Category: Class Certification Motions

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

Duane Morris Takeaways: In Raines, et al. v. U.S. Healthworks Medical Group, Case No. 19-CV-1539 (S.D. Cal. Aug. 16, 2024), Judge Dana M. Sabraw of the U.S. District Court for Southern District of California recently certified a class consisting of every applicant for a paid position who underwent a post-offer, pre-placement examination and allegedly received the employer’s health history questionnaire pursuant to Rule 23(a) and (b)(3). This case gives a warning to businesses acting as agents for employers in the on-boarding process.

Case Background

Under California’s Fair Employment and Housing Act (“FEHA”), Cal. Gov’t. Code § 12900, et seq, an employer can condition an employment offer upon the job application passing a pre-placement examination (“PPE”) only if the examinations are related to the job and consistent with business necessity.  Gov’t Code  12940(e).  In this case, Plaintiffs Kristina Raines and Darrick Figg, two applicants for jobs, filed a class action lawsuit alleging that the PPE involved “intrusive, highly offensive, overbroad, and unrelated” medical questions on a standardized health history questionnaire (“HHQ”), used by Defendant U.S. Healthwors Medical Group (“USHW”), an occupational health provider that acted on behalf of employers. Id. at 1.

After applying for a food service position, Plaintiff Raines allegedly answered all of the 150 questions on the HHQ and save for one she thought completely unrelated to her job duties.  Id.  The employer then allegedly revoked its employment offer to Raines because she refused to complete the medical examination.  Id. at 3.  Plaintiff Figg alleged that, like Raines, USHW directed him to complete the same HHQ for a volunteer position.  Id.  Figg answered all of the questions, and his employer ultimately hired him as an unpaid volunteer. Id.

In their complaint, Plaintiffs Raines and Figg claimed, individually and on behalf of putative class members, that USHW’s medical examinations:  (1) violated the FEHA; (2) violated the Unruh Civil Rights Act, Cal. Civ. Code § 51, et seq.; (3) intruded on Plaintiffs’ right to seclusion; and (4) violated California’s Unfair Competition Law, Cal. Business & Professions Code § 17200, et seq.  Id.  Plaintiffs sought to certify a class under the FEHA against USHW consisting of 370,000 job applicants for both paid and unpaid positions who underwent a PPE and were subjected to USHW’s standardized HHQ at one of its approximately 78 facilities in California between October 23, 2017, and December 31, 2018.  Id. at *4.

The Court’s Class Certification Ruling

The Court examined all prerequisites under Rule 23(a), including numerosity, commonality, typicality, and adequacy of representation.  Id. at 6.  The Court held that Plaintiff Raines met all of the prerequisites under Rule 23(a) but that Plaintiff Figg failed to satisfy the typicality requirement because he was not an applicant for a paid position and therefore did not attain employee status under the FEHA.  Id. at 8.

The Court then examined the requirements under Rule 23(b)(3), which calls for two separate inquiries, including:  (1) whether the issues of fact or law common to the class “predominate” over issues unique to individual class members; and (2) whether the proposed class action is “superior” to other methods available for adjudicating the controversy.  Id. at 9.  The Court found that Plaintiffs’ proposed class met both requirements and certified the class.  Id. at 18.

In reaching its conclusion, the Court determined that:  (1) USHW “administered the PPEs on behalf of and at the direction of employers;” (2) all class members received the same HHQ from USHW regardless of the duties or functions of the job conditionality offered; and (3) at least one question on the HHQ was not relevant to any job.  Id. at 14-15.  The Court held that, given such evidence, whether USHW acted on behalf of referring employers and engaged FEHA-related activities by administering a medical questionnaire could be adjudicated on a class-wide basis.  Id. at *15.

The Court further ruled that Plaintiffs’ common evidence also addressed injury, causation, and damages because the alleged injury to class members was caused by their being subjected to overbroad and offensive medical inquiries from a standing HHQ in violation of § 12940(e).  Id.  Because Plaintiffs were pursuing only nominal and punitive damages, the Court disagreed that it would need to engage in thousands of individualized inquiries among class members to properly assess damages.  Id.

Key Takeaways

This class certification ruling shows how a court can use the workers’ common evidence to resolve class-wide agency issue.  Additionally, the massive number of potential class members pursuing only nominal and punitive damages convinced the Court to certify the class.  The decision further implicates the potential hurdles faced by businesses acting as “agents” of referring employers in challenging putative class actions under the FEHA.  Businesses acting as agents should carefully evaluate whether their practices are in compliance with FEHA as this ruling confirms that the FEHA’s definition of “employer” may include employer’s agents.

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

Duane Morris Takeaway: In the first half of 2024, across all major types of class actions, courts issued rulings on 203 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 138 rulings, with an overall success rate of 68%. In contrast, in 2023, the plaintiffs’ class action bar succeeded in certifying class actions at a higher rate. Across all major types of class actions, courts issued rulings last year on 451 motions to grant or to deny class certification. Of these, plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of 72%. In 2022, by comparison, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.

In 2024, the number of motions that courts considered varied significantly by subject matter area, and the number of rulings varied across substantive areas.

The following list summarizes the results in each of ten key areas of class action litigation:

WARN – 100% granted / 0% denied (1 of 1 granted / 0 of 1 denied)
FLSA / Wage & Hour (Conditional Certification) – 84% granted / 16% denied (68 of 81 granted / 13 of 81 denied)
Antitrust – 80% granted / 20% denied (8 of 10 granted / 2 of 10 denied)
FCRA / FDCPA – 75% granted / 25% denied (3 of 4 granted / 1 of 4 denied)
Securities Fraud – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
ERISA – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
Discrimination – 60% granted / 40% denied (6 of 10 granted / 4 of 10 denied)
Privacy – 60% granted / 40% denied (3 of 5 granted / 2 of 5 denied)
FLSA / Wage & Hour (Decertification) – 33% granted / 67% denied (3 of 9 granted / 6 of 9 denied)
Civil Rights – 48% granted / 52% denied (10 of 21 granted / 11 of 21 denied)
Consumer Fraud – 48% granted / 52% denied (12 of 25 granted / 13 of 25 denied)
Data Breach – 33% granted / 67% denied (1 of 3 granted / 2 of 3 denied)
Products Liability / Mass Torts – 0% granted / 100% denied (0 of 1 granted / 1 of 1 denied)
TCPA – 0% granted / 100% denied (0 of 3 granted / 3 of 3 denied).

The plaintiffs’ class action bar obtained the highest rates of success in WARN, wage & hour, antitrust, and FCRA class actions. There has only been one WARN certification ruling in 2024, which was granted by the court for a 100% success rate. In wage & hour litigation, plaintiffs succeeded in obtaining orders certifying classes and/or collective actions in 68 of 81 rulings issued during 2024, a success rate of 84%. In cases alleging antitrust violations, plaintiffs succeeded in obtaining orders certifying classes in 8 of 10 rulings, for a success rate of 80%. And in cases alleging FCRA violations, plaintiffs managed to obtain class certification rulings in 3 of 4 rulings issued during 2024, a success rate of 75%.

Courts Issued More Rulings In FLSA Collective Actions and Wage & Hour Class Actions Than In Any Other Areas Of Law

For the first half of calendar year 2024, courts again issued more certification rulings in FLSA collective actions and wage & hour class actions than in other types of cases. Plaintiffs historically have been able to obtain conditional certification of FLSA collective actions at a high rate, which surely has contributed to the number of filings in this area.

From January 1 to July 1, 2024, courts considered more motions for certification in FLSA matters than in any other substantive area. Overall, courts issued 90 rulings. Of these, 81 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 9 addressed second-stage motions for decertification of collective actions. Of the 81 rulings that courts issued on motions for conditional certification, 68 rulings favored plaintiffs, for a success rate of nearly 84%.

These numbers are higher than the numbers observed in 2023, during which courts issued 183 rulings. Of these, 165 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.

At the decertification stage, courts generally have conducted a closer examination of the evidence and, as a result, defendants historically have enjoyed an equal if not higher rate of success on these second-stage motions as compared to plaintiffs.

The results so far in 2024 have not supported that typical success. Of the 9 rulings that courts issued on motions for decertification of collective actions, only 3 rulings favored defendants, for a lower success rate of 33%.

An analysis of the rulings demonstrates that a disproportionate number emanated from traditionally pro-plaintiff jurisdictions, including the judicial districts within the Second Circuit (16 decisions) and Ninth Circuit (10 decisions), which include New York and California, respectively.

Takeaways From The Numbers Midway Through 2024

Notable this year at the halfway point, there have been a very small number of rulings emanating from the Fifth and Sixth Circuits (4 and 7 decisions, respectfully), which could account for the high overall conditional certification rate in the wage & hour space, given that these two circuits have imposed new, stricter standards for conditional certification. Plaintiffs likely are shifting their case filings away from these two circuits toward jurisdictions with more lenient, more plaintiff-friendly standards for conditional certification.

The numbers no doubt flow from the different standards and approaches that courts in different federal circuits take in evaluating motions for conditional certification and decertification and, in turn, the likelihood of plaintiffs’ success on such motions. If more courts join the Fifth and Sixth Circuits in abandoning the traditional two-step certification process under 29 U.S.C. § 216(b), and thereby increase the time and expense of gaining a conditional certification order, it may lead to a reshuffling of the deck in terms of where plaintiffs file their cases and the types of claims they pursue.

We will continue to track class certification trends in 2024 and will report on final numbers in the Duane Morris Class Action Review – 2025, which will be published in the first week of January. Stay tuned!

By Gerald L. Maatman, Jr., Jennifer A. Riley, Tiffany E. Alberty, and Ryan T. Garippo

Duane Morris Takeaways:  On May 30, 2024, In Re HomeAdvisor, Inc. Litigation, No. 16-CV-01849 (D. Colo. May 30, 2024), Chief Judge Philip Brimmer of the U.S. District Court for the District of Colorado denied a motion for reconsideration of his prior order denying of class certification of a putative nationwide and states-specific classes.  This decision further illuminates plaintiffs’ substantial burden of maintaining a nationwide class action, particularly when state law claims are involved.

Case Background

Plaintiffs are eleven individuals, and one corporation (collectively “Plaintiffs”), who sued HomeAdvisor, Inc. and similar entities (collectively “HomeAdvisor”) for misrepresentations of the quality of the leads it sells to its home service professionals.  HomeAdvisor operates an online marketplace that helps connect home service professionals with homeowners in need of home improvement services, by collecting information from homeowners, and selling that information onto the home service professionals as a “lead.”  Id. at 1. Plaintiffs, however, claim that HomeAdvisor misrepresents the quality of the leads that it sells.  HomeAdvisor advertises that its leads are “high quality” and from “project-ready customers.”  Id. at 2. Yet, Plaintiffs claim that they often receive leads that are valueless because they lead to “wrong or disconnected phone numbers, contain “wrong contact information,” relate back to individuals who “never even heard of HomeAdvisor” or who are “not homeowners,” or are for “customers” who completed the project months before the lead was received. Id.

Consequently, Plaintiffs sued HomeAdvisor seeking to recover damages, claiming that the “leads were ‘garbage,’” and ultimately  moved for class certification.  Id. at 3. In January 2024, the Court granted Plaintiffs’ motion for class certification in part, and denied it in part.  The Court certified a nationwide misappropriation class and three state misappropriation classes.  At the same time, the Court denied Plaintiffs’ request to certify a nationwide deceptive practices class and nine state deceptive practices classes.  These state-specific classes arose out of claims under California, Colorado, Florida, Idaho, Illinois, Indiana, New Jersey, New York, and Ohio state law.

The Court’s denial was based upon the finding that Plaintiffs failed to establish the predominance and superiority requirements under Rule 23(b)(3).  The Court held that plaintiffs failed to present any analysis to support certification of the state law claims, and because the Tenth Circuit case law requires claim-specific analysis, Plaintiffs’ failure to do so was fatal to their request for class certification.  Shortly thereafter, Plaintiffs filed a motion for reconsideration asking, in part, for the Court to reconsider its ruling on the state law claims.  Plaintiffs claimed that the Court did not adequately consider a choice-of-law provision within HomeAdvisors’ terms and conditions, and that they would have prevailed under the laws of all the state-specific claims.

The Court’s Opinion

While it observed that the federal rules do not specifically provide for motions for reconsideration, the Court considered both of Plaintiffs’ requests raised in the motion.

As to the choice-of-law provision, which purportedly specifies that Colorado law applies, Plaintiffs argued that the Court erred in its choice of law analysis by not considering that provision.  Plaintiffs contended that either under a theory of estoppel, or based on HomeAdvisors’ contractual terms and conditions, that the choice-of-law provision should apply to all the state law claims.  The Court, however, rejected Plaintiffs’ argument because they failed to make the estoppel argument in their original class certification motion, and only provided a two-sentence argument in a “perfunctory matter” without any supporting legal authority. Id. at 8. The Court refused to entertain these new arguments.  Similarly, because Plaintiffs failed to raise the terms and conditions choice-of-law provision in their original motion, and contradicted the enforceability of the terms and conditions in their pleadings, the Court found these arguments unpersuasive.  As a result, the Court declined to reconsider its decision, which refused to certify a nationwide deceptive practices class applying Colorado law.

Further, with regard to the state-specific analysis, Plaintiffs attempted to revive their arguments for certification by arguing that the Court erred in not applying an alternative deceptive practices theory under nine states’ deceptive practices laws.  However, vital to Plaintiffs’ deceptive practices claim was the Rule 23 predominance requirement, which in the Tenth Circuit, requires a “claim-specific analysis.” Id. at 9.  Accordingly, the Court held that Plaintiffs are required to identify (1) “which elements would be subject to class-wide proof;” (2) “which elements would be subject to individual proof;” and (3) “determine which of these issues would predominate.”  Id. (citing Brayman, Sherman and CGC Holding Co., LLC v. Broad & Cassel, 773 F.3d 1076 (10th Cir. 2014)).  Yet, Plaintiffs never identified these elements and alleged 43 common law and statutory claims under states’ laws.  The Court opined that barebones allegations of “fraud, unjust enrichment and breach of implied contract” were insufficient to identify the elements of each unique states’ laws, as the Court recognized significant variations in each state law.  Explicitly, the Court noted, “it is not the Court’s job to research the elements of [43] laws when plaintiffs failed to undertake the analysis in their motion.” Id. at 10.

Finally, and as a practical matter, the Court reasoned that even if the predominance element existed, the docket would be unmanageable as Plaintiffs presented no evidence as to how the Court would conduct a single trial, for nine state classes, with 43 claims.

Implications For Companies

The holding in In Re HomeAdvisor, Inc. Litigation highlights the required specificity for class action plaintiffs to certify nationwide deceptive practices claims.  If they cannot proceed on a nationwide theory, plaintiffs must identify the elements of each and every states law, if they want to prevail at the certification stage.  Where these elements are not identified, employers have an opportunity to raise these deficiencies with the Court, and that can ultimately change the landscape of which (if any) class claims will survive through the certification stage.  Corporate counsel, therefore, should take note of these developments and ensure (where applicable) that similar arguments are raised at this stage of the proceedings.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Zachary J. McCormack

Duane Morris Takeaways: On May 30, 2024, in Oliver v. Navy Federal Credit Union, No. 1:23-CV-1731, 2024 U.S. Dist. LEXIS 96704 (E.D. Va. May 30, 2024), Judge Leonie M. Brinkema of the U.S. District Court for the Eastern District of Virginia denied class certification in a suit accusing Navy Federal Credit Union (“Navy Federal”) of racial discrimination in violation the Fair Housing Act (“FHA”) and the Equal Credit Opportunity Act (“ECOA”). In denying certification of the proposed class, Judge Brinkema reasoned that the circumstances of each loan application process are so individualized, that to promote the efficient use of resources, the Court allowed the nine plaintiffs to proceed on their federal ECOA and FHA disparate impact claims individually, but not as a class action.

Navy Federal persuaded the Court that its loan approval statistics themselves do not show it acted with discriminatory intent considering plaintiffs failed to show specific facts alleging they were qualified for the mortgage products they sought. However, the Court ruled that the nine plaintiffs sufficiently pled that statistical disparities revealed a disparate impact among non-white loan applicants and that Navy Federal’s underwriting process may have caused these inconsistencies. Therefore, the Court dismissed plaintiffs’ disparate treatment claims, but allowed the disparate impact claims to proceed past Navy Federal’s motion to dismiss.

Case Background

Navy Federal is an American global credit union headquartered in Vienna, Virginia, and is the largest natural member credit union in the United States, both in asset size and in membership, with an estimated $178 billion in assets and 13.5 million members. On February 20, 2024, nine plaintiffs brought a civil action individually and on behalf of other members of a putative class of similarly-situated applicants who applied for original residential purchase mortgages, refinancings, and home equity lines of credit, and were either denied financing or offered financing at less favorable terms than they initially sought. Id. at *5. Specifically, plaintiffs alleged they were the victims of disparate treatment and disparate impact discrimination under both federal and state civil rights laws due to Navy Federal’s mortgage underwriting policies, which had a disparate impact on minority loan applicants and Navy Federal’s refusal to correct those discrepancies constituted intentional discrimination. Id.

Like all mortgage lenders, Navy Federal is required to submit data to the Consumer Financial Protection Bureau under the Home Mortgage Disclosure Act (“HMDA”). Id. at *6. In the complaint filed in February, the plaintiffs relied on three independent reports analyzing Navy Federal’s publicly-available HMDA data. Id. Through these reports, plaintiffs asserted that a disparity in outcomes for minority loan applicants demonstrated that Navy Federal was on notice of the discriminatory impact of its mortgage lending program, and did not act to address the disparity, thus establishing direct or circumstantial evidence of an intent to discriminate. Id.

The first report, from August 2021, analyzed the public 2019 HMDA data and identified financial institutions which had significant racial disparities in mortgage lending. Id. Navy Federal, identified as one such lender, was twice as likely to deny black applicants who applied for mortgages as compared to similarly situated white applicants. Id. at *7. The second report, from November 2022, found that — even after taking credit scores into consideration — credit unions denied mortgages to minority applicants at rates up to 1.9 times higher than similarly qualified white applicants. Id. The third report, from December 14, 2023, involved Cable News Network’s findings that, in 2022, Navy Federal approved mortgages for 48% of black applicants, 56% of Latino applicants, and 77% of white applicants. Id. Navy Federal had the largest disparity of loan approvals among the 50 largest U.S. lenders, according to CNN. Id. at *8.

The Court’s Decision

Plaintiffs asserted two theories of discrimination under the FHA and the ECOA — disparate treatment and disparate impact. Id. at *11. Although similar, a disparate treatment claim requires intentional discrimination, whereas a disparate impact claim requires showing Navy Federal’s loan underwriting process had a disproportionate adverse impact on minorities. Id.

Regarding the disparate treatment claims, Navy Federal persuaded Judge Brinkema that the statistics in these reports themselves did not show it acted with discriminatory intent. Id. at *19. The Court concluded that Plaintiffs failed to show plausible direct or circumstantial evidence of discriminatory intent, and failed to allege facts showing that plaintiffs were qualified for the mortgage products they sought. Id. at *20. Therefore, the Court dismissed those claims. Id.

In analyzing the disparate impact claims, Judge Brinkema ruled that the suit’s nine remaining plaintiffs sufficiently pled that statistical disparities revealed a statistical impact among non-white loan applicants and that Navy Federal’s underwriting process may have caused these inconsistencies. Id. at *22. Allowing these claims to move past the motion to dismiss stage, the Court opined that, during discovery, if the plaintiffs can link Navy Federal’s underwriting process to the precise disparities and adverse consequences experienced by the borrowers — taking into consideration their individualized application criteria — then the Court may revisit whether the claims can survive summary judgment. Id.

Navy Federal also argued its notice of claim provisions precluded several allegations. Id. Judge Brinkema, however, determined that additional notice to Navy Federal would not been futile. Ultimately, Judge Brinkema dismissed the disparate treatment claims, and allowed the disparate impact claims to proceed as well as plaintiffs’ claim for declaratory relief under 28 U.S.C. § 2201.

Implications Of The Decision

Under the HMDA, mortgage lenders are required to submit data to the Consumer Financial Protection Bureau, and therefore should be prepared to defend against disparate impact and disparate treatment claims weaponizing these publicly available statistics. This order illustrates the importance of statistical data in both class action disparate treatment claims and disparate impact claims. It serves as a cautionary tale depicting how reports analyzing HMDA data could bolster claims of discrimination under the ECOA and FHA. Corporate counsel should take note of the Court’s reliance on HMDA data as evidence of discriminatory lending procedures which could have disproportionate adverse effect on minorities, and continue to monitor this space for future developments.

.

 

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Derek S. Franklin

Duane Morris Takeaways: On May 10, 2024, in Richards v. Eli Lilly & Co., et al., No. 1:23-CV-00242 (S.D. Ind. May 10, 2024), Chief Judge Tanya Walton Pratt of the U.S. District Court For The Southern District Of Indiana granted Eli Lilly’s motion asking the Court to certify for interlocutory appeal the question of whether a plaintiff must show more than a “modest factual showing of similarity” in order to issue notice in a collective action.  The Court certified for review by the Seventh Circuit the specific question of “[w]hether notice in a collective action can issue based on a modest factual showing of similarity, rather than upon a showing by a preponderance of the evidence that requires the Court to find that commonality across the collective [action] is more likely than not.” The ruling and the future appellate decision should be required reading for companies involved in wage & hour litigation.

Case Background

Named Plaintiff Monica Richards brought a proposed collective action against Defendants Eli Lilly & Company and Lilly USA, LLC’s (collectively, “Eli Lilly”) under the Age Discrimination in Employment Act (ADEA) alleging that Eli Lilly knowingly and willfully denied promotions to qualified employees who were older than 40, including herself and all other similarly situated employees.  Id. at 1.

Plaintiff moved for conditional certification of a proposed ADEA collective action of “[a]ll Eli Lilly employees who were 40 or older when they were denied promotions for which they were qualified, since February 12, 2022.”  Id. at 2.  Plaintiff’s motion urged the Court to utilize a “two-step” legal standard to evaluate collective action certification established in 1987 by Lusardi v. Xerox Corp., 118 F.R.D. 351 (D.N.J. 1987).  Id. at 2.  Under the Lusardi framework, plaintiffs need only present what some judges have described as a “modest factual showing” that similar potential plaintiffs exist to satisfy the first step, i.e., certification of a collective action on a conditional basis.  Id.  In the second step, assuming others have joined the lawsuit as opt-in plaintiffs and the parties have completed discovery on the merits, the court makes a final determination whether the opt-in plaintiffs actually qualify as parties to the litigation on the basis of substantial similarity to the named plaintiffs in what is known as a second-stage final certification order.  Id. at 3.

Eli Lilly responded that the Court should follow the recent Fifth Circuit decision in Swales v. KLLM Transp. Servs., LLC, 985 F.4th 430 (5th Cir. 2021), and/or Sixth Circuit decision in Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023), which both rejected the longstanding two-step approach developed in Lusardi in favor of more rigorous one-step processes.  Id.

On March 25, 2024, the Court granted Plaintiff’s motion for conditional certification of the ADEA collective action using the two-step Lusardi framework that Plaintiff urged the Court to adopt.  Thereafter, Eli Lilly filed a motion asking the Court to certify an immediate appeal on the question of which legal standard courts in the Seventh Circuit should use to evaluate conditional certification of a collective action. Plaintiffs sought review pursuant to 28 U.S.C. § 1292(b). Id. at 2.

Certification Of Interlocutory Appeal

On May 10, 2024, the Court granted Eli Lilly’s motion and certified for interlocutory appeal the specific question of: “Whether notice in a collective action can issue based on a modest factual showing of similarity, rather than upon a showing by a preponderance of the evidence that requires the Court to find that commonality across the collective [action] is more likely than not.” Id. at 12.

In doing so, the Court explained that the certified question met the criteria for an interlocutory appeal under 28 U.S.C. § 1292(b) because it “involves a controlling question of law to which there is substantial ground for difference of opinion and an immediate appeal from the order may materially advance the ultimate termination of litigation.”  Id. at 12.  The Court further reasoned that “Eli Lilly simply seeks clarity on the proper legal standard for collective certification, not whether the Court appropriately applied the facts to a particular standard,” and that “[t]he Seventh Circuit should be given the opportunity to clarify the standard, should it so choose.”  Id. at 6.

Along with certifying the this legal question for appellate review, the Court stayed the issuance of notice to members of the proposed collective action pending the outcome of the Seventh Circuit’s ruling.  Id. at 12.

Implications For Employers

The Richards decision is consequential because it will prompt the Seventh Circuit to weigh in for the first time on the applicable legal standard governing what a plaintiff must establish for a court to grant conditional certification of a collective action.  While the proposed collective action in Richards concerns claims under the ADEA, the ADEA incorporates the FLSA’s collective action procedures, meaning that the certified question will also impact collective action lawsuits under the FLSA.

As any employer who has been sued by a named plaintiff seeking to represent an FLSA collective action knows, the discovery burden imposed by application of the two-step Lusardi decision is far more onerous than what the Fifth Circuit established in Swales or the Sixth Circuit established in Clark.

On top of the discovery implications, employers litigating FLSA cases in the Seventh Circuit will want to keep a close eye on how it rules in Richards, since it will significantly impact how heavy of a burden plaintiffs will face in order to show they are similarly situated to the individuals they seek to notify of a collective action.

By Gerald L. Maatman, Jr. and Gregory Tsonis

Duane Morris Takeaways: In a decisive ruling on February 29, 2024, Judge Eric F. Melgren of the U.S. District Court for the District of Kansas granted the motion by defendants Bombardier, Inc. (“Bombadier”) and its subsidiary Learjet, Inc., (“Learjet”) in Wood, et al. v. Learjet Inc. et al., Case No. 18-CV-02681 (D. Kan. Feb. 29, 2024), to decertify a collective action brought under the Age Discrimination in Employment Act (“ADEA”). This landmark decision underscores the increased scrutiny applied during the decertification stage of collective actions, especially concerning allegations under the ADEA, and how defendants can successfully achieve decertification by attacking proffered evidence and establishing the individualized inquiries which preclude proceeding as a collective action.

Case Background

The lawsuit originated from claims by two named plaintiffs, both over the age of 40 and former employees at the Bombardier Flight Test Center (“BFTC”) in Wichita, Kansas, operated by Learjet.  The named plaintiffs alleged a pattern or practice of age discrimination in violation of the ADEA, i.e., specifically that defendants targeted non-union employees over the age of 40 for termination.  Following the lawsuit’s initiation, and applying the “similarly situated” collective action standard incorporated by the ADEA from the Fair Labor Standards Act, plaintiffs sought conditional certification of a collective action under the traditionally “lenient” standard applied by the courts within the Tenth Circuit and others in evaluating certification of collective actions.  Specifically, the plaintiffs sought and obtained conditional certification for a collective action consisting of non-union personnel employed since April 2, 2016 at the BFTC whose employment was terminated when they were over 40 years of age.  After the dissemination of notice, additional plaintiffs opted in, with four remaining by the time the defendants moved for decertification.

Procedurally, the defendants moved to decertify the collective action after the conclusion of fact discovery.

The two named plaintiffs and four opt-ins all worked in the BFTC, were over the age of 40 at the time their employment ended, and were terminated for various reasons.  One named plaintiff was terminated as a result of performance issues and a safety violation.  The other named plaintiff was placed on a performance improvement plan for time management issues that resulted in his termination.  While Learjet terminated one opt-in plaintiff for insubordination in connection with his failure to repay a tax payment reimbursement to the company, the three other opt-in plaintiffs were laid off as part of corporate reorganizations, with performance playing a role in some, but not all, layoff-related terminations.

The Court’s Decision

Applying the Tenth Circuit’s two-step approach for collective action certification, the Court moved from the “lenient standard” at the conditional certification stage to the “stricter” standard post-discovery to assess whether the plaintiffs were “similarly situated.”  Id. at 9.  The analysis to determine whether the members of the collective action were “similarly situated” to the named plaintiffs involved examining disparities in employment circumstances and available individual defenses, as well as procedural fairness and efficiency considerations.

The Court found the evidence of a discriminatory policy, predicated on an alleged statement about the company’s age composition, insufficient to establish a pattern or practice of discrimination. To establish an unlawful policy, plaintiffs relied on a single statement made by a director at a meeting in which he “drew an inverted triangle to represent a large number of older workers (at the top) and a small number of younger workers (at the bottom)” and allegedly stated that “the age balance was upside down” and that they “needed to reduce the age of the Company.”  Id. at 3.  The Court, however, determined that “no evidence” of a discriminatory policy existed other than the alleged statement.  Notably, the Court highlighted the lack of documentation, meetings, or direct involvement by management in any discriminatory policy’s alleged development or implementation.  Id. at 13.  Furthermore, terminations affecting the named plaintiffs and opt-ins spanned three years and involved various decision-makers, and evidence demonstrated that the average age of BFTC employees and percentage of workers over the age of forty increased between 2015 and 2019.  Id. at 8, 13.

The Court also considered the individual circumstances of the named plaintiffs’ and opt-ins’ terminations, noting significant differences in the reasons for termination and the involvement of different managers in these decisions.  The Court credited defendants’ argument that individualized defenses required decertification, as some opt-in plaintiffs executed releases barring their ADEA claims, the named plaintiffs’ claims were limited by the scope of their charges of discrimination, and one opt-in failed to disclose claims against defendants in bankruptcy proceedings.  Id. at 16.  Though noting that the individualized evidence was “not onerous,” the Court opined that the diversity in employment circumstances and the presence of individualized defenses underscored the plaintiffs’ disparate situations, which counseled against the maintenance of a collective action.  Id. at 16.  Finally, the Court also found that the “lack of common representative evidence” and the “highly individualized” circumstances of each plaintiff threatened to confuse a jury by requiring separate mini trials, which was wholly inefficient.  Id. at 17.  Accordingly, the Court granted defendants’ motion to decertify.

Implications for Employers

This decision sends a strong message about the potential hurdles faced by plaintiffs in sustaining collective actions after fact discovery, particularly in pattern-or-practice ADEA cases. For employers, the ruling highlights the importance of meticulous record-keeping, clear performance management, and consistent application of termination policies to defend against collective action claims effectively.

Moreover, this decision showcases the strategic value of aggressively challenging collective action certification on the basis of individualized claims and defenses, thereby preventing the broad-brush grouping of distinct employment cases. Employers should also note the critical role of early, proactive legal strategies in managing and mitigating the risks associated with collective action litigation.

By Gerald L. Maatman, Jr. and Sean P. McConnell

Duane Morris Takeaways: On February 2, 2024, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the District of Northern California granted Plaintiffs’ motion to certify a class of purchasers of one or more iOS applications or application licenses from Defendant Apple, Inc. (“Apple”) or who paid for one or more in-app purchases since July 10, 2008 in In Re Apple iPhone Antitrust Litigation, No. 4:11-CV-06714 (N.D. Cal. Feb. 2, 2024). The Court rejected defense arguments that class certification should be denied on the grounds that the model of Plaintiffs’ expert revealed millions of uninjured class members and that individual issues would predominate. Instead, the Court found that the model showed an estimated 7.9% of the class is uninjured and that with more complete data the model will be capable of showing antitrust impact on a class-wide basis.

In Re Apple iPhone Antitrust Litigation is required reading for any corporate counsel handling antitrust class action litigation involving claims by end consumers.

Case Background

Plaintiffs are purchasers of iPhone applications (apps), app subscriptions, and/or in-app content via the iPhone App Store. Defendant sells iPhones and requires app purchases to be made via the App Store. Plaintiffs claim that Apple charges App Store developers supracompetitive commissions that are passed on to consumers in the form of higher prices for app downloads, subscriptions, and in-app purchases. Plaintiffs assert claims under § 2 of the Sherman Act for unlawful monopolization and attempted monopolization of the iPhone applications aftermarket.

In a prior ruling, the Court denied class certification. It had concluded that Plaintiffs could not establish the predominance requirement under Rule 23(b)(3) because they had not demonstrated that damages from Apple’s alleged anticompetitive conduct could be proven on a class-wide basis. According to the Court, the methodology of Plaintiffs’ expert failed to reasonably ascertain how many class members were unharmed by the alleged conduct and individual questions would predominate.

The Court’s Class Certification Ruling

In response to the Court’s ruling, Plaintiffs narrowed their class definition to only include Apple account holders who have spent $10 or more on app or in-app content.

Using that new definition, Plaintiffs submitted revised and new expert reports estimating that the proposed class includes only 7.9% unharmed members and again moved for class certification under Rule 23(b)(3). Since the Court’s prior ruling, the Ninth Circuit also rejected the argument that “Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.” Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 31 F. 4th 651, 669 (9th Cir. 2022). According to the Court, the revised model can show the impact of Apple’s allegedly anticompetitive conduct across all class members, and once Apple produces the rest of its app transactional data, the model will be able to calculate the exact extent of injury suffered by each class member. Under Olean, the Court opined that Plaintiffs meet the predominance requirement.

Implications For Defendants

In Re iPhone Antitrust Litigation is another example of a federal court class certification decision turning on the existence of common, injury-producing conduct. The Court credited evidence that may be over inclusive at class certification stage of the proceedings, but is nonetheless capable of showing the impact of the allegedly anticompetitive conduct across all class members at trial.