Wisconsin Appellate Court Vacates Class Certification Order And Finds That Department Of Corrections Employees Are Not Entitled To Additional Pay

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

Duane Morris Takeaways:  On May 15, 2024, in McDaniel, et al. v. Wisconsin Department of Corrections, No. 22-AP-1759, 2024 WL 2168148 (Wis. App. May 15, 2024), the Wisconsin Court of Appeals of held that the Wisconsin Department of Corrections (“WDOC”) employees were not entitled to compensation for time spent waiting in line to get to security checkpoints; passing those security checkpoints; getting their daily assignments and equipment; and walking to their job stations.  This decision further illuminates the scope of compensable time under the Fair Labor Standards Act (“FLSA”) and its state law analogs.

Case Background

Plaintiffs Nicole McDaniel and David Smith (“Plaintiffs”), both hourly employees, sued the WDOC for an alleged failure to provide them with compensation for their pre-shift and post-shift activities.  These activities included waiting in line for and passing through security checkpoints; getting their daily assignments and equipment; and walking to their job stations.  These activities took the employees anywhere between three and 30 minutes per day.  Plaintiffs, believing they were entitled to additional paid time as a result of these activities, sued under the Wisconsin state wage and hour laws and the FLSA. After discovery, they moved to certify their purported class.

In response, the WDOC argued that each of these pre-shift and post-shift activities were non-compensable under the Portal-to-Portal Act and its state law equivalents.  Their rationale was that “the principal activities for which an employee was hired, such as time spent commuting, time spent walking from the entrance of a workplace to one’s assigned post, and other similar activities” are excluded from the scope of compensable work activities.  Id. at *3. The WDOC, therefore, argued that the class should not be certified because the purported class members could not recover as a matter of law.

The trial court disagreed with the WDOC.  It held that it was “sufficiently plausible” that the employees time was compensable and it certified a class comprised of “[a]ll current and former non-exempt, hourly-paid [WDOC] employees who worked as security personnel in a correctional institution . . . in the State of Wisconsin.”  Id. at *2.  The WDOC appealed that ruling.

Court of Appeals Opinion

The Wisconsin Court of Appeals reversed the trial court’s decision. It held that the trial court abused its discretion to certify the class.  In so doing, the Court of Appeals relied heavily on the U.S. Supreme Court decision in Integrity Staffing Solutions, Inc. v. Busk, 574 U.S. 27 (2014), which sets forth the legislative intent for the Portal-to-Portal Act and its case law progeny.  The Court of Appeals explained that “the Portal-to-Portal Act was created by Congress in direct response to a series of ‘expansive definitions’ of a ‘workweek’ under the FLSA.”  Id. at *3.  There, the Supreme Court in Busk unanimously concluded that participation in security screenings were not compensable activities that the employer hired their employees to perform.

The Wisconsin Court of Appeals adopted the U.S. Supreme Court’s reasoning and reached the same conclusion.  Indeed, none of the activities for which Plaintiffs sued were “integral and indispensable” activities that the employees were hired to perform for the WDOC.  Id.  Instead, the Court of Appeals reasoned that these activities were merely ancillary to Plaintiffs’ job functions.

In short, the Court of Appeals concluded that Plaintiffs could “point to no questions of law or fact common to the class regarding activities at the start and end of the compensable work day” and the trial court erred by certifying the class because the class could not recover as a matter of law.  Id. at *4 (internal citations omitted).

Implications For Employers

The holding in McDaniel, et al. v. Wisconsin Department of Corrections has far broader implications than just the practices within the Wisconsin state correctional system.  Employers, particularly those in Wisconsin, will often not be required to compensate employees for similar activities on the basis that those pre-shift and post-shift activities are exempt from the FLSA’s reach.

It is worthy of note, however, that corporate counsel must be confident in its determinations with respect to the FLSA, because a willful violation of the statute may result in increased liability for employers.

Indiana Federal Court Certifies Issue Of Collective Certification Standard For Seventh Circuit Review

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.

Plaintiffs Win Conditional Certification In Gender Bias Lawsuit Against AstraZeneca

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Christian J. Palacios

Duane Morris Takeaways:  On May 15, 2024, U.S. District Judge Sara Ellis of the U.S. District Court for the Northern District of Illinois conditionally certified a collective action of female workers employed by AstraZeneca, and approved notice to be sent to female sales representatives who have worked at the pharmaceutical company since December 30, 2018.  The case, captioned Jirek, et al., v. AstraZeneca Pharmaceuticals LP, Case No. 1:21-CV-6929 (N.D. Ill., May 14, 2024), represents another significant win for the plaintiffs’ bar, and serves as a reminder of the low legal threshold that plaintiffs have to satisfy in order to conditionally certify a collective action at the initial stage of a lawsuit. This ruling is particularly noteworthy given the fact that collective action definition that has been approved by the Court will include notice to likely thousands of AstraZeneca’s female sales representatives on a nationwide basis (as AstraZeneca employs over 3,500 sales representatives to market its pharmaceutical products, as noted in the beginning of the Court’s order).

