Jeffrey Zohn – Class Action Defense

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Jeffrey R. Zohn

Duane Morris Takeaways: On August 3, 2023, Judge Elaine E. Bucklo of the U.S. District Court For The Northern District Of Illinois granted class certification for individuals located in Illinois who had their genetic test results disclosed to third parties by Defendant Sequencing, LLC (“Sequencing”) in Melvin v. Sequencing, LLC, Case No. 21-CV-2194 (N.D. Ill. Aug. 3, 2023). Plaintiff David Melvin moved for class certification under Rule 23 on the basis that Sequencing violated the rights of up to 1,550 people under the Illinois Genetic Information Privacy Act (“GIPA”). Sequencing opposed the motion by arguing that a ruling on class certification should be delayed or denied because Plaintiff is not an adequate class representative and that Plaintiff failed to establish the predominance and superiority requirements of Rule 23. Sequencing’s position was not well-taken as the Court granted the Motion in a succinct 11-page order that described aspects of Sequencing’s arguments as “unaccompanied by authority” and lacking “reasoned argument.” The ruling is required reading for any companies dealing with GIPA claims in class action litigation.

GIPA Background

The Illinois legislature enacted the GIPA, 410 ILCS 513, in order to enhance privacy protections by prohibiting the unauthorized disclosure and use of an individual’s genetic information. Relevant to Melvin, Section 15 of the GIPA provides that “genetic testing and information derived from genetic testing is confidential and privileged and may be released only to the individual tested and to persons specifically authorized . . . by that individual to receive the information.” Id. at *2. Section 30 of the GIPA provides that “[n]o person may disclose . . . the identity of any person upon whom a genetic test is performed or the results of a genetic test in a manner that permits identification of the subject of the test[.]” Id. Section 35 of the GIPA prohibits the dissemination of genetic information to an entity other than the one to which the subject provided it. Id.

Case History

In Melvin, Plaintiff sought to represent a class of Illinois consumers who sent their DNA to Sequencing only for Sequencing to disclose it to unknown third party developers without first obtaining those consumers’ consent.

During discovery, Sequencing described its process for collecting and analyzing its customers’ DNA. The customers either send Sequencing their DNA directly or upload the results of a DNA test taken by a third party, such as 23andMe or Ancestry.com. Sequencing uses that information to create a “DNA data file” containing “raw human DNA data” that can be used to assess the customers’ genetic code. Id. at 4. The customers can then purchase reports based on their own genetic code. Most of the reports that are available for purchase are provided by third party developers. As soon as a customer purchases a report, their personal and genetic information is automatically transmitted to the corresponding third party developer.

Plaintiff, who went through this entire process, claimed that Sequencing did not inform him that his genetic information would be shared and that he never consented to the disclosure of that information to anyone.

The Court’s Opinion

In granting Plaintiff’s motion for class certification, Judge Bucklo issued an 11-page order “plain[ly]” explaining “that a class action is the superior vehicle for pursuing the class claims asserted” by Plaintiff. Id. at 10. Since Sequencing did not meaningfully dispute or argue otherwise, the Court concluded that Plaintiff satisfied the numerosity, commonality, typicality, and adequacy of counsel requirements of Rule 23 of the Federal Rules of Civil Procedure.

Sequencing suggested that Plaintiff was not an adequate class representative because he had suffered no damages at all. The Court rejected this “bald statement,” which was “unaccompanied by authority or reasoned argument.” Id. at 9. It noted that Sequencing “offers no basis to believe that Plaintiff would not be entitled to the same statutory damages he claims on behalf of the class and subclass if he succeeds in establishing Defendant’s liability.” Id.

The Court was also unpersuaded by Sequencing’s argument to deny class certification based on Plaintiff’s failure to establish the predominance and superiority requirements of Rule 23. It reasoned that “no absent class members have filed individual GIPA claims against” Sequencing nor has Sequencing articulated a reason to believe that individual class members have an interest in pursuing and controlling separate GIPA actions. Id. at 10.

As a last ditch effort to oppose class certification, Sequencing argued that the Court should “probe behind the pleadings before coming to rest on the certification question.” Id. at 10-11. This argument was not well-taken by the Court. Judge Bucklo determined that “[P]laintiff’s motion does not rest on the pleadings alone but on the ample evidence he has developed in discovery. Moreover, [Sequencing] offers no hint of the evidence it expects to uncover that would cut against class treatment of Plaintiff’s claims.” Id.

Finding that none of Sequencing’s arguments had merit, the Court granted Plaintiff’s motion and certified the class.

Implications For Corporate Defendants

When opposing a motion for class certification, it is important to choose arguments carefully and selectively. In Melvin, Sequencing conceded that Plaintiff had satisfied most of the Rule 23 requirements while only half-haphazardly arguing that Plaintiff did not satisfy the remaining requirements. The Court did not take Sequencing’s overall position seriously, as it described Sequencing’s opposition as containing “bald statement[s]” “unaccompanied by authority or reasoned argument.”

By Gerald L. Maatman, Jr. and Jeffrey R. Zohn

Duane Morris Takeaways: On July 28, 2023, Judge Michael P. Shea of the U.S. District Court For The District Of Connecticut granted class certification for current and former employees of Yale-New Haven Hospital in Ruilova et al. v. Yale-New Haven Hospital, Inc. et al., Case No. 3:22-CV-00111 (D. Conn. July 28, 2023). Plaintiffs alleged that their retirement accounts were not appropriately managed, which resulted in poor investment decisions and excessive fees. Although many class action defendants are emboldened to fight on every aspect of plaintiffs’ claims, the Defendants in Ruilova took a different approach. Prior to the Court granting certification, Defendants stipulated to the certification of an over 25,000-person class in order to streamline the litigation and efficiently manage the litigation. Per Rule 23, the Court deemed that the motion satisfied the requirements for class certification.

Case History

In January 2022, Plaintiffs Kaity Ruilova and Eileen Brannigan (“Plaintiffs”) filed a class action lawsuit against Yale-New Haven Hospital, Inc. and its Board of Directors and Investment Oversight Committee (“Defendants”) alleging breach of fiduciary duty under the Employee Retirement Income Security Act (“ERISA”). Plaintiffs sought to represent over 25,000 former and current employees that participated in the Yale-New Haven ERISA Plan (“the Plan”). The Plan had assets totaling approximately $1.66 billion.

The lawsuit alleged that Defendants failed to fully disclose the expenses and risks of the Plan’s investment options to participants, allowed unreasonable expenses to be charged to participants (at a rate around 33% higher than comparable plans), and accepted high-cost and poorly-performing investments. Plaintiffs sought to recover all losses resulting from each breach of fiduciary duty.

Defendants filed a motion to dismiss that the Court granted in part and denied in part. The Court dismissed the claims made against the Board of Directors because the Board of Directors was not a fiduciary of the Plan. The Court denied the motion to dismiss as to the claim alleging that the Plan incurred excessive recordkeeping and administrative fees and the related failure-to-monitor claims.

While still denying that they are liable to Plaintiffs, approximately four months later, Defendants struck a deal with Plaintiffs to jointly file a stipulation to certify the class just as Plaintiffs articulated in the Complaint. The Court certified the class in a brief half page order one month later. Per its duty under Rule 23, the Court analyzed the motion and determined that Plaintiffs met the prerequisites for class certification.

Implications for Class Action Defendants

While a court certifying a class does not always make headlines, this one is unique. Defendants proactively agreed to stipulate to the certification of the class that Plaintiffs’ counsel alleged in the Complaint. The parties’ conversations and thought processes that led to this decision will never be known, but this strategy is a good reminder to always assess the merits of plaintiffs’ claims and only attack the weakest aspects of the case. Doing more is a waste of everyone’s resources, may demonstrate a lack of good faith, and could damage credibility in the eyes of the court.