DMCAR 2023 Trend # 1 – Class Action Settlements In 2022 Redistributed Wealth At An Unprecedented Level Video

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

Duane Morris Takeaway: In today’s video blog, Duane Morris partner Jerry Maatman discusses how the aggregate monetary value of class action settlements exploded to an all-time high in 2022, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims into enormous settlement values. In 2022, the plaintiffs’ bar was successful in converting case filings into significant settlement numbers at higher levels than any recent year. Tune in below to hear all about this 2022:

 

 

Fifth Circuit Affirms Striking Class Allegations From The Face Of A Complaint

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Michael DeMarino

Duane Morris Takeaways – In Elson v. Black, No. 21-20349, 2023 WL 111317, at *1 (5th Cir. Jan. 5, 2023), the U.S. Court of Appeals for the Fifth Circuit affirmed the District Court’s decision to strike the class allegations in a nationwide class action alleging false and deceptive marketing practices.  The decision in Elson is an important one for companies because it serves as reminder that, although sometimes discouraged, motions to strike class allegations are still a key weapon for defeating a class action lawsuit and cutting off class-wide discovery.

Background Of The Case

Plaintiffs were a group of women who alleged that Defendants falsely advertised the benefits and effectiveness of Defendants’ beauty product.  In their complaint, Plaintiffs asserted claims under the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 and multiple state statutes on behalf of a nationwide class and seven sub-classes representing the seven states in which Plaintiffs resided. Id. at *1.

Defendants moved to strike Plaintiffs’ class allegations and, after a hearing and some limited discovery, the District Court agreed with that position and struck the class allegations.  The District Court concluded that “[b]ecause the basis for the claims are misrepresentations, reliance on them will be a key factor with every potential plaintiff” and it was “not convinced that commonality is present as each potential plaintiff would have to show that their reliance was justified.”  Id. at *2.  The District Court also dismissed Plaintiffs’ individual claims for failure to state a claim.  Plaintiffs then appealed the order striking the class allegations, as well as the dismissal of their individual claims. Id.

The Fifth Circuit’s Ruling

On appeal, Plaintiffs mainly argued that the District Court failed to conduct the “rigorous analysis” required by Rule 23 of the Federal Rules of Civil Procedure and, in turn, overlooked the fact that reliance is not an element of many of the state statutes at issue. Id. The Fifth Circuit disagreed.  Applying an abuse of discretion standard, the Fifth Circuit concluded that Plaintiffs were unable to establish Rule 23(b)(3)’s requirement that “questions common to the class predominate over other questions.” Id.

Specifically, the Fifth Circuit noted that the burden was on Plaintiff to show that the differences in state law would not predominate over issues individual to each plaintiff in the litigation.  The Fifth Circuit therefore concluded that, by failing to present a sufficient choice of law analysis, Plaintiffs failed to meet their burden of showing that common questions of law predominate and, in fact “variations in state law . . .  swamp any common issues and defeat predominance.” Id. at *3.

Just as important, the Fifth Circuit also held that Plaintiffs could not establish predominance because “Plaintiffs’ allegations introduce numerous factual differences that in no way comprise a coherent class.” Id.  In reaching that holding, the Fifth Circuit observed that the named plaintiffs did not complain “about the same alleged misrepresentations.” Id.  As a result, the Fifth Circuit opined that “discerning the truth or falsity of each representation would require a group-by-group analysis, complicated by the fact that the members of each group are from different states.” Id.

In response, Plaintiffs proposed seven state-specific sub-classes under Rule 23(c)(5).  However, the Fifth Circuit rejected that solution. ‘‘Sub-class,” the Fifth Circuit opined, “is not a magic word that remedies defects of predominance. The burden is on Plaintiffs to demonstrate to the district court how certain proposed sub-classes would alleviate existing obstacles to certification.”  Id. at *4. Ultimately, the Fifth Circuit held that Plaintiffs failed make that showing.

At the end of the day, the Fifth Circuit ruled that “[d]espite the brevity of the . . . order, we see no reason to reverse the district court formalistically for its further elaboration on what is clear from the face of the pleadings” and concluded that it did not abuse its discretion in striking the class allegations.