Background

The Named Plaintiffs Natalie Jirek, Judy Teske, and Natalie Ledinsky brought suit against their former employer, global biopharmaceutical company, AstraZeneca, alleging violations of the Equal Pay Act of 1963 (the “EPA”) for failure to pay a purported collective action of female employees less than their male counterparts for the same or substantially similar work in sales positions within the same pay scale levels. Jirek et al., v. AstraZeneca Pharmaceuticals LP, Case No. 1:21-CV-06929, ECF No. 88 at p. 2 (N.D. Ill. Jan. 26, 2024) (the “Conditional Certification Motion”).

Plaintiffs’ evidence in support of this sex-based wage discrimination claim included 10 online job postings from different locations, a declaration from each of the named-plaintiffs, AstraZeneca’s “Career Ladder Program Guide” (an internal evaluation guide from July 2010, which, according the AstraZeneca’s declarant, hadn’t been used since 2015), and two unequal pay violations issued by the U.S. Department of Labor’s Office of Federal Contract Compliance Program’s (“OFCCP”) following the OFCCP’s evaluation and analysis of AstraZeneca’s payment structure.  According to the conditional certification motion, the OFCCP found that, beginning in September 2016, AstraZeneca failed to comply with Executive Order 11246, which prohibits companies that do over $10,000 in U.S. government business from discriminating against employees on the basis of gender. Id.  Specifically, the OFCCP found that AstraZeneca discriminated against female employees in “Specialty Care Sales Representative Level 4 positions” in violation of the Executive Order, after comparing random samplings of men and women and finding that there was a difference in $2,182.07 between the sexes in sales representative positions. As a result of the OFCCP Conciliation Agreement, all the women in the OFCCP’s sampling were entitled to back pay plus interest. The Complaint alleges that despite this, Defendant did not change its discriminatory pay practices until at least 2021.

The Court’s Decision

On May 14, 2024, Judge Ellis entered an order conditionally certifying the collective action and allowing Plaintiffs to send notice to “females employed by AstraZeneca in sales positions as of December 30, 2018.”

By all accounts, this is a sweeping collective action definition that likely will result in notice to thousands of current and former AstraZeneca female employees within the collective action period.  Of the evidence submitted by Plaintiffs’ counsel, the Court noted that it found the similarity in language amongst job postings to be a compelling reason to support Plaintiffs’ assertion that the sales representatives were similarly situated, regardless of location. See ECF No. 114, at 12.  Although the Court noted that Defendant’s proffered declaration from AstraZeneca’s Vice President of Human Resources attempted to “diffuse” some of the similarities, the Court reasoned that these factual questions were inappropriate for resolution at the conditional certification stage. Id.  The Court declined to engage in other “credibility determinations” that AstraZeneca presented to respond to the evidence Plaintiffs submitted.  The Court also observed that the “OFCCP Agreement [gave] Plaintiffs the hook they need[ed] to tie the nationwide body of sales representatives to alleged widespread gender-based pay discrimination.”  Id. at 14.

The Court concluded its analysis of Plaintiffs’ conditional certification motion by noting the weakness of Plaintiffs’ declarations, stating, “Frankly, Plaintiffs’ declarations do not say much, primarily regurgitating allegations contained in their already thin amended complaint. But another word for ‘allegations lifted from a complaint and a repeated verbatim in a declaration’ is ‘evidence’ and arguably weak evidence is still evidence that the Court – again – may not weigh at this stage.”  Id. at 16.  In the same order, the Court asked the parties to continue engaging in negotiations regarding the proposed form of notice, and tolled the statute of limitations for the time period that elapsed between the Court’s decision and the Court’s approval of the notice form.

Implications

The conditional certification stage of a collective action is a universally recognized lenient standard for plaintiffs to meet. Nevertheless, Judge Ellis’s approval of such a massive collective action at the conditional certification stage is a blow to the defense, and is a reminder of how lenient the evidentiary standard is for the first stage of collective actions. Although it remains to be seen if Plaintiffs will be able to prevail at stage two of the Court’s analysis (after notice has been sent to collective members and discovery has been conducted), for now, Plaintiffs will be able to proceed with their collective action in a significant Equal Pay Act lawsuit.

Federal Court In Kansas Blows Up ADEA Collective Action Against Learjet, Inc. And Bombardier, Inc., Granting Defendants’ Motion To Decertify 

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.

California Federal Court Grants Class Certification To iPhone App Purchasers

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.

California Federal Court Denies Class Certification Of COVID-19 Vaccine Mandate Claims

By Gerald L. Maatman, Jr., Nