Category: Class Certification Motions

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

Duane Morris Takeaway: In the first half of 2025, across all major types of class actions, courts issued rulings on more than 211 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 145 rulings, with an overall success rate of 69%. In contrast, in 2024, the plaintiffs’ class action bar succeeded in certifying class actions 63% of the time. However, plaintiffs have not been as successful so far this year as compared to 2023, when courts granted 72% of class certification motions, or 2022 when courts granted 74% of class certification motions.

Across all major types of class actions, courts issued rulings last year on 432 motions to grant or to deny class certification. Of these, plaintiffs succeeded in obtaining or maintaining certification in 272 rulings, for an overall success rate of 63%. In 2023, by comparison, courts issued rulings on 451 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of nearly 72%. In 2022, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.

2022 – 74%
2023 – 72%
2024 – 63%
2025 – 69%

In 2025, 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 (2 of 2 granted / 0 of 2 denied)
Antitrust – 92% granted / 8% denied (11 of 12 granted / 1 of 12 denied)
ERISA – 92% granted / 8% denied (11 of 12 granted / 1 of 12 denied)
FLSA / Wage & Hour (Conditional Certification) – 82% granted / 18% denied (58 of 71 granted / 13 of 71 denied)
Securities Fraud – 75% granted / 25% denied (12 of 16 granted / 4 of 16 denied)
TCPA – 67% granted / 33% denied (4 of 6 granted / 2 of 6 denied)
Consumer Fraud – 58% granted / 42% denied (15 of 26 granted / 11 of 26 denied)
Civil Rights – 56% granted / 44% denied (19 of 34 granted / 15 of 34 denied)
Discrimination – 55% granted / 45% denied (6 of 11 granted / 5 of 11 denied)
Privacy – 43% granted / 57% denied (3 of 7 granted / 4 of 7 denied)
FCRA / FDCPA – 40% granted / 60% denied (2 of 5 granted / 3 of 5 denied)
FLSA / Wage & Hour (Decertification) – 33% granted / 67% denied (1 of 3 granted / 2 of 3 denied)
Products Liability / Mass Torts – 33% granted / 67% denied (1 of 3 granted / 2 of 3 denied)
RICO – 25% granted / 75% denied (1 of 4 granted / 3 of 4 denied)
Data Breach – 0% granted / 100% denied (0 of 2 granted / 2 of 2 denied)

The plaintiffs’ class action bar obtained the highest rates of success in WARN, antitrust, ERISA, and wage & hour class actions. There have only been two WARN certification rulings in 2025, which were both granted by the court for a 100% success rate. In cases alleging antitrust violations, plaintiffs succeeded in obtaining orders certifying classes in 11 of 12 rulings, for a success rate of 92%. In cases alleging ERISA violations, plaintiffs managed to obtain class certification rulings in 11 of 12 rulings issued during the first half of 2025, a success rate of 92%. And in wage & hour litigation, plaintiffs succeeded in obtaining orders certifying classes and/or collective actions in 58 of 71 rulings issued during 2025, a success rate of 82%.

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 2025, courts 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, 2025, courts considered more motions for certification in FLSA matters than in any other substantive area. Overall, courts issued 74 rulings. Of these, 71 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 3 addressed second-stage motions for decertification of collective actions. Of the 71 rulings that courts issued on motions for conditional certification, 58 rulings favored plaintiffs, for a success rate of 82%.

These numbers are higher than the numbers observed in 2024, during which courts issued ­­171 rulings. Of these, 156 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 15 addressed second-stage motions for decertification of collective actions. Of the 156 rulings that courts issued on motions for conditional certification, 124 rulings favored plaintiffs, for a success rate of 79.5%.

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 2025 have not supported that typical success. There have only been 3 rulings thus far that courts issued on motions for decertification of collective actions, and only 1 ruling 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 (21 decisions) and Third Circuit (12 decisions), which include New York and Pennsylvania, respectively.

Takeaways From Certification Statistics Midway Through 2025

Notable thus far at the halfway point of the year, there have been a very small number of rulings emanating from the Fifth and Sixth Circuits (1 and 0 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 2025 and will report on final numbers in the Duane Morris Class Action Review – 2026, which will be published in the first week of January. Stay tuned!

By Gerald L. Maatman, Jr., Shannon Noelle, and Anna Sheridan

Duane Morris Takeaways: In Meinert et al. v. Port Authority of Allegheny County, Case No. 2:22-CV-01736 (W.D. Pa. 2025), Judge Robert J. Colville of the U.S. District Court for the Western District of Pennsylvania denied class certification for a class of former transit company employees that were allegedly denied medical and religious exemptions to an employer-mandated COVID-19 vaccination policy. In so doing, the Court highlighted opportunities for defendants to defeat class certification by offering proof that the proposed class is amenable to ordinary joinder and that individualized inquiries predominate over common ones in terms of the qualified disabilities, sincerely held religious beliefs, and undue hardship. The ruling is a required read for corporate counsel facing workplace-related class actions.

Background

Former bus drivers and maintenance workers of Pittsburgh Regional Transit filed a class action complaint against the transit company in December 2022 alleging that a company policy issued in early 2022 requiring COVID-19 vaccinations for employees resulted in class members being denied a medical or religious exemption in violation of federal and state law prohibiting discrimination based on a disability or sincerely held religious belief.  In total, the transit company received 350 accommodation requests related to its COVID-19 vaccination policy — 54 of which were for medical exemptions and 296 of which were for religious exemptions.  The Company formed an Accommodation Review Committee that ultimately granted 13 medical exemption and 30 religious exemption requests to its vaccination policy. 

The plaintiffs argued that the exemption review process was a “sham.”   As it regards the medical exemption review process, the plaintiffs argued all proposed class members (the “medical exemption class”) were denied a medical exemption because their pre-existing conditions or disabilities did not show a contraindication to the CDC guidelines and the Company did not factor whether the conditions were a recognized disability under the ADA.  As it regards its religious exemption review process, the plaintiffs maintained that the Company did not engage in any individualized analysis to determine undue hardship (the “religious exemption class”). 

The Court’s Decision

In its Rule 23 analysis, the Court ruled that the medical exemption class failed to meet the numerosity and commonality prerequisites and that the religious exemption class failed to satisfy the commonality and predominance requirements for class certification.  The Court found that as the plaintiffs presented no evidence to contradict the Company’s proof that only 12 individuals fell into the proposed medical exemption class, the Court opined that the plaintiffs failed to establish numerosity and demonstrate that joinder of all members was impracticable, particularly given that all class members were employees of the Company in Pittsburgh. 

The Court also rejected plaintiffs’ generic arguments that class certification would promote consistent results and judicial economy.  The Court further addressed the lack of commonality of the medical exemption class in dicta (as the lack of numerosity was sufficient to dismiss the proposed class) but nevertheless found that determining whether each member of the class had a cognizable disability would be an individualized inquiry that could not be considered on a class wide basis. 

With respect to the religious exemption class, the Court found a lack of commonality given that the sincerity of a class member’s religious beliefs and the undue hardship to the Company are both individualized inquiries not suitable for class treatment.  The Court rejected plaintiffs’ contention that the Company did not engage in any individual analysis to determine undue hardship, crediting an affidavit submitted by the Company detailing the Accommodation Review Committee’s process and attaching denial letters, which it reasoned illustrated that the Company considered undue hardship on an individual-by-individual basis.  For the same reasons, the Court also reasoned that predominance was lacking as to the religious exemption class given that the sincerity of class members’ religious beliefs and undue hardship to the Company would both turn on individualized proof rather than evidence common to all class members. 

Implications of the Decision

The Court’s decision underscores the opportunity for defendants to defeat certification by submitting evidence that proposed members of the class are limited and could be easily joined through ordinary joinder procedures and that the proposed class-wide proceeding is not apt to generate common answers as to whether class members are entitled to relief, as opposed to common questions. 

Employers implementing similar review processes for exemption requests to company policies are well-advised to document and evidence an individualized process in evaluating and responding to such requests to defend against class action exposure.   

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

Duane Morris Takeaways: On December 17, 2024, in a critical ruling in Stafford, et al. v. Bojangles’ Restaurants, Inc., No. 23-2287 (4th Cir. Dec. 17, 2024), the Fourth Circuit vacated the district court’s certification of a class action involving allegations of unpaid off-the-clock work and unauthorized edits to employee time records at Bojangles Restaurants. The Fourth Circuit determined that the district court erred in its application of Rule 23’s commonality and predominance requirements, relying on overly broad class definitions and vague assertions of company-wide policies. The decision underscores the importance of specificity in class certification arguments and highlights the successful opposition to class certification when plaintiffs rely upon generalized allegations and purportedly common policies in wage-and-hour litigation.

Case Background

Bojangles’ Restaurants, Inc. operates over 300 fast-food locations across eight states. The company employs a three-tier management structure with shift managers, assistant general managers, and general managers. Shift managers, the lowest tier, are responsible for a variety of operational duties, including pre-opening and post-closing tasks. Bojangles maintains internal policies prohibiting off-the-clock work and requiring employees to clock in and out to ensure accurate tracking of hours and overtime pay.

The lawsuit arose from allegations that Bojangles violated its policies by requiring shift managers to perform off-the-clock work and, at times, by systematically editing time records to reduce overtime payments. The Named Plaintiff Richard Stafford, a former hourly-paid shift manager, alleged that he was frequently required to work off the clock, perform unpaid tasks such as cleaning, making bank deposits, and traveling between locations, and was subject to unauthorized time-shaving.

The lawsuit was originally filed as an FLSA collective action and, in 2020, the district court conditionally certified a collective action for Stafford’s FLSA claims that attracted nearly 550 opt-in plaintiffs. Stafford later amended the complaint to assert state law class claims under various state wage and hour laws, and subsequently sought Rule 23 class certification for state law claims in North Carolina, South Carolina, Alabama, Georgia, Kentucky, Tennessee, and Virginia. While five of the state law classes failed to meet Rule 23’s adequacy prong, the district court certified classes for North Carolina and South Carolina shift managers, citing the Bojangles Opening Checklist, which allegedly mandated pre-shift tasks, as a common issue. The class definitions broadly included all shift managers employed within three years of the complaint’s filing since the district court found that at least 80% of shift managers would have worked an opening shift at some point.

Bojangles appealed, arguing that the district court’s class certification was overly broad and lacked the specificity required under Rule 23.

The Fourth Circuit’s Decision

The Fourth Circuit found that the district court relied excessively on generalized claims of Bojangles’ policies without providing specific evidence of commonality among the class members. While the Opening Checklist provided some basis for commonality regarding pre-shift work, the district court failed to address whether other alleged activities, such as time-shaving and post-closing tasks, were similarly unified by a common policy. The Fourth Circuit emphasized that “[a]llegations of generalized policies are not usually sufficient for the purposes of class certification” and further noted that Rule 23 does not permit a “30,000-foot view of commonality.” Id. at 11. Instead, plaintiffs must demonstrate that common questions predominate over individualized issues, and they had not done so with respect to the type of alleged off-the-clock work and time shaving.

The Fourth Circuit also criticized the overly broad class definitions, which included all shift managers employed during a three-year period without specifying the types of claims or injuries alleged. Such vague definitions risked including individuals with no viable claims and failed to meet Rule 23’s requirements. The lack of specificity raised concerns about commonality, predominance, and typicality, according to the Fourth Circuit, because some plaintiffs may not even have off-the-clock or time shaving claims against Bojangles.  It suggested that sub-classes might be appropriate to address distinct issues but left this determination to the district court on remand.

The decision concluded by emphasizing the importance of adhering to Rule 23’s prerequisites to ensure that class actions remain a viable and efficient mechanism for resolving disputes.  Characterizing Rule 23 class actions as a “carefully crafted compromise,” the Fourth Circuit observed that its decision was meant to “ensure that the class-action train stays on the tracks.”  Id. at 19. Without clear evidence of commonality and precise class definitions, the Fourth Circuit ultimately vacated and remanded the district court’s class certification decision.

Implications for Employers

This decision provides a helpful roadmap for employers facing wage-and-hour class action cases premised on an alleged common policy.  As this case exemplifies, employers should focus on the lack of specificity in alleged policies to counter claims of commonality or predominance. Demonstrating variations in employee experiences, decision-making processes, or other individualized factors can effectively undermine arguments for class-wide treatment.

Thinking through such considerations is an absolute necessity, and one that begins with the planning of a strategic defense early in the litigation process. Documenting lawful policies and practices during discovery lays a foundation for opposing class certification.   By emphasizing the need for clear evidence and precise definitions, this ruling underscores the challenges plaintiffs face in meeting Rule 23’s rigorous standards. Employers can use these standards to their advantage, ensuring that ill-defined and nebulous classes are not certified in the high-stakes litigation they often face.

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.

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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.