Gregory Tsonis – Page 2 – Class Action Defense

December 12, 2022March 12, 2025 by Gerald L. Maatman, Jr.

Federal Court In New York Rejects Louis Vuitton’s Motion To Dismiss BIPA Suit Over Virtual Try-On Tool

By Kelly Bonner, Gerald L. Maatman, Jr., and Gregory Tsonis

Duane Morris Takeaway – In another blow to retailers utilizing virtual try-on technology to enhance shopping experiences this holiday season, Judge Denise Cote for the U.S. District Court for the Southern District of New York recently denied in part Defendant Louis Vuitton North America, Inc.’s motion to dismiss proposed class action claims that its “Virtual Try-On” tool violated the Illinois Biometric Information Privacy Act (“BIPA”). In Theriot v. Louis Vuitton North America, Inc., Case No. 1:22 Civ. 02944, the Court rejected Defendant’s extraterritoriality argument, as well as claims that a third party not named in the lawsuit operated the “Virtual Try-On” tool and collected users’ biometric data. However, the Court dismissed Plaintiffs’ Section 15(a) claim that Defendant failed to develop and make publicly available a written policy for retaining and destroying biometric data on the grounds that Plaintiffs lacked Article III standing. The Court’s ruling in Theriot illustrates the continued risk for retailers from biometric data privacy lawsuits invoking the BIPA.

Case Background

Louis Vuitton North America (“Defendant”), a subsidiary of French luxury conglomerate LVMH, operates a website that features a “Virtual Try-On” tool, which allows users to visualize themselves in a particular pair of eyeglasses. Id. at 2. When a user clicks on the words, “Try On”, the tool automatically activates the user’s computer or phone camera to depict a live image of that user “wearing” the selected glasses in real-time, or allows the user to upload a photograph of his or her face. Id. at 2-3. While the tool is featured on Defendant’s website, it is operated by an application created by a third-party company, which was not named in this case, and incorporates that company’s proprietary technology to collect and process a user’s facial geometry. Id. at 3.

Plaintiffs, residents of Illinois, alleged that Defendant violated Section 15(b) of the BIPA by capturing users’ facial geometry without informing them how that data is collected, used, or retained. Plaintiffs also alleged that Defendant lacked a publicly-available written policy establishing how long such data is retained and when it is destroyed, in alleged violation of Section 15(a) of the BIPA. Plaintiffs filed a putative class action lawsuit against Defendant, alleging jurisdiction based on diversity and the Class Action Fairness Act, and seeking to represent a class of individuals that used the “Virtual Try-On” tool. Defendant moved to dismiss Plaintiffs’ amended complaint.

The Court’s Ruling On Defendant’s Motion To Dismiss

Defendant sought to dismiss Plaintiffs’ BIPA claims on three grounds, two of which the Court rejected.

The Court dismissed Plaintiffs’ Section 15(a) claim on the grounds that Plaintiffs lacked Article III standing. Id. at 8. Relying on the Seventh Circuit’s decision in Bryant v. Compass Group, which remanded Section 15(a) claims to state court because the company’s statutory duty was to the public generally, the Court concluded that because the company’s duty was not to the specific individuals whose biometric information is collected, but to the public generally, Plaintiffs failed to allege any particularized, individual harm. Id. The Court reasoned that “Plaintiffs’ § 15(a) claim is expressly based on the ‘failure to develop and make publicly available a written policy for retention and destruction of biometric identifiers,’ rather than on the unlawful retention of data after the initial purpose for collecting the data had been satisfied …. As the court held in Bryant, because the duty to develop and disclose a retention policy is owed to the public generally, plaintiffs have failed to allege a particularized harm sufficient for Article III standing.” Id.

Plaintiffs sought to analogize their case to another decision by the Seventh Circuit — Fox v. Dakkota Integrated Systems, LLC, in which the Seventh Circuit found that the plaintiff had standing to pursue her Section 15(a) claims where she alleged that the defendant not only failed to publish a retention policy, but unlawfully retained her biometric data, and such allegations were sufficient to allege an injury in fact for Article III standing. Id. at 9. But the Court rejected this comparison, noting that Plaintiffs’ amended complaint centered on Defendant’s alleged failure to develop and publish policies governing data collection and retention — not Defendant’s retention of the data. Id. The Court also rejected Plaintiffs’ alleged injury due to “the unknowing loss of control of …of biometric identifiers” and “violations of their privacy” as relevant to Plaintiffs’ Section 15(b) claim — not a Section 15(a) claim. Id. at 9-10.

