to the Supreme Court, two reasons led to that conclusion: “(1) ascertainability is generally a requirement in class action litigation, and imposing such a condition would unduly limit the privilege in this kind of case;” and (2) “the eventual identification of class members by way of documents obtained during discovery is not a substitute for reaching absent class members and witnesses in the beginning stages of litigation.” Id.

Implications For Employers

The Colorado Supreme Court’s decision in BKP, Inc. is notable in that it may serve to embolden the inclination of some class action plaintiffs’ attorneys to use strategic communication techniques to air their clients’ claims in the ‘court of public opinion’ in an attempt to gain leverage, as well as using mass communication tools to grow the reach of their lawsuit to more potential class members. While employers understandably may want to fight back against weaponized misinformation by asserting defamation claims, employers should exercise caution and pick their battles when it comes to such claims, given the high potential for variance in judicial outcomes in states where the case law on this issue remains unsettled and the jurisdictional variables also at play. Ultimately, corporate counsel should carefully consider the potential risks of pursuing a defamation claim against an attorney based on statements that a court may find shielded by privilege regardless of their truthfulness.

September 14, 2023 by Gerald L. Maatman, Jr.

Illinois Federal Court Orders Defendant To Pay Over $4 Million In Arbitration Fees In Mass Arbitration Alleging Violation Of The BIPA

By Gerald L. Maatman, Jr., Rebecca S. Bjork and Derek Franklin

Duane Morris Takeaways: Mass arbitration continues to be a formidable tool for plaintiffs’ attorneys seeking to deal with class action waivers in arbitration agreements. This trend is aptly demonstrated by a new ruling in Wallrich, et al. v. Samsung, Case No. 22-CV-5506 (N.D. Ill. Sept. 12, 2023), where Judge Harry D. Leinenweber of the U.S. District Court for the Northern District of Illinois ordered the defendants – who had been served with just shy of 50,000 arbitration demands – to pay the arbitration fees and submit to arbitrating consumers’ claims that the defendants had committed violations of the Illinois privacy laws. Those fees had been waived by the arbitration authority, as allowed by a provision in its’ supplemental rules, but the Court sided with the plaintiffs, who had moved to compel arbitration after the fees were waived, and seeking also to require the defendants to pay them.

Case Background

The Named Plaintiffs filed 49,986 arbitration claims with the American Arbitration Association (“AAA”) on September 7, 2022 on behalf of consumers who are users of Samsung mobile devices. Id. at 2, 5. They alleged that the defendants had unlawfully collected their biometric information in violation of the Illinois Biometric Information Privacy Act. The user agreement required all disputes be resolved in final, binding arbitration and it prohibited class actions. Id. at 3.

The agreement also required use of the services of the AAA and explicitly invoked the AAA’s rules, including its supplemental rules relating to arbitration fees. Id. On September 27, 2022, Samsung refused to pay its portion of the initial arbitration fees to the AAA because it believed the claimants included deceased individuals and others who did not reside in Illinois. Id. at 6. Plaintiffs responded by moving to compel arbitration on October 7, 2022. Id. at 7.

The Court’s Decision

Judge Leinenweber compelled arbitration of the claims of living, Illinois resident petitioners and ordered the respondents to pay the AAA arbitration fees. He first concluded that the arbitration agreements are valid between Samsung and those who actually are its consumers. Id. at 21-22. Second, he noted that as to the petitioners that respondents suspected were either deceased or not Illinois residents, he explained that petitioners’ counsel used Samsung’s own customer list to remove ineligible petitioners. Id. Third, he determined that the arbitration agreement left questions of arbitrability to the arbitrator, thereby declining to rule on respondents’ argument that the collective action waiver in the agreement applies to mass arbitrations, which would bar petitioners’ claims with the AAA. Id. at 25. Finally he ruled that he had the authority to construe and enforce the AAA’s rules about arbitration fees, and determined that respondents are required to pay approximately $4.13 million in fees. Id. at 30, 33-34.

Implications For Employers

As corporations who employ large numbers of individuals in their workforces know, agreements to arbitrate claims related to employment-related disputes are common. They serve the important strategic function of minimizing class action litigation risks. But corporate counsel also are aware that increasingly, plaintiffs’ attorneys have come to understand that arbitration agreements can be used to create leverage points for their clients. Mass arbitrations seek to put pressure on respondents to settle claims on behalf of large numbers of people, even though not via the procedural vehicle of filing a class or collective action lawsuit. As a result, corporate counsel should carefully review arbitration agreement language with an eye towards mitigating the risks of mass arbitrations as well as class actions.

September 11, 2023 by Gerald L. Maatman, Jr.

Ohio Federal District Court Authorizes Notice Of FLSA Claims In Step One Of The Two-Step “Strong Likelihood” Test And Certifies Rule 23 Class

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

Duane Morris Takeaways: In Hogan v. Cleveland Ave Restaurant, Inc. d/b/a Sirens, et al., 15-CV-2883 (S.D. Ohio Sept. 6, 2023), Chief Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio authorized notice to potential opt-in plaintiffs and conditionally certified a collective action of thousands of adult club dancers in a case asserting violations of the Fair Labor Standards Act (“FLSA”) and Ohio law, including claims of unpaid minimum wages, unlawfully withheld tips, and unlawful deductions and/or kickbacks. For good measure, the Court also granted class certification on the plaintiffs’ state law claims. The opinion is a must-read for employers in the Sixth Circuit facing — or hoping to avoid facing — class and collective wage & hour claims.

