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Posted on by Gerald L. Maatman, Jr.

California Court of Appeal Affirms Trial Court Judgment Defeating Malicious Prosecution Action Where Sister-in-Law Served As Class Representative In Underlying Lawsuit

By Gerald L. Maatman, Jr., Daniel D. Spencer, and George J. Schaller

Duane Morris Takeaways: On June 10, 2026, in Citizens of Humanity, LLC v. John Donboli et al., No. D085849, 2026 Cal. App. LEXIS 360 (Cal. App. June 10, 2026), the California Court of Appeal affirmed the trial court’s decision in favor of Defendants in a malicious prosecution action stemming from a consumer class action over “Made in the U.S.A.” labeling on jeans.  The Court of Appeal held that a familial relationship between a named plaintiff and class counsel does not, as a matter of law, deprive a class action of probable cause, and that Apple Computer, Inc. v. Superior Court, 126 Cal.App.4th 1253(2005), does not establish a per se bar on relatives of class counsel serving as class representatives.

For companies that have faced consumer class actions and are considering malicious prosecution counterclaims, this decision underscores that the probable cause standard remains a high bar and requires a showing that any reasonable attorney would agree the underlying claims were totally and completely without merit.

Case Background

Citizens of Humanity LLC is a jeans manufacturer whose products had “Made in the U.S.A.” labels, despite Citizens Ingrid-style jeans having fabrics and components sourced from Japan and China.  Citizens of Humanity, LLC v. John Donboli et al., No. D085849, 2026 Cal. App. LEXIS 360, *7 n. 2 (Cal. App. June 10, 2026). 

In June 2014, attorneys John Donboli and JL Sean Slattery of Del Mar Law Group LLP filed a putative class action against Citizens in federal court, alleging the labels violated former California Business and Professions Code § 17533.7, the Consumers Legal Remedies Act, and the Unfair Competition Law.  Id. at *3.

In the federal court action against Citizens, Louise Clark served as the named-plaintiff who previously purchased Citizens’ Ingrid-style jeans.  Citizens later discovered Clark was attorney Slattery’s sister-in-law.  Id.  Based on this familial relationship, Citizens moved to disqualify Del Mar Law Group as class counsel.  While that motion was pending, Clark filed a motion to withdraw and substitute a new named-plaintiff, Coni Hass.  Id. at *4.  The federal court granted the motion to withdraw and substitute and found that the substitution “vitiate[d]” Citizen’s disqualification motion and also held Citizens “failed to demonstrate that [Clark] or her counsel . . . acted in bad faith” in requesting substitution.  Id.

As the action was pending, the California Legislature amended § 17533.7 to permit “Made in the U.S.A.” labeling where foreign-sourced materials constitute no more than 5% (or 10% if not domestically sourceable) of the final wholesale value of the product.  Id.  In response to the amendment, Citizens moved to dismiss.  The district court granted Citizens’ motion and allowed Hass leave to amend, but Hass elected not to amend and the case was dismissed.  Id. 

In February 2018, Citizens filed this action for malicious prosecution against attorneys Donboli and Slattery, Del Mar Law Group, and former named plaintiffs Clark and Hass (collectively “Defendants”). 

Defendants moved to strike the complaint under the anti-SLAPP statute, but the trial court denied their motion, and that ruling was later affirmed by this Court of Appeal (see Citizens of Humanity, LLC v. Hass, 46 Cal.App.5th 589 (2020)).  Citizens of Humanity, LLC, 2026 Cal. App. LEXIS 360 at *5. 

In affirming, the Court of Appeal “found two conflicting narratives . . . regarding the origin of the federal mislabeling case.”  Id. at *5-6.  It concluded one possible narrative was “that Clark was a shill plaintiff, and [her attorneys] were aware of this fact.”  The second possible narrative focused on Hass and whether Defendants “knew ‘that Hass purchased Ingrid-style jeans with a label that said ‘Made in the U.S.A.’ and components of those jeans came from a foreign country[.]’”  Id. at *6. 

After affirming, the case was remanded and the matter proceeded to trial.  After opening statements, and after Citizens presented testimony from the company’s founder, the parties asked the court “to ‘review certain exhibits, [and] deposition testimony from Clark and Hass’ and the parties ‘agreed to have the [c]ourt make a determination on probable cause’” consequently waiving their right for the jury to decide that issue.  Id. at *7.  After accepting evidence and hearing argument the trial court ruled in favor of Defendants concluding “Citizens had not established [Defendants] lacked probable cause for” the previously filed putative class action and entered judgment for Defendants.  Id. at *7-8.  Citizens appealed. 

The Court of Appeal’s Decision

The Court of Appeal affirmed the decision of the trial court. 

Citizens’ primary argument on appeal was that Defendants lacked probable cause as a matter of law because Clark, as Slaterry’s sister-in-law, was an improper class representative under Apple Computer, Inc. v. Superior Court.  Citizens relied on the Apple court’s observation that “the majority of courts . . . have refused to permit class attorneys, their relatives, or business associates from acting as the class representative.”  Citizens of Humanity, LLC, 2026 Cal. App. LEXIS 360 at *10-11.  The Court of Appeal rejected this argument on multiple grounds.

First, the Court of Appeal distinguished Apple factually and noted that the plaintiff in that case was an attorney at one of the representing firms who stood to gain monetarily from recovery of attorney fees.  Id. at *11.  The Court of Appeal reasoned that Apple addressed a “‘financial relationship and interdependence between’ the plaintiff and associated.”  Id.  Here, however, Citizens presented no information “about any ‘financial relationship’ between Slattery and Clark.”  The Court of Appeal also determined it was not “reasonable to presume ‘interdependence’ solely based on [Slattery and Clark’s] relationship as siblings-in-law.”  Id. 

Second, the Court of Appeal held that the relevant passage in Apple is, “at best” “dictum that cannot bind very reasonable attorney on threat of a malicious prosecution judgment.”  Id. at *12. 

Third, it reasoned that even if a disqualifying conflict existed, it would not be fatal to the putative class action against Citizens.  As the Court of Appeal noted “Clark could have pursued the claim with different counsel, or [Del Mar] Law Group could have proceeded with a different representative plaintiff, which is what the district court authorized here after Clark decided to withdraw.”  Id. at *13. 

Accordingly, the Court of Appeal affirmed and agreed with “the trial court’s conclusion that Apple is not determinative of the probable cause analysis here.”  Id. 

Implications For Corporate Litigants

For companies facing consumer class actions, including those with origin-of-manufacture claims such as “Made in the U.S.A.,” this decision serves as a reminder that labeling must comply with current statutory standards. 

Even assuming a company is successful in defeating a consumer class action, then companies considering malicious prosecution actions should take note that class representative conflicts, including familial relationships with class counsel, are evaluated on a fact-specific basis.  There is no per se rule of disqualification, and even where a conflict exists, it goes to the fitness of counsel or the representative, not the viability of the underlying claim itself.  As the Court of Appeal noted here, the class action can proceed with substitute counsel or a substitute plaintiff.

The decision in Citizens of Humanity, LLC, serves as a cautionary tale that even relatives of class counsel can potentially serve as class representatives and further narrows adequacy challenges to class certification.  It also demonstrates another way class counsel can creatively select representative plaintiffs while still allowing courts to scrutinize representative plaintiffs for actual conflicts on a case-by-case basis. 

Posted on by Gerald L. Maatman, Jr.

Seventh Circuit Affirms Summary Judgment For Tortilla Manufacturer El Milagro In Sexual Harassment Suit

By Gerald L. Maatman, Jr., Jennifer A. Riley, Gregory Tsonis, and George J. Schaller

Duane Morris Takeaways: On May 27, 2026, in Sanchez, v. El Milagro, Inc., 2026 U.S. App. LEXIS 14984 (7th Cir. May 26, 2026), the Seventh Circuit issued an opinion that affirmed a district court’s decision granting summary judgment in favor of tortilla manufacturer El Milagro, Inc. (“El Milagro”) for claims of sexual harassment in the workplace in violation of Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Illinois Human Rights Act (“IHRA”). 

The opinion fully vindicated the Company’s defenses, and clarifies that a prompt and thorough investigation coupled with appropriate action to bring harassment to an end are crucial to avoid liability under sexual harassment law. 

Background

In 2022, Plaintiff Alma Sanchez filed a Class Action Complaint against her employer, El Milagro, Inc. (“El Milagro”), a tortilla manufacturer and distributor of tortilla products, alleging a sexually hostile work environment in violation of the IHRA and, subsequently, Title VII.

Plaintiff alleged she joined El Milagro in July 2019. Plaintiff claimed that in 2020, co-worker Francisco Gutierrez sexually harassed her by “inappropriately touching her three times,” although the Seventh Circuit’s opinion noted that Plaintiff’s version of events changed in numerous ways over time.  Id. 

According to the subsequent statement to Human Resources that Plaintiff submitted after the third alleged incident, Gutierrez “inappropriately touched [Plaintiff] first in October or November 2019, then in March 2020, and finally in August 2020.”  Id. *4-5.  Her Complaint, however, alleged that “Gutierrez touched her first in May or June 2020, then in July 2020, and finally in August 2020.”  Id. *5. 