However, the Court rejected both of Defendant’s arguments to dismiss Plaintiffs’ Section 15(b) claims.

First, the Court rejected Defendant’s argument that Plaintiffs “pleaded themselves out of court” by alleging that Defendant’s “Virtual Try On” tool was powered by a third party not party to the litigation, and that that third party is the entity that collects users’ biometric identifiers. Id. at 12. Instead, the Court concluded that Plaintiffs’ complaint sufficiently alleged that Defendant “collects detailed and sensitive biometric identifiers and information, including complete facial scans, of its users” and “takes active steps to collect users’ facial scans …. such as inviting users to take advantage of the Virtual Try-On tool.” Id. at 12-13.

Second, the Court found no basis to dismiss Plaintiffs’ Section 15(b) claim on extraterritoriality grounds even though, as Defendant argued, the events giving rise to Plaintiffs’ claims did not occur “primarily and substantially” in Illinois. Id. at 14. Instead, the Court concluded that Plaintiffs were “Illinois residents who used the Virtual Try-On Tool while in Illinois, and that there was no indication from Plaintiffs’ complaint that any other events relevant to their claims occurred elsewhere. Id.

Implications for Companies Using Biometric Equipment

The Court’s ruling in Theriot illustrates the continued risk for retailers from biometric data privacy lawsuits invoking the BIPA, and the resiliency of Section 15(b) claims despite efforts to dismiss at the pleading stage.

Notably, earlier lawsuits involving BIPA claims and eyewear have been dismissed under BIPA’s health care exemption, which exempts “information captured from a patient in a health care setting or information collected, used, or stored for health care treatment, payment, or operations under the federal Health Insurance Portability and Accountability Act of 1996,” including “prescription lenses, non-prescription sunglasses, and frames meant to hold prescription lenses.” See Opinion and Order at 7, Svobova v. Frames for America, Inc., No. 21-CV-5509 (N.D. Ill. Sept. 8, 2022) (concluding that plaintiff was a “patient receiving a health care service in a health care setting). But the issue of whether courts will apply BIPA’s health care exemption to luxury sunglasses is currently pending in the U.S. District Court for the Northern District of Illinois in Warmack v. Christian Dior, Inc., Case No. 1:22-CV-04633, while its application with respect to so-called “cosmeceuticals” and other luxury skincare products raises significant FDA regulatory concerns.

In the meantime, companies should implement proper safeguards and consent processes for the collection and retention of biometric data — particularly with respect to Illinois consumers or states considering similar legislation — and consider how they notify users and obtain consent regarding biometric data.

November 23, 2022December 1, 2023 by Gerald L. Maatman, Jr.

Illinois Court Finds That Collective Action Certification In A Wage & Hour Case Demands More Than Barebones Affidavits When Balanced Against Facially Lawful Policies

By Gerald L. Maatman, Jr., Gregory Tsonis, Shaina Wolfe

Duane Morris Synopsis- In Roberts, et al. v. One Off Hospitality Group, Ltd., Case No. 21-CV-05868 (N.D. Ill. Nov. 10, 2022), a group of restaurants successfully defended against the proposed conditional certification of a collective action under the Fair Labor Standards Act (“FLSA”) in a lawsuit brought by a bartender. In a win for the defense at a stage where plaintiffs generally have a low evidentiary burden, the Court determined that barebones affidavits fall short of what a Plaintiff must show in terms of proof to anchor a conditional certification order. While Plaintiff alleged that the restaurants’ policy off-the-clock work and overtime policies violated the FLSA, Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois determined that Plaintiff did not make the “modest factual showing” that other similarly situated employees experienced the allegedly common, unlawful policy. The decision demonstrates the importance and value in maintaining up-to-date lawful employee handbooks, and specifically, policies on wages and overtime.

Case Background

Plaintiff, an hourly non-exempt bartender, filed lawsuit alleging that One Off Hospitality Group — the owner and operator of several popular restaurants including Publican and Big Star — and several executives (“Defendants”) violated the FLSA and other Illinois wage and hour laws. She alleged that Defendants failed to properly pay her by requiring her to clock-in and clock-out at the times of her scheduled shift, regardless of the time she actually worked, to avoid paying overtime compensation. She further alleged that Defendants did not pay their employees for performing off-the-clock work and/or offered gift cards as compensation instead of cash. When she recorded her overtime work, Plaintiff claimed that management reprimanded her for violating internal company policy.

On July 14, 2022, Plaintiff moved, pursuant to § 216(b) of the FLSA, for conditional certification of a collective action of all current and former hourly non-exempt employees who worked within Defendants’ restaurants. In support of her motion, Plaintiff attached only two sworn declarations. Plaintiff’s declaration focused on her unique experience, and detailed the compensation structure and missed overtime hours she experienced. Plaintiff also included a declaration from a former Floor Supervisor and Assistant General Manager that worked in Defendants’ restaurants, which focused on the company’s policy of requiring employees to work off the clock. In opposition, Defendants put forth their Employee Handbook and emphasized that their written, uniform policy at every location prohibited off-the-clock work. Defendants also included sworn declarations from employees and managers stating the company policy and the repercussions for engaging in off the clock work.

The Court’s Ruling Denying Conditional Certification

The Court denied Plaintiff’s motion for conditional certification. It found that Plaintiff had not made a “modest factual showing” that she and other employees were victims of a common policy or plan that violated the law. Id. at 3.

After analyzing the evidence, the Court held that Plaintiffs’ sworn declarations were insufficient and that she needed other corroborative evidence. Notably, Court emphasized that, “[c]ritically absent are affidavits from any other similarly situated employees who worked at the defendants’ restaurants.” Id. at 4. Significantly, the Court explained that “[t]he need for additional support is particularly pronounced where, as here, the defendants maintained a facially lawful policy.” Id. The Court held that “‘modest factual support’ demands more than the barebones affidavits provided.” Id.

Implications for Employers

The Court’s decision in denying conditional certification is not an outlier, but over the past several years, nearly 80 percent of such motions have been granted in federal court due to the low burden applicable to § 216(b) of the FLSA.

Judge Kendall’s decision underscores the value of generally maintaining Employee Handbooks and, specifically, policies regarding wages and overtime. In addition to providing clear guidelines to employees on what is allowed, these policies provide the first line of defense in FLSA lawsuits seeking to groups of allegedly similarly situated employees, particularly where plaintiffs marshal minimal evidence that certification of a collective action is appropriate.

November 11, 2022March 12, 2025 by Gerald L. Maatman, Jr.

Illinois Federal Court Rejects Efforts To Dismiss BIPA Claims Involving Virtual Try-On Technology

By Gerald L. Maatman, Jr., Gregory Tsonis, and Kelly Bonner

Duane Morris Takeaways – In a significant decision for retailers, Judge Manish Shah of the U.S. District Court for the Northern District of Illinois recently denied in part Defendant Estée Lauder’s motion to dismiss proposed class action claims that its consumer “try-on” technology violated the Illinois Biometric Information Privacy Act (“BIPA”). The Court rejected Defendant’s personal jurisdiction argument, as well as claims that its website terms and conditions required Plaintiff to arbitrate her dispute, and that Plaintiff lacked standing to sue on behalf individuals that used websites Plaintiff herself did not visit. In a decision entitled Kukovec v. The Estée Lauder Companies, Inc., Case No. 22-CV-1988 (N.D. Ill.), the Court determined, however, that Plaintiff did not sufficiently plead that the cosmetics giant intentionally or recklessly violated consumers’ biometric privacy rights, and thereby dismissed those claims. The ruling in Kukovec illustrates the ongoing legal risks for retailers in using “try-on” tech to enhance customer service.

Case Background

Too Faced Cosmetics, a cosmetics brand owned by Defendant Estée Lauder, operates a website featuring a try-on function to allows shoppers to virtually test its products. When a shopper clicks a “Try It On” button, a pop-up box appears containing a disclaimer informing the shopper that their “image will be used to provide you with the virtual try-on experience” and a link to a privacy policy. Id. at 4. If the shopper selects the “Live Camera” option, the user’s computer camera is activated and the product is overlaid on part or all of the user’s face. Id.

Plaintiff, an Illinois resident, alleged that Defendant’s try-on tool violated Section 15(b) of the BIPA by capturing users’ facial geometry without informing them how that data is collected, used, or retained. Id. at 6. Plaintiff also alleged that Defendant lacked a publicly-available written policy establishing how long such data is retained and when it is destroyed, in violation of Section 15(a) of the BIPA. Id. Plaintiff filed a putative class action lawsuit against Defendant, seeking to represent a class of individuals that used the virtual try-on tool not just on the Too Faced website, but also four other websites for Defendant’s other brands. Id. Defendant removed the case to federal court based on diversity jurisdiction and the Class Action Fairness Act, then moved to dismiss the complaint.

The Court’s Ruling On Defendant’s Motion To Dismiss

Defendant sought to dismiss Plaintiffs’ claims on four grounds, three of which the Court fully rejected.

First, Defendant argued that the Court lacked personal jurisdiction over it since its “Try On” tool was “geography neutral,” did not target Illinois consumers, and the mere accessibility of the tool to Illinois consumers lacked the substantial connection to Defendant’s sale of cosmetics and employees in Illinois. Id. at 8. The Court rejected this “overly narrow” interpretation of personal jurisdiction. It held that “[t]he try-on tool is part of [Defendant’s] cosmetics marketing and sales strategy,” since those that use the tool are also presented with buttons to add the products to their cart or send as a gift. Id. at 9.

Second, Defendant argued that venue was improper because Plaintiff’s claims were subject to arbitration pursuant to a provision in its website’s terms and conditions. Id. at 11. Central to the issue of whether Plaintiff had constructive knowledge of the arbitration agreement was whether the terms and conditions were presented in “clickwrap” form, where a customer has to affirmatively check a box to assent (as courts generally uphold such assent), or “browsewrap” form, where a customer’s continued use of a website is taken as passive assent (and which require more detailed analysis). Defendant’s website contained both clickwrap and browsewrap forms, but the Plaintiff only visited pages with browsewrap forms. Id. at 12. Users of the virtual try-on tool received a pop-up notification that had Too Faced’s privacy policy, not its terms and conditions, though the privacy policy contained a link to the terms and conditions. Id. On other pages, the terms and conditions were presented at the bottom of webpages “in the middle of fifteen links to other pages on the site and six links to social media platforms. . .” Id. The Court held such a website design insufficient to provide constructive notice, since a customer “could easily try the tool without once confronting the terms-and-conditions link.” Id. at 14. Further, the Court rejected Defendant’s argument that the Plaintiff had constructive notice because she recently filed two other BIPA-related lawsuits against TikTok and L’Oréal, noting that a website user “is not automatically on notice that any website she visits likely has terms and conditions just because she’s visited other websites that have them.” Id. at 15. Accordingly, the Court held that Plaintiff lacked constructive knowledge and that the arbitration clause could not be enforced against her.

Third, Defendant also sought to dismiss the complaint on the basis that it provided only “conclusory legal statements” and lacked sufficient facts establishing that Defendant captured users’ facial geometry, collected biometric data, or acted negligently, recklessly, or intentionally under the BIPA. Id. at 16. The Court disagreed. It found that the complaint “alleged enough to infer” that Defendant captured Plaintiff’s biometric information and “no intermediary separated the defendant from the collection of plaintiff’s facial geometry.” Id. at 17. However, since recklessness and intentionality require a specific state of mind that Plaintiff did not allege, the Court dismissed Plaintiff’s claims for reckless or intentional conduct, but allowed Plaintiff an opportunity to amend her complaint. Id. at 18.

Finally, Defendant contended that since Plaintiff did not use the websites of its four other brands that utilize the virtual try-on tool, she lacked standing to sue on their behalf. The Court noted that because no class had been certified, yet Defendant’s argument was premature. The Court reasoned that plaintiff “alleges an injury from a technology deployed across multiple websites” and that standing exists because Plaintiff’s injury “can be redressed by a decision in her favor.” Id. at 20.

Implications For Companies Using Biometric Equipment

By allowing consumers to “try-on” products in a virtual environment, retailers increasingly rely on biometric data to provide hyper-personalized services and recreate the real-world shopping experience for the virtual world. But as the popularity of try-on technology grows, so too does the legal risk from biometric data privacy lawsuits. Since 2019, numerous retailers have been sued for violating the BIPA and other state biometric privacy laws for their use of try-on tech and other digital tools to personalize consumer recommendations. The Kukovec decision highlights how new technologies expose companies to costly litigation, even when they take steps to notify consumers or mandate arbitration. Companies should consider how they notify customers regarding try-on technology, ensure that their privacy policies stay current with evolving legislation and competing definitions of “biometric data,” and implement proper safeguards and consent processes.

November 7, 2022 by Gerald L. Maatman, Jr.

What Employers Should Know About The EEOC’s Draft Strategic Plan For FY 2022-2026

By Gerald L. Maatman, Jr., Jennifer A. Riley, Rebecca S. Bjork, and Gregory Tsonis

Duane Morris Takeaways: On November 4, 2022, the U.S. Equal Employment Opportunity Commission released a preliminary draft of its 2022-2026 Strategic Plan. According to its preliminary draft, the EEOC plans to focus its internal operations over the next four years to make changes that it hopes will improve its performance securing targeted injunctive relief and conducting systemic investigations, along with its use of technology to process charges and conciliate them. The four-year plan – which is distinct from the EEOC’s strategic enforcement plan, still to be released in the coming months – was published in the Federal Register and is open for comment until December 4, 2022. Even if employers do not submit comments, they would be well-advised to review the draft and final Plan once it is announced because it provides a window into the EEOC Commissioners’ thinking for how the agency will use its resources to redress and deter workplace discrimination.

Introduction

Every four years, the EEOC prepares a Strategic Plan that drives how it will improve its internal operations to better enforce federal anti-discrimination laws. The Plan for 2022-2026 that has now been published in the Federal Register is important because once it is finalized after the review and comment period expires, it will set forth specific goals along with performance metrics to measure how well those goals are being met. The key elements of the draft Plan and why they are important are critical data points for employers.

Operational Improvements And Performance Metrics Sought By The EEOC

The 2022-2026 Strategic Plan draft signals that when investigating private sector employers, the EEOC will focus its internal operations on four key areas. First, the EEOC will ensure that by FY 2025, “90% of EEOC conciliations and litigation resolutions contain targeted, equitable relief and that level is maintained through FY 2026.” (Draft Strategic Plan at 15.) The draft Plan explains the EEOC’s view that such a goal likely would improve compliance with the statutes enforced by the agency nationwide.

Second, between FY 2022 and 2026, the EEOC aims to continue to “favorably resolve at least 90% of enforcement lawsuits.” (Id. at 16.) On this point, the EEOC explains that because its systemic litigation program is resource intensive, this goal is important to enable the agency to use its resources in a wise and efficient manner. Employers who have faced systemic lawsuits are well-aware of the amount of litigation resources they can consume, both for the companies involved and the EEOC.

Third, “In each year through FY 2026, the EEOC will provide training to all field staff on identifying and investigating systemic discrimination, and at least 90% of investigators and trial attorneys will participate in systemic training each year.” (Id.) The draft Plan explains that the purpose of this goal is “expanding the EEOC’s capacity to conduct systemic investigations, resulting in a coordinated, strategic, and effective approach to systemic enforcement.” (Id.) This likely signals that the draft Strategic Enforcement Plan will continue to emphasize and prioritize the EEOC’s use of pattern or practice lawsuits to enforce the statutes over which Congress gave it authority.

Fourth, “the EEOC will make significant progress toward enhanced monitoring of conciliation agreements, leading to a more robust compliance program.” (Id. at 17.) The Commission’s focus here is to implement “streamlined and standardized procedures, improved tracking and internal reporting mechanisms, and related training for EEOC field staff” to ensure that conciliation agreements are reached and enforced. (Id.).

Finally, the EEOC continues to be aware that its charge intake process needs work. The draft Plan pledges to leverage technological advancements to “enhance its intake services to potential charging parties, respondents, and representatives.” (Id. at 19.)

Implications For Employers

The EEOC’s FY 2022-2026 draft Strategic Plan is a document that provides insight into the direction the agency will take to improve how it functions.

With a nod the old E.F. Hutton TV commercial, “when the EEOC speaks, employers should listen…”

November 3, 2022 by Gerald L. Maatman, Jr.

Massachusetts State Court Rules In Class Action That A Multiple-Choice Promotional Test Discriminated Against Minority Police Officers

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

Duane Morris Takeaways – In Tatum et al. v. Commonwealth of Massachusetts, et al., C.A. No. 0984-CV-00576 (Mass. Sup. Ct. 2022), a Massachusetts state court judge conducted a class trial found that a multiple-choice promotional exam – used for years by various police departments to determine promotions – discriminated against Black and Latino police officers in violation of Massachusetts law. In analyzing the test format, which largely required “rote memorization,” the court opined that the exam failed to adequately test for the relevant job qualifications, as well as the police departments’ use of a ranking system from which candidates were selected for promotion. Ultimately, the court held that the test and ranking system adversely impacted minorities and interfered with their ability to promote to sergeant. The decision demonstrates why employers must be careful to implement policies and processes that do not have a discriminatory impact, even if on their face such policies and practices appear to be neutral.

Case Background

The Commonwealth of Massachusetts’ Human Resource Division (“HRD”), for 50 years, administered a written multiple-choice test to police officers to determine promotion to sergeant. Id. at 4. Officers were ranked almost exclusively according to their scores on the written examination, with individuals at the top of the list being first in line for promotion. In 2007, certain police officers that were subject to the written examination sued the Commonwealth of Massachusetts, and the municipalities in which they worked as police officers. They alleged that the testing process unfairly discriminated against them due to their race and national origin in violation of state and federal law. Id. at 2. The U.S. Court of Appeal for the First Circuit, in an interlocutory appeal, held that state defendants did not qualify as “employers” under Title VII and were entitled to sovereign immunity, thereby resulting in the dismissal of state law claims against the state defendants, which the plaintiffs subsequently re-filed in state court. Id. Though the Massachusetts state court initially dismissed the entire action based on the First Circuit decision, the Massachusetts Supreme Judicial Court remanded several claims, rejected the defense of sovereign immunity, and held that the plaintiffs could be entitled to relief under Massachusetts law prohibiting discrimination. Id. at 3. The state trial court subsequently certified a class of current and former police officers that took the written examination administered by HRD in certain years between 2005 and 2012. Id.

Ultimately, the plaintiffs lost their federal court case after a bench trial, with the federal court finding that the tests had a disparate impact on minorities but that plaintiffs failed to prove that Boston refused to adopt an alternative test with less disparate impact. Id. Though the defendants in the state court case tried to dismiss the entire state court action based on the federal court’s decision, the Massachusetts Appeals Court held that defendants did not show issue preclusion and it authorized the case for trial. Id. at 3-4. The state trial court conducted a two-week bench trial in June and July of 2022 limited to the issue of class-wide liability. Id. at 1.

The State Court’s Findings Of Fact And Conclusions Of Law

The state court found a “massive amount of evidence proving the known and unjustified disparate impact” of HRD’s testing format. Id. at 1. Turning first to the format of the test, the court noted that exam questions “largely test for rote memorization of facts and passages taken directly from textbooks that candidates are asked to study,” and studies commissioned by the HRD over the years to measure the test’s efficacy “did not identify test-taking skills and lack of test-related anxiety as job related.” Id. at 8. The multiple choice portion of the test accounted for 80% of a candidate’s score, with 20% coming from an “Education and Experience” form that each candidate would complete. Id. The court explained that the allocated percentages had no discernible basis, and further disparaged the Education and Experience portion since every officer received 14 of the 20 available points simply for being able to sit for the exam. Id. at 8, 28. Though HRD worked with consultants and subject matter experts to identify the knowledge, skills, and abilities (“KSAs”) important to the job of sergeant, the court noted that the multiple choice questions could only test for 22% to 40% of the relevant KSAs and “did not in fact test for some skills that could have been tested” due to the types of multiple choice questions asked. Id. at 13-15. Rather than focusing on abstract knowledge and memorization of academic textbooks, the court reasoned that questions testing situational judgment, for example, should have been used but were not. Id. at 19.

Given the format of the multiple-choice exam and the types of questions asked, the court observed that a racial disparity existed based on test-taking ability, and not on job qualifications. Noting that “[t]est taking skills are built through practice,” the court adopted the opinions of expert witnesses who testified that “minorities, in general, have had fewer opportunities to participate in our educational system” and differences in average test scores of minorities on tests of cognitive abilities “is due to socioeconomic differences, lack of access to opportunity, and structural racism that exists within the system.” Id. at 26. Ultimately, the court found that “[b]ecause HRD failed to test many important KSAs, measured test-taking skills and memorization, enabled test-related anxiety to affect results and failed to ask questions that focused upon measuring job-related knowledge, its format did not rank candidates for promotional purposes on a basis that was substantially job related.” Id. at 14.

The court also noted that HRD had knowledge of the shortcomings and adverse impact of its tests before and during their use. A 1987 job analysis conducted by a consulting firm recommended that a written test “did not assess many of the attributes needed for the job” and “should account for no more than 40% of the overall score.” Id. at 16. In addition, a study conducted for the Boston Police Department in 2000 advised HRD that an examination should include non-written components, such as an assessment center and performance review system. Id. at 17. The failure to include a performance based assessment technique, the court explained, “injects extraneous influences (such as test-taking ability and temporary memorization skills) into the selection process.” Id. Analysis of the rate of minorities’ promotion to sergeant showed that minorities were promoted at a drastically lower rate than non-minority officers. Id. at 17-19.

The court further determined that Defendants failed to adopt alternatives that would have minimized or eliminated the adverse impact of the tests on minority test-takers. The tests could have contained fewer questions, reducing the “large cognitive loads” and memorization required, in order to reduce the adverse impact. Id. at 45. Rather than using questions that require “rote memorization,” HRD could have used questions that tested situational judgment and were written in plain language instead of “convoluted phrases.” Id. Most notably, banding, in which scores within a range are treated as equal, would have reduced adverse impact because there was no evidence that a police officer that scored one point higher than another was more qualified or would make a better sergeant. Id. at 45-46. Further, HRD adopted 11-point bands in 2009 at the recommendation of a consultant. Id. Finally, the use of other testing methods, such as oral assessments and performance reviews, to assess nonwritten skills “such as leadership, conscientiousness, calmness under pressure, decision-making, interpersonal skills, and oral communication” would have reduced the adverse impact of the tests. Id. at 47.

As a result of the myriad shortcomings of HRD’s written tests, the Court described at length the statistically significant adverse impact of the tests on minority test-takers across all years as compared to white test-takers in the form of lower passing rates, lower overall scores, lower rate of promotion of minority police officers, and increased delay in promotion of minority police officers. Id. at 34-42. Given the adverse impact on scoring and the use of a rank-order list to determine promotions, the court found an adverse impact on the ability and timeliness of minority police officers to achieve promotion to sergeant. Id. at 57. The multiple-choice format of the exam and the ranking of candidates were not job-related, the court also held, given the invalidity of the exam and ranking process. Id. at 61-63. Based upon its factual findings, the court held that “[o]verwhelmingly persuasive evidence proves that HRD interfered with the class members’ rights to consideration for promotion to police sergeant without regard to race or national origin.” Id. at 75.

Implications for Employers

The Tatum decision illustrates why employers with criteria for promotion must be cognizant of how such testing systems may adversely impact classes of individuals in violation of state and federal law. While the testing system used in this case appeared neutral, in practice the test and ranking system resulted in less promotions and increased delay in promotions for minorities. This case demonstrates the potential for costly and years-long class action lawsuits stemming from employer policies and practices in determining promotions. Given these risks, it behooves employers to ensure that neutral policies and practices do not adversely impact groups of individuals.

October 17, 2022 by Gerald L. Maatman, Jr.

Indiana Court Of Appeals Strikes Down Class Action COVID-19 Immunity Statute

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

Duane Morris Takeaways – In Mellowitz v. Ball State University and Board of Trustees of Ball State University, et al, No. 22A-PL-337 (Ind. Ct. App. Oct 5, 2022), the Indiana Court of Appeals struck down a 2021 law that sought to protect in-state universities from class action liability related to the shutdown of university campuses during the COVID-19 pandemic. While the law stated that individuals “may not” bring class actions against universities resulting from actions taken to defend against the spread of COVID-19, the Indiana Court of Appeals held that the statute was “procedural” and in conflict with Rule 23 of Indiana’s Rules of Trial Procedure, which states that individuals “may” proceed as a class under certain circumstances. The Court’s ruling is important, as it puts at risk other statutes passed in Indiana and other states restricting class actions against businesses for COVID-19-related claims.

Background Of The Case

In 2020, Plaintiff Keller J. Mellowitz, a student at Ball State University, filed a putative class action asserting claims for breach of contract and unjust enrichment against Ball State as a result of the university’s decision to cancel in-person classes during the COVID-19 pandemic. Id. at 3. After the complaint was filed, the Indiana General Assembly in 2021 enacted Public Law 166-2021, part of which was codified as Indiana Code Section 34-12-5-7 (“Section 7”) and barred class actions against post-secondary educational institutions for claims of breach of contract and unjust enrichment arising from COVID-19. Ball State subsequently sought relief from Plaintiff’s lawsuit under Section 7, which the trial court granted, and Plaintiff appealed. Id. at 5.

The Appellate Court’s Ruling Reversing And Remanding the Trial Court’s Decision

Plaintiff argued on appeal that, as a procedural statute, Section 7 impermissibly conflicts with Indiana Trial Rule 23, which governs class-action procedures and sets forth the requirements to proceed as a class action, thus rendering Section 7 a “nullity.” The Indiana Court of Appeals began its analysis recognizing longstanding precedent establishing that in a conflict between a procedural statute and the Indiana Rules of Trial Procedure, “the trial rules govern,” however trial rules “cannot abrogate or modify substantive law.” Id. at 6-7. Whether a law was “substantive,” the Court explained, depended on whether it established “rights and responsibilities” whereas procedural laws merely prescribed “the manner in which such rights and responsibilities may be exercised.” Id. at 7.

In analyzing the specific statutes at issue, the Court of Appeals examined Indiana’s analog to Federal Rule 23, which sets forth the criteria for bringing a class action. The Court of Appeals noted that Indiana Trial Rule 23 was indisputably a procedural rule that allows a plaintiff, when the appropriate criteria are met, to assert his or her claims on behalf of others. Turning to Section 7, the Court of Appeals explained that the statute did not affect any plaintiff’s substantive right to bring a suit for breach of contract or unjust enrichment, but simply “frustrates them by encouraging a multiplicity of lawsuits from similarly situated plaintiffs.” Id. at 14. While Ball State argued that the law protected Indiana universities from “widespread legal liability” from actions taken to combat and mitigate the spread of COVID-19, the Court of Appeals found the argument “unpersuasive,” explaining that since Section 7 did not prevent any individual plaintiff from asserting the same claims against universities, it therefore “does not reduce the institutions’ potential legal liability in the slightest.” Id. at 14-15. Ball State also argued that adopting Plaintiff’s “extreme position” would endanger two similar laws passed by the Indiana Legislature, which sought to protect business owners from class-action tort liability. Id. at 15 n.6. The Court rejected Ball State’s argument. It determined that it had “no opinion” on those statutes since they were not before it in the appeal. Id.

With Indiana Trial Rule 23 stating that a plaintiff “may” bring a class action and Section 7 stating the plaintiff “may not,” the Court of Appeals held that both laws could not apply in a given situation and, as a result, Section 7 was a “nullity.” Id. at 15. The Court of Appeals therefore reversed the trial court’s ruling and remanded the case for further proceedings.

Implications for Employers

While Ball State will very likely appeal this decision to the Indiana Supreme Court, the rationale adopted by the Indiana Court of Appeals could undermine similar statutes meant to protect Indiana employers from class action liability resulting from actions taken in response to the COVID-19 pandemic. As many other states throughout the country similarly passed laws meant to protect businesses from liability due to COVID-19, the Mellowitz decision provides a potential avenue for plaintiffs to challenge laws in other states. Mellowitz demonstrates that employers should continue to be aware of the potential for class action lawsuits stemming from response to the COVID-19 pandemic, despite efforts by Indiana’s legislature and other states’ legislatures to prevent such costly, high-risk litigation.