By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory Tsonis
Duane Morris Takeaways: Complex wage & hour litigation has long been a focus of the plaintiffs’ class action bar. The relatively low standard by which plaintiffs can achieve conditional certification under the Fair Labor Standards Act (FLSA), often paired with state law wage & hour class claims, offers a potent combination by which plaintiffs can pursue myriad employment claims. To that end, the class action team at Duane Morris is pleased to present the second edition of the Wage & Hour Class And Collective Action Review – 2025. This new publication analyzes the key wage & hour-related rulings and developments in 2024 and the significant legal decisions and trends impacting wage & hour class and collective action litigation for 2025. We hope that companies and employers will benefit from this resource and that it will assist them with their compliance with these evolving laws and standards.
Click here to download a copy of the Wage & Hour Class And Collective Action Review – 2025 eBook.
Stay tuned for more wage & hour class and collective action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.
Duane Morris Takeaway: The California Private Attorneys General Act (PAGA) inspired more representative lawsuits than any other statute in America over the past year. According to the California Department of Industrial Relations, plaintiffs filed more than 9,464 PAGA notices in 2024, a nearly 22% increase over 2023, and a whopping 85,936% increase over the 11 PAGA notices filed in 2006. The so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to nothing to curb interest in these cases, which continue to present one of the most viable workarounds to workplace arbitration agreements.
Watch the video below to see Jennifer Riley explain this trend in detail:
The PAGA created a scheme to “deputize” private citizens to sue their employers for penalties associated with violations of the California Labor Code on behalf of other “aggrieved employees,” as well as the State. A PAGA plaintiff may pursue claims on a representative basis, i.e., on behalf of other allegedly aggrieved employees, but need not satisfy the class action requirements of Rule 23. In other words, the PAGA provides the plaintiffs’ class action bar a mechanism to harness the risk and leverage of a representative proceeding without the threat of removal to federal court under the CAFA and without the burden of meeting the requirements for class certification.
If successful in prosecuting such a case, aggrieved employees receive 25% of any civil penalties and pass the other 75% to the California Labor and Workforce Development Agency (LWDA). The plaintiffs’ attorneys who pursue the action may collect their attorneys’ fees and costs.
According to data maintained by the California Department of Industrial Relations, the number of PAGA notices filed with the LWDA has increased exponentially over the past two decades. The number grew from 11 notices in 2006, to 1,606 in 2013, and then experienced three sizable jumps – to 4,530 in 2014, to 5,732 in 2018, and to 7,464 in 2023, each coinciding with a significant shift in the legal landscape, as discussed below. In 2024, notices exceeded 9,464 for the first time, an all-time high.
From 2013 to 2014, employers saw the largest single year increase, from 1,605 notices in 2013 to 4,532 notices in 2014, an increase of 182%. The most significant drop in the past two decades occurred in 2022, when notices fell from 6,502 in 2021 to 5,817 in 2022, before their resurgence in 2023 and continued growth in 2024. The following chart illustrates this trend.
These numbers closely tie to the shifting landscape of workplace arbitration, as discussed below, in that each of the major shifts coincides with the timing of a significant expansion or pull back in the law governing the enforcement of arbitration agreements.
PAGA Reform seemingly has had little to no impact on the growth on PAGA filings. On June 18, 2024, Governor Newsom announced that labor and business groups had inked a deal to alter the PAGA in return for removing the referendum to repeal the PAGA from the November 2024 ballot. The California Legislature quickly moved to approve two bills (AB 2288 and Senate Bill 92). The alterations include reforms to the penalty structure, new defenses for employers, changes to the PAGA’s standing requirements, and a new “cure” process for both small and large employers, among other changes. These reforms affect all PAGA notices filed on or after June 19, 2024, with some exceptions.
The PAGA As A Work-Around To Arbitration
The growing adoption of arbitration programs has led the plaintiffs’ class action bar to identify work-arounds, and the PAGA has emerged as one of the most popular.
The California Supreme Court cemented the PAGA as the frontrunner for employment-related claims with its decision in Iskanian, et al. v. CLS Transportation Los Angeles, 59 Cal.4th 348 (Cal. 2014). The California Supreme Court held that representative action waivers in arbitration agreements are “contrary to public policy and unenforceable as a matter of state law.” Id. at 384. In so holding, Iskanian established the PAGA as a mechanism by which a plaintiff could pursue a representative action unhindered by arbitration agreements or commitments to arbitrate on an individual basis. The decision undoubtedly fueled the filing of PAGA notices in 2014, which catapulted from 1,606 in 2013 to 4,530 in 2014.
The PAGA-workaround movement suffered its first significant set-back in 2022 with the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022). In Viking River, the U.S. Supreme Court held that, to the extent Iskanian precludes division of PAGA actions into individual and non-individual claims, and thereby “prohibit[s] parties from contracting around this joinder device,” the FAA preempts such rule. Id. The Supreme Court opined that the PAGA provides no mechanism to enable a court to adjudicate non-individual claims once an individual claim has been committed to a separate proceeding. As a result, the U.S. Supreme Court opined that Moriana lacked statutory standing to continue to maintain her non-individual claims in court, and, after compelling arbitration of the plaintiff’s individual PAGA claims, the lower court should have dismissed the PAGA representative claims. Id.
The set-back was short lived as, in 2023, the California Supreme Court minimized the impact of the Viking River decision. In Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (Cal. 2023), the California Supreme Court took up the issue of whether, under California law, a PAGA plaintiff whose individual PAGA claims are compelled to arbitration retains standing to bring representative PAGA claims. The California Supreme Court answered the question in the affirmative. It disagreed with the U.S. Supreme Court’s interpretation of California law and held that, once a PAGA plaintiff’s individual claims are compelled to arbitration, the plaintiff retains standing to maintain non-individual PAGA claims in court so long as he is an “aggrieved employee.” Id. at 1105. By deciding that an individual who signs an arbitration agreement can return to court after arbitration to pursue representative proceedings under the PAGA, the California Supreme Court relegated arbitration agreements to a mere hurdle rather than a bar to PAGA representative actions.
Although Viking River and Adolph are a mere one and two years old, respectively, the plaintiffs’ bar is continuing to attempt to find ways to eliminate the arbitration hurdle all together and to allow plaintiffs to proceed with their representative actions in court. One emerging trend is for plaintiffs to file complaints seeking to pursue only representative components, explicitly excluding their individual PAGA claims. These claims informally have become known as “headless” PAGA claims.
While this line of reasoning seemingly goes against the ruling in Adolph and other cases, which have held that a PAGA claim necessarily consists of both and individual and representative portion, the California Court of Appeal supported it in April 2024 with its decision in Balderas, et al. v. Fresh Start Harvesting, 101 Cal.App.5th 533 (2024). In that opinion, the California Court of Appeal denied a motion to compel arbitration, holding that a plaintiff could maintain a representative PAGA action, even without an individual PAGA claim, so long as the plaintiff alleges that he or she suffered a Labor Code violation.
We expect parties to heavily litigate this line of reasoning in 2025, with multiple appeals already filed as to rulings that follow the Balderas “headless” PAGA standard.
Given the technical requirements of California wage & hour law, coupled with the potentially crushing statutory penalties available to successful plaintiffs, employers should anticipate continued growth of PAGA lawsuits in 2025.
Duane Morris Takeaway: Data breach litigation remained expansive in 2024 as plaintiffs filed more data breach class actions than in any other year and double the number filed in 2022. As the number of data breaches has accelerated, such events have provided the fuel for a surge of class actions. Despite the significant increase in filings, courts issued few (only four) class certification decisions in 2024, suggesting that many motions are in the pipeline or that, observing the difficulty that plaintiffs have faced in certifying such cases over the past two years, plaintiffs are electing to monetize their data breach claims prior to reaching that crucial juncture. So long as defendants continue to play ball on the settlement front, we are likely to see settlement payouts continue to lure plaintiffs to this space and fuel those filing numbers.
Watch the video below to learn more about this trend from Review co-editor Jennifer Riley:
Filing Numbers Continue Their Upward Trajectory
The volume of data breach class actions continued to proliferate in 2024. Data breach has emerged as one of the fastest growing areas of class action litigation. After every major (and not-so-major) report of a data breach, companies now can expect the resulting negative publicity to prompt one or more class action lawsuits, saddling companies with the significant costs of responding to the data breach as well as the significant costs of dealing with high-stakes class action lawsuits, often on multiple fronts.
Companies that are unfortunate enough to fall victim to data breaches in 2024 faced class actions at an increasing rate. In 2024, we tallied 1,488 class action filings in the data breach area, compared with 1,320 in 2023, and 604 in 2022.
As the graphic depicts, the growth of filings in the data breach area has been extraordinary, from 108 class action filings in 2018 to 1,488 class action filings in 2024, an increase of more than 1,265% over six years.
Several factors likely contributed to this continued surge in data breach class actions in 2024. First, data breaches have continued to increase at a rate that roughly tracks the shape of the curve depicted above. Second, whereas data breach actions pursued a decade ago faced little prospect of success, recent court decisions have provided a roadmap for plaintiffs to attempt to show standing and successfully plead duty, causation, and damages, thereby providing additional momentum for the plaintiffs’ class action bar. Third, settlement numbers have fueled filings, as plaintiffs are succeeding in monetarizing claims early before facing the investment or risk of class certification, making data breach claims a continued area of popularity for the plaintiffs’ bar.
The U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez, et al., 141 S.Ct. 2190 (2021), presents a fundamental threshold challenge for many data breach class action plaintiffs in terms of whether the plaintiff can show that he or she suffered a concrete injury such that he or she has standing to assert a claim. In TransUnion, the Supreme Court ruled that certain putative class members, who did not have their credit reports shared with third parties, did not suffer concrete harm and, therefore, lacked standing to sue. Since the TransUnion decision, standing has emerged as a key defense to data breach litigation because the plaintiffs often have difficulty demonstrating that they suffered concrete harm.
Courts, however, have continued to disagree over the application of TransUnion in the data breach context and have handed down a kaleidoscope of decisions. For instance, in cases where plaintiffs fail to assert plausible allegations of present injury that are fairly traceable to the data breach and rely instead on an asserted risk of future harm, some courts have found that mere public disclosure of private facts is sufficiently “concrete” to establish standing, whereas others have required allegations showing that the risk of future harm is substantial.
In Logan, et al. v. Marker Group, Inc., 2024 WL 3489208 (S.D. Tex. July 18, 2024), for example, plaintiffs alleged that the defendant failed to properly secure their protected health information and personally identifiable information (PII), thus leaving them to “face a lifetime of heightened risk of identity theft and fraud” as a result of the data breach. Id. at *6. The court granted the defendant’s motion to dismiss on the basis of lack of standing, finding that “the mere risk of future harm, standing alone, cannot qualify as a concrete harm.” Id. (citing TransUnion).
In Jones, et al. v. Sturm, Ruger & Co.,2024 WL 1307148 (D. Conn. Mar. 27, 2024), by contrast, plaintiff alleged that a breach compromised customers’ PII and payment card data (PCD). The court denied the defendant’s motion to dismiss for lack of standing. The court concluded that, under TransUnion, the plaintiff’s alleged injury was sufficiently “concrete” for standing purposes because “exposure of Plaintiffs’ PII to unauthorized third parties ‘bears some relationship’ to the ‘well-established common-law analog: public disclosure of private facts.’” Id. at *3 (quoting Bohnak v. Marsh & McLennan Companies, Inc., 79 F.4th 276, 285 (2d Cir. 2023)).
Plaintiffs who clear the standing hurdle face another key inflection point at the class certification phase. Despite the significant increase in filings, however, courts issued only five rulings on motions for class certification in 2024. This suggests that hundreds of motions are in the pipeline or that, observing the difficulty that plaintiffs have faced in certifying data breach such cases over the past two years, plaintiffs are electing to monetize their data breach claims prior to reaching that crucial juncture.
In Baker, et al. v. Parkmobile, LLC, 21-CV-2182, ECF No. 243 at 23 (N.D. Ga. Apr. 8, 2024), for example, a plaintiff’s expert conceded in detail at his deposition that, to resolve plaintiff’s claims, the court would need to undertake highly individualized inquiries as to whether the plaintiff was subject to a credential stuffing attack and whether such attack caused any injury. The parties reached a settlement while the motion for class certification was fully briefed and a decision was pending.
The certification rate, however, improved somewhat for plaintiffs in 2024. Courts issued five rulings on motions for class certification, and plaintiffs prevailed on two, a success rate of 40%. By comparison, in 2023, courts issued seven rulings on motions for class certification, and plaintiff prevailed in one, for a success rate of 14%.
Despite the increase in success rate, the recipe for successfully certifying a data breach class remains a work in progress, as unsuccessful plaintiffs encountered both new and old issues in 2024. For instance, in In Re Blackbaud, Inc. Customer Data Breach Litigation, 2024 WL 2155221 (D.S.C. May 14, 2024), the court denied class certification because plaintiffs failed to identify any administratively feasible way for the court to ascertain the identities of about 1.5 billion putative class members whose data was stored in 90,000 backup files.
In Vest Monroe, LLC, et al. v. Doe, No. S-23-G-1224, 2024 Ga. LEXIS 187 (Ga. Sept. 4, 2024), the Georgia Supreme Court upheld the denial of class certification because variation in the materials allegedly disclosed prevented plaintiff from showing commonality or typicality. The plaintiff’s claim arose from the conduct of an ex-employee who disclosed digital copies of documents and recordings. In finding a lack of commonality, the trial court noted the differences in the type of documents allegedly disclosed with respect to members of the proposed class, as some contained diagnosis and treatment information, while others did not. Id. at *4. Relatedly, some members of the proposed class had clinical information revealed, while plaintiff did not. The Georgia Supreme Court determined that the trial court did not err in its determination.
Although plaintiffs continue to search for a road map to reliably certify data breach class actions, defendants are continuing to fund settlements, allowing plaintiffs to monetize their claims without clearing the certification hurdle. Such circumstances are apt to continue to draw plaintiffs’ class action lawyers to the data breach space and to continue to generate filings.
By Rebecca S. Bjork, Gerald L. Maatman, Jr., and Jennifer A. Riley
Duane Morris Takeaway: In a unanimous decision issued on January 15, 2025, the U.S. Supreme Court decided in Royal Canin U. S. A. v. Wullschleger, No. 23-677 (U.S. Jan. 15, 2025), that when a plaintiff files a civil suit under both state and federal law and subsequently amends the complaint to drop the federal law claims, the case must be remanded to state court due to lack of subject matter jurisdiction in the district court. This decision lends clarity to employers who have been navigating a circuit split on the question of whether federal district court subject matter jurisdiction is determined at the time of removal to federal court, or whether subsequent amendments abandoning federal claims destroys such jurisdiction. This issue arises over and over again in class action litigation.
Introduction
In a decision that will provoke readers’ memories (fondly or otherwise) of first year civil procedure class in law school, the U.S. Supreme Court ruled that a plaintiff’s deceptive marketing lawsuit originally stating both state and federal causes of action, that later dropped the federal claim in an amended complaint, must be remanded to state court. In a 9-0 decision, Justice Kagan explained that once the state law claims are stripped away, no federal subject matter jurisdiction exists and remand is required. Deciding a split amongst the circuit courts, the Supreme Court sided with the Eighth Circuit – and against the First, Third, Fourth, Sixth and Eleventh Circuits – in deciding that when a case is removed to federal court, an amended complaint dropping the federal claims destroys the district court’s jurisdiction.
This is obviously of interest for employers facing federal statutory class-wide claims involving issues such as wage and hour and discrimination, that also implicate overlapping state statutes.
The Ruling In Royal Canin U. S. A. v. Wullschleger
The U.S. Supreme Court issued its unanimous decision in Royal Canin U. S. A. v. Wullschleger, No. 23-677 (U.S. Jan. 15, 2025). In this case, the plaintiff purchased the defendant’s dog food that requires a prescription to obtain, believing that it contains medicine that off-the shelf dog food does not. Id. at 4. After learning that it does not, she filed suit in Missouri state court alleging violations of the state’s statute against deceptive marketing practices. Her complaint also included a claim under the federal Food, Drug and Cosmetic Act, 21 U.S.C. 301 (“FDCA”), that also forbids deceptive marketing practices.
Royal Canin, seeking perhaps to avoid being thrown to the dogs in a state court jury pool, decided to file a notice of removal of the plaintiff’s lawsuit to federal district court based on federal question jurisdiction (the plaintiff’s FDCA count). Id. at 4-5. In response, the plaintiff amended her complaint, dropping the FDCA claim, and only seeking relief under Missouri state law. Id. at 5. She then moved to remand to state court where she originally filed her complaint, but the district court denied her motion. Id. She ultimately appealed the dismissal of her amended complaint on the merits to the Eighth Circuit, and it reversed the district court’s decision to maintain jurisdiction of the matter and remanded it to state court. Id. Royal Canin sought certiorari to resolve the circuit split, and the Supreme Court obliged and affirmed the Eight Circuit’s ruling.
Basis Of The Supreme Court’s Opinion
In a very systematic and straightforward opinion of the Court, Justice Kagan explained why the limitations on federal court jurisdiction established by statute (e.g., 28 U.S.C. 1331 – cases “arising under” federal law) mandate SCOTUS’ unanimous conclusion. Long-established precedent holds that federal courts are courts of limited jurisdiction. Also, Congress has determined the scope of “supplemental jurisdiction,” where federal courts interpret and apply state law but only so long as they have concurrent federal jurisdiction to do so in the litigation. 28 U.S.C. 1367. And, the Supreme Court emphasized another statute that mandates that if at any time it appears that the federal court lacks subject matter jurisdiction, the case “must” be remanded to state court. 28 U.S.C. 1447(c). Id. at 3-4.
Applying these principles, the Supreme Court rejected Royal Canin’s argument that such limitations do not apply once a case has been removed to federal court and so-called “removal jurisdiction” exists. The Supreme Court explained, “Royal Canin argues that our precedent makes an exception for when an amendment [to a complaint] follows a lawsuit’s removal, but that is to read two bits of gratuitous language for a good deal more than they are worth.” Id. at 6. The Supreme Court continued that “Nothing in § 1367’s text . . . distinguishes between cases removed to federal court and cases originally filed there.” Id. at 8. And, unfortunately for Royal Canin, the Supreme Court has already held that in such a circumstance relating to original jurisdiction, the amended complaint is what determines jurisdiction, not the one at the time of removal. Id. As a result, the Supreme Court concluded that when the plaintiff “reconfigured her case to make it only about state law” her suit “became one for a state court.” Id. at 20.
Implications For Employers
As employers know, many class and collective action lawsuits are filed by plaintiffs that allege both state law and federal law claims. The classic example is a hybrid class and collective action under the Fair Labor Standards Act and a similar but often more onerous state statute governing how employees are paid. In our experience, many plaintiffs add their state law claims in order to extend the relevant statute of limitations period, for example, or sweep in certain state law substantive claims that are not available under a governing federal law.
Royal Canin U. S. A. v. Wullschleger will simplify litigation strategy decisions for employers with nationwide workforces. However, it remains to be seen how the plaintiffs’ bar will respond in terms of crafting both original and amended complaint strategies in the employment law space. We will be following developments closely and will provide our analysis and insights here.
Duane Morris Takeaway: Although courts issued fewer decisions on motions for class certification in 2024 as compared to 2023, the plaintiffs’ class action bar obtained certification at a more consistent rate across all substantive areas, suggesting that plaintiffs are being more selective in their investments and the cases they pursue through class certification.
Watch Duane Morris partner Jennifer Riley discuss the consistent certification rates in 2024 and what it means for 2025 in the video below:
In 2024, courts issued rulings on 432 motions for class certification, a decrease from 2023, when courts issued rulings on 451 motions for class certification. Of those, courts granted motions for class certification at a lower rate. Courts granted 272 of those motions, for a certification rate of approximately 63%. In 2023, by contrast, courts granted 324 motions for class certification, for a certification rate of approximately 72%.
Although the certification rate overall was lower, plaintiffs obtained certification at a more consistent rate across substantive areas, from a low of 33% in the RICO area, to a high of approximately 86% in the WARN areas. By contrast, in 2023, the numbers varied more substantially across substantive areas, from a low of 14% in the data breach area, to a high of 97% for securities fraud.
Plaintiffs Continued To Certify Cases At High Rates
In 2024, plaintiffs succeeded in certifying class actions at a high rate. Across all major types of class actions, courts issued rulings on 432 motions to grant or to deny class certification in 2024. Of these, plaintiffs succeeded in obtaining or maintaining certification in 272 rulings, an overall success rate of approximately 63%.
The numbers show that, when compared to 2023, plaintiffs filed fewer motions for class certification in 2024, and succeeded in certifying fewer classes in 2024.
By comparison, in 2023, courts issued rulings on 451 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, with an overall success rate of 72%. In 2022, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.
In 2024, the number of motions that courts considered varied significantly by subject matter area, and the number of rulings varied across substantive areas. The below chart summarizes these results in each of the key areas of class action litigation (sorted by plaintiffs’ success rate).
The plaintiffs’ bar obtained the highest rates of success in WARN Act, wage & hour, securities fraud, and antitrust class actions. In cases alleging claims for violation of the WARN Act, plaintiffs succeeded in obtaining orders certifying classes in six of seven rulings issued during 2024, a success rate of 85.7%. In wage & hour class and collective actions, plaintiffs succeeded in obtaining first-stage certification orders in 124 of 156 rulings issued during 2024, a success rate of 79.5%. In cases alleging antitrust violations, plaintiffs succeeded in obtaining orders certifying classes in 15 of 21 rulings issued during 2024, a success rate of 71.4%.
Although the certification rate overall was lower, as discussed above, moving down to 63% in 2024 from 72% in 2023, plaintiffs obtained certification at a more consistent rate across substantive areas. In 2024, plaintiffs succeeded in certifying cases alleging WARN Act violations at a rate of 85.7%, their highest rate of success among substantive areas. Plaintiffs succeeded in certifying cases alleging RICO violations at a rate of 33.3%, their lowest rate of success across substantive areas. Compared to 2023, these numbers reflect less variance across substantive areas.
In 2023, plaintiffs succeeded in certifying cases alleging securities fraud at a rate of 97.2%, their highest rate of success among substantive areas. Plaintiffs succeeded in certifying cases alleging data breach claims at a rate of 14.3%, their lowest rate of success across substantive areas.
The year over year compression suggests that plaintiffs were more selective during 2024 relative to the cases in which they sought class certification, particularly at the low end.
In 2024, for example, the number of rulings on motions for class certification in the data breach area dropped to four, a decrease of 42.9%, but plaintiffs fared better on those four, going two for four, for a success rate of 50.0%.
Courts Issues More Rulings In FLSA Collective Actions Than In Any Other Area Of Law
In 2024, courts issued more certification rulings in FLSA collective actions than in any other type of case. Many courts historically have applied a more lenient standard to such motions, allowing plaintiffs to increase the size of their cases with comparatively low investment, contributing to the number of filings in this area.
Overall, courts issued 171 rulings. Of these, 156 addressed motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.
Plaintiffs’ success rate at the conditional certification stage outpaced their performance from 2023. In 2023, courts issued 183 rulings. Of these, 165 addressed motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.
The results plaintiffs achieved in 2024 are more similar to the results they obtained in 2022, during which courts issued rulings on 236 motions. Of these, 219 addressed motions for conditional certification of collective actions, and 18 addressed motions for decertification of collective actions. Of the 219 rulings that courts issued on motions for conditional certification, 180 rulings favored plaintiffs, for a success rate of 82%.
Although success rates stayed high, and climbed closer to the rate observed in 2022, the overall number of rulings declined. This phenomenon likely reflects the impact of the so-called Swales-Clark movement. Until 2021, courts almost universally applied a two-step process to certification of FLSA collective actions. At the first stage, courts required a plaintiff only to make a “modest factual showing” that he or she was similarly-situated to others, and plaintiffs often met such burden at the outset of litigation by submitting declarations from a limited number of potential collective action members.
At the second stage, courts conducted a more thorough examination of the evidence to determine whether in fact the plaintiff was similarly-situated to others and the court manageably could try the case on a collective basis.
Over the past few years, however, courts have started taking a fresh look at the two-step process and whether it comports with the FLSA. Federal appellate courts in two circuits – the Fifth Circuit and Sixth Circuit – along with various district courts answered that question in the negative.
In 2021, the Fifth Circuit in Swales, et al. v. KLLM Transport Services, LLC, 985 F.3d 430, 436 (5th Cir. 2021), rejected the two-step approach to evaluating collective action certification, holding instead that district courts should “rigorously scrutinize the realm of ‘similarly-situated’ workers … at the outset of the case.”
In 2023, the Sixth Circuit in Clark v. A&L Homecare & Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), likewise jettisoned the two-step approach but expressly declined to adopt the standard approved by the Fifth Circuit. Instead, the Sixth Circuit introduced a new standard that requires the plaintiff to demonstrate a “strong likelihood” that other employees are “similarly-situated” to the plaintiff.
Although different, both Swales and Clark require plaintiffs to make a more substantial showing than the first-step approach requires, thereby requiring more factual development and, as a result, more investment on the part of the plaintiffs’ bar. As a result, we have seen fewer motions filed in these two circuits over the past two years, as plaintiffs progress further into discovery before filing their motions for conditional certification and as plaintiffs shift their efforts away from pursuing collective actions in the Fifth and Sixth Circuits.
Indeed, once a hotbed of filings, the number of rulings in the Fifth and Sixth Circuits were muted in 2024. In the Fifth Circuit, courts issued rulings on six motions for conditional certification, and plaintiffs prevailed on five, for a success rate of 83%, and, in the Sixth Circuit, courts issued rulings on ten motions for conditional certification, and plaintiffs prevailed on eight, for a success rate of 80%. While the results are solid for plaintiff’s side lawyers, the investment of time and effort to secure certification and thereafter monetize their cases shows a far longer track than in other federal circuits
These numbers illustrate the impact of Clark. Whereas courts in the Sixth Circuit issued rulings on ten motions for conditional certification this year, in 2023, as Clark began to take hold, courts in the Sixth Circuit issued 22 decisions on motions for conditional certification.
In 2022, the last full year before Clark, courts in the Sixth Circuits issued 36 decisions on motions for conditional certification. These numbers show a decrease of 14 rulings in each of the past two years. These numbers may continue to decline as plaintiffs shift their case filings to other circuits that have retained the lenient two-step approach or to other areas.
The distribution of conditional certification rulings over the past years shows that a disproportionate number emanated from traditionally pro-plaintiff jurisdictions, including the judicial districts within the Second Circuit (33 decisions) and Ninth Circuit (21 decisions), which include New York and California, respectively. The following map illustrates these variations:
At the decertification stage, courts generally have conducted a closer examination of the evidence and, as a result, defendants historically have enjoyed an equal if not higher rate of success on these second-stage motions as compared to plaintiffs. The results in 2024, however, were less favorable for defendants. Courts issued 15 rulings on motions for decertification. Of these, five rulings favored defendants, for a success rate of only 33.3%, and 10 rulings favored plaintiffs, for a success rate of 66.6%.
By comparison, in 2023, courts issued 18 rulings on motions for decertification of collective actions. Of these, eight favored defendants, for a success rate of 44.4%, and ten rulings favored plaintiffs, for a success rate of 55.6%. Such a rate aligns with the success rate defendants enjoyed in 2022. In 2022, courts similarly issued 18 rulings on motions for decertification of collective actions. Of these, defendants prevailed in nine, for a success rate of 50%, and plaintiffs prevailed in nine, for a success rate of 50%.
The variation in numbers across federal circuits no doubt flows from the different standards and approaches that different courts take in evaluating motions for conditional certification and decertification and, in turn, the likelihood of plaintiffs’ success on such motions. If more courts join the Fifth and Sixth Circuits in abandoning the traditional two-step certification process, and thereby increase the time and expense of gaining a conditional certification order, it may lead to a reshuffling of the deck in terms of the types of cases plaintiffs pursue and where plaintiffs choose to file them.