As to her first alleged incident of harassment, Plaintiff’s Complaint asserted that Gutierrez “intentionally ‘rubbed his genitals’ against her buttocks as he passed her on the production line and then continued to walk away.”  Id.  In her deposition, however, Plaintiff testified that “she believe[d] Gutierrez purposefully touched her because ‘there were many ways for him to pass through without touching [her],” that he did not “touch her for long because ‘he made it look like he was passing by,’” and when she felt the contact and turned around “[h]e had already passed.”  Id.  In her later statement to Human Resources, Plaintiff wrote that Gutierrez “said sorry” but at her deposition, she testified that Gutierrez “turned around and stare[d] at me like watching and saying ‘oops.’”  Id. *5-6. 

Plaintiff alleged she verbally reported this incident two hours later to Supervisor Arturo Brito, which Brito denied.  Id. *6.  In her HR statement, Plaintiff “stated that although she mentioned this incident to Brito, she did not tell him Gutierrez’s name.”  At her deposition, however, Plaintiff claimed that “she ‘specifically told Brito that Mr. Gutierrez had rubbed his genitals on my buttocks’” but, when asked outright, she “agreed that she did not share Gutierrez’s name with [the supervisor] when she reported the first incident.”  Id.  No Human Resources report was made about this incident at the time.

Plaintiff also asserted Gutierrez “sexually harassed her for the second time in July 2020” and claimed that he “groped her buttock with his hand.”  Id. *6-7.  Plaintiff contradicted herself about whether and when she reported this incident.  In her HR statement, she wrote that she “could not have reported the incident because the factory had been permanently shut down because of the pandemic, but later claimed in the lawsuit that she did report the harassment to Brito the day after it happened.  Id. *7.  Plaintiff alleged that she informed Brito about this incident, but no complaint about this alleged incident was sent to El Milagro’s Human Resources department.  Id.  

The third incident occurred on August 29, 2020, and Plaintiff contended that “Gutierrez touched her buttocks for ‘a short time,’ or ‘a few seconds’ while she was stooping down to put down boxes that she was holding.”  Id.  In her written statement to HR, Plaintiff claimed that “Gutierrez touched her buttocks with one hand”  but asserted during the lawsuit that “Gutierrez groped her with both hands when she bent over to put down a box that she was carrying.”  Id.  

After reporting the third incident to Brito, Plaintiff submitted a written statement to Human Resources describing the three incidents.  Gutierrez’s statement claimed he accidentally touched Plaintiff while packing tortillas and apologized.  Id.  Plaintiff later testified that she “had not seen anyone else experience sexually harassing conduct at any time during her employment at El Milagro.”  Id.  Plaintiff also alleged subsequent verbal harassment by other coworkers, but Plaintiff did not tell Brito or El Milagro’s HR the names of those individuals.  Id. *9.

The district court granted El Milagro summary judgment on Plaintiff’s claims.  It also ruled that Plaintiffs’ class action claims could not be certified. Plaintiff appealed the district court’s decision on her individual claim to the Seventh Circuit.

The Seventh Circuit’s Opinion

The Seventh Circuit, in an opinion written by Judge Kenneth F. Ripple, affirmed the district court’s decision granting summary judgment in favor of El Milagro and fully vindicated its position.

As to the controlling legal standard, the Seventh Circuit first concluded that while Title VII and the IHRA do not contain identical language, “both this court and Illinois state courts consistently state that the analytical standards are the same.”  Id. *9.  Thus, “[t]o constitute actionable sexual harassment, the activity ‘must be sufficiently severe or pervasive to alter the conditions of the [the victim’s] employment and create an abusive working environment.”  Id. *10.  While noting that “physical acts are considered ‘more severe than harassing comments alone,’” the Court also noted that “physical harassment lies along a continuum just as verbal harassment does.”  Id. *12.

Turning to the merits, the Seventh Circuit noted an employer is liable under the IHRA and Title VII “only if it was negligent in controlling working conditions.”  To prove such negligence, the Seventh Circuit explained Plaintiff must establish two points: (1) that El Milagro had “notice or knowledge of the harassment,” and (2) that El Milagro “did not take ‘prompt and appropriate corrective action reasonably likely to prevent harassment from recurring.”  Id. *16. 

Assuming that Plaintiff reported the first two incidents to Brito, as she claimed, the Seventh Circuit concluded that Plaintiff could not establish El Milagro’s knowledge of the first two incidents of alleged harassment.  Based on the record evidence, the Court reasoned that “what she told Brito led him to believe that she was complaining of accidental touching that happened because the production lines on which she and Gutierrez worked had close quarters.”  Id. at *21.  As a result, the Seventh Circuit concluded that “[w]e do not believe that a reasonable jury could conclude from [Plaintiff’s] deposition testimony, or any other evidence in the record related to her reporting of the first two incidents, that she gave Brito ‘enough information to make a reasonable employer think that there was some probability that she was being sexually harassed.’”  Id. *20-21. 

As to the third incident, all three judges agreed that investigation and corrective measures taken by El Milagro’s Human Resources department were sufficient.  The Seventh Circuit noted that “[a]n HR employee interviewed [Plaintiff] and Gutierrez separately,” “HR concluded that the events described by [Plaintiff] could not be substantiated,” and that El Milagro “provided [Plaintiff] with a letter, dated September 16, informing her that the case was closed and that it had told Gutierrez, in a ‘call of attention’ letter, to immediately change his behavior toward her.”  Id. *21-22.  The Seventh Circuit also determined that “[a]lthough El Milagro did not interview any witnesses, [Plaintiff] did not identify any.”  Id. *22.

Thus, the Seventh Circuit concluded that the “prompt investigation” was “the hallmark of a reasonable corrective action” (id.) and that “El Milagro’s investigation shows that it ‘took the harassment seriously and took appropriate steps to bring the harassment to an end.’ . . . [i]t had in place a viable and appropriate mechanism for reporting the misbehavior.”  Id.   A jury could not reasonably conclude, the Seventh Circuit held, that “El Milagro was negligent in fulfilling its responsibilities in responding to the situation.”  Id. 

Finally, as to alleged verbal harassment that occurred after HR investigated, the Seventh Circuit concluded that Plaintiff “did not report to anyone the names of the people who made the harassing comments that she overheard after the investigation concluded so El Milagro could not investigate them.”  Id. 

Accordingly, the Seventh Circuit affirmed the judgment of the district court.

Implications For Employers

The Seventh Circuit’s opinion clarifies what constitutes proper notice in alleged incidents of sexual harassment and reasonable corrective measures taken when an employer is properly on notice, including prompt investigations to bring alleged harassment to an end. 

Employers should evaluate their sexual harassment policies and practices to ensure that reporting mechanisms, documentation, and investigation process are sound and that reports of harassment are communicated promptly to those responsible for investigating them.  A thorough investigation and quick implementation of reasonable corrective measures can often insulate employers from liability under either Title VII or the IHRA. 

Posted on by Gerald L. Maatman, Jr.

President Trump’s New National Enforcement Program For The EEOC And What It Means For Employers

By Gerald L. Maatman, Jr., George J. Schaller, and Ryan T. Garippo

Duane Morris Takeaways:  On June 4, 2026, the U.S. Equal Employment Opportunity Commission (the “EEOC”) announced its National Enforcement Plan (the “NEP”) for fiscal years 2025 – 2029.  The NEP reflects the EEOC’s new priorities under President Donald Trump and formally rescinds the agency’s strategic objections during President Joseph Biden’s administration. 

Employers should take note of this development as it is clear that the NEP signals a forthcoming crackdown on: (1) employers’ diversity, equity, and inclusion (“DEI”) programs; (2) instances of “anti-American” bias; (3) efforts to limit “single-sex spaces” for transgender individuals; and (4) failures to provide religious accommodations.

The EEOC’s National Enforcement Plan

As readers of this blog will know, the EEOC looks and acts differently under President Trump than it did under President Biden.  President Biden’s strategic priorities, which we wrote about here, here, and here, largely focused on discrimination resulting from the use of artificial intelligence, preventing systemic harassment, enforcing equal pay obligations, and protecting historically marginalized groups.  President Trump’s EEOC is a lot different.

On June 4, 2026, the EEOC’s Chair Andrea Lucas (R) and Commissioner Brittany Panuccio (R) rolled out the agency’s new NEP over the objection of Commissioner Kalpana Kotagal (D).  The NEP describes the agency’s areas of strategic focus because “it is not feasible for the [EEOC] to devote the same amount of resources to each charge.”  (NEP at 2.)  Thus, “the agency must continue to be strategic about the matters it prioritizes to maximize the agency’s impact.”  (Id.)  To that end, the EEOC identified four major areas where it intends to be more proactive in its enforcement efforts, each of which is discussed more fully below.