Implications For Companies Facing Class Actions

The ruling in Elson underscores the importance that a motion to strike can play in defeating class action claims as a first strike response and is a reminder that sub-classes are not a cure-all for predominance problems.  Although some jurisdictions have viewed such motions with a bit of skepticism, corporate defendants are well-advised to consider whether to bring such a motion at the outset of the case, as an order striking class allegations is functionally equivalent to an order denying class certification and thus could put an early end to what otherwise might be tedious and lengthy litigation.

DMCAR 2023: Trend # 1 – Class Action Settlements In 2022 Redistributed Wealth At An Unprecedented Level

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

Duane Morris Takeaway: As authors and editors of our firm’s our Class Action Review, we identified ten (10) key trends in class action litigation over the past year. Trend # 1 focuses on the unprecedented number of massive class action settlements reached in the last 12 months. Aside from the Big Tobacco settlements nearly two decades ago, 2022 marked the most extensive set of billion-dollar class action settlements in the history of the American court system.

 In 2022, there were 15 class actions that resolved cases for $1 billion or more in settlements.

In the aggregate, the value of these settlements totaled $63.66 billion. The members of the billion-dollar settlement club include the following:

The largest 20 settlements during 2022 included the following:

Many of these settlements arose from opioid litigation against the pharmaceutical industry.

On an aggregate basis, class actions and government enforcement lawsuits against opioid manufactures, retailers, and distributors garnered more than $50 billion in settlements.

Much like the era of Big Tobacco settlements that transformed that industry, the opioid settlements are transforming the pharmaceutical industry and its distribution chain.

When the final tally is completed over the next several years, the aggregate settlements may top $100 billion.

These settlements have redistributed wealth at an unprecedented rate.

The plaintiffs’ class action bar scored rich settlements in virtually every area of class action litigation. The following provides the overall total of the top 10 most lucrative settlements in each of these areas:

$50.32 billion – Products liability class actions and mass tort
$8.596 billion – Consumer fraud class actions
$3.729 billion – Antitrust class actions
$3.254 billion – Securities fraud class actions
$1.31 billion – Civil Rights class actions
$896.7 million – Privacy class actions
$597 million – Employment discrimination class actions
$574.55 million – Wage & hour class and collective actions
$404.5 million – Government enforcement actions
$399.6 million – ERISA class actions
$719.21 million – Data breach class actions
$210.11 million – Fair Credit Reporting Act class actions

Suffice to say, 2022 was unlike any other year on the class action settlement front. As success often begets copy-cats, corporations can expect the plaintiffs’ class action bar will be equally if not more aggressive in their case filings and settlement positions in 2023.

Key Takeaways From The EEOC’s Draft Strategic Enforcement Plan For 2023-2027

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

Duane Morris Takeaways: On January 10, 2023, the EEOC published a draft of its proposed Strategic Enforcement Plan (“SEP”) for Fiscal Years 2023-2027. While the draft SEP was only released for public comment and is not yet final, a reading of the tea leaves suggests that a handful of subjects will be squarely on the EEOC’s radar for the next four years, including: (1) discrimination stemming from the use of artificial intelligence in hiring; (2) preventing and remedying systemic harassment; (3) equal pay obligations; and (4) various categories relating to emerging areas where protections are needed, protecting vulnerable workers, and providing access to justice.

The EEOC’s Strategic Priorities

  1. Artificial Intelligence 

While the EEOC’s focus on eliminating barriers in recruitment and hiring is not a new phenomenon, employers’ increasing use of artificial intelligence in hiring has added a new wrinkle in this space. The SEP specifically notes that the EEOC will focus “on the use of automated systems, including artificial intelligence or machine learning, to target job advertisements, recruit applicants, or make or assist in hiring decisions where such systems intentionally exclude or adversely impact protected group.” Id. at 9. The Commission adds that it will monitor screening tools or requirements that disproportionately impact workers based on their protected status, including those facilitated by artificial intelligence or other automated systems, pre-employment tests, and background checks. Finally, the EEOC notes that it will keep an eye on restrictive application processes or systems, including online systems that are difficult for individuals with disabilities or other protected groups to access.

Employers who utilize artificial intelligence in the hiring process should take heed. The EEOC listed this category first in terms of subject matter priorities. Given the Commission’s implied skepticism in regards to the impact of automated hiring software, now is the time for employers to vet their systems and make sure they are legally compliant.

  1. Systemic Harassment

Preventing and remedying systemic discrimination has long been a cornerstone priority for the EEOC. The EEOC Commissioners appointed by different presidential administrations have taken varying approaches to tackling discrimination on a systemic level, but regardless, the EEOC always has its eyes open for instances where there is widespread discriminatory practices at a company. The SEP makes clear that “[h]arassment remains a serious workplace problem,” noting that over 34% of the charges of employment discrimination the EEOC received between FY 2017 and FY 2021 included an allegation of harassment. Id. at 14. The SEP labels this a potential systemic issue, noting that a claim by an individual or small group may fall within this priority if it is related to a widespread pattern or practice of harassment. The EEOC indicates it will combat this problem by focusing on strong enforcement with appropriate monetary relief and targeted equitable relief to prevent future harassment.

While isolated incidents of harassment at largescale organizations may seem inevitable, the SEP’s declaration of this priority suggests employers need to pay closer attention to claims of harassment. If the EEOC senses that harassment is part of the fabric of an organization’s culture, such a situation could be ripe for a systemic discrimination claim. Accordingly, employers should take each individual claim of harassment seriously, and should consistently work to eradicate such behavior from the workplace.

  1. Equal Pay

The SEP makes clear that equal pay, and gender pay differences in particular, will continue to be a focus for the EEOC. The SEP notes that “[b]ecause many workers do not know how their pay compares to their coworkers’ and, therefore, are less likely to discover and report pay discrimination, the Commission will continue to use directed investigations and Commissioner Charges, as appropriate, to facilitate enforcement.” Id. at *13. Transparency appears to be a key component of this strategic priority, as the EEOC opines that pay secrecy policies, retaliating against workers for asking about pay or sharing their pay with coworkers, reliance on past salary history to set pay, and requiring applicants to specify their desired or expected salary at the application stage will all be areas of concern.

Pay audits should be a consistent practice for employers. If they are not, the EEOC’s inclusion of this priority in its SEP suggests that the Commission will aggressively investigate such claims and ask employers to produce data. Employers can best avoid the time and cost-draining exercises of producing pay data by proactively examining their compensation practices up front.

  1. Additional Priorities

The remaining three subject matter priorities include: (1) addressing emerging and developing issues; (2) protecting vulnerable workers; and (3) providing access to justice. In regards to emerging issues, the SEP seeks to address discrimination that is influenced by local, national and global events, such as pandemic-related discrimination and incidents of targeting various racial and religious groups. The SEP also seeks enhanced protections for vulnerable workers, such as migrant workers, disabled people, older workers, teenaged workers, and LGBTQ+ individuals. Finally, the SEP seeks to focus on policies and practices that limit substantive rights, discourage or prohibit individuals from exercising their rights under employment discrimination statutes, or impede the EEOC’s investigative or enforcement efforts. For example, this priority includes practices that deter or prohibit filing charges with the EEOC or cooperating freely in EEOC investigations or litigation.

In sum, these additional priorities are geared towards flexibly adopting to the evolving needs of the workforce, to make sure all individuals have uninhibited access to justice.

Implications For Employers

The EEOC’s SEP is an important publication for employers since it previews areas where companies may be targeted for investigations. While the 2023-2027 SEP is currently in draft form, we do not anticipate that there will be any significant overhaul, particularly in regards to the strategic priorities that are analyzed in this blog post. Accordingly, prudent employers should be mindful of these strategic priorities, and get a head-start on compliance if they have not already done so.

Presenting A Duane Morris Exclusive Event: Top Trends In Class Action Litigation In-Person Panel And Webinar Discussion For Book Launch

Duane Morris Takeaways: You are invited to join Duane Morris Partners Gerald L. Maatman, Jr. and Jennifer Riley for a panel discussion marking the release of the Duane Morris Class Action Review. The DMCAR has received rave reviews (here and here) since its publication, and this event will provide expert insights into the top 10 class action trends of 2022, and perspectives on what corporate counsel and business leaders can expect in 2023. Prominent plaintiffs’ class action lawyer of Joe Sellers of Cohen Milstein will join the discussion to provide thoughts on what the plaintiffs’ bar is expected to focus on in 2023.

Please register here to attend in person or by zoom to reserve your seat!

In Person Event: Thursday, January 26, 2023
Registration: 1:30 p.m. to 2:00 p.m. Eastern
Book Launch and Discussion: 2:00 p.m. to 3:00 p.m. Eastern
Reception: 3:00 p.m. to 5:00 p.m. Eastern

Location: 
Convene CityView
Duane Morris Plaza | 13th Floor
30 South 17th Street
Philadelphia, PA 19103

Speakers: 

Gerald L. Maatman, Jr., Partner and Chair Workplace Class Action Group, Duane Morris LLP

Jennifer A. Riley, Partner and Vice-Chair Workplace Class Action Group, Duane Morris LLP

Joseph M. Sellers, Partner Cohen Milstein

Opening Remarks: 

Matthew A. Taylor, Chairman and CEO, Duane Morris LLP

Thomas G. Servodidio, Vice-Chairman, Duane Morris LLP

Duane Morris Class Action Review – 2023 Overview Video

Duane Morris Takeaways:  As our Duane Morris Class Action Review outlines, 2022 was a year of history making developments in the class action world. The Review is the preeminent resource for discussing the trends of 2022 and what to expect in 2023. Below is a video exploring the origin of the Review, presented by Jerry Maatman and Jennifer Riley, partners at Duane Morris, Co-Chairs of the Firm’s class action defense group, and the Review editors.  Check it out below:

Illinois Appellate Court Affirms Dismissal Of BIPA Class Action Lawsuit

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

Duane Morris Takeaways:  In Barnett v. Apple Inc., Case No. 1-22-0187, 2022 Ill. App. LEXIS 556 (Ill. App. 1st Dist. Dec. 23, 2022), after a trial court dismissed a biometric privacy class action lawsuit involving the use of facial and fingerprint recognition features, the Illinois Appellate Court affirmed the dismissal order. In an important decision defining the parameters of liability under the Illinois Biometric Information Privacy Act (“BIPA”), the Illinois Appellate Court held that the users of the technology themselves were responsible for possessing, capturing, and collecting their biometric data

For businesses that are confronted with biometric privacy class action allegations in the context of recognition software, this monumental victory for Apple provides an excellent roadmap to attack such claims at the pleading stage.

Case Background

Plaintiffs alleged that Apple violated the Biometric Information Privacy Act, 740 ILCS 14/1 et seq., by offering users of its phones and computers the option of utilizing face and fingerprint recognition features without first instituting a written policy regarding the retention and destruction of the users’ biometric information; and without first obtaining the users’ written consent.  Id. at *1-2.  Plaintiffs claimed Apple was “in possession of,” “collected,” and “captured,” the users’ biometric information, since Apple designed, owned, and had the ability to remotely update the software.  Id. at *2.

On January 3, 2022, the trial court granted Apple’s motion to dismiss.  Id. at *9.  First, the trial court held that Plaintiffs failed to allege that their biometric information was sent to Apple’s servers or any third party server.  Rather, Plaintiffs expressly alleged that the information was stored locally on Plaintiffs’ own devices.  Second, the trial court held that Plaintiffs did not allege that Apple stored any of Plaintiffs’ biometric data in Apple databases.  Third, the trial court held that it was clear Plaintiffs voluntarily chose to use Face ID and Touch ID features, and could delete their biometric information from their devices if they chose.  On February 2, 2022, Plaintiffs filed a timely notice of appeal.  Id. at *11.

The Illinois Appellate Court’s Decision

The Illinois Appellate Court affirmed the trial court’s dismissal of Plaintiffs’ complaint.  Addressing the issue of “possession,” the Appellate Court explained that the term was not defined in the BIPA statute. Id. at *16.  Plaintiffs argued that Apple ‘possesse[d]” their information because Apple software collected and analyzed their information.  Id. at *17.  Rejecting Plaintiffs’ argument, the Appellate Court opined that based on the facts alleged by Plaintiffs, it seemed as though Apple designed these features with the express purpose of handing control to the user.  Id. at *17-18.  The Appellate Court also noted that these features were completely elective, explaining that the user must undertake a series of affirmative steps in order to use them.  Id.  Finally, the Appellate Court found that Plaintiffs’ arguments were not persuasive since Plaintiffs alleged that the information is stored on the users’ own individual devices, and that users may delete the information and disable the features at their convenience. Accordingly, the Appellate Court held that Plaintiffs failed to properly allege that Apple possessed their biometric information.

Turning to the issue of whether Apple collected and captured Plaintiffs’ biometric information, the Appellate Court explained that these terms were also not defined in the BIPA statute.  Id. at *20.  In support of their proposed definitions, Plaintiffs cited a BIPA class action in the employment context, where the employee plaintiff was required to use the biometric scanner or lose her  job.  Id. at *22-23 (citations omitted).  Rejecting Plaintiffs’ argument, the Court noted that the biometric features in this care were wholly optional, the information was stored exclusively on Plaintiffs’ devices, and Plaintiffs could delete the information at will.  Further, the Court noted that Plaintiffs specifically alleged that the information is stored only on their devices.  Accordingly, the Appellate Court held that Plaintiffs failed to properly allege that Apple captured and collected their biometric information.

In conclusion, the Appellate Court summarized its findings as follows:  “[P]laintiffs do not dispute that the user’s biometric information is stored on the user’s own device; that Apple does not collect or store this information on a separate server or device; that these features are completely optional; that the user is the sole entity deciding whether or not to use these features; that, to enable the features, the user employs his or her own device to capture and collect his or her own biometric information on that device; that, to utilize these features, the user must undertake a number of steps, which are all documented in photos in plaintiffs’ complaint; and that the user has the power to delete this biometric information from the device, at any time, without negatively impacting the device.”  Id. at *22-23.  Accordingly, the Appellate Court affirmed the trial court’s dismissal of Plaintiffs’ BIPA class action.

Implications For Employers

Facial recognition technology is rapidly becoming more prevalent in both the employment and consumer contexts.  This decision underscores the importance of carefully analyzing the allegations in biometric privacy class action pleadings.  In situations where users maintain control over their own biometric data, this may be a helpful decision to seek an early exit from the lawsuit.  Finally, Apple’s victory further provides some optimism for companies defending biometric privacy class actions, as the recent tide of key decisions has largely been adverse to defendants.

Check Out The Duane Morris Class Action Review Website

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

Duane Morris Takeaways – The all-new Duane Morris Class Action Review can be viewed on its very own website – click here to see everything offered! View the Top 10 Trends and settlements in all areas of class action litigation for 2022 here. You can also preorder the Review eBook here and review the Duane Morris Class Action Review Overview Video, featuring partners Jerry Maatman and Jennifer Riley here.

The Class Action Review

This one-of-a-kind publication provides a comprehensive analysis of class action litigation trends and significant rulings and settlements from 2022 that will enable corporate counsel and business leaders to make informed decisions when dealing with complex litigation risks in 2023.

The Review is 450 pages long, including 23 substantive chapters (with extensive charts and graphics), and 4 appendices, and is available in hard copy and e-Book formats.

It covers every conceivable area of substantive law involving class actions brought against corporate defendants. Our goal is to provide readers with the definitive desk reference for dealing with the complexities of class action litigation

We hope our loyal blog readers enjoy the Review! Stay tuned for more video and blog content highlighting each Top 10 Trend, and for an invitation to a Duane Morris exclusive in-Person and webinar Book Launch event!

It Is Here — The Duane Morris Class Action Review – 2023

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

Duane Morris Takeaways: As we kick off 2023, this is the inaugural year of the new Duane Morris Class Action Review.  It 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, wage & hour class and collective actions, 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, 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 settlement in each area. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2023.

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 copy of the eBook here, and download the Review overview on the key Rule 23 decisions and top class action settlements here.

The 2023 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 4 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. With the potential for exponential enlargement of the size and scope of an action comes the potential for exponential expansion of peril for a corporate defendant. Class action lawsuits can create legal nightmares for companies and their management teams. The exposure created by such aggregation of claims can pose a challenge to a corporation’s balance sheet, market share, and reputation. Sometimes such litigation can push a defendant into bankruptcy.

With the growth of class action litigation over the past decade, counsel for defendants and plaintiffs alike have become more sophisticated, the statutory authority and case law precedents have continued to evolve, and parties on both sides have expanded their arsenal of tools to pursue and to defend these cases. As a result, class action litigation entails ever-changing guideposts, new playbooks, and innovation. The plaintiffs’ class action bar used Rule 23 to its fullest in 2022 in prosecuting class actions against Corporate America. The result was a year like no other in the class action space.

We identified 10 key trends that characterize the past year. These trends involve:  (i) massive class action settlements; (ii) U.S. Supreme Court decisional law on class action issues; (iii) set-backs and statutory impediments to the arbitration defense; (iv) plaintiff-friendly class certification conversion rates; (v) a simmering in government enforcement actions paired with indications of more aggressive federal and state agency litigation against corporations in the coming year; (vi) expansive growth in privacy class action litigation; (vii) an expansion of data protection issues that continue to plague corporate defendants; (viii) continued confusion over the problem of uninjured class members to class certification; (ix) aggressive assertion of defenses based on personal jurisdiction and venue; and (x) transformative rulings on the PAGA front including the first major setback for the plaintiffs’ bar.

Trend #1 – Class Action Settlements In 2022 Redistributed Wealth At An Unprecedented Level

Aside from the Big Tobacco settlements nearly two decades ago, 2022 marked the most extensive set of billion-dollar class action settlements in the history of the American court system. Many of these settlements arose from opioid litigation against manufactures, distributors, and retailers in the pharmaceutical industry. On an aggregate basis, class actions and government enforcement lawsuits garnered more than $71 billion in settlements, with 15 class action cases settling for more than $1 billion. These settlements have redistributed wealth at an unprecedented rate. Suffice to say, 2022 was unlike any other year on the class action settlement front. As success often begets copy-cats, corporations can expect the plaintiffs’ class action bar will be equally if not more aggressive in their case filings and settlement positions in 2023.

Trend # 2 – The U.S. Supreme Court’s Decisions In 2022 Continued To Define The Class Action Landscape

As the ultimate referee of law, the U.S. Supreme Court has continued to define and shift the playing field for class action litigation. The Supreme Court’s rulings in 2022 were no exception. Consistent with its approach over the past several years, the Supreme Court issued three key rulings that impact the plaintiffs’ bar’s ability to bring and maintain class actions. The rulings include Southwest Airlines Co. v. Saxon, et al., 142 S.Ct. 1783 (2022), Morgan, et al. v. Sundance, Inc., 142 S.Ct. 1708 (2022), and Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022). The most effective tool for combating class actions may be the arbitration defense. Contrary to the tendency of its rulings in recent years to expand the arbitration defense, and thus make it more difficult for the plaintiffs’ bar to pursue claims on a class-wide basis, this past year the U.S. Supreme Court pulled back on the arbitration defense by narrowing its coverage.

Trend # 3 – The Arbitration Defense Suffered Setbacks In 2022

Of all defenses, a defendant’s ability to enforce an arbitration agreement containing a class or collective action waiver may have had the single greatest impact in terms of shifting the pendulum of class action litigation. With its decision in Epic Systems Corp. v. Lewis, et al., 138 S. Ct. 1612 (2018), the U.S. Supreme Court cleared the last hurdle to widespread adoption of such agreements. In response, more companies of all types and sizes updated their onboarding materials, terms of use, and other types of agreements to require that any disputes be resolved in arbitration on an individual basis. To date, companies have enjoyed a high rate of success enforcing those agreements and using them to thwart class actions out of the gate. Given the impact of the arbitration defense, in 2023, companies may face additional hurdles, on the judicial or the legislative front, as the plaintiffs’ bar continues to look for workarounds.

Trend # 4 – The Likelihood Of Class Certification In 2022 Was As Strong As Ever

In 2022, the plaintiffs’ class action bar succeeded in certifying class actions at a high rate. Across all major types of class actions, courts issued rulings on over 360 motions to grant or to deny class certification in 2022. Of these, plaintiffs succeed in obtaining or maintaining certification in 268 rulings, with an overall success rate of nearly 75%. The plaintiffs’ class action bar obtained the highest rates of success in securities fraud, ERISA, WARN, and FLSA actions. In cases alleging securities fraud, plaintiffs succeeded in obtaining orders certifying classes in 23 of the 24 rulings issues during 2022, a success rate of 96%. In ERISA litigation, plaintiffs succeeded in obtaining orders certifying class in 18 of 23 rulings issued during 2022, a success rate of 78%. In cases alleging WARN violations, plaintiffs managed to certify classes in 100% of the suits that resulted in decisions this year.

Trend # 5 – Government Enforcement In 2022 Took A Back Seat

Over the past year, the Biden Administration continued to roll out changes on several fronts as it aimed to expand the rights, remedies, and procedural avenues available to workers. During 2022, such efforts fueled litigation. With its decision in West Virginia v. Environmental Protection Agency, 142 S.Ct. 2587 (2022), the U.S. Supreme Court imposed another hurdle to agency rule-making. Meanwhile, government enforcement litigation activity took a back seat. Over the past two years, the U.S. Department of Labor, in particular, has continued to roll out worker-friendly rules that could have a cascading impact on workplace class actions, including rules designed to wipe out the pro-business policies of the Trump Administration. Such efforts continued on multiple fronts in 2022, including with respect to rules regarding businesses’ utilization of independent contractors and their use of the tip credit. Whereas companies continued to see pro-business rules promulgated by the Trump Administration withdrawn and overwritten in 2022, courts continued to impose hurdles to agency rulemaking, the success of which will continue to be seen in 2023. Enforcement activity remained steady as political appointments remain pending.  Employers are apt to see increased activity in 2023 as the EEOC in particular gains its full component of Biden appointees and can exercise its majority power to advance its agenda.

Trend # 6 – Privacy Class Actions Became An Intense Focus Of The Plaintiffs’ Class Action Bar

Privacy litigation – in a multitude of forms and theories – manifested itself as the hottest area of growth in terms of activity by the plaintiffs’ class action bar. The Illinois Supreme Court likely will rule on key BIPA matters in the early part of 2023 and that the statute will continue to drive class action litigation. Its technical requirements, combined with stiff statutory penalties and fee-shifting, provide a recipe for attention from the plaintiff’s class action bar, and companies’ continued development and use of innovative technologies are apt to provide a veritable barrel of opportunity. The plaintiffs’ bar also grounded privacy claims in the electronic interception provisions of various state laws. While Congress has refrained from addressing data privacy through federal legislation, many states have enacted their own laws, and 2022 saw significant state legislative activity regarding data privacy with five states preparing for new privacy laws to take effect in 2023, including California, Colorado, Connecticut, Utah, and Virginia.

Trend # 7 – Data Protection Issues Continued To Plague Corporate Defendants

Companies that fall victim to data breach attacks have to contend not only with the significant costs of responding to the data breach and potential of government fines, but also the high costs of dealing with high-stakes class action lawsuits. Corporations also suffered setbacks as courts disagreed over the application of the U.S. Supreme Court’s decision in TransUnion v. Ramirez, et al., 141 S. Ct. 2190 (2021), to data breach cases. 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. The Supreme Court decision in Ramirez has not resulted in a bright line rule on standing in data breach cases, as courts continue to apply different interpretations of Ramirez when analyzing the particular circumstances surrounding the breach in assessing the question of standing.

Trend # 8 – Courts Continued To Grapple With Problems Of Standing And Uninjured Class Members

During 2022, courts continued to grapple with the rules that govern the certification of classes that contain uninjured class members. Various cases climbed to the federal circuit level, with varying results, and the U.S. Supreme Court once again declined to take up the issue, making uninjured class members a continued topic of disagreement and debate for 2023. The issue remains one that divides lower federal courts, thereby fueling uncertainty on an important class action issue. If a defendant’s showing that one or more members of the defined class did not suffer a concrete harm can defeat class certification, such a defense is a potent tool for the defense.  As a result, while 2022 saw the further development of the defense, corporate defendants are likely to see continued litigation over this issue during the upcoming year.

Trend # 9 – Corporate Defendants Aggressively Asserted Defenses Based On Personal Jurisdiction

In 2022, corporate defendants aggressively asserted defenses based on personal jurisdiction to fracture class and collective actions. In Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773 (2017), the U.S. Supreme Court held that each plaintiff in a mass action must demonstrate a basis for the court to exercise personal jurisdiction over the defendant for purposes of adjudicating his or her claims, even if those claims are similar to the claims of other plaintiffs. Federal circuits, however, have disagreed on the impact of the Supreme Court’s ruling in the collective action and class action context. It is unlikely that the Supreme Court will resolve this issue in 2023, and corporate defendants can expect that personal jurisdiction will remain a powerful defense for facing class and collective actions outside of their home states.

Trend # 10 – PAGA Actions Suffered Their First Setback, Work-Arounds Continued To Percolate

In 2022, actions under the California Private Attorneys General Act (PAGA), Cal. Lab. Code, §§ 2698, et seq., saw their first setback as a workaround to workplace arbitration programs that require individual proceedings. 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. As the adoption of arbitration programs gained popularity as a mechanism to contract around class and collective actions, the plaintiffs’ class action bar identified work-around strategies. The PAGA workaround suffered its first significant set-back in 2022 with the U.S. Supreme Court’s highly anticipated decision in Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022), which addressed the arbitrability of PAGA claims.

What Should Companies Expect In 2023?

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 2023 is likely to follow that trend. A company’s 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 in 2022, coupled with the ever-developing case law under Rule 23, corporations can expect more lawsuits, expansive class theories, and an aggressive plaintiffs’ bar in 2023. These conditions necessitate planning, preparation, and decision-making to position corporations to withstand and defend class action exposures. These crucial issues are inevitably posed by any class action litigation. By their very nature, class actions involve decisions on strategy at every turn. The positions of the parties are constantly changing and corporate defendants must always be looking ahead and anticipating issues during every phase of the litigation.

We hope the Duane Morris Class Action Review provides practical insights into complex potential strategies relevant to all aspects of class action litigation and other claims that can cost billions of dollars and require changed business practices in order to resolve

The 2022-2023 Judicial Hellholes Report From The American Tort Reform Association On The Worst Jurisdictions For Defendants

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

Duane Morris Takeaways: Every year the American Tort Reform Association (“ATRA”) publishes its “Judicial Hellholes Report,” focusing on litigation issues and identifying jurisdictions likely to have unfair and biased administration of justice. The ATRA recently published its 2022-2023 Report and Georgia is identified as the most disadvantageous jurisdiction in the country for corporate defendants, the highest ever ranking for the state. Readers can find a copy here and the executive summary here.

The Judicial Hellholes Report is an important read for corporate counsel facing class action litigation because it identifies jurisdictions that are generally unfavorable to defendants. The Report defines a “judicial hellhole” as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.

The 2022 Hellholes

In its recently released annual report, the ATRA identified 8 jurisdictions on its 2022 hellholes list – which, in order, include: (1) Georgia (with massive verdicts bogging down business and third-party litigation financing is playing an increasing role in litigation); (2) Pennsylvania (especially in the Philadelphia Court of Common Pleas and the Supreme Court of Pennsylvania); (3) California (with Proposition 65 lawsuits thriving and a huge overall volume of lawsuits, in addition to Private Attorney General Act (PAGA) litigation and Americans with Disability Act (ADA) accessibility lawsuits; (4) New York (with “no-injury” consumer class action lawsuits and the highest volume of lawsuits under the ADA); (5) Illinois (particularly in Cook County as another “no-injury required” hotspot and lawsuits stemming from the Illinois Biometric Information Privacy Act); (6) South Carolina (particularly in asbestos litigation); (7) Louisiana (including deceptive lawsuit advertising practices, coastal litigation, and COVID-19 litigation); and (8) St. Louis, Missouri (with focuses on asbestos litigation and “phantom damages”).

According to the ATRA’s analysis, these venues are less than optimal for corporate defendants and often attract plaintiffs’ attorneys, particularly for the filing of class action lawsuits. Therefore, corporate counsel should take particular care if they encounter a class action lawsuit filed in one of these venues.

The 2023 “Watch List”

The ATRA also included 3 jurisdictions on its “watch list,” including Florida (the ATRA noted that Florida has been making strides to mitigate lawsuit abuse, but issues of inflated medical damages and deceptive trial lawyer advertising still remain); New Jersey (with a powerful trial bar), and Texas (particularly the Court of Appeals for the Fifth District, which the ATRA opined has developed a reputation for being pro-plaintiff and pro-liability expansion).

In addition, the ATRA recognized that several jurisdictions made significant positive improvements this year, highlighting decisions issued by Florida Supreme Court, the U.S. Court of Appeals for the Fourth Circuit, and the Arizona Supreme Court. The ATRA also noted that nine state legislatures enacted positive civil justice reforms this year.

 Implications For Employers

The Judicial Hellholes Report often mirrors the experience of companies in high-stakes class actions, as Georgia, California, New York, Pennsylvania, Illinois, Louisiana, Missouri, and South Carolina are among the leading states where plaintiffs’ lawyers file class actions. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and more generous damages recovery possibilities under state laws.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

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

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