Duane Morris Takeaways: As we kick off 2025, we are pleased to announce the publication of the third annual edition of the Duane Morris Class Action Review. It is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting corporations, including class certification rulings in the substantive areas of antitrust, appeals, the Class Action Fairness Act, civil rights, consumer fraud, data breaches, discrimination, EEOC-initiated and government enforcement litigation, the Employee Retirement Income Security Act of 1974, the Fair Credit Reporting Act, labor, privacy, procedural issues, product liability and mass torts, the Racketeer Influenced and Corrupt Organizations Act, securities fraud, state court class actions, the Telephone Consumer Protection Act, wage & hour class and collective actions, and the Worker Adjustment and Retraining Notification Act. The Review also highlights key rulings on attorneys’ fee awards in class actions, motions granting and denying sanctions in class actions, the largest class action settlements across all areas of law, and primers on both the Illinois Biometric Information Privacy Act and the California Private Attorney General Act. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2025.
We are humbled and honored by the recent review of the Duane Morris Class Action Review by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. 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. The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting corporate America and provides insight as to what companies and corporate counsel can expect in terms of filings by the plaintiffs’ class action bar and government enforcement agencies like the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”
We are equally proud that the Review made its way into American jurisprudence over the past year, with a federal district court citing our analysis on class action trends in its decision on a motion for class certification.
Click here to access our customized website featuring all the Review highlights, including the ten major trends across all types of class actions over the past year. Order your free copy of the e-book here, and download the Review overview here.
Check out an exclusive article featuring the Review posted this morning in Forbes here. The Firm’s press release on the Review can be found here.
The 2025 Review analyzes rulings from all state and federal courts in 23 areas of law. It is designed as a reader-friendly research tool that is easily accessible in hard copy and e-book formats. Class action rulings from throughout the year are analyzed and organized into 23 chapters and 7 appendices for ease of analysis and reference.
Executive Summary Of Key Class Action Trends Over The Past Year
Class action litigation presents one of the most significant risks to corporate defendants today. Procedural mechanisms like the one set forth in Rule 23 of the Federal Rules of Civil Procedure have the potential to expand a claim asserted on behalf of a single person into a claim asserted on behalf of a behemoth that includes every employee, customer, or user of a particular company, product, or service, over an extended period. Class actions allow plaintiffs to pursue claims on behalf of a defined and sometimes sprawling group of unnamed individuals. By aggregating the claims of many persons in a single lawsuit, plaintiffs can seek to increase the size of their cases exponentially in terms of the number of claims they assert and the damages they seek. As a result, class actions can present substantial implications for corporate defendants.
As plaintiffs increase the size of their cases, the resulting legal risks can grow, bringing increased leverage for plaintiffs. A negative ruling in a class action has the potential to reshape a defendant’s business model, to impose significant financial consequences, and to shape standards for the entire industry. The outcome of a class action lawsuit, therefore, can be significant and potentially devastating for a company. Due to their potential implications, class actions are often costly to defend. Defending a class action can be a time-consuming and resource-intensive process that diverts management attention from core business activities. Plaintiffs can attempt to leverage this reality to make class actions as expensive and disruptive as possible, in an effort to bring about litigation fatigue and to extract sizable settlements from corporations.
Class actions are sometimes even more perilous to settle. Given the potential size and cost, class action settlements can attract media attention and lead to public scrutiny. Lucrative settlements can prompt copy-cat lawsuits and lead to more claims. Negative publicity can have widespread implications, including potential harm to a company’s reputation, potential damage to its brand, and potential drop in consumer trust. Class actions are complex legal proceedings with uncertain outcomes. The complexity can arise from managing multiple claims, myriad legal issues, and assorted class members, making it challenging for corporate defendants to predict and control the result. Due to these factors, corporate defendants should approach class actions from a broad vantage point with a thoughtful and multi-faceted defense strategy.
We developed a one-of-a-kind resource to provide a practical desk reference for corporate counsel faced with defending class action litigation. We have organized this year’s book into 23 chapters, with seven appendices, each of which provides an analysis of the trends in a particular area of class action litigation, along with the key decisions from courts across the country that companies can use to shape their defense strategies.
We identified ten key trends that characterized 2024. These trends include: (i) the continued prevalence of massive class action settlements; (ii) the normalization of plaintiff-friendly class certification conversion rates across substantive areas of class action litigation; (iii) the expansion of privacy class action litigation; (iv) continued efforts to chip away at and counter the impact of the arbitration defense as a barrier to class action litigation; (v) a surge of challenges to diversity, equity, and inclusion (DEI) programs that are likely to fuel class claims; (vi) decisions by the U.S. Supreme Court laying the groundwork for rebooted litigation theories and defenses; (vii) continued growth of data breach class actions; (viii) attention-getting headlines regarding PFAS litigation, which generated the largest class settlement and attorneys’ fee award of 2024; (ix) filing activity in California on the PAGA front demonstrating its continued popularity among the plaintiffs’ class action bar; and (x) a decreased role for government enforcement activity.
Trend # 1 – Settlement Numbers Break $40 Billion For The Third Year In A Row
In 2024, settlement numbers broke the $40 billion mark for the third year in a row. The cumulative value of the highest ten settlements across all substantive areas of class action litigation totaled $42 billion. That number is the third highest value we have tallied in the last two decades, trailing only the settlement numbers from 2023 and 2022. In 2023 settlements totaled $51.4 billion, and in 2022, settlements totaled $66 billion. Combined, the past three years of $159.4 billion reflect use of the class action mechanism to redistribute wealth at an unprecedented level.
Trend #2 – Class Certification Numbers Normalize Across Substantive Areas
Although courts issued fewer decisions on motions for class certification in 2024 as compared to 2023, the plaintiffs’ class action bar obtained certification at a more consistent rate across all substantive areas, suggesting that plaintiffs are being more selective in their investments and the cases they pursue through class certification. In 2024, courts issued rulings on 432 motions for class certification, a decrease from 2023, when courts issued rulings on 451 motions for class certification. Of those, courts granted motions for class certification at a lower rate. Courts granted 272 of those motions, for a certification rate of approximately 63%. In 2023, by contrast, courts granted 324 motions for class certification, for a certification rate of approximately 72%.
Trend #3 – Privacy Class Actions Continue To Proliferate As Plaintiffs Search For Winning Theories
The plaintiffs’ class action bar has continued to invest in the privacy class action space and, over the past year, has generated a multitude of filings, making privacy one of the hottest areas of growth in terms of activity by the plaintiffs’ class action bar. As technology continues to infiltrate our everyday lives, it provides ongoing inspiration for novel claims. Two of the most active areas of privacy litigation over the past year include: (1) litigation regarding “biometric” technologies under the Illinois Biometric Privacy Act (BIPA); and (2) claims regarding website advertising technologies (adtech) asserted under a variety of federal and state statutory and common laws.
Trend #4 – Plaintiffs Continue To Chip Away At The Arbitration Defense
Despite another tumultuous year of rulings, the arbitration defense remained one of the most powerful weapons in the class action defense toolkit. A defendant’s ability to enforce an arbitration agreement containing a class or collective action waiver continues to reign as one of the most impactful defenses in terms of shifting the pendulum of class action litigation. The U.S. Supreme Court cleared the last hurdle to widespread adoption of such agreements with its decision in Epic Systems Corp. v. Lewis, et al., 138 S. Ct. 1612 (2018). In response, more companies of all types and sizes updated their onboarding systems, terms of use, and other types of agreements to require that employees and consumers resolve any disputes in arbitration on an individual basis. In 2024, the defense won 91 of 167 motions to compel arbitration, for a success rate of 54%. By way of comparison, in 2023 the defense won 126 of 190 motions to compel arbitration, for a success rate of 66%.
Trend #5 – Plaintiffs Target DEI and ESG Initiatives Prompting Roll Back
The U.S. Supreme Court’s 2023 decision in Students for Fair Admissions, Inc. (SFFA), et al. v. President & Fellows of Harvard College, 600 U.S. 181 (2023), stimulated a flood of claims targeting diversity equity and inclusion (DEI) programs over the past year. Headlines were replete with cases of employees and applicants accusing employers of prioritizing diversity over merit and improperly using protected characteristics to guide decision-making, setting the stage for more class action activity in this area.
Trend #6 – The Supreme Court Lays The Groundwork For Rebooted Litigation Theories
As the ultimate referee of law, the U.S. Supreme Court traditionally has defined the playing field for class action litigation and, through its rulings, has impacted the class action landscape. The past year was no exception. Although the U.S. Supreme Court did not directly address the procedural mechanisms that govern class actions during its most recent term, it issued multiple decisions that are sure to influence the class action space.
Trend #7 – Data Breaches Gives Rise To An Unprecedented Number Of Class Action Filings
Data breach litigation remained expansive in 2024 as plaintiffs filed more data breach class actions than in any other year and double the number filed in 2022. As the number of data breaches has accelerated, such events have provided the fuel for a surge of class actions. Despite the significant increase in filings, courts issued few (only five) class certification decisions in 2024, suggesting that many motions are in the pipeline or that, observing the difficulty that plaintiffs have faced in certifying such cases over the past two years, plaintiffs are electing to monetize their data breach claims prior to reaching that crucial juncture. So long as defendants continue to play ball on the settlement front, we are likely to see settlement payouts continue to lure plaintiffs to this space and fuel those filing numbers.
Trend #8 – PFAS Inspires Forever Litigation
PFAS class actions inspired some of the most attention-grabbing headlines this past year across the legal landscape. PFAS, or per- and polyfluoroalkyl substances, are a group of manmade chemicals that are resistant to oil, water, and heat. They are used in many consumer and industrial products and are commonly called “forever chemicals” because of their persistence, meaning they do not break down easily in the environment. PFAS generated the largest class action settlement in 2024, which came in at more than twice the next highest settlement, which also involved PFAS, and generated an attorneys’ fee award of nearly one billion dollars. These numbers are going to inspire a continued wave of PFAS class actions, as the plaintiffs’ class action bar targets more companies with claims that their products or packaging contained PFAS, and those companies, in turn, search for claims against their material suppliers.
Trend #9 – California Remains Ground Zero For PAGA Representative Actions
The California Private Attorneys General Act (PAGA) inspired more representative lawsuits than any other statute in America over the past year. According to the California Department of Industrial Relations, plaintiffs filed more than 9,464 PAGA notices in 2024, a nearly 22% increase over 2023, and a whopping 85,936% increase over the 11 PAGA notices filed in 2006. The so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to nothing to curb interest in these cases, which continue to present one of the most viable workarounds to workplace arbitration agreements.
Trend #10 – The Change At The White House Signals A Decreased Role For Government Enforcement Litigation
Government enforcement litigation is similar in many respects to class action litigation. In lawsuits brought by the U.S. Equal Employment Opportunity Commission (EEOC), as well as the U.S. Department of Labor (DOL), government enforcement claims typically involve significant monetary exposure, numerous claimants, and complex procedures. These types of lawsuits most often pose reputational risks to companies. As the White House shifts from blue back to red, the incoming Trump Administration has promised less government oversight of business and less regulation, thereby signaling less government enforcement litigation. Change, therefore, is inevitable.
Conclusion
Class action litigation is a staple of the American judicial system. The volume of class action filings has increased each year for the past decade, and 2025 is likely to follow that trend. In this environment, programs designed to ensure compliance with existing laws and strategies to mitigate class action litigation risks are corporate imperatives.
The plaintiffs’ bar is nothing if not innovative and resourceful. Given the massive class action settlement figures from 2022 through 2024 (a combined total of $159.4 billion), coupled with the ever-developing law, corporations can expect more lawsuits, expansive class theories, and an equally if not more aggressive plaintiffs’ bar in 2025. These conditions necessitate planning, preparation, and decision-making to position corporations to withstand and defend class action exposures.
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Gregory Tsonis
Duane Morris Takeaways: On December 17, 2024, in a critical ruling in Stafford, et al. v. Bojangles’ Restaurants, Inc., No. 23-2287 (4th Cir. Dec. 17, 2024), the Fourth Circuit vacated the district court’s certification of a class action involving allegations of unpaid off-the-clock work and unauthorized edits to employee time records at Bojangles Restaurants. The Fourth Circuit determined that the district court erred in its application of Rule 23’s commonality and predominance requirements, relying on overly broad class definitions and vague assertions of company-wide policies. The decision underscores the importance of specificity in class certification arguments and highlights the successful opposition to class certification when plaintiffs rely upon generalized allegations and purportedly common policies in wage-and-hour litigation.
Case Background
Bojangles’ Restaurants, Inc. operates over 300 fast-food locations across eight states. The company employs a three-tier management structure with shift managers, assistant general managers, and general managers. Shift managers, the lowest tier, are responsible for a variety of operational duties, including pre-opening and post-closing tasks. Bojangles maintains internal policies prohibiting off-the-clock work and requiring employees to clock in and out to ensure accurate tracking of hours and overtime pay.
The lawsuit arose from allegations that Bojangles violated its policies by requiring shift managers to perform off-the-clock work and, at times, by systematically editing time records to reduce overtime payments. The Named Plaintiff Richard Stafford, a former hourly-paid shift manager, alleged that he was frequently required to work off the clock, perform unpaid tasks such as cleaning, making bank deposits, and traveling between locations, and was subject to unauthorized time-shaving.
The lawsuit was originally filed as an FLSA collective action and, in 2020, the district court conditionally certified a collective action for Stafford’s FLSA claims that attracted nearly 550 opt-in plaintiffs. Stafford later amended the complaint to assert state law class claims under various state wage and hour laws, and subsequently sought Rule 23 class certification for state law claims in North Carolina, South Carolina, Alabama, Georgia, Kentucky, Tennessee, and Virginia. While five of the state law classes failed to meet Rule 23’s adequacy prong, the district court certified classes for North Carolina and South Carolina shift managers, citing the Bojangles Opening Checklist, which allegedly mandated pre-shift tasks, as a common issue. The class definitions broadly included all shift managers employed within three years of the complaint’s filing since the district court found that at least 80% of shift managers would have worked an opening shift at some point.
Bojangles appealed, arguing that the district court’s class certification was overly broad and lacked the specificity required under Rule 23.
The Fourth Circuit’s Decision
The Fourth Circuit found that the district court relied excessively on generalized claims of Bojangles’ policies without providing specific evidence of commonality among the class members. While the Opening Checklist provided some basis for commonality regarding pre-shift work, the district court failed to address whether other alleged activities, such as time-shaving and post-closing tasks, were similarly unified by a common policy. The Fourth Circuit emphasized that “[a]llegations of generalized policies are not usually sufficient for the purposes of class certification” and further noted that Rule 23 does not permit a “30,000-foot view of commonality.” Id. at 11. Instead, plaintiffs must demonstrate that common questions predominate over individualized issues, and they had not done so with respect to the type of alleged off-the-clock work and time shaving.
The Fourth Circuit also criticized the overly broad class definitions, which included all shift managers employed during a three-year period without specifying the types of claims or injuries alleged. Such vague definitions risked including individuals with no viable claims and failed to meet Rule 23’s requirements. The lack of specificity raised concerns about commonality, predominance, and typicality, according to the Fourth Circuit, because some plaintiffs may not even have off-the-clock or time shaving claims against Bojangles. It suggested that sub-classes might be appropriate to address distinct issues but left this determination to the district court on remand.
The decision concluded by emphasizing the importance of adhering to Rule 23’s prerequisites to ensure that class actions remain a viable and efficient mechanism for resolving disputes. Characterizing Rule 23 class actions as a “carefully crafted compromise,” the Fourth Circuit observed that its decision was meant to “ensure that the class-action train stays on the tracks.” Id. at 19. Without clear evidence of commonality and precise class definitions, the Fourth Circuit ultimately vacated and remanded the district court’s class certification decision.
Implications for Employers
This decision provides a helpful roadmap for employers facing wage-and-hour class action cases premised on an alleged common policy. As this case exemplifies, employers should focus on the lack of specificity in alleged policies to counter claims of commonality or predominance. Demonstrating variations in employee experiences, decision-making processes, or other individualized factors can effectively undermine arguments for class-wide treatment.
Thinking through such considerations is an absolute necessity, and one that begins with the planning of a strategic defense early in the litigation process. Documenting lawful policies and practices during discovery lays a foundation for opposing class certification. By emphasizing the need for clear evidence and precise definitions, this ruling underscores the challenges plaintiffs face in meeting Rule 23’s rigorous standards. Employers can use these standards to their advantage, ensuring that ill-defined and nebulous classes are not certified in the high-stakes litigation they often face.
Duane Morris Takeaway: Happy Holidays to our loyal readers of the Duane Morris Class Action Defense Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – the Duane Morris Class Action Review – 2025. We will go to press in early January and launch the 2025 Review from our blog and our book launch website.
The 2025 Review builds on the success of our previous editions and represents our twentieth annual study of the class action space. At over 600 pages, the 2025 Review has more analysis than ever before, with discussion of over 1,250 class certification rulings from federal and state courts over this past year. The Review will be available for download as an E-Book too.
The Review is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America, including the substantive areas of antitrust, appeals, the Class Action Fairness Act, civil rights, consumer fraud, data breach, EEOC-Initiated and government enforcement litigation, employment discrimination, the Employee Retirement Income Security Act of 1974, the Fair Credit Reporting Act, labor, privacy, procedural issues, product liability and mass torts, the Racketeer Influenced and Corrupt Organizations Act, securities fraud, state court class actions, the Telephone Consumer Protection Act, wage & hour class and collective actions, and the Worker Adjustment and Retraining Notification Act. The Review also highlights key rulings on attorneys’ fee awards in class actions, motions granting and denying sanctions in class actions, and the top-class action settlements in each area. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2025.
We are humbled and honored by the recent review of the Duane Morris Class Action Review – 2024 by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. 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. The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting corporate America and provides insight as to what companies and corporate counsel can expect in terms of filings by the plaintiffs’ class action bar and government enforcement agencies like the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”
We look forward to providing the 2025 edition of the Review to all our loyal readers in early January. Stay tuned and Happy Holidays!
By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller
Duane Morris Takeaways: In EEOC v. Cambridge Transportation., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857 (D. Minn. July 8, 2024), Judge Nancy E. Brasel of the U.S. District Court for the District of Minnesota accepted U.S. Magistrate Judge Dulce J. Foster’s Report and Recommendation (see EEOC v. Cambridge Transportation, Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024)) to impose civil contempt sanctions against Cambridge Transportation Inc. for its failure to comply with an EEOC subpoena. The EEOC sought documents in its administrative charge investigation into Title VII discrimination allegations on behalf of a former Cambridge Transportation, Inc. worker.
The Court ordered payment to the EEOC of $100 per day for each day Cambridge Transportation, Inc. remains out of compliance beginning on June 7, 2024. Over one month later, Cambridge remains out of compliance based on the docket. This ruling is a warning admonisiton for employers facing EEOC subpoenas and the seriousness for any alleged non-compliance with the Commission’s investigation process.
Case Background
On October 19, 2023, the EEOC petitioned for an Application for and Order to Show Cause Why Administrative Subpoena Should Not Be Enforced (the “Application”) against Respondent Cambridge Transportation, Inc. (“Cambridge”). (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, ECF No. 1.) The EEOC’s subpoena duces tecum sought information from Cambridge regarding a charge of discrimination under Title VII of the Civil Rights Act of 1964. (See id.) In the underlying charge, Charging Party Becky Blechinger alleged that Cambridge “discriminated against her on the bases of her sex (female), race (white), national origin (United States) and disability by paying a higher rate of compensation to men of Somalian national origin,” who worked at Cambridge. (See id., ECF No. 2, at 2.)
On November 1, 2023, the Court issued an order to show cause for the EEOC’s Application. (See id., ECF No. 7.) On November 21, 2023, the EEOC provided a status report that reflected it had not effectuated service on Cambridge. (See id., ECF No. 9)
On December 19, 2023, the EEOC filed a Motion to Stay Proceedings. (See id., ECF No. 12.) Therein, the EEOC stated Cambridge responded and acknowledged receipt of the Court’s order to show cause and further indicated that Cambridge intended to produce the documents identified in the EEOC’s Application by December 26, 2023. (See id.) The following day the Court stayed the case. (See id., ECF No. 13.)
On January 25, 2024, the EEOC filed another status report with a request due to Cambridge’s failure to comply with the subpoena. Thereafter, the Court entered an order for hearing on the EEOC’s Application. (See id., ECF Nos. 14 & 15.) On February 22, 2024, Cambridge attended the hearing via telephone through its non-attorney registered agent. (See id., ECF No. 18.)
On February 27, 2024, the Court granted the EEOC’s Application and determined that Cambridge must comply with the subpoena or otherwise the Court may find Cambridge in civil contempt and impose a daily fine for each day Cambridge remains out of compliance. (See id., ECF No. 20.)
On May 14, 2024, the EEOC provided a status report to the Court and reiterated that Cambridge failed to comply with the subpoena and requested the Court impose a civil fine of $800 per day, for each day past May 14, 2024, that Cambridge remains non-compliant. (See id., ECF No. 23.)
On May 20, 2024, the Court ordered a hearing on the EEOC’s Application and required Cambridge to retain counsel to enter an appearance on its behalf to show cause why sanctions should not be imposed for failure to comply with the Court’s February 27 order. (See id., ECF No. 25.) On June 7, 2024, the hearing occurred and Cambridge did not appear. (See id., ECF No. 27.)
The Magistrate’s Report and Recommendation and the District Court Judge’s Finding
On June 10, 2024, Magistrate Judge Dulce J. Foster issued his Report and Recommendation. (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024). The report detailed the continued failures of Cambridge to respond to the Agency’s subpoena and efforts to enforce its subpoena. (See id., at *1-6.)
The Court opined Cambridge had “ample time to retain counsel, for its alleged counsel to enter an appearance and to ensure its counsel either would be available to attend the show cause hearing or move to reschedule it” and “despite having months,” it had “faile[d] to do so and made no efforts to explain that failure or seek more time to comply.” (See id., at *5.) As a result, the Court found Cambridge waived all of its defenses to the EEOC’s motion and request for sanctions. (See id., at *5-6.)
The Court reiterated its authority that it “may hold a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.” (See id, at *6) (quoting Fed. R. Civ. P. 45(g).) The Court found Cambridge’s continued non-compliance with the subpoena warranted contempt and imposition of monetary sanctions. (See id.) The Court’s recommendation was not made “lightly, but Cambridge’s intransigent refusal to cooperate” left the Court with few other options. (See id.)
On the requested $800 per day fine from the EEOC, the Court reasoned at this stage that it was not justified at this stage. (See id.) The Court instead recommended an initial daily fine of “$100 per day for each day Cambridge remains noncompliant with the subpoena beginning June 7, 2024, the date of the show cause hearing, and continuing until Cambridge satisfactorily complies.” (See id., at *7.) The Court further held “additional sanctions and penalties may be warranted in the future” if Cambridge’s failure to comply continues. (See id.)
The District Court Judge found no clear error in the Magistrate Judge Foster’s recommendation and report. (United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857, at * 1 (D. Minn. July 8, 2024).) In so holding, the Court adopted the report in full, and found Cambridge in civil contempt and ordered payment of $100 per day for each day Cambridge remains out of compliance with the EEOC’s subpoena, beginning on June 7, 2024. (Id.) The Court left open whether any additional sanctions and penalties may apply.
Implications For Employers
This recommendation and report, and resulting Court order, illustrates the length to which the EEOC will go to enforce its investigation of allegations of discrimination under Title VII of the Civil Rights Act of 1964. Companies should recognize the EEOC’s enforcement efforts have teeth, and heed the Court’s response that imposed a daily fine based on total non-compliance.
Companies should take measures to ensure compliance with any EEOC request for information and respond accordingly, and promptly, to any investigation including subpoena requests. Otherwise, Companies may find themselves footing a $100 bill for every day of non-compliance and possibly expose themselves to further civil contempt sanctions.
Duane Morris Takeaway: In the first half of 2024, across all major types of class actions, courts issued rulings on 203 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 138 rulings, with an overall success rate of 68%. In contrast, in 2023, the plaintiffs’ class action bar succeeded in certifying class actions at a higher rate. Across all major types of class actions, courts issued rulings last year on 451 motions to grant or to deny class certification. Of these, plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of 72%. In 2022, by comparison, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.
In 2024, the number of motions that courts considered varied significantly by subject matter area, and the number of rulings varied across substantive areas.
The following list summarizes the results in each of ten key areas of class action litigation:
WARN – 100% granted / 0% denied (1 of 1 granted / 0 of 1 denied)
FLSA / Wage & Hour (Conditional Certification) – 84% granted / 16% denied (68 of 81 granted / 13 of 81 denied)
Antitrust – 80% granted / 20% denied (8 of 10 granted / 2 of 10 denied)
FCRA / FDCPA – 75% granted / 25% denied (3 of 4 granted / 1 of 4 denied)
Securities Fraud – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
ERISA – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
Discrimination – 60% granted / 40% denied (6 of 10 granted / 4 of 10 denied)
Privacy – 60% granted / 40% denied (3 of 5 granted / 2 of 5 denied)
FLSA / Wage & Hour (Decertification) – 33% granted / 67% denied (3 of 9 granted / 6 of 9 denied)
Civil Rights – 48% granted / 52% denied (10 of 21 granted / 11 of 21 denied)
Consumer Fraud – 48% granted / 52% denied (12 of 25 granted / 13 of 25 denied)
Data Breach – 33% granted / 67% denied (1 of 3 granted / 2 of 3 denied)
Products Liability / Mass Torts – 0% granted / 100% denied (0 of 1 granted / 1 of 1 denied)
TCPA – 0% granted / 100% denied (0 of 3 granted / 3 of 3 denied).
The plaintiffs’ class action bar obtained the highest rates of success in WARN, wage & hour, antitrust, and FCRA class actions. There has only been one WARN certification ruling in 2024, which was granted by the court for a 100% success rate. In wage & hour litigation, plaintiffs succeeded in obtaining orders certifying classes and/or collective actions in 68 of 81 rulings issued during 2024, a success rate of 84%. In cases alleging antitrust violations, plaintiffs succeeded in obtaining orders certifying classes in 8 of 10 rulings, for a success rate of 80%. And in cases alleging FCRA violations, plaintiffs managed to obtain class certification rulings in 3 of 4 rulings issued during 2024, a success rate of 75%.
Courts Issued More Rulings In FLSA Collective Actions and Wage & Hour Class Actions Than In Any Other Areas Of Law
For the first half of calendar year 2024, courts again issued more certification rulings in FLSA collective actions and wage & hour class actions than in other types of cases. Plaintiffs historically have been able to obtain conditional certification of FLSA collective actions at a high rate, which surely has contributed to the number of filings in this area.
From January 1 to July 1, 2024, courts considered more motions for certification in FLSA matters than in any other substantive area. Overall, courts issued 90 rulings. Of these, 81 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 9 addressed second-stage motions for decertification of collective actions. Of the 81 rulings that courts issued on motions for conditional certification, 68 rulings favored plaintiffs, for a success rate of nearly 84%.
These numbers are higher than the numbers observed in 2023, during which courts issued 183 rulings. Of these, 165 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.
At the decertification stage, courts generally have conducted a closer examination of the evidence and, as a result, defendants historically have enjoyed an equal if not higher rate of success on these second-stage motions as compared to plaintiffs.
The results so far in 2024 have not supported that typical success. Of the 9 rulings that courts issued on motions for decertification of collective actions, only 3 rulings favored defendants, for a lower success rate of 33%.
An analysis of the rulings demonstrates that a disproportionate number emanated from traditionally pro-plaintiff jurisdictions, including the judicial districts within the Second Circuit (16 decisions) and Ninth Circuit (10 decisions), which include New York and California, respectively.
Takeaways From The Numbers Midway Through 2024
Notable this year at the halfway point, there have been a very small number of rulings emanating from the Fifth and Sixth Circuits (4 and 7 decisions, respectfully), which could account for the high overall conditional certification rate in the wage & hour space, given that these two circuits have imposed new, stricter standards for conditional certification. Plaintiffs likely are shifting their case filings away from these two circuits toward jurisdictions with more lenient, more plaintiff-friendly standards for conditional certification.
The numbers no doubt flow from the different standards and approaches that courts in different federal circuits take in evaluating motions for conditional certification and decertification and, in turn, the likelihood of plaintiffs’ success on such motions. If more courts join the Fifth and Sixth Circuits in abandoning the traditional two-step certification process under 29 U.S.C. § 216(b), and thereby increase the time and expense of gaining a conditional certification order, it may lead to a reshuffling of the deck in terms of where plaintiffs file their cases and the types of claims they pursue.
We will continue to track class certification trends in 2024 and will report on final numbers in the Duane Morris Class Action Review – 2025, which will be published in the first week of January. Stay tuned!