First, the EEOC stated an explicit intention to attempt to “[r]emedy[] DEI-related race and sex discrimination.”  (Id. at 6.)  In particular, the EEOC cited the U.S. Supreme Court’s recent decisions in Ames v. Ohio Department of Youth Services, 605 U.S. 303 (2025), Muldrow v. City of St. Louis, Missouri, 601 U.S. 346 (2024), and Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, 600 U.S. 181 (2023) as the basis for its decision.  As a result, we expect to see continued efforts from President Trump’s administration to crackdown on DEI programs both in the workplace and in higher education.

Second, the EEOC states that it plans to prosecute claims with an intent to “protect[] American workers from anti-American national origin discrimination.”  (NEP at 6.)  This prosecutorial decision tracks with last year’s first-of-its-kind settlement against LeoPalace Resort, which we blogged about here, where a group of American workers alleged that they were subject to less favorable treatment than their Japanese colleagues.  We can also expect these enforcement actions to continue throughout the second Trump administration.

Third, the EEOC intends to ensure access for women to “single-sex spaces at work” due to the “binary nature of sex.”  (Id.)  This objective continues to signal a rollback of President Biden’s efforts to enforce protections in favor of transgender workers, and tracks with the agency’s decision last year to dismiss all lawsuits seeking to enforce such protections.  As readers will recall, we blogged about the decision to dismiss these lawsuits here because they were purportedly based on “gender ideology extremism.”  This area is one where there is the potential for a significant uptick in EEOC enforcement actions and investigations.

Fourth, the EEOC stated its continued commitment to “religious liberty rights” including the right “to receive religious accommodations and be free from religious discrimination, harassment, and related retaliation.”  (Id.)  As we explained here, however, employers can expect certain types of religious bias to be policed more heavily than others.  In accordance with President Trump’s policy platform, EEOC Chair Lucas has explicitly cited “antisemitism” as the basis for the current emphasis on religious discrimination.  This enforcement priority tracks with recent appellate court decisions, such as EEOC v. Center One, LLC, No. 22-2943, 2024 WL 379956, at *4 (3d Cir. Feb. 1, 2024), where the Third Circuit held that forcing an employer to work on Yom Kippur and Rosh Hashanah could create “’intolerable’ conditions of discrimination.”  Thus, the EEOC is signaling its intent to continue to build on precedent like Center One in the religious discrimination space.

Implications For Employers

Employers should take note of these enforcement priorities as it previews the types of cases that the EEOC intends to pursue both through investigations and litigation.  Thus, if they have not already, corporate counsel should consider whether any revisions are necessary to their organization’s DEI programs as well as to any policies concerning differential treatment provided based on national origin, sex, or religion.

Further, if an organization receives notice of an EEOC charge or subpoena – particularly one targeting a pattern, practice, or policy based on the above-mentioned objectives – it should take such allegations extremely seriously and contact experienced counsel to help them navigate the process.

Posted on by Gerald L. Maatman, Jr.

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

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

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

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

Case Background

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

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

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

The Court’s Decision

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

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

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

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

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

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

Implications For Businesses

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

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

Posted on by Jennifer A. Riley

The Beard Group’s Class Action Money & Ethics Conference Covers Major Developments And Trends In Class Action Litigation

By Jennifer A. Riley, Greg Tsonis, George J. Schaller, and Ryan T. Garippo

Duane Morris Takeaways: Jennifer A. Riley, Greg Tsonis, George J. Schaller, and Ryan T. Garippo, members of the Duane Morris Class Action Defense Group, recently attended the Beard Group’s Class Action Money & Ethics Conference organized in New York City.  The conference, held on May 21, 2026, hosted hundreds of attendees, covered key trends in class action litigation, and honored several attorneys for their accomplishments in the class action industry.  Jennifer A. Riley of Duane Morris gave the keynote address, and George J. Schaller and Ryan T. Garippo of Duane Morris received awards for their accomplishments as two of 12 Premier Class Action Lawyers Of Tommorow in the United States.

The Conference

At the Class Action Money & Ethics Conference, the Beard Group, Inc. hosts a gathering of the top class action professionals to discuss the hottest topics in class action and multi-plaintiff litigation, including new filings, pre-trial proceedings, settlements, verdicts, and the latest trends in this area of the law.  The Conference featured panelists and attendees who are attorneys on both sides of the bar, judges, as well as other professionals who focus their work on class action litigation.

The Conference features panels that speak on a wide range of topics.  These topics included the use of data analytics and artificial intelligence in class action litigation, mass arbitrations, the trends in data breach and consumer protection litigation, environmental class actions, and more.

The State Of The Industry

Jen Riley, Vice Chair of Duane Morris’s Class Action Defense Team, opened the Conference by presenting the ten latest trends in class action and multi-plaintiff litigation in her keynote speech.  The presentation is based on the findings from the Duane Morris Class Action Review, which is a “one-of-a-kind” publication, that summarizes class action trends and decisions across substantive areas of law.

As Jen Riley explained, in 2025, class action litigation exploded which led to record-breaking settlement figures by a wide margin.  In 2025, the ten largest class action settlements can be aggregated to a total of over $79 billion dollars which were paid from corporate defendants to individuals across the nation.  This trend was driven by high class certification rates, high quantities of class action filings, shifts within the substantive claims that plaintiffs are pursuing and several other variables.  The net effect of these trends was that the class action mechanism served as an effective tool for the plaintiffs’ bar to redistribute wealth at an unprecedented level.

Jen Riley also discussed the shifting landscape with respect to some of the most cutting-edge defenses to defeating class actions.  She discussed the success of corporate defendants in defeating class actions via motions to compel arbitration, and some of the latest case law on arbitrations that is currently being litigated before the U.S. Supreme Court.  In addition, she reviewed the ongoing federal appellate circuit split concerning the standards for when to grant conditional certification (if at all) under the Fair Labor Standards Act and the applicability of the personal jurisdiction defense to the claims of individual class and collective action members.  Jen Riley, providing the keynote address, is pictured below:

Panels On Class Actions And Related Issues

Following Jen Riley’s keynote address, numerous panels followed on the state of class action litigation across various areas of substantive law.  The panels in the morning focused on a wide range of topics.  The first panel discussed the use of data analytics in class action litigation, particularly by plaintiffs’ attorneys, to identify potential defendants to sue and then effectively prosecute their clients’ claims after.  There were also panelists on securities class actions, which helped explain the role that private plaintiffs’ firms have to play during the Trump administration’s control of the U.S. Securities and Exchange Commission.  The morning ended with a discussion of the future of litigation financing and the impact of various state laws on the continued viability of the practice. 

The panels in the afternoon focused largely on consumer class actions and again covered many areas of substantive law.  The afternoon opened with a lively panel on the current state of mass arbitrations, including a conversation regarding the plaintiffs’ bar’s use of arbitration agreements in their engagement letters, and how it impacts their ability to challenge the viability of arbitration agreements in federal and state courts across the country.  There were panels on how the plaintiffs’ bar evaluates claims in data breach cases, as well as the shifting trends in data privacy class actions as a result.  These panels were followed by additional discussions on the impact of multi-district litigation, environmental class actions, and a comparative analysis of global class actions which explained the various ways that plaintiffs are seeking to monetize mass torts and other alleged harms outside of Rule 23’s class action mechanism.  The afternoon concluded with a panel on the scope of consumer protection class actions, including the cutting-edge theories that plaintiffs are pursuing to advance the law in this space, as well as the challenges in identifying plaintiffs to pursue such claims in light of the Eleventh Circuit’s decision that service payments are per se impermissible in class action settlements.

Premier Class Action Lawyers Of Tommorow Award Ceremony

After the panels concluded, there was a reception which was emceed by the Honorable Kathy King, who is a Justice on the Supreme Court in New York County state court.  Justice King gave her concluding remarks on the event and also awarded this year’s Premier Class Action Lawyers Of Tommorow with awards for accomplishments in the class action industry.  The award was provided to twelve attorneys, under the age of 40, who are redefining the frontiers of class action litigation through innovative strategies, landmark victories, and unwavering commitment to justice on both sides of the bar.

This year’s award winners included Ryan Garippo and George Schaller, both of Duane Morris, who were honored to accept their awards from Judge King and the Beard Group.  George and Ryan are pictured below:

Posted on by Gerald L. Maatman, Jr.

Illinois Appellate Court Affirms Corporate Officers Who Did Not Knowingly Permit IWPCA Underpayment Violations Are Not Employers

By Gerald L. Maatman, Jr., Gregory Tsonis, and George J. Schaller

Duane Morris Takeaways: On March 17, 2026, in People ex. rel. Ill. DOL v. Quality Therapy & Consultation, Inc., et al., 2026 Ill. App. Unpub. LEXIS 594 (1st Dist. 2026), the Illinois Appellate Court affirmed the circuit court’s decision finding corporate officers were not “employers” as defined in section 2 of the Illinois Wage Payment And Collection Act (“IWPCA”), the corporate officers had not knowingly permitted underpayments, and accordingly, the corporate officers were not liable under Section 13 of the IWPCA.  Justice Margaret S. McBride authored the opinion on behalf of the Appellate Court.