Case Background

On October 6, 2015, the named plaintiff Hogan filed the lawsuit as a class and collective action asserting violations of the FLSA and Ohio law. After amending the complaint in May 2017 to add additional defendants, on May 14, 2020, Hogan filed a Second Amended Class and Collective Action Complaint, the operative complaint, with a second named plaintiff, Valentine.

In the operative complaint, the named plaintiffs asserted claims against seven adult entertainment clubs and their owners and managers as well as two club associations and an individual defendant with which the clubs were associated. The plaintiffs later settled their claims against one of the seven clubs.

The allegations in the operative complaint center on the clubs’ use of a landlord-tenant system by which the defendant clubs charged dancers “rent” to perform at the clubs for tips from customers in lieu of paying them wages for hours worked.

On September 26, 2022, the plaintiffs moved for certification of their claims as a class and collective action. The parties concluded briefing on the motion five months before May 2023, when the Sixth Circuit issued its pivotal decision in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023). In Clark, the Sixth Circuit ushered in a new, more employer-favorable standard for deciding motions for conditional certification pursuant to 29 U.S.C. § 216(b) of the FLSA.

The District Court’s Decision

First, the court articulated the standard by which it would decide the plaintiffs’ motion for court-supervised notice of their FLSA claims. The court described the Sixth Circuit’s opinion in Clark as “maintain[ing] the two-step process for FLSA collective actions but alter[ing] the calculus.” Slip Op. at 7. Whereas pre-Clark case law authorized notice at step one of the two-step process after only a modest showing of similarly-situated status, the standard post-Clark demands that plaintiffs show a “strong likelihood” exists that there are others similarly situated to the named plaintiffs with respect to the defendants’ alleged violations of the FLSA prior to authorizing notice. Defendants after Clark retain the ability, after fact discovery concludes, to demonstrate that the named plaintiffs in fact are not similarly- situated to any individual who files a consent to join the lawsuit as a so-called opt-in plaintiff. Also unchanged by Clark is the standard for determining similarly-situated status for FLSA purposes.

The court in Hogan concluded that the plaintiffs adequately demonstrated a “strong likelihood” that they are in fact similar to the proposed group of dancers who too were classified as “tenants” of the six defendant clubs who paid rent to lease space at the clubs to earn tips from customers without receiving any wages from the defendant clubs.

In support of their motion, the plaintiffs submitted sworn declarations, deposition testimony, and documentary evidence of the defendants’ policies and practices with respect to dancers. The court found that the plaintiffs showed that the clubs maintained a system in which the defendants acted together to require dancers to pay rent for leasing space, often documented in lease agreements, instead of being paid as employees for performing work.

Among the defendants’ arguments opposing the plaintiff’s motion, the court considered, but ultimately rejected, the defendants’ argument that arbitration provisions in the lease agreements should preclude court-authorized notice of the FLSA claims. The court cited Clark for the proposition that it may consider as a relevant factor the defense of mandatory arbitration agreements in deciding whether to authorize notice of FLSA claims. Homing in on the facts, the court reasoned that members of the potential collective action did not all sign the lease agreements and that those who signed the lease agreements had the option to agree to forgo arbitration of their claims. According to the court, the defendants would have a stronger basis to defeat court-authorized notice if they could show that all dancers had to sign the lease agreement and the lease agreement made arbitration mandatory.

In addition, the court evaluated whether the plaintiffs satisfied the Rule 23 standards for seeking to certify a class of dancers on their state law claims. The court concluded that the plaintiffs met the requirements for class certification under Rule 23(b)(3), because questions of law or fact common to class members predominated over any questions affecting only individual members (the predominance inquiry), and that a class action was superior to other available methods for fairly and efficiently adjudicating the case (the superiority inquiry).

As to predominance, the court reasoned that the issue of the defendants’ alleged unlawful system of treating dancers as tenants rather than paying them wages predominated over individualized issues such as whether a particular dancer signed a lease agreement. As to superiority, the court concluded that the relatively small size of each dancer’s wage claim demonstrated that individuals would have little incentive to pursue their claims alone. Finding no factors pointing against class treatment of the claims, the court concluded that treating the claims as a class action was the superior method for adjudicating liability efficiently.

Implications For Employers

Hogan is the latest in a series of opinions applying the Sixth Circuit’s novel “strong likelihood” standard to plaintiffs’ efforts to expand the scope of their FLSA claims to potential opt-in plaintiffs. The developing case law in this area reflects a highly fact-specific approach to deciding whether plaintiffs have made the necessary showing to unlock court-authorized notice of their claims to potential opt-in plaintiffs. The opinion in Hogan is significant in that it grapples with the “strong likelihood” standard alongside the well-established test for certifying a class pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure.