Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Brandon Spurlock with their discussion of the Senate Banking Committee’s hearing this week regarding consumer protection in the financial sector from the risks of artificial intelligence, as well as their analysis of the potential implications in the regulatory environment and class action space as AI continues to be utilized in workplace and commercial operations.
Episode Transcript
Jerry Maatman: Welcome, loyal blog readers and listeners to our Friday weekly podcast series. I’m joined by my colleague Brandon Spurlock today, and we’re going to be focusing on artificial intelligence and the fact that that issue has been foremost in the mind of legislators in Washington, D.C. Brandon, welcome to our weekly podcast.
Brandon Spurlock: Thanks, Jerry. Always happy to be here.
Jerry: Brandon, there was quite a lot of activity at the Senate Banking Committee this week with respect to artificial intelligence. It involved consumers and protection of consumers. To me AI is everywhere and in the news, in terms of how it impacts the workplace, how it impacts consumers – what’s your take away from what occurred in Washington, D.C. this week?
Brandon: Yeah, Jerry, this topic is exploding everywhere, and the changes in every sector are fast and furious is AI advances. The hearing was led by the committee’s chairman, Democratic Senator Sherrod Brown from Ohio. Brown opened the hearing by highlighting positive aspects of technology for society in the financial world. And you think about things like ATM machines providing quick access to money, smartphone apps that can access banking online and bill paying, but also explain that automation has led to many of the financial crises that we’ve seen in the past two decades. Brown stressed that any AI use in the financial sector should be utilized to make the economy better for consumers, and that there should be significant safeguards in place to ensure that it does so.
His Republican counterpart, Senator Mike Rounds of South Dakota, who was filling in for the committee’s ranking member, also stressed the risks of AI, but took a different stance on the issues of regulation. He stated that there should be regulations regarding “transparency and explainability in decision-making, especially where credit is involved” – but that Congress should take a “pro-innovative stance” so the U.S. can attract talent, and that halting the progress of AI in the financial sector could put the U.S. at a competitive disadvantage.
Jerry: It struck me that here is a great example of technology accelerating faster than the law, and the law is trying to catch up, and government regulators are thinking about the void that exists in the system about regulation. I know that the Senate Committee and Senator Brown focused on fraud and antitrust concerns, but the overlay also was in the fear that artificial intelligence incorporates a bias, that use of the artificial intelligence could have an adverse impact on protected minority groups. What’s your takeaway in terms of what we’re going to see in the future in this particular area?
Brandon: Well, that’s spot on Jerry. Brown highlighted several AI tools that companies in the financial sector already use have been shown to have ingrained discriminatory biases towards Black and Latino American borrowers. Specifically, banks use algorithms and machine learning AI models and consumer lending that can determine a borrowers creditworthiness. But it often automates, super charges the biases that end up excluding minorities.
Jerry: I know that the Consumer Financial Protection Bureau is dabbling in this area, also focusing on regulations. But it seems to me that this is an area that the plaintiffs’ class action bar is following. And my sense is that we’re going to see a tipping point soon where there is going to be private plaintiff lawsuits brought over these issues with allegations that either the use of the AI implicated antitrust or fraud concerns or discrimination, either in the employment arena in the workplace, or with the extension of credit or with loans. What’s your takeaway of class action risks in this area?
Brandon: Well, you know there was a committee witness attending the hearing, Daniel Gorfine. He’s the founder and CEO of advisory firm Gattaca Horizons, and he’s a former chief innovation officer with the CFTC. He noted the risk of AI, but stated the “speculative fear or fear of future harm … should not broadly block development of AI in financial services.”
Another witness, University of Michigan computer science and engineering professor Michael Wellman, urged that public and open knowledge on what practices can create risk will help better prepare financial systems for AI and inspire market rules and systems that remain resilient to AI’s inevitable impacts.
So with all this said, Jerry, there will probably be no shortage of class action lawsuits that are filed, and I think as we see how those class actions progress, we’ll also see how they impact the regulatory environment. I think both are going to have an impact on one another.
Jerry: Brandon, you’re a thought leader in this area, and we’ll be closely following artificial intelligence and its implications in litigation and government regulation, and in terms of what it means to companies in the private sector. Sincerely appreciate you lending your expertise today to our podcast and thanks so much for joining us.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik with their analysis and discussion of the Equal Employment Opportunity Commission’s (“EEOC”) Strategic Plan for Fiscal Years 2022-2026.
Episode Transcript
Jerry Maatman: Welcome, loyal blog readers to our weekly installment of the Friday podcast, the Class Action Weekly Wire. I’m joined today by my partners, Alex Karasik and Jennifer Riley. Welcome.
Jennifer Riley: Great to be here. Thanks for having me.
Alex Karasik: Thanks, Jerry – Thrilled to be on the podcast.
Jerry: Today’s topic is the EEOC Strategic Plan for 2022 through 2026. It was just published this past month. Alex – what’s this about and what does it mean for employers?
Alex: Great question, Jerry. The Strategic Plan furthers the EEOC’s mission of preventing and remedying unlawful employment discrimination in advancing the Commission’s goal of providing equal opportunities and employment for all people. The Strategic Plan focuses on 1) enforcement, 2) education and outreach, and 3) organizational excellence. The Strategic Plan also provides performance measures for each strategic goal. So for corporate counsel who are involved in employment-related compliance as well as EEOC litigation, the new Strategic Plan is really required reading. You can find a copy of the Strategic Plan linked to the Duane Morris Class Action Blog, where we discuss the impact of the Plan and break down what it means for employers.
Jerry: Jen, enforcement is a big ticket item – it reminds me of the old EF Hutton commercial, ‘when EF Hutton speaks, people listen.’ And as Alex said, certainly when the EEOC talks about how it’s going to spend taxpayer dollars in enforcement of anti-discrimination laws, employers should listen and take notice. What are the takeaways in your mind when it comes to enforcement-related issues?
Jen: Well in the Strategic Plan, Jerry, the EEOC describes its primary mission as to prevent unlawful employment discrimination through its administrative mechanisms and through the litigation in terms of its enforcement mechanisms as well as through as adjudicatory and oversight processes. So the EEOC states that its main strategic focus for employing these mechanisms is through this fair and efficient enforcement based on the circumstances of each charge or each complaint, while maintaining a balance of meaningful relief for victims of discrimination.
Jerry: Well, I know that you can divide up the EEOC’s docket into systemic cases and non-systemic cases – systemic cases being much like class actions, even though the EEOC doesn’t have to comply with Rule 23 to litigate those. The EEOC also talks about outreach and education. Alex, is that something that employers should heed and take notice of?
Alex: Absolutely, Jerry – and one of the goals of the EEOC is trying to really prevent discrimination in these types of issues before they even ever surface to litigation. And the EEOC Strategic Plan does exactly that. It includes programs and events that come at cost-effective tools for enforcement. So these programs are primarily designed to help individuals from protected categories who may have historically been subjected to employment discrimination. Part of the EEOC’s education and outreach involves expanding technology through social media. That’s where a lot of workers are these days and a lot of people in society – and ensuring that the EEOC website and digital tools are more user-friendly and accessible and leveraging technology to capture a wider audience. These efforts to improve education and outreach are aimed at promoting public awareness of employment, discrimination laws while maintaining information and guidance for employers, federal agencies, unions, and staffing agencies. So really, the EEOC is dedicated to educating a large contingency of groups and organizations on what it can do to prevent discrimination.
Jerry: I also thought the aspect of the Plan that talked about organizational excellence was interesting. I, for one, have participated in internal EEOC training sessions where government attorneys came to be trained on cutting edge theories and techniques and employment discrimination laws. I once was an outside lecturer welcomed in by the EEOC to give that training. Jen, what do you read in terms of the EEOC’s investment taxpayer dollars into organizational excellence and what it means at the receiving end for employers in terms of lawsuits and techniques used by the government and litigating those lawsuits?
Jen: Well Jerry, the Strategic Plan makes clear that organizational excellence is the cornerstone of achieving the eeoc strategic goals. So the Plan states that the EEOC aims to improve on its culture of accountability, inclusivity, and accessibility. In addition to that, the Plan states that the EEOC will continue to advance civil rights in the workplace by ensuring resources are allocated properly to strengthen its intake, outreach, education, enforcement, and service goals. In terms of that organizational excellence strategic goal, it has two prongs including improving the training of the EEOC employees and enhancing the EEOC’s infrastructure. For employees, the Plan states that the EEOC will continue to foster enhanced diversity, equity, inclusion, accessibility in the workplace, maintain employee retention, implement leadership and succession plans. And relative to that to the agency’s infrastructure, the Plan embraces this increased use of technology through analytics as well as through the management of fiscal resources to promote the agency’s mission.
Jerry: Those are a very ambitious set of accomplishments that the government is staking out for itself. Alex, at the end of the day, what do you think are the most important takeaways for corporate counsel in terms of this newly published document from the EEOC?
Alex: Corporate counsel should pay attention to what they can do to best prevent discrimination and use this Strategic Plan to identify areas where the EEOC will essentially be focusing on in the coming years. The Strategic Plan is like a roadmap for businesses that they should absolutely pay attention to. Some of the focus areas that we learned about were systemic discrimination, conciliation, litigation, increasing the Commission’s capacity for litigating systemic violations of the discrimination laws., and how the EEOC is really ramping up its efforts to investigate charges. The EEOC’s focus on technology is a really key area for employers, and they’re taking advantage of the tools, such as the Internet, artificial intelligence, websites, social medias, and these types of things to look at where might employees be, and where my potential victims discrimination be, and how we can reach them to both educate them on the discrimination laws and what the key priorities are for the businesses and the Commission alike in terms of handling these issues. So these continue to be pillars for the agency – the areas that we just discussed today – and employers should absolutely buckle up for what will be a very busy four years of EEOC-initiated investigations and litigation.
Jerry: Thank you, Alex, and thank you, Jen, for your analysis and synopsis of this most important document. And thank you, loyal blog readers for tuning into our weekly podcast. Have a great day.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Nick Baltaxe with their analysis of settlement approval issues highlighted in class action litigation of 2022.
Episode Transcript
Jerry Maatman: Hello blog readers and thank you for welcoming us this week. I’m joined by my colleague and associate Nick Baltaxe and today we’re going to talk about settlement approval in the class action context. Nick, thanks so much for joining us on this week’s podcast.
Nick Baltaxe: Thank you for having me Jerry, you know it’s always a pleasure.
Jerry: Well, Rule 23 does many things and one of the things that regulates is the process by which a court must approve a settlement. In general litigation I think probably 98% of cases are disposed of either in motions to dismiss or by settlement. What about in the class action context – how are cases handled and how do they exit the court system?
Nick: So similarly, there’s very rarely trials to verdicts in the class action context. The reason for that is trials are not just very financially expensive in terms of legal fees, but present a large amount of financial exposure and a large possibility of an adverse verdict that could be very, very financially harmful and present unacceptable risks. So because of those risks, class actions are typically resolved before or on the heels of class certification order. As you stated, Rule 23 not only provides a process for the certification of a class action, but also provides the procedure for the settlement of the class action. Specifically, Rule 23(e) lays out a three-part settlement approval process that includes preliminary approval, which is approval that provides notice to the putative class, notice the class members, and finally, final settlement approval.
Jerry: Well, our Duane Morris Class Action Review has a chapter in and of itself with respect to key settlements as well as settlement approval issues, and as general counsel that I deal with often say, ‘if I’m going to settle a class action I only want to settle it once, I want a broad settlement bar’ – what are some of the positive attributes or reasons to settle a class action?
Nick: Yes, so there’s benefits to both sides of the aisle for settling these class actions on an early basis. From the plaintiffs’ point of view and a reason that you see a lot of plaintiffs’ attorneys and plaintiffs being willing to settle these sorts of cases at an early stage – you get payment quicker and even with the class approval, the class settlement approval process – that can take a longer period of time, so you want plaintiffs generally want to settle this on an early side so that they can get the money quicker. However, on the side of the employers, of the defendants, as indicated before getting the trial in these cases is usually a very expensive process in terms of legal fees, so settling early avoids the high costs including all the burdensome discovery related costs that come from having to defend class actions that you don’t see in other non-class related litigation. You also see benefits to the court system by avoiding needless litigation that clogs court dockets, especially in the context of these class actions or these cases, depending on the size of the putative class and issues with manageability and other class certification issues can take multiple weeks. Additionally, although class action settlements are matters of public record, they generally contain provisions where a defendant will not admit liability, which can also be positive for the publicity for that defendant. Finally and importantly, a settlement will bar anyone who is in that class and receives remuneration – in other words, does not opt out – from bringing claims, and those settlements can be crafted to be as broad as possible to eliminate as many claims assuming that the named plaintiff is agreeable and the court approves.
Jerry: Thank you for that overview of the process. Chapter 20 of the Duane Morris Class Action Review analyzes the significant settlement approval decisions rendered in state and federal courts. Briefly based on your analysis and review of an array of those decisions, what are some of the common obstacles or objections that judges in reviewing class action settlements focus upon in terms of issues where settlements are not approved?
Nick: In order to secure the court’s approval to send notice to the class regarding that settlement, there must be sufficient information provided to the court in order to determine whether or not it will be likely to approve the settlement and certify the class purely for the purpose of the judgment. Rule 23(e) itself actually includes a detailed list of factors that must be considered before the final approval of the class settlement. Those factors include things like the quality of class representation, whether the negotiations took place at an arm’s length, the adequacy of class relief, and the equitable treatment of class members. So you’ll see a lot of discussion on whether or not the negotiations were fair, whether the agreed-upon number provides proper relief for all the class members, and those are some of the bigger obstacles that you’ll see facing approval and also mostly the reasons that a court is going to push back and not approve of a proposed class action settlement.
Jerry: I think one of the common myths in the class action space is that once you settle the class action, it’s pretty much a rubber stamp approval process – and I think nothing could be further from the truth. The law is different in every jurisdiction and the practice locally is different in front of every court, but if there is one trend it seems to me that in California, more so than in any other geographic venue, judges are very strict in reviewing class action settlements and are more apt to deny approval probably than in any other jurisdiction. What does this mean overall for both plaintiffs’ counsel and defense counsel in terms of the practice, of how they craft a settlement, what it should look like, and how it’s presented to a court?
Nick: So the settlement process being as non-rubber stamped as it is and a court-by-court basis applying these standards on non-identical fashions presented a lot of strategic dilemmas for both parties when they’re crafting a settlement agreement. For example, for a defendant you have to consider how much you’d be willing to concede in the settlement agreement without losing your ability to defend the case to the extent the settlement falls through or the settlement is not approved by the court. You also have to consider if a settlement is going to be viewed as not sufficient – potentially too cheap by a court or deemed inadequate or unfair when reviewed and considering all of the putative class members, and also as indicated, you have to consider how broad you attempt to make the release. It is a strategic positive for a defendant to make as broad of a release as possible, secure as much protection for class claims coming from those class members, but too broad of a release might get push back from the court.
We saw a lot of these issues in a more recent case that has been continuing to develop over the past few months which was Lusk, et al. v. Five Guys Enterprises LLC, et al. As you indicated, in California there seems to be a very stringent class action approval process. In the Eastern District of California, Lusk v. Five Guys is now on its fifth attempt to have class certification approved from that district court; they had chances in December 2019, October 2020, June 2021, and in a recent denial in 2022 the court looked at things such as the willingness to pay one million dollars to settle claims that it’s discredited in its briefs as a perverse set of circumstances, the court looked to cautiously and rigorously scrutinize the attempt to settle the class action, and even warned the parties to carefully consider how they would like to proceed before fighting another notion of this kind, and it would not consider a new motion that merely tinkers with the same details that the previous motions have already presented. So as indicated by you know this rule and as you mentioned with California, it’s a strict process, it’s not a very simple rubber stamp – you don’t see most cases get to a fourth or a fifth go around, but you do see courts really scrutinize what the parties are bringing forward in their class action approval motions.
Jerry: That’s a fascinating case and case study, it reminds me of kind of the counter-intuitive notion that defense counsel is bargaining for the lowest possible settlement, and that’s true, but also the lowest possible settlement that a court will approve and kind of evidence of that is the famous or infamous, depending on how one looks at it, Facebook BIPA settlement where the parties presented a $550 million settlement to the court and the court said ‘that’s inadequate, that’s a not enough of a payment to the class,’ and sent them into the room so to speak to renegotiate the deal, and months later the deal was sweetened is $650 million and then the court approved it. So certainly not a rubber stamp process and certainly there are situations where a court may force the parties back to the negotiating table to change, sweeten, revise the deal to the extent the court may feel it’s unfair.
Another area of concern is not the plaintiffs’ lawyer or the named plaintiff, but class members who may register an objection, and there is a process in Rule 23 for the court to undertake and hear and rule upon objections to class action settlements. How does that work in this space?
Nick: So objections are very common in the class action settlement sphere and on certain occasions objections can even be successful in overturning the settlement or getting it vacated on appeal. One really interesting example from the last year was Saucillo, et al. v. Peck. In that case plaintiffs brought a class action and representative claim under PAGA based on different alleged violations of the California Labor Code. Several years of litigation passed and the parties reached a settlement. The district court overruled the objection of an objector who had filed a separate PAGA claim in a different case but was not a party to the underlying PAGA claim. In this decision Ninth Circuit opined that the objector had no right to appeal in the action to which he was not a party. However, with respect to the class action settlement at issue in the appeal, a different objector argued that in evaluating the proposed pre-certification settlement the district court erroneously applied a presumption of fairness. The district court considered that the parties engaged in an arm’s length, serious, informed, and non-conclusive negotiation, both counsels were experienced and knowledgeable, and therefore applied a presumption of fairness. However, the Ninth Circuit reasoned that in the pre-certification context the district court should have employed a higher standard of fairness and put in a more probing inquiry into what would normally be required under Rule 23(e). It remanded the case for further proceedings based on that language.
Jerry: Another area of concern are attorney’s fees, where the court in the final approval hearing has to adjudicate the petition for attorneys’ fees and award of costs filed by class counsel, and this is an area where there are both objections and where courts want to make sure that plaintiffs’ counsel are not getting rich off the backs of the class, and they tend to be very noteworthy rulings where a court will measure the lodestar and the amount of hours and fees that go into the class action settlement. In terms of the past 12 months were there are some notable rulings in this space that would bear upon ideas about how to negotiate settlements?
Nick: Attorneys’ fees awards and the requests that come with them are heavily scrutinized in the class action context, not only because of the money that’s at risk but because of the fairness that underlies the entire class action settlement process. This sort of calculation in the request for attorneys’ fees will often lead to very heavy-handed disputes especially when they come at the end of an already hard-fought class action with the settlement at risk. Nonetheless, you see a lot of class counsel attempting to recover for their time attributable and leading to disputes that, as you said, come quite often to these sorts of cases.
One of the most recent ones was found in the Fifth Circuit in Fessler, et al. v. Porcelana Corona De Max, S.A. This was a punitive class of consumers who sued for Porcelana, who was a toilet manufacturer, for providing or in manufacturing the detective toilet tanks. They settled the case in two parts, first entering into a partial settlement over certain models that Porcelana manufactured in a specific plant, the Benito Juarez plant, between 2007 and 2010. At this point the plaintiffs sought to certify the claims that were not settled and the district court denied the motion. The parties then subsequently reached a class-wide settlement agreement for the second portion and filed a motion for an awards of attorneys’ fees for the two classes. Porcelana then challenged the amount sought, arguing that the recovery by plaintiffs’ counsel should be limited to the hours spent on behalf of the successful class claims only. The district court granted that motion, finding it “practically impossible” to identify which hours should be removed from the attorneys’ fee award and be allocated to either one class claim or the other class claim. Instead, it simply reduced the lodestar amount that it was going to award to the attorneys. Upon appeal by Porcelana, the Fifth Circuit reversed the district court’s order on the fee award. It held that specifically when attorneys’ fees requested by class counsel is supported by time spent on both successful and unsuccessful claims, the district court “must address the ‘common core of facts’ and the ‘common legal theories’ sufficiently so that no fees are awarded on unsuccessful theories.” The Fifth Circuit therefore vacated the attorneys’ fee award and remanded the case back to the district court to “consider the amount of damages and non-monetary relief sought compared to what was actually received by the class.” So a case like this goes to show that even in an approved settlement the attorneys’ fees can be a point of dispute and that parties have to very seriously consider what could be attributed to successful class claims, what could be attributed to non-successful class claims, and how those sorts of splits could potentially lead to significant disputes in the class action settlement approval processes.
Jerry: Those are great insights from the Fifth Circuit. I know that a lot of people are sometimes unaware that actually in California in the Ninth Circuit, the benchmark and attorneys’ fees is 25% and in many areas of the country they’re 33% and there are some instances where courts have awarded 35% up to 40% or 42% percent, so location, location, location is everything when it comes to settlement approval, as well as awards of attorneys’ fees.
Well, thank you Nick for joining us on this week’s podcast, the Class Action Weekly Wire, and signing off for Nick and myself – Jerry Maatman here at Duane Morris. Have a great day.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Ethan Feldman with their analysis of key trends in product liability / mass tort class action litigation in 2022.
Episode Transcript
Jerry Maatman: Welcome loyal blog readers to our Friday series of podcasts, the Class Action Weekly Wire. I’m Jerry Maatman, partner at Duane Morris, and joining me today is my associate Ethan Feldman, and we’re here to talk about products liability and mass torts. Welcome, Ethan.
Ethan Feldman: Great to be here. Thank you for having me, Jerry.
Jerry: I’ve read somewhere in various accounts that 2022 was a phenomenal incredible year for the class action space when it came to products liability and mass torts. How would you sum up what happened in the last 12 months?
Ethan: It’s definitely been busy – it always is. Last year we saw a lot of settlements in the opioid arena, they totaled around $50 billion – that’s with the B billion – due to a bunch of multi-billion dollar settlements coming out of multi-district litigations. A lot of the lawsuits were brought by state and local governments against the manufacturers and distributors. One of the main players in there was Purdue Pharma, the manufacturer of OxyCotin. That entity agreed to pay $12 billion in settlements. A the end of May 2023, the Second Circuit approved a plan under the under which the Sackler family – the owners of Purdue Pharma – actually would give up ownership of the company and contribute $11.5 billion in cash over time to distribute to a fund to prevent and treat addiction. Of those funds $750 million is slated to go to individual victims and payouts are expected in the range of about $3,500 to $50,000. The retailers were also involved – CVS, Walgreens, and Walmart agreed to settle their claims for about $14 billion with the state and local governments. Oher manufacturers, Teva and Allergan, reached settlements not to exceed $4.25 billion and $2.37 billion, paid out over 13 years. Some other distributors involved McKesson, Cardinal Health, Amerisource Bergen, agreed to pay not more than $20 billion over 18 years. There were also 40 states that have their own specific agreements about apportionments between state and local counties that have opted into the settlement – they’re all very different, the general theme is that
it’s determined by population, that’s how the apportion is going to be governed.
Jerry: Absolutely eye-popping numbers. To my way of thinking, the only analog in the recent American jurisprudence would be two decades ago when attorneys general settled big tobacco product liability and mass tort case cases. So is there anything left or are we going to continue to see the tale of opioid litigation settlements in 2023?
Ethan: I think there’s going to be some more in 2023 there’s a website Opioidsettlementtracker.com which reports that there’s some settlement amounts between U.S. governments – not federal, the state and local like I talked about, so I think we’re going to start to see some of some of those come to fruition in 2023.
Jerry: Really quite a story and a headline for 2022 and 2023. For our listeners could you articulate in the class action space the difference between uh product liability as opposed to mass torts and how they’re different and how uh they’re they are related?
Ethan: So they’re definitely related but they’re also very different. Generally if you take the sphere of product liability, you can divide that up into two categories. There’s the injury claims and then there’s the labeling claims, you can also think of the labeling claims as false advertising. The injury claims are best suited for the mass tort actions and the labeling claims more so lead to class actions. The injury mass tort actions usually can’t satisfy the Rule 23 evidentiary requirements or the similar state procedural laws for that matter just due to the individualized nature of plaintiff-specific circumstances that require individual proof of the injury. For example, you get a mass tort action that you know plaintiffs claim they took a medication that causes all different kinds of cancers, those individual claims would require different types of proof that would likely prevent class certification. Those types of claims are often are defeated at the at the class certification stage, you know they do lend themselves however to multi-district litigation and other coordinated proceedings that you can find in the states that involve the same products, same descendants, and the same set of operative facts.
Jerry: That’s a great description of both the differences and the relatedness of them. When I teach my law class at Northwestern, the kind of the theme of a class action is the ability to put one person on the stand they tell their story and it transposes to everyone else, and when you’re dealing with mass torts and personal injury claims everybody’s damages tend to be different although those cases tend to be ripe for issue certification where liability issues might be dealt with on a class-wide basis but injuries in individual hearings. You mentioned MDLs, or multi-district litigation, could you explain for our listeners the role that MDLs have in this space?
Ethan: So, in 2022 the JPML – the Judicial Panel on Multi-District Litigation – reported there are 172 pending MDLs across the country. 21 of those had over 1,000 pending actions, and another 24 of them had 100 and 1,000 actions. The biggest was the 3M ear plug litigation, which had over 250,000 claimants. MDL proceedings make up roughly 50% of all the federal dockets. So the MDL actions can often, like we spoke about, contain the individualized product claims distinct from the class claims. For example, in addition to the class claims there’s current litigation over nicotine products which has a personal injury aspect of it, which include allegations that exposure to nicotine can alter brain development.
Jerry: You know, that the 3M ear plug litigation got a lot of play in the media last year. Could you explain for our listeners what’s going on in that MDL?
Ethan: That MDL called In Re 3M Combat Arms Earplug Products Liability Litigation is currently pending in the United States District Court in the Northern District of Florida. There’s been a bunch of bellwether trials there, the verdicts were all over the place. We saw a plaintiff verdict for $77 million and you also see defense verdicts. That docket has you know over 3,500 filings, it was initially formed in 2019, and has even seen recent transfers into the MDL today four years later. Right now those proceedings are stayed due to bankruptcy filed by a defendant that was acquired by 3M during the manufacturing of the earplugs that are at issue, plaintiffs of course want to lift the stay for certain claims that don’t involve that defendant. That master long-form complaint actually contains 16 different causes of action, violations of states consumer protection laws, but the main point of the complaint is that defendants knew the earplugs were defective, made statements that misrepresented their effectiveness, and relying on those misrepresentations – the plaintiffs use the earplugs and develop the hearing disorders because of that. There’s also accounts for negligence and strict liability under a design defect series as well.
Jerry: Well, thanks for that cogent description. What are other hot areas in the products liability and mass tour arena? I gave a presentation at a class action conference last month in New York, a two-day conference, and day two was all about what was called the Camp Lejeune mass tort litigation in terms of uh what’s going on in the Eastern District of North Carolina – would that be an area that our listeners should look to in 2023 for big developments in this space?
Ethan: Yeah, absolutely. I think you’re referencing to PFOA litigation – I’m going to do my best to pronounce it – perfluorooctanoic acid, it’s very well known as PFOA litigation. These are used in a wide variety of products, they’re often called forever chemicals because they take a long time to decompose. There’s types of lawsuits that defendants should have known that the PFOAs have the potential to cause bodily injury and there’s also been several lawsuits brought on behalf of states by the Attorneys General for water contamination and things like that. There’s always going to be pharmaceutical litigation and medical device litigation, but the hotbed right now seems to be the PFOA litigation.
Jerry: These are great insights and analysis, Ethan. Thank you very much for joining us on the Class Action Weekly Wire, and to our loyal blog listeners thank you for tuning in to our Friday podcast. Have a great day.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Rebecca Bjork with their discussion and analysis of key sanctions issued in class action litigation throughout 2022.
Jerry Maatman: Hello everyone and thank you for being here in our weekly installment each Friday of the Class Action Weekly Wire. Joining me today is Rebecca Bjork of our Washington D.C. office who is a special counsel in our Workplace Class Action Group.
Rebecca Bjork: Thanks – great to be here, Jerry.
Jerry: Today we have a little bit of a different topic – an important one and one that tends to rear itself from time to time in class action litigation, and that’s the topic of sanctions – either sanctions against the plaintiffs’ lawyer who brought the case or sanctions against defense counsel involved in the class action litigation. One of the chapters of our Duane Morris Class Action Review details the largest sanctions awards and rulings throughout the United States each year. Rebecca, what are some of the reasons that you’ve seen in the case law about why courts would ever enter sanctions in a class action?
Rebecca: Well, by way of background, sanctions really are simply thought of as penalties – in civil cases, they are typically in the form of a monetary fine, usually issued in response to violating some sort of court procedures or abusing the judicial process. And of course the most extreme sanction imposed in civil cases is dismissal with prejudice of the filing party’s claim – or on the other hand, dismissal of the answer of the responding party – so then the case would have no further movement going forward and it would be over with judgment against the party that was being sanctioned.
This actually happened in one case last year, Gui Zhen Zhu, et al. v. Matsu Corp., where the judge struck the defendants’ answer and entered a default judgment against them – and this was in a wage and hour collective action – and the reason for the sanction under Rule 37(b) was that their counsel disobeyed a court order to provide a class list for the provision of notice of the collective action under the Fair Labor Standards Act by the deadline that the court had set, and in addition the counsel had withdrawn his appearance without securing substitute counsel for the collective.
Jerry: It’s interesting – I’ve always thought that because sanctions are such an odious sort of end result of a lawsuit, that the losing party in the end of the sanctions are order often makes an appeal – and to me, one of the key decisions that I read in 2022 was the Tenth Circuit decision in the case of O’Rourke, et al. v. Dominion Voting Systems, Inc., which was a case where various citizens had sued saying that the presidential election was a fraud and that their votes weren’t counted. The defendants had to respond to the lawsuit, filed a motion to dismiss for lack of standing, judge granted it and found that in essence the lawsuit was frivolous, shouldn’t have been brought, that the arguments of the plaintiffs in terms of their standing were just entirely frivolous, and to the extent that even during oral argument they admitted as much and the district court judge entered sanctions of $187,000. The Tenth Circuit opinion affirming that decision in terms of the sanction order makes for very interesting reading – it’s almost a road map of what lawyers should not do, and a road map in terms of what lawsuits should not be brought because there’s no basis in law or fact for them to be brought – and you know kind of that notion of making a bad situation even worse where a district court sanction order is then broadcast nationwide in a court of appeals decision, which is exactly what happened, and it was picked up in the media and it’s become quite an important case. I think if you’re corporate counsel and you wanted to read one sanctions order – that Tenth Circuit decision would be kind of required reading in terms of the sanctions area.
Rebecca: That’s absolutely right, and if you’re a class action attorney you should probably be aware of the fact that sanctions can be awarded if settlement agreements are violated, and this happened last year in a case called Asset Acceptance, LLC, et al. v. Caszatt. The court granted a motion not only for sanctions but also for civil contempt and awarded the counterclaim defendant a payment of $387,314.04 in remedial damages to class members who were wrongly subject to collections. This was a debt collection class action, and the counterclaim plaintiffs’ counsel also had to pay the defendant’s attorneys’ fees, more than $1.1 million, and an additional monetary sanction of close to $1.2 million if they fail to pay within 30 days of the deadline set by the court.
Jerry: That’s a great point, Rebecca. In my experience another fertile ground where sanctions tend to be in the mix is with discovery and as we all know in class actions, discovery tends to be very laborious, very expensive – and if you’re a defendant it involves production of massive amounts of material, either written or electronically stored information. I read with interest the Hudgins, et al. v. Total Quality Logistics, LLC decision last year where there was a sanction order entered with respect to the manner and method by which the defendant had approached discovery, and the magistrate judge giving the defendant opportunity after opportunity and basically saying ‘I have no alternative but to sanction you and to impose monetary costs upon you because of the cavalier attitude and the positions you took in discovery.’ In my experience, magistrate judges lording over discovery – especially in federal court and especially in class actions – are getting very serious about that because of the potential costs and delays that are involved in games that are played with discovery.
Rebecca: That’s absolutely right, and not only monetary sanctions in the context of discovery are important to keep your eyes on, but also barring the use of evidence in the trial of the case. That happened in a case last year, L.D., et al. v. United Behavior Health, a class action alleging not paying sufficiently for out-of-network claims for substance use disorder and mental health treatments for people who were insured by the defendant. What happened in that case was that plaintiffs filed a motion for sanctions after the defendant submitted tens of thousands of documents in discovery after the discovery deadline had elapsed, and the court granted the plaintiffs’ motion and barred the defendant from using documents, audio records, an Excel spreadsheet – all of the information that they had failed to produce before the close of discovery.
Jerry: That’s a great example because sanctions or threats of sanctions are also used as a weapon, often by the plaintiffs’ bar against the defendants since discovery tends to be more focused on the defendants because they have the information, the data. In terms of the array of case law rulings in 2022, by your way of thinking, were there any notable rulings where judges backed up what defendants did and denied plaintiffs’ motions for sanctions in a class action?
Rebecca: Sure, absolutely there are instances where sanctions are denied even when a rule or proper procedure is violated if the defendant can show the court that there was no bad faith or willfulness on their part. This happened in a case in the state of Pennsylvania where it was involving people who were wards of the state who had profound intellectual disabilities, and they filed a class action alleging their civil rights were being violated. The name of the case is Jennings, et al. v. Wolf, and they failed to disclose an expert but released the expert’s report one day after the deadline. Plaintiffs still had four months left to rebut the testimony and they did, so the testimony didn’t come as a surprise to them, so the court found that there was no evidence of bad faith in order to apply any sanctions in that instance.
In a similar case, it wasn’t necessarily an issue of lack of bad faith that the defendant was able to convince the judge that they were not obligated under law to do what the plaintiffs’ side was asking them to do in a class action, and in this case it was producing the list of all putative class members’ names and addresses prior to certification. This was Holland-Hewitt, et al. v. Allstate Life Insurance Co., and again that court found that sanctions were not warranted in that situation.
Jerry: Well those are great insights and analysis Rebecca, I know you’re a subject matter expert in this area and I’m sure we’ll see more in 2023 since by their very nature, class actions involve very significant issues and lots of discoveries, so I’m sure corporate counsel will see other threats of sanctions and sanctions rulings down the line. Thank you loyal blog readers for joining us for our Friday weekly podcast – signing off, thanks so much.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jennifer Riley, Katelynn Gray, Sheila Raftery Wiggins, and associate Shaina Wolfe with their analysis of key trends and notable rulings in the class action landscape of the Telephone Consumer Privacy Act (“TCPA”). We hope you enjoy the episode.
Episode Transcript
Jennifer Riley: Thank you for being here again, for the next episode of our Friday weekly podcast, the Class Action Weekly Wire. I’m Jen Riley, partner at Duane Morris, and joining me today are partners Sheila Raftery Wiggins and Katelynn Gray and associate Shaina Wolfe. Thank you guys for being on the podcast today.
Today we wanted to discuss trends and important developments in Telephone Consumer Protection Act or “TCPA” class action litigation. The TCPA has long been a booming focus of consumer litigation, particularly in the class action space. The statute was enacted in 1991 – it’s a federal statute – it’s aimed at protecting consumers from companies that use ATDS, meaning automatic telephone dialing systems, to engage in mass telemarketing methods, including robocalls. The TCPA originally focused on unwanted telephone calls and faxes. For many years, plaintiffs successfully have alleged that a defendant used an automatic telephone dialing system (ATDS) to call or send messages to a cell phones without obtaining prior express consent.
Sheila, can you explain some of the recent Supreme Court litigation governing the TCPA’s interpretation – in particular, what constitutes an autodialer?
Sheila Raftery Wiggins: Sure, Jen. In 2021, the U.S. Supreme Court issued its ruling Facebook, et al. v. Duguid, which adopted a narrow interpretation of what devices count as an ATDS. Before Duguid, some federal circuits held that equipment could qualify as an autodialer just because it autodialed stored phone numbers that had not been randomly or sequentially generated in the first instance. But the Supreme Court rejected this interpretation and held that “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called,” because the contrary interpretation “would capture virtually all modern cell phones, which have the capacity to store telephone numbers to be called and dial such numbers.”
Jen: Got it. Are there other types of communication governed by the TCPA?
Katelynn Gray: As you can imagine, Jen, the TCPA was enacted thirty years ago, so of course the methods and the technologies that businesses use to engage customers now has changed. I’m sure all of you have received text messages from businesses for a variety of different reasons, including to communicate with customers, solicit consumer feedback, announce product promotions, identify the status of a delivery, even utilize two-factor security authentication. So, as a result of that – as a result of the changes that have occurred in the last thirty years – courts have now begun interpreting the TCPA to include text messages. The TCPA also empowers the Federal Communications Commission, or something that we refer to as the FCC, to “prescribe regulations to implement” the statute, and to create exemptions to statutory liability “by rule or order.” 47 U.S.C. § 227(b)(2)(B). So under this authority, the FCC has actually created a “two-tier system of consent” for TCPA liability, with different kinds of calls essentially requiring different types of consent.
Jen: Shaina, can you talk about how successful the plaintiffs’ bar has been in obtaining class certification in TCPA class action cases?
Shaina Wolfe: The plaintiffs’ bar was fairly successful in 2022 where they sought class certification over TCPA issues, particularly relating to or involving robocalls. The plaintiffs’ bar won 67% of motions for class certification, and companies secured denials in 33% of the decisions.
Jen: So it sounds like the plaintiffs’ bar has been fairly successful overall. Sheila, can you comment on some of the notable successful certification rulings in this space?
Sheila: Sure – in Head, et al. v. Citibank, N.A., the plaintiff received 100 robocalls from the defendant, a bank, over the course of three months regarding an overdue credit account of a man she did not know. The plaintiff was never a customer of the defendant and did not authorize the man or anyone else to open an account with the defendant using her cellphone number. The plaintiff filed a class action, alleging that the defendant routinely violated the TCPA by placing calls using an artificial or prerecorded voice to telephone numbers assigned to a cellular telephone service, without prior express consent. The court granted the motion. The court explained that the defendant did not deny that it places billions of calls each year regarding delinquent accounts, or that millions of accounts in its system are marked “wrong number” and that at least one unsolicited call must be placed to the number before a telephone number is marked wrong. Moreover, the court noted that the defendant did not dispute that it called the plaintiff repeatedly before it marked the account associated with her number “cease-and-desist,” making a clear inference that there may be numbers not yet marked “wrong,” “no consent,” or “cease-and-desist” for which the defendant does not have authorization to robocall. The court also found that the proposed class satisfied the typicality and commonality requirements, that common questions of law and fact predominated, and that in the absence of a class action, thousands of meritorious claims would likely go unredressed because the cost of litigation would dwarf any possible reward under the TCPA.
Jen: Thanks so much Sheila. Katelynn, were there any memorable class certification rulings denying certification in 2022?
Katelynn: So there was one that I’ll talk about, but I just would generally say in 2022 it seems that defendants in TCPA class actions continued to succeed in defeating class certification by demonstrating that the proposed representative, or the individual who sought to represent the class, was inadequate or atypical, so essentially didn’t have anything in common with the other class members – especially where the circumstances surrounding their consent distinguish them from those other class members. So one of those examples was a case called Bustillos, et al. v. West Covina Corp. Fitness. This was a case where a former gym member went into the defendant’s gym and he provided his phone number to an employee who entered it into his profile – and I’m sure a lot of us do this all the time. Unfortunately for the company, the phone number provided was actually one digit off from the actual number of the former gym member – and belonged to the plaintiff in this case. At one point, the defendant authorized its marketing agency to send out a one-time pre-recorded telephone message to former gym members and guests who had expressed interest in joining the gym at a certain point – essentially inviting them to join or rejoin. Most of these individuals had provided their telephone numbers when they filled out a guest registration or a contract with the defendant when they joined the gym the first time. The plaintiff was one of 1,400 individuals that received a pre-recorded message on her cell phone from the defendant offering a gym membership promotion. So in this instance, the Court denied certification because they found the plaintiff in this case did not allege or produce evidence that any of the other messages were sent to wrong numbers and therefore found she was not typical to the members of the class she proposed to represent.
Shaina: Another common reason that courts deny class certification in TCPA cases is due to predominance of an individualized issue. For TCPA cases, one of the most powerful affirmative defenses is showing consent to the telemarketing messages. Courts have tended to rule in favor of defendants where they can show that a substantial portion of the proposed class consented to the communications; the purpose and nature of each communication varied from person to person; or identifying who provided consent and who did not would be impractical or impossible. There were also several case rulings that demonstrated this defense, including Cooper v. Neilmed Pharmaceuticals, Inc., where the defendant successfully offered five methods by which it received prior express invitation or permission from recipients before sending faxes, which creates almost a sort of presumption that the consent issue will be individualized.
Jen: Before we turn to settlements, if I recall the largest TCPA jury verdict ever was overturned on appeal last year, is that correct?
Sheila: That’s correct. The largest TCPA jury verdict involved in an award of $925 million, however, the defendant successfully overturned the verdict on appeal. In Wakefield, et al. v. ViSalus, Inc., the plaintiffs filed a class action alleging that the defendant made unlawful telephone calls using prerecorded voice messages in violation of the TCPA. Following a trial, the jury returned a verdict in favor of the plaintiffs and found that the defendant sent over 1.8 million prerecorded calls to class members without prior express consent. Accordingly, the jury awarded the minimum statutory damages of $500 per call for a verdict against the defendant of $925 million. The defendant filed a post-trial motion challenging the constitutionality of the statutory damages award under the due process clause of the Fifth Amendment as being unconstitutionally excessive. The district court denied the motion. On appeal, the Ninth Circuit vacated and remanded the district court’s denial of the defendant’s motion. On appeal, the defendant contended that even if the TCPA’s statutory penalty of $500 per violation was constitutional, an aggregate award of $925,220,000 was so “severe and oppressive” that it violated the defendant’s due process rights. So this case has ultimately obtained an extension of time from the Supreme Court to file a petition for certiorari.
Jen: Wow, we will absolutely keep listeners updated as to what happens next in that case. As far as TCPA settlements, I doubt there were any quire that large, but were there any significant settlements over the past year – Shaina, can you comment on that?
Shaina: I can. Although none were in the hundreds of millions, there were several multi-million class-wide TCPA settlements in 2022. Four of the top 10 were over $15 million and the value of the top 10 totaled over $134 million.
Jen: Thanks Shaina. Great insights and analysis, everyone. I know that these are only some of the cases that had interesting rulings over the past year in the TCPA class action space. The remainder of 2023 is sure to give us some more insights into the ways that class actions are evolving in the TCPA class litigation area. Thanks again everybody for joining us today, thanks to the panel – we look forward to connecting again next Friday on the next episode of the Class Action Weekly Wire.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and special counsel Brandon Spurlock with their analysis of key trends and notable rulings throughout class action litigation at the state court level.
Episode Transcript
Jennifer Riley: Thank you for being here again, for the next episode of our Friday weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is special counsel Brandon Spurlock. Thank you, Brandon, for being on the podcast.
Brandon Spurlock: Great to be here, Jen.
Jen: So today we wanted to discuss trends and important developments in state court class action litigation, since the decision on where to file a class action will always be an important strategic decision for plaintiffs’ lawyers – especially those seeking to maximize their odds for class certification, as well as seeking larger verdicts, settlements, and things of that nature. Whether it is between state or federal court, or deciding in which particular to state to file, many factors impact this decision. Brandon, can you tell our listeners what some of those factors are?
Brandon: Sure. Although almost all state law procedural requirements for class certifications mirror Rule 23 of the Federal Rules, the plaintiffs’ bar often perceives state courts as having a more positive predisposition toward their clients’ interests, particularly where putative class members have connections to the state or when the events at issue occurred in the state where the action is filed. But beyond forum shopping between state and federal court, the plaintiff’s bar also seeks out individual states that are believed to be “plaintiff friendly” such as California, Georgia, Florida, Illinois, Louisiana, Massachusetts, Missouri, to name some others – these are all among the leading states where plaintiffs’ lawyers file a volume of class actions. These courts are thought to have more relaxed procedural rules related to discovery, consolidation, and class certification, a lower bar for evidentiary standards, higher than average jury awards, among other considerations. All of this incentivizes forum-shopping related to state class actions.
Jen: In reviewing key state court class action decisions and analyzing class certification rulings, it seems that many state courts tend to apply a fairly typical Rule 23-like analysis, similar to the analysis we would see in federal court, although many state decisions also focus on the underlying claims at issue to address whether a class certification is appropriate and whether the matter should proceed on a class basis. Nevertheless, that said, understanding how state courts apply those respective Rule 23 analyses under the applicable state procedural law is really crucial I think toward effectively navigating those complexities and developing effective defense strategies in these types of lawsuits.
Brandon: Jen, I think that’s absolutely right. Another important topic for companies is state private attorney general laws. In particular, California’s controversial Private Attorneys General Act that we all know as PAGA. PAGA authorizes workers to file lawsuits to recover civil penalties on behalf of themselves, and other employees in the State of California for state labor code violations. Although California is the only state to have enacted this type of law so far, several other states are considering their own similar private attorney general laws, including New York, Washington, Oregon, New Jersey, and Connecticut. So it will be crucial to monitor state legislation on this topic given the impact such laws will have on class litigation strategy.
Jen: Absolutely – and we will continue to monitor all those developments and getting them out to listeners of the podcast as well as readers of the blog as they occur. Brandon, were there any key rulings from your perspective in specific state courts in 2022, going into 2023?
Brandon: Well, California being the epicenter of class actions filed in state courts – it’s a state that has more class action litigation than any other state. So needless to say we got some important rulings out of California. While all varieties of class-wide cases are filed in California, a high majority are consumer fraud and employment-related. Even when an employer’s written, formal policies appear facially neutral and compliant, employees may successfully seek class certification for demonstrating common issues where an employer’s practices and protocols allegedly violate law. So you asked about some key cases – one, in Cruz, et al. v. Health, the plaintiff filed a class action against his former employer for wage and hour violations stemming from defendant allegedly utilizing a time rounding policy that systemically resulted in uncompensated hours worked, as well as for failing to provide the plaintiff and other hourly employees with full, uninterrupted meal periods in compliance with the California Labor Code. So in this case, the plaintiff also brought derivative claims for inaccurate wage statements, failing to pay all wages due, and violations of California Business & Professions Code, as well as penalties under the PAGA. The court granted the plaintiff’s motion to certify his rounding-time, meal period, and derivative claims. In certifying the class for the “rounding policy” claim, the court reasoned that the plaintiff’s theory of liability – that the defendant’s policy of rounding employees’ time punches to the nearest quarter-hour increment resulted in employees’ systematic under compensation – presented common questions of law and fact that predominated over the individualized issues that might arise, including the calculation of damages to which each putative class member might be entitled. So, with respect to the meal period claims, the court agreed that while the defendant’s formal, written meal break policy may comport with California law, this fact alone did not preclude class certification. The plaintiff presented evidence of numerous meal break violations, including missed, short, and late employee breaks, which the court found sufficient to establish a rebuttable presumption that defendant had a “de facto policy” that failed to provide putative class members with compliant meal periods, and constituted a predominant question appropriately resolved on a class-wide basis. Having determined the rounding time and meal period claims appropriate for class certification, the court also certified the plaintiff’s derivative claims, concluding that they too involved common questions of law or fact also suitable for certification.
Jen: Thanks Brandon. Another key example of a PAGA ruling from last year occurred in a case called Estrada, et al. v. Royalty Carpet Mills, Inc. In that case were a group of hourly workers at the defendants’ carpet manufacturing facilities, brought claims primarily based on purported meal and rest break violations. Following a bench trial and an appeal, the California court of appeal addressed several issues, including: (i) the defendants’ policy of requiring workers to stay on premises during paid meal breaks; and (ii) the trial court striking of the PAGA claims based on manageability concerns. Regarding the meal break question, the defendant in that case had a policy of paying workers their regular wages during meal periods, but did not give them premium pay for having to remain on the premises. The defendants argued the on-premises meal policy was lawful because the employees were relieved of duty and paid wages during the meal period. The court of appeal ultimately disagreed with that argument – it opined that employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please, and if an employer does not provide an employee with a compliant meal period, then the employer had to provide the employee with premium pay for the violation. Turning to the trial court’s dismissal of the representative PAGA meal period claim due to unmanageability, which is probably an even more crucial part of the decision, the court of appeal addressed the question of whether the PAGA has a manageability requirement similar to class actions. The court of appeal stated that a representative action under the PAGA is not a class action, but rather an administrative law enforcement action where the legislative purpose is to augment the limited enforcement capacity or capability of the Labor Workforce Development Agency (“LWDA”) by empowering employees to enforce the Labor Code as representatives of the Agency. The court reasoned that allowing courts to dismiss PAGA claims based on manageability concerns would actually interfere with the PAGA’s express design as a law enforcement mechanism, and create this extra hurdle that does not apply, and should not apply, to LWDA enforcement actions.
Brandon: Jen that was fantastic and insightful analysis. Florida was a state where the courts were disinclined to allow plaintiffs to proceed on a class-wide basis on claims related to the COVID-19 pandemic. There have a been a lot of class actions on the court docket that are related the pandemic. In University Of Florida Board Of Trustees v. Rojas the plaintiff, a graduate student, filed a class action asserting claims for breach of contract and unjust enrichment related to paid fees not refunded following the campus shut-down due to COVID-19. To support the breach of contract claim, the plaintiff filed a copy of the University’s financial liability agreement; an estimate of tuition and fees for the 2019-2020 academic year; and the plaintiff’s tuition statement showing he paid his tuition and fees for the Spring 2020 semester. The complaint also cited to various university webpages that contained general statements or descriptions of various campus amenities. The plaintiff, on behalf of a class of other students, asserted that these documents, in the aggregate, made up an express written contract between him and the university for specific on-campus resources and services during the relevant time period. However, the trial court dismissed the unjust enrichment claim, but allowed the contract claim to move forward. The Florida court of appeal then disagreed. It ruled that the “hodge-podge” of documents did not constitute an express written contract sufficient to overcome sovereign immunity enjoyed by the university. The court of appeal further found that the liability agreement merely conditioned a student’s right to enroll upon the agreement to pay tuition and fees, and although the agreement mentioned the provision of “educational services,” that general phrase fell far short of conveying an express promise by the university to provide in-person or on-campus services to a student at any specific time. For these reasons, the court of appeal reversed and remanded to the trial court for entry of judgment in favor of the university on the basis that sovereign immunity barred the action.
Jen: The last one I wanted to mention, because it really was a novel situation, was a ruling from Massachusetts that addressed the issue when the named plaintiff dies before class certification. The case is Kingara, et al. v. Secure Home Health Care Inc. In that case the plaintiff, a licensed practical nurse, filed suit against the defendant, an in-home care provider for the elderly, alleging causes of action arising under the state wage act, minimum fair wage law, and overtime law. The plaintiff died before the plaintiff’s counsel had filed a motion for class certification. Thereafter, the plaintiff’s counsel filed a motion to send notice to the putative class informing them of the plaintiff’s death and inviting them to join the action. The plaintiff’s counsel also sought an order requiring the defendant to identify the putative class members’ names and addresses and extend the tracking order deadlines to allow substitution of another putative class representative. The trial court granted the motions, and the defendant appealed. The Massachusetts Supreme Judicial Court explained that, upon a client’s death, the lawyer’s authority to act for the client terminates. So because the plaintiff had not filed a motion for class certification before he died, the plaintiff’s counsel could not take further action absent a motion by the deceased plaintiff’s legal representative. In addition, although counsel for a certified class has a continuing obligation to each class member – again here, there was not a certified class – the appeals court concluded that counsel does not have any authority to act for a putative class when no motion for class certification was pending, counsel had not located the deceased client’s representative, and counsel had not identified any other putative class member to serve as a putative class representative.
Brandon: Very interesting ruling Jen. It’s not often your plaintiff in the class action is going to pass away during the litigation, but definitely a good one for corporate counsel to note in the event that situation happens to them in the future.
Jen: Thanks so much, Brandon. Great insights and analysis Brandon. I know that these are only some of the cases that had generated some really interesting rulings in the myriad types of class action litigation pending across the country. 2023 is sure to give us some exciting rulings as well that we will look forward to blogging about and presenting on in future installations of the Class Action Weekly Wire. Thanks everyone for joining us today – great to have you here.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Brandon Spurlock with their discussion of the Senate Banking Committee’s hearing this week regarding consumer protection in the financial sector from the risks of artificial intelligence, as well as their analysis of the potential implications in the regulatory environment and class action space as AI continues to be utilized in workplace and commercial operations.