The decision in Quality Therapy protects corporate decision-makers from personal and strict liability where those decision-makers do not “knowingly permit” a corporation, or such an employer, to violate provisions of the IWPCA. 

Case Background

In 1996, Quality Therapy and Consultation, Inc. was founded by Frances M. Parise and John Parise (collectively “the Parises”).  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594,at *2.  Quality Therapy provided occupational therapy, speech therapy, and physical therapy services in Illinois to long-term care facilities.  Frances Parise acted as Quality Therapy’s president and secretary whereas John Parise was the chief executive officer, and each owned 50% of Quality Therapy and shared authority for business decisions.  Id. at *2-3. 

After Quality Therapy incurred substantial legal fees from a 2015 federal investigation into its Medicare billing practices and experienced a slow in payments from a primary client, the State of Illinois, Quality Therapy’s profit margins shifted into the negative.  Id. at *3-4.  In September 2017, Quality Therapy, as a result of the negative margins, could not meet its payroll obligations and issued a WARN Act notice to its employees, “advising that the business would close and all employment would cease in 60 days.”  Id. at *4. 

Thereafter Quality Therapy informed staff they would not receive their September wages and Quality Therapy was closing on September 30, 2017.  Id.  Throughout September, the Illinois Department of Labor (the “Department”) received the first of “93 wage applications from [former] employees that would eventually total $550,496, exclusive of statutory penalties.”  See id. at *5.

Quality Therapy relied on a bank line of credit to fund payroll on a timely basis, and after the Parises notified the bank that Quality Therapy was closing, the bank immediately called the corporation’s line of credit and froze all funds on hand.  Id.  Quality Therapy never regained control of its bank account and was unable to access any of its money to pay its employees.

Circuit Court Case Background

In December 2019, the Department filed a three-count complaint, which was later amended in February 2020, and directed individual counts against Quality Therapy, as well as Frances and John Parise, that each knowingly permitted Quality Therapy’s underpayments of unpaid wages and other compensation.  The Department maintained all three defendants met the definition of employer under the IWPCA.  Id. at *7.

Quality Therapy had been dissolved and was found in default.  The Parises moved for summary judgment on the amended complaint and argued that the Illinois’ Supreme Court decision in Andrews v. Kowa Printing Corp., 217 Ill. 2d 101 (2005), “precluded a corporate officer’s individual liability under section 2 of the Wage Act.”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594, at *7-8.  The Department responded that “[the Parises] each acted directly or indirectly in [Quality Therapy’s] interest, which made them ‘employers’ within the meaning of section 2.” Id. at *8 

The circuit court denied summary judgment and then presided over a two-day bench trial focusing on Quality Therapy’s ability to pay.  Id.  The circuit court entered default judgment against Quality Therapy, but, the circuit court rejected “the Department’s argument that the Parises were ‘employers’” as defined in section 2 of the IWPCA, and found that “only [Quality Therapy] was the wage claimants’ employer under section 2.”  Id. at *8.  The circuit court also denied the claims against the Parises under section 2 and found “[t]he only proper [IWPCA] claim brought under the pleadings against [the Parises] is grounded in” section 13 of the IWPCA.  Id.  The circuit court reasoned that Frances and John Parise, as corporate officers of Quality Therapy, had not knowingly permitted the underpayments and were not liable under section 13 since Quality Therapy was incapable of meeting its payroll.  Id.  

The Department appealed on the grounds that “the circuit court erred in finding that the Parises were not employers with Section 2.” The Department acknowledged its argument on appeal ran contrary to the Illinois Supreme Court’s decision in Andrews, 217 Ill. 2d 101, but the Department contended that the 2011 amendment to section 13 of the IWPCA “impliedly amended section 2 [of the IWPCA] and superseded Andrews.” Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594, at *9.

The Appellate Court Decision

The Appellate Court affirmed the circuit court’s holding that the Parises were not employers within section 2 of the IWPCA.  The Appellate Court, applying the Andrews precedent and interpreting “the statutory language,” concluded “that the amendment to section 13 had no effect whatsoever on section 2” of the IWPCA.  Id. at *11.

The Appellate Court rejected the Department’s argument that the 2011 amendment to the IWPCA blended sections 2 and 13 such that it “would render anyone who had a decision making role in payment decisions personally liable for unpaid wages and final compensation.”  Id. at *9.  The Appellate Court explained the two sections contained distinct definitions, standards, and terms, and presumed that “the legislature did not intend, inconvenient, absurd, or unjust consequences.”  Id. at *10. 

The Department’s appeal focused on the last clause of section 2 stating that “any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee” is deemed an “employer” for purposes of the IWPCA.  Id. at *11 (quoting 820 ILCS § 115/2).  The Department asserted the last clause of section 2 should be read “in conjunction with section 13.” 

At issue was the underlined language, added to section 13 in the 2011 amendment:

“In addition to an individual who is deemed to be an employer pursuant to section 2 of this Act, any officers of a corporation or agents of an employer who knowingly permit such employer to violate the provisions of this Act shall be deemed to be the employers of the employees of the corporation.”  820 ILCS § 115/13.

The Appellate Court disagreed that the 2011 amendment to section 13 “effectively modified section 2 and dramatically changed a corporate decision maker’s potential liability for wages.”  Id. at *11-12.  The Appellate Court reasoned that the IWPCA imposes liability on “two separate and distinct definitions of ‘employer’” because “[i]f there was no distinction between the liability of the corporation and the individual officer, then there would be no reason to have two separate definitions of what constitutes an ‘employer.’”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594at *12-13 (citing Elsener v. Brown, 2013 IL App (2d) 1209209 ¶ 66).

The Appellate Court also rejected the Department’s expansive interpretation of section 2 and section 13 as “unpersuasive.”  Id. at *13.  Notably, the Appellate Court cited the Illinois Supreme Court’s language in Andrews, which acknowledged “the breadth of the language” in section 2 was “confounding” because when read literally, it would “make an ‘employer’ out of every person who possesses even a modicum of authority over another employee, from the CEO to the head of the maintenance staff, as such persons undeniably act ‘directly or indirectly in the interest of an employer in relation to an employee.’”  Andrews, 217 Ill 2d. at 107.  Accordingly, following the Illinois Supreme Court, the Appellate Court opined that “[a] literal reading [of that clause] would result in absurdity or unjustness in part because of an employer’s strict liability for wages.”  Quality Therapy, 2026 Ill. App. Unpub. LEXIS 594at *13. 

Various other reasons supported the Appellate Court’s decision.  Andrews, the Appellate Court noted, has been consistently applied without “any court or litigant suggesting that the analysis was abrogated by the amendment to section 13 that took effect in 2011.”  Id. at *16 (collecting cases following Andrews.)  Additionally, the Appellate Court noted that the legislature’s drafted language across both relevant sections of the IWPCA were not constructed with “parallel wording” nor a declaration of an intent to change section 2’s meaning for the phrase “any person or group of persons.”  Id. at *18.  Following the Department’s interpretation of the IWPCA, the Appellate Court reasoned, would upend “well-established principles of corporate law” and “create personal liability for shareholders, officers, managers, and supervisory employees, regardless of the precision with which corporate formalities are observed, and would remove the fundamental protections afforded by long-standing principles of corporate law.”  Id. at *21-22.

Consequently, the Appellate Court found “the amendment to section 13 maintains the framework of the [IWPCA] – it did not alter the general definition set out in section 2 nor did it modify liability under section 13.”  Id. at *20. 

Finally, the Appellate Court also dismissed the Department’s “new argument on appeal” that it could rely on a self-adopted regulation “which blends sections 2 and 13 based on the Department’s reading of the amendment.”  Id. at *22.  The Appellate Court found the Department’s interpretation was not well founded and the regulation was “also flawed because it is not based on the new, clear prefatory clause in section 13.”  Id. at *26-27.

Accordingly, the Appellate Court affirmed the circuit court’s judgment.

Implications For Employers

Quality Therapy draws a line in the sand delineating when a corporate decisionmaker meets the definition of “employer” under section 2 of the IWPCA.  The Appellate Court relied on longstanding Illinois Supreme Court precedent to find the 2011 amendment to section 13 of the IWPCA did not alter the scope of section 2 of the IWPCA.  

Employer’s facing claims for violations of the IWPCA must ensure they comply with the payment provisions of the IWPCA.  However, protections for corporate-decision makers remain intact, and merely being in a decision-making role with respect to payment decisions is insufficient to establish personal liability for unpaid wages and final compensation under the IWPCA. 

Instead, Quality Therapy establishes that only those corporate decision makers who “knowingly permit” an employer to violate provisions of the IWPCA shall be also deemed an “employer of the employees of the corporation” pursuant to section 13 of the IWPCA.

Posted on by Gerald L. Maatman, Jr.

Third-Party Complaint Dismissed With Prejudice After Alabama Federal Court Finds Parties’ Indemnity Provisions Do Not Apply To Title VII In EEOC Sex Discrimination Lawsuit

By Gerald L. Maatman, Jr., George J. Schaller, and Andrew P. Quay

Duane Morris Takeaways: On March 9, 2026, in EEOC v. TCI of Alabama, LLC, Case No. 25-CV-89, 2026 U.S. Dist. LEXIS 47895 (N.D. Ala. Mar. 9, 2026), Judge Corey L. Maze of the U.S. District Court for the Northern District of Alabama dismissed a third-party complaint seeking to enforce indemnity provisions between Defendant-TCI and third-party staffing firms with the aim of indemnifying TCI from liability under Title VII.  The Court held that parties cannot contract away their responsibilities under Title VII in light of its comprehensive remedial scheme. 

The Court’s decision illustrates that corporate defendants cannot shift potential Title VII liability through contracted indemnity clauses entered into by staffing firms that refer employees.

Case Background

TCI of Alabama, LLC (“TCI”) disposes and recycles PCB contaminated items at various plants and employs laborers to do so.  Id. at *3.  To hire laborers, since 2020, TCI has “relied exclusively on third-party temporary staffing agencies” who refer qualified applicants.  Id.

The EEOC investigated TCI after the Commission learned that TCI allegedly refused to recruit and hire qualified women for laborer positions.  Id.  Following its investigation, the EEOC issued TCI a letter of determination, found reasonable cause to believe that TCI violated Title VII, and invited TCI to conciliate.  Id.  The Parties did not reach a conciliation agreement, and the EEOC filed the instant lawsuit.  Id. 

The EEOC’s lawsuit brought one claim for sex discrimination under Title VII.  Id. at *3-4.  According to the EEOC, TCI “intentionally excluded from employment a class of qualified females seeking employment as laborers in favor of hiring equally or less qualified male applicants.”  Id. at *4.  The EEOC maintained that TCI refused to hire women for numerous reasons including that TCI instructed third party staffing agencies, Orin Staffing, LLC, Personnel Staffing, Inc., and WorkSmart Staffing, Inc. (the “Staffing Firms”) not to refer women for its laborer positions because “among other reasons, women would ‘distract’ male workers and increase the risk of sexual harassment in the workplace.”  Id. 

TCI answered the complaint and then filed its own third-party complaint for breach of contract against the Staffing Firms.  Id.  TCI’s third-party complaint alleged the Staffing Firms “agreed via contracts” to lawfully refer qualified laborers to TCI.  Id.  The contracts also contained indemnification provisions, which required the Staffing Firms, as joint employers of referred employees, to indemnify TCI “for all claims caused by the [Staffing Firms’] breach of contract, including a breach caused by failing to follow the law when referring applicants.”  Id. at *4-5.

Accordingly, TCI contended that even if the EEOC’s allegations were true, the Staffing Firms’ compliance with TCI’s alleged unlawful instruction was itself “unlawful and violated Title VII.”  Id. at *5.  Therefore, the Staffing Firms exposed TCI to legal claims which TCI was indemnified for under their agreed contracts.  Id.

The EEOC and the Staffing Firms moved to dismiss TCI’s third-party complaint.  Id.  Their arguments for dismissal varied. Id.  The Court focused on one argument raised by the EEOC, whether Title VII preempts TCI’s breach of contract claim and therefore requires dismissal of TCI’s third-party complaint.  Id. at *6-7.

The Court’s Opinion

Judge Maze agreed with the EEOC that Title VII preempts TCI’s breach of contract claim and dismissed the third-party complaint with prejudice, explaining that any amendment would be futile.  Id. at *9.

Acknowledging Title VII’s “comprehensive remedial scheme,” the Court adopted the holding in EEOC v. Blockbuster, Case No. 07-CV-2612, 2010 U.S. Dist. LEXIS 2889 (D. Md. Jan. 14, 2010), which held that parties accused of violating Title VII may not bring claims for indemnification against third parties “to skirt their own liability.”  TCI of Alabama, LLC,2026 U.S. Dist. LEXIS47895, at *7.  In Blockbuster, the EEOC brought a Title VII action against the home video rental chain for failing to prevent and correct known sexual harassment at one of its warehouse facilities.  Blockbuster, 2010 U.S. Dist. LEXIS 2889, at *1.  Blockbuster, like TCI here, filed a third-party complaint against a staffing firm that agreed to indemnify Blockbuster against any losses arising from any employment claim brought by its employees.  Id. The Court in Blockbuster granted judgment on the pleadings against Blockbuster and held that “[t]he primary goal of Title VII to eradicate discriminatory conduct would be thwarted if Blockbuster were permitted to contract around its obligations and shift its entire responsibility for complying with Title VII” to a third party.  Id.

The Court here agreed that the policy rationale in Blockbuster applied in greater force to TCI’s third-party indemnification claims given those claims rested on the EEOC’s allegation that TCI instructed staffing firms not to refer qualified women.  TCI of Alabama, LLC,2026 U.S. Dist. LEXIS47895, at *8. “Federal public policy would be undermined,” the Court explained, “if TCI had the ability to tell others to help TCI violate federal law and then pay TCI if TCI got caught.”  Id.  Therefore, a contractual indemnity provision could not shield TCI from liability under Title VII.

Even though the EEOC’s lawsuit continues against TCI, the Staffing Firms involved in hiring are not off the hook.  In a footnote, the Opinion clarifies that if the Staffing Firms violated Title VII by complying with TCI’s unlawful request to not refer qualified women for laborer jobs, they too can face liability in another case.  Id. at *9, n. 2. 

Accordingly, the Court dismissed TCI’s third-party complaint with prejudice.

Implications For Businesses

EEOC v. TCI of Alabama, LLC demonstrates that corporate defendants cannot turn a blind eye to potential Title VII harms and attempt to contract away Title VII liability.  While indemnity clauses may appear all-encompassing, courts continue to decline coverage where Title VII violations are alleged. 

This Court agreed that public policy concerns control and remain critical in analyzing the scope of an indemnity provision in alleged gender-bias hiring under Title VII.  After TCI of Alabama, LLC, Companies contracting with outside staffing firms cannot rely on “shifting the blame” through indemnity provisions in contracts when faced with Title VII claims brought by the EEOC. 

Posted on by Gerald L. Maatman, Jr.

California Court Of Appeal Affirms Dismissal Of Standalone PAGA Action Because A Prior Global Settlement Precluded Overlapping Claims

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

Duane Morris Takeaways:  On November 19, 2025, in Brown v. Dave & Buster’s of Cal., Inc., Case No. B339729, 2025 Cal. App. LEXIS 750 (Cal. App. Nov. 19, 2025), the California Court of Appeal for the Second Appellate District affirmed a trial court’s decision granting judgment on the pleadings that barred a standalone PAGA plaintiff’s claims for lack of standing and due to a prior global settlement with overlapping claims.

In an important decision for all employers in California, the Court of Appeal recognized a prior PAGA settlement fully encompassed and released the standalone plaintiff’s claims as to all defendant entities.  Accordingly, the Court of Appeal affirmed the trial court order finding that the plaintiff did not have standing to sue and her claims were barred by claim preclusion. 

Case Background

Lauren Brown worked for Dave & Buster’s of California, Inc. and Dave & Buster’s Inc. (collectively “Buster’s”) in its Westchester restaurant location from November 2016 to April 2018.  Id. at *1-2. 

In June 2019, Brown filed a standalone representative action under the Labor Code Private Attorneys General Act (“PAGA”) against Buster’s and alleged Buster’s “failed to provide meal periods, rest periods, vacation pay, and wage statements . . . and routinely required employees to work off-the-clock.”  Id. at *2.

Buster’s filed a demurrer to abate/stay, or in the alternative, a motion for discretionary stay, and argued that Brown’s action “was between the same parties on the same cause of action in at least two previously-filed actions” in Espinoza v. Dave & Buster’s Management Corporation, Inc., Los Angeles County Superior Court Case No. BC710345, and Lopez v. Dave & Buster’s of California, Inc., et al.,San Diego County Superior Court Case No. 37-2018-00054080-CU-OE-CTL.  See Brown, 2025 Cal. App. LEXIS 750at *2. In October 2019, the trial court found Brown’s case was “‘substantially identical’ to the Espinoza action” and sustained Buster’s demurrer and stayed the case.  Id. 

Buster’s, in February 2020, filed a statement with the trial court concerning additional information on earlier-filed PAGA actions.  Buster’s statement included “when each case was filed, when the other plaintiffs submitted their requisite notices to the Labor and Workforce Development Agency (Agency), and which claims overlapped with Brown’s.”  See id. at *3.  Buster’s disclosed Rocha v. Dave & Buster’s Management Corporation, Inc., Santa Clara County Superior Court Case No. 19CV348961, and Andrade v. Dave & Buster’s Management Corporation, Inc., San Diego County Superior Court Case No. 37-2019-00019561-CU-OE-CTL (“Andrade”).  See Brown, 2025 Cal. App. LEXIS 750at *3.

On April 1, 2022, the Andrade parties entered into a long-form settlement agreement with all three Buster’s entities, including those that Brown sued.  Included in the released claims was “failure to pay accrued vacation pay at the end of employment, including but not limited to claims under the California Labor Code.”  The released claims specifically cited § 227.3 of the California Labor Code regarding vacation pay.  Id. at *4-5.

The plaintiff in Andrade moved for settlement approval, showing she notified the Agency of her motion and settlement agreement.  The Agency accepted the settlement and did not oppose it.  On November 4, 2022, the San Diego Superior Court granted approval of the Andrade settlement.  Id.

In April 2023, the parties in Brown’s action notified the court that the Andrade action had settled.  Brown alleged there “might not be complete overlap with Andrade as to her unpaid vacation claim, but she was still checking on this issue.”  Id. at *4.

Thereafter, in June 2023, Buster’s moved for judgment on the pleadings and argued the Andrade settlement released all of Brown’s claims and that claim preclusion barred Brown’s lawsuit.  Id.  Buster’s supported its motion with various documents from the Andrade action, including the pre-filing notice to the Agency on May 13, 2019, the Andrade complaint filed on November 14, 2019 (which omitted a vacation pay violation), the amended notice letter to the Agency on February 3, 2022, and the corresponding amended complaint filed in Andrade on March 10, 2022.  The amended notice to the Agency added a vacation pay claim, under § 227.3, and added the named defendants in Brown’s case.  Id. at *4. 

Brown opposed Buster’s motion and asserted she had standing to bring all claims in her PAGA letter because Buster’s violated her rights under the Labor Code.  Citing LaCour v. Marshalls of Cal., LLC, 94 Cal. App. 5th 1172 (2023), Brown maintained because the Andrade plaintiff failed to exhaust her claims before the Agency, “she was therefore not deputized to pursue and settle the Labor Code violations in [Andrade’s] amended complaint.”  See Brown, 2025 Cal. App. LEXIS 750at *5.  Brown also noted the plaintiff in Andrade waited 35 days between sending her amended pre-filing notice and filing her complaint in court, and therefore, the Andrade settlement did not apply to Brown’s §227.3 vacation pay claims against the Buster’s entities Brown sued.  Id.

The trial court granted Buster’s motion without written comment, dismissed Brown’s complaint with prejudice, and entered judgment in favor of Buster’s.  Thereafter, Brown appealed.  Id. at *5-6.

The California Court of Appeal’s Decision

The Court of Appealaffirmed the trial court’s decision, finding Brown lacked standing, claim preclusion barred Brown’s PAGA claims, and the Andrade plaintiff’s failure to wait 65 days to file her amended complaint was a “harmless defect” where the Agency had an opportunity to object to the Andrade global settlement and did not do so.

At the outset, the Court of Appealopined Brown identified no error from the trial court decision and determined Brown “effectively concede[d]” the Andrade settlement resulted in a final judgment on the merits and did not bar her non-vacation pay claims.  Id. at *6. The Court of Appealsimilarly rejected Brown’s argument that she had standing to pursue Labor Code violations after November 4, 2022, the date after court approval of the Andrade settlement, because her employment with Buster’s ended in 2018.  Id. at *6-7.

The Court of Appealconsidered the sole issue as — “did Andrade’s failure to adhere strictly to the 65-day waiting period for her amended claims defeat Buster’s claim preclusion argument?”  Id. at *7.  In determining this question, the Court of Appealexplained § 2699.3 of the Labor Code provides “if the Agency does not respond within 65 calendar days of an aggrieved employee providing it with written notice, ‘the aggrieved employee may commence a civil action.’”  The crux of the Court of Appeal’sdecision centered on Andrade’s amended complaint which was filed “fewer than 65 days after her amended notice to the Agency.”  Id.

The Court of Appealreasoned claim preclusion “bars a new lawsuit if the first case had (1) the same cause of action; (2) between the same parties, or parties in privity; and (3) a final judgment on the merits” and noted the doctrine “promotes judicial economy by requiring all claims based on the same cause of action that were or could have been raised to be decided in a single suit.”  Id. 

Brown argued LaCour, 94 Cal.App.5th 1172 (2023), controls and suggested the Court of Appealfind the Andrade settlement “does not bar her vacation pay or reach the Buster’s defendants in [Brown’s] case because [the] Andrade [plaintiff] filed her second amended complaint only 35 days after submitting her amended presuit notice to the agency.”  See Brown, 2025 Cal. App. LEXIS 750at *7-9.  The Court of Appeal interpreted Brown’s reliance on LaCour to suggest the plaintiff in Andrade “was never authorized to pursue the additional vacation pay claim and new defendants in her amended complaint” which would necessarily encompass Brown.  Id. at *9.

Buster’s contended LaCour is “‘completely inapposite’ and factually distinguishable” given “Andrade’s initial notice letter, initial complaint, amended notice letter, and amended complaint ‘expressly include all of Brown’s alleged Labor Code violations such that they encompass Brown’s entire PAGA claim.’”  Buster’s additionally contended “Andrade’s failure to abide by the 65-day waiting period is a technicality” and “not dispositive as to the issue of administrative exhaustion under PAGA.”  Id.

The Court of Appealdetermined on the “administrative exhaustion issue, LaCour does not apply” and California’s Supreme Court has described “PAGA’s statutory pre-filing notice requirement as a ‘condition of suit.’”  Similarly, the Court of Appealreasoned the purpose of PAGA’s pre-filing notice requirement is to afford “the Agency ‘the opportunity to decide whether to allocate scare resources to an investigation…’” Id. at *11. It explained “[n]othing in the statute’s language or any published case law suggests the 65-day waiting period also applies to amended notices and complaints.”  Id.  Accordingly, the Court of Appealfound “Andrade’s failure to wait 65 days was a harmless defect” and the “Agency accepted Andrade’s global settlement with Buster’s after it had an opportunity to object.”  Id.  at *12.  

In sum, the Court of Appeal held “Andrade’s settlement fully encompassed and released Brown’s claims as to all Buster’s entities, thus satisfying all elements of claim preclusion” and affirmed the trial court’s decision. 

Implications For Employers

Employers facing PAGA litigation can rely on Brown for support that prior settlements have a preclusive effect where, as here, the prior settlement and second lawsuit have overlapping claims. 

Brown also supports the proposition that PAGA’s 65-day notice waiting period requirement for filing suit may not apply to amended PAGA notices.  In another win for employers, the Court of Appeal found the plaintiff in Brown could not recover for periods after she left the company in 2018 – thereby limiting the scope of PAGA penalties further.

Given the myriad issues employers defend against in PAGA litigation, this decision signals an important strategic consideration in defending overlapping PAGA actions.  Employers when faced with multiple PAGA actions must consider the sequencing of PAGA settlements and whether an already settled PAGA action can create a preclusive effect barring a separate PAGA action.

Posted on by Gerald L. Maatman, Jr.

Duane Morris Class Action Review Cited In Three U.S. Supreme Court Briefs

By Gerald L. Maatman, Jr., Jennifer A. Riley, Ryan T. Garippo, and George J. Schaller

Duane Morris Takeaways:  On October 15, 2025, in Eli Lilly & Co., et. al. v. Richards, et al., No. 25-476 (U.S. Oct. 17, 2025), Eli Lilly & Co. filed a Petition For Writ Of Certiorari after a decision by the U.S. Court of Appeals for the Seventh Circuit which created a four-way circuit split as to the proper interpretation of 29 U.S.C. § 216(b).  This petition drew briefing from several amici curiae, including the U.S. Chamber of Commerce and the CHRO Association.

Similarly, when the U.S. Court of Appeals for the Ninth Circuit decision widened that circuit split to include five different methodical approaches in Cracker Barrel Old Country Store, Inc. v. Andrew Harrington, et al., No. 25-559 (U.S. Nov. 5, 2025), Cracker Barrel also filed a Petition For A Writ of Certiorari.

Significant for readers of this blog, both petitioners and amici also cited the Duane Morris Class Action Review as the authoritative source on FLSA certification statistics and the widening circuit split regarding when it is appropriate to send notice to would-be plaintiffs, under 29 U.S.C. § 216(b) in a Fair Labor Standards Act (“FLSA”) collective action.

In its review of our practice group’s resource, Employment Practices Liability Consultant Magazine (“EPLiC”) said, “The Duane Morris Class Action Review is ‘the Bible’ on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.” EPLiC continued, “The review is a must-have resource for in-depth analysis of class actions in general and workplace litigation in particular.

With the submission of our analysis to the U.S. Supreme Court, we are humbled and proud to be cited as the authoritative source in the class action space.

The Briefing In Richards And Harrington

Both Cracker Barrel and Eli Lilly correctly argued in their petitions that “the circuits are split five ways in how to interpret” Section 216(b) and the case law in this area “is in total disarray.”  Both petitions ask the U.S. Supreme Court to help organize this “disarray.”  As such, a brief guide through these disjointed methodological approaches is included below.

First, there is the familiar and lenient two-step standard in Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987), which was expressly adopted by the U.S. Court of Appeals for the Second Circuit, Scott v. Chipotle Mexican Grill, Inc., 954 F.3d 502, 515 (2d Cir. 2020), and “acquiesced to . . . without express adoption” by the First, Third, Tenth, and Eleventh Circuits.  Kwoka v. Enterprise Rent-A-Car Company of Boston, LLC, 141 F.4th 10, 22 (1st. Cir. 2025); Zavala v. Wal Mart Stores Inc., 691 F.3d 527, 534 (3d Cir. 2012); Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095, 1105 (10th Cir. 2001); Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208, 1219 (11th Cir. 2001)

Under the Lusardi approach, at step one, a plaintiff moves for conditional certification, relying solely on his or her allegations, and not competing evidence submitted by the employer. If the employee’s motion is granted, would-be plaintiffs receive notice of the lawsuit and then have the ability to opt-in as party plaintiffs to the case and participate in discovery.  At the close of discovery, the employer can then move to decertify the conditionally certified collective action, and prove the employees are not similarly situated with the benefit of discovery and evidence.

Second, in Campbell v. City of Los Angeles, 903 F.3d 1090, 1114 (9th Cir. 2018),the Ninth Circuit adopted a variation of the Lusardi two-step approach but also required the plaintiff to show he or she is similarly situated to his or her fellow employees in “some material aspect of their litigation” and not just similar in some sort of irrelevant way, but the plaintiff may rely on mere allegations to make that showing.

Third, the Fifth Circuit in Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430, 443 (5th Cir. 2021), rejected Lusardi’s two-step approach outright, and required its district courts to “rigorously enforce” the FLSA’s similarity requirement at the outset of the litigation in a one-step approach.  “[T]he district court needs to consider all of the available evidence” at the time the motion is filed and decide whether the plaintiff has “met [his or her] burden of establishing similarity.”  Id. at 442-43.

Fourth, the Sixth Circuit in Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023), adopted a comparable standard to Swales requiring the employee to show a “strong likelihood” that others are similarly situated to him or her before the district court can send notice, but leaving open the possibility of the employer filing a motion for decertification down the line. Clark, 68 F.4th at 1011.

Fifth, the Seventh Circuit in Richards, et al. v. Eli Lilly & Co, et al., 149 F.4th 901 (7th Cir. 2025), rejected the Lusardi framework but declined to go as far as Clark or Swales.  Instead, the Seventh Circuit approach requires “a plaintiff must first make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated” to secure notice and an employer “must be permitted to submit rebuttal evidence” for the court to consider.  Richards, 149 F.4th at 913.  But, there is not a bright line rule as to whether the court should decide the similarly situated question in a one or two step approach as the analysis is not an “all-or-nothing determination.”  Id. at 913-914.

Sixth, as correctly noted by counsel for Cracker Barrel, the U.S. Courts of Appeal for the D.C., Fourth, and Eighth Circuits have not yet opined on the proper interpretive method, leaving their district courts free to choose among the available options.

Duane Morris Class Action Review Citations

It should go without saying that these issues are complicated, and employers are looking to experienced practitioners to help them navigate this procedural morass.  For that reason, both petitioners and the amici curiae turned to the Duane Morris Class Action Review, and its authors, as the authoritative source in support of their petitions.

The first citation is found in Eli Lilly’s petition for writ of certiorari, which cites Avalon Zoppo, Circuit Split Widens on Judicial Approach to Sending FLSA Collective Action Notices, Nat. L. J. (Aug. 11, 2025), regarding the proper interpretation of Richards, following the Seventh Circuit’s decision in that case.  In that article, Gerald L. Maatman, Jr., Chair of the Duane Morris Class Action Defense Group, stated “[t]he [Seventh Circuit’s] holding is going to reverberate and have a huge impact on wage and hour litigation throughout the United States.”

The second citation can be found in Cracker Barrel’s petition, following the Ninth Circuit’s holding in Harrington, which cites directly to the Duane Morris Class Action Review for varying conditional certification rates under this patchwork quilt of legal standards. Indeed, in the 2024 and 2025 editions of the Duane Morris Class Action Review, our analysis showed that:  (1) the federal circuit courts that follow or acquiesce to Lusardi grant conditional certification at rates of 84%; (2) the Ninth Circuit grants conditional certification at rates of approximately 71% under the lenient-plus approach; and (3) the remaining Fifth, Sixth, and Seventh Circuits, with varied stricter standards, granted certification at rates approximating 67%.  The petition further noted our finding that only approximately 10% of conditionally certified FLSA collective actions reach the decertification stage.

The third citation is found in the U.S. Chamber of Commerce and the CHRO Association’s amicus brief which relies on the Duane Morris Class Action Review for the proposition that “motions for conditional certification . . . are granted in a large majority of [FLSA] cases.”  Looking at the statistics, the amici highlight “[i]n 2024, district courts granted 80% of motions seeking court-ordered notice” with “Plaintiffs enjoy[ing] similar success in past years”

These U.S. Supreme Court practitioners and defense counsel are not alone as others refer to the Duane Morris Class Action Review as “the Bible” on class action litigation.  It is also relied on by some of the world’s largest plaintiffs’ firms and federal judges, see, e.g., Laverenz v. Pioneer Metal Finishing, LLC, 746 F. Supp. 3d 602, 614 (E.D. Wis. 2024).  The Duane Morris Class Action Review is the “one stop shop” and authoritative source on collective action certification rates, collective action trends and analysis, and the implications, pressures, and contours that parties face when engaged in FLSA collective action litigation.

Implications For Employers

Although the petitioners are still briefing their petitions, it is clear that the myriad approaches adopted by the federal circuit courts are ripe for some clarity from the U.S. Supreme Court, which would hopefully provide a roadmap for district courts to assess collective actions uniformly.

Further, the framework for when and how to send notice under Section 216(b) are not the only issues presented by these petitions.  Eli Lilly expressly invited the U.S. Supreme Court to overturn Hoffman-La Roche, Inc. v. Sperling, 493 U.S. 165 (1989) and plaintiff-appellee in Harrington would also have the high court decide whether Bristol-Myers Squibb Co. v. Sup. Ct. of Cal., 582 U.S. 255 (2017) applies to collective actions, which we blogged about here.

Because these questions, and many others, remain in flux and unanswered, employers should monitor this blog for updates as it is a trusted source for companies, defense counsel, plaintiffs’ firms, federal judges, and U.S. Supreme Court practitioners alike.  We will be following these petitions as they unfold.

Posted on by Gerald L. Maatman, Jr.

Signaling A Slowdown? EEOC’s FY 2025 Lawsuit Filings Reflect A Narrowing Of Priorities After Change In Presidential Administration

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

Duane Morris Takeaways:  In FY 2025 (October 1, 2024 to September 30, 2025), the EEOC’s litigation enforcement activity stalled significantly compared to previous years.  By the numbers, FY 2025 lawsuit filings ended on the lower end of the spectrum with 94 lawsuits filed compared to the height of filings in FY 2018 (217 lawsuits).  The decline in enforcement activity suggests that during President Trump’s second term in office, employers should not expect the EEOC to be as aggressive as past regimes in terms of the volume of government enforcement lawsuits, particularly in terms of systemic litigation.

Though the overall filings totals are lower than previous years, certain geographic regions, types of claims, and key industries remain prime targets of the Commission’s lawsuits.  Our analysis of these patterns is set forth below and is offered to arm employers with the EEOC’s FY 2025 litigation scorecard through an evaluation of district office enforcement activity, filings by statute and discrimination basis, and the most impacted industries. 

In sum, there is still a bevy of EEOC lawsuits being filed against businesses, but in a more localized and targeted fashion.  Employers should continue their legal compliance with all EEOC initiatives.

Lawsuit Filings Based On Month And Year

The EEOC’s fiscal year ends each year on September 30.  The final deluge of filings for EEOC-initiated litigation maintained its year-end boost in 2025.  This year, in September alone, 35 lawsuits were filed, down from September filings in FY 2024 (50 lawsuits filed) and September filings in FY 2023 (67 lawsuits filed) – but still a significant total, nonetheless.  Of the 94 total filings this year, just over one-third of EEOC lawsuits were filed in September, down from FY 2024’s last-minute filing frenzy accounting for half of that year’s filings.  The following chart shows the EEOC’s filing pattern over FY 2025:

We track the EEOC’s filing efforts across the entire fiscal year with its beginning in October through the anticipated filing spree in September.  Unlike other fiscal years, the EEOC’s filing patterns were consistent in the first half of FY 2025, peaking with 14 lawsuits in January.  Filings again slowed down until Summer, where there was a resurgence of another 14 lawsuits in June 2025.  Thereafter, lawsuit filings dipped until the “eleventh hour” in September.

Comparing these filings in FY 2025 to previous years, the EEOC filed significantly less lawsuits than in FY 2024 (111) and FY 2023 (144 lawsuits), signaling a trend in decreased EEOC enforcement activity.  Though EEOC litigation filings continuously decreased compared to pre-COVID era filing metrics, the EEOC’s presence as a litigation powerhouse persists.  The following graph shows the EEOC’s year-over-year fiscal year filings beginning in FY 2017 through FY 2025:

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 throughout the EEOC’s fiscal year.  Some district offices tend to be more aggressive than others.  Some focus on different case filing priorities.  The following chart shows the number of lawsuit filings by each of the EEOC district offices.

In FY 2025, Philadelphia and Chicago led the pack in filing the most lawsuits at 11 each, followed by Indianapolis with 8 filings, then Atlanta, Birmingham, Houston, and Phoenix with 7 filings, and Charlotte, New York, and Miami each with 6 filings.  St. Louis had 5 filings, Los Angeles and San Francisco had 4 filings, and Dallas had 3 filings.  Memphis had the lowest amount with only 2 filings. 

Like FY 2024, Philadelphia proved itself as a leader in EEOC enforcement filings. Chicago remained steady with 11 filings, same as FY 2024.  St. Louis (2 filings in FY 2024) and Phoenix (4 filings in FY 2024) also experienced increases in filings compared to last year.  Other offices comparatively lagged in enforcement activity, Atlanta (11 filings in FY 2024), Indianapolis (9 filings in FY 2024), and Houston (8 filings in FY 2024), showed slight decreases in enforcement activities.  Across the board filings generally evened out for each district office compared to FY 2024, but overall, filings fell.  

Although filing trends were down for all Districts, the total filings demonstrate the EEOC maintained its consistent litigation strength, across all district offices.  Employers with operations in Philadelphia and Chicago should pay extra attention to EEOC charge activity given the aggressiveness of the Commission in those regions.

(Note: Three EEOC press releases from the Washington D.C. Field Office included their lawsuit filings as part of the Philadelphia District Office statistics)

Lawsuit Filings Based On Type Of Discrimination

We also analyze the types of lawsuits the EEOC filed in terms of the statutes and theories of discrimination alleged. This enables us to determine how the EEOC is shifting its strategic priorities.

When considered on a percentage basis, the distribution of cases filed by statute skewed significantly in favor of Title VII cases when comparing FY 2025 to previous fiscal years.  Title VII cases once again made up the majority of cases filed, as they constituted 50% of all filings in FY 2025 (decreased from 58% of all filings in FY 2024, significantly down from 68% of all filings FY 2023 and 69% of filings in FY 2022, and decreased compared to 61% of all filings in FY 2021).

Overall, ADA cases also made up the next most significant percentage of the EEOC’s FY 2025 filings – totaling 31.5%.  This is an overall decrease in previous years where ADA filings amounted to 42% in FY 2025, 34% in FY 2023, and 37% in FY 2021.  Though these filings are marginally higher than FY 2022 where ADA filings on a percentage basis amounted to 29.7% of all filings.

There was also an uptick in ADEA filings, as 9 ADEA cases were filed in FY 2025, whereas 6 age discrimination cases were filed in FY 2024, after 12 age discrimination cases were filed in FY 2023 and 7 age discrimination cases were filed in FY 2022.  Like FY 2024, this year the EEOC pursued Pregnant Worker’s Fairness Act cases with 6 filings compared to FY 2024’s 3 filings.  In addition, FY 2025 had a slight increase in Pregnancy Discrimination Act cases where 5 cases were filed compared to FY 2024’s 4 filed cases.  Notably absent from FY 2025’s filing balance are cases under the Equal Pay Act and Genetic Information Nondiscrimination Act.  The following graph shows the number of lawsuits filed according to the statute under which they were filed.

We also collect data on the allegations for which the EEOC bases its litigation filing. 

The EEOC’s basis for suit remained the same among its core tenets, with Disability, Sex, and Retaliation claims leading the way.  Collectively, these three bases were alleged in 59.4% of FY 2025 EEOC filings.  In FY 2024, those same three core tenets also took the top three spots (collectively alleged in 67.6% of FY 2024 EEOC filings). Notably, in FY 2025, only 3 Race or National Origin based lawsuits were filed by the EEOC, or 2.3% of the total lawsuit filings.  In FY 2024, 8.9% of all filings included Race claims.  The following graph shows a comparison of the filings in FY 2025 to FY 2024 for the allegation basis in filings:

Lawsuits Filings Based On Industry

In monitoring the EEOC’s filings by industry, FY 2025 aligns with prior EEOC-initiated lawsuits in the top two industries compared to FY 2024, demonstrating the Commission’s focus on a few major industries.

In FY 2025, two industries remained in the EEOC’s targets: Hospitality and Healthcare:   On a percentage basis, Hospitality (Restaurants / Hotels / Entertainment) comprised 25% of filings, and Healthcare had 21.3% of filings.  A key difference in FY 2025 compared to FY 2024 is Manufacturing (15% of FY 2025 filings; 12.1% of FY 2024 filings) overtaking Retail (11.3% of FY 2025 filings; 23.1% of FY 2024 filings) as the next most targeted industry.  The staggering drop in enforcement actions against Retailers poses a distinct drop in enforcement actions in this industry.  Only one other industry, Transportation & Logistics, entered double digit enforcement activity (with 10%).The remaining industries in FY 2025 did not enter double-digit percentages though Staffing and Construction each experienced EEOC initiated litigation in FY 2025 (8.8%, and 8.8% of filings respectively per industry).

Unlike FY 2024, FY 2025 did not have any actions which involved Property Management industries.  Overall, the FY 2025 industry spread aligns with FY 2024, where Hospitality and Healthcare are the most heavily targeted industries.  Though Manufacturing and Retail swapped positions in enforcement priority, both still placed in the third and fourth impacted industries.  Like FY 2024, the EEOC’s FY 2025 fiscal year again did not advance any industry-based filings in the Automotive, Security, and/or Technology industries.

Like FY 2024, Hospitality and Healthcare employers should continue to monitor their compliance with federal anti-discrimination laws.  These industries are regular hotbeds for charges and ultimately lawsuits.  No matter the industry, every employer should recognize they are vulnerable to EEOC-initiated litigation as detailed by the below graph.

Looking Ahead To Fiscal Year 2026

Moving into FY 2026, the EEOC’s budget justification includes a $19.618 million decrease from FY 2025.  President Trump’s Administration prioritizes a return to the “agency’s true mission.”  The reinvigorated EEOC aims to “return to its founding principles and restore evenhanded enforcement of employment civil rights laws on behalf of all Americans.”  The EEOC’s mission is guided by the President’s pledge to “restore dignity to the American worker” and is bolstered by the President’s series of executive orders.

The FY 2026 EEOC budget justification signals a transition to “attacking all forms of race discrimination, including rooting out unlawful race discrimination arising from DEI programs, policies, and practices; protecting American workers from unlawful national origin discrimination involving preferences for foreign workers; defending women’s sex-based rights at work; and supporting religious liberty by protecting workers from religious bias and harassment and protecting their rights to religious accommodations at work.”  The Commission also intends to continue its efforts in incorporating technological advances, streamlining and improving operational processes, and refining its organizational structure to ensure efficiency and effective EEOC enforcement.

The EEOC also shifted its goals in FY 2025.  The EEOC now prioritizes three strategic goals.  First, the EEOC will combat and prevent employment discrimination through the strategic application of the EEOC’s law enforcement authorities.  In achieving this goal, the EEOC will employ broad remedial measures and exercise its enforcement authority fairly, efficiently, and based on the circumstances of the charge or complaint.  Second, the EEOC will prevent employment discrimination and advance equal employment opportunities through education and outreach.  Namely, the EEOC will increase public awareness of employment discrimination laws, and knowledge of specific rights and responsibilities under these laws, while also using its agencies to advance and resolve EEO issues.  Third, the EEOC will strive for organizational excellence through its people, practices, and technology.  In so doing, the EEOC intends to achieve a culture of accountability, inclusivity, and accessibility balanced against intake, outreach, education, enforcement, and service to the public to protect and advance civil rights in the workplace.

Key Employer Takeaways

In several respects, FY 2025 represented a change in enforcement targets and continued efforts in key discriminatory areas.  While total filings decreased, the new administration foreshadows a targeted approach in upcoming EEOC enforcement.  This is considerably true where the requested budget decrease reflects a narrower window of enforcement priorities but maintains the EEOC’s hallmark tradition of defending public civil liberties. 

Given the President’s second term is just beginning, the EEOC’s FY 2025 data should be taken with a grain of salt.  After all, it was a year of transition for the Commission.  The Commission’s FY 2025 filings suggest discrimination always stays within the purview of the EEOC’s priorities, but what constitutes “actionable” or “litigation-worthy” discrimination is wavering.  We anticipate these figures will grow by next year’s report.  Finally, given the volatility of the EEOC’s priorities, it is more crucial than ever for employers to stay abreast of EEOC developments and comply with anti-discrimination laws.

***This article is published in advance of EEOC’s FY 2025, with the data current as of 5:00 p.m. CST. Duane Morris will post the final numbers and statistics through FY 2025, by 5:00 p.m. CST on October 1, 2025.

***For more on the EEOC’s FY 2025, we invite you to attend Duane Morris’ Year-End EEOC Review Webinar on October 22, 2025.  To register for the webinar access the link here.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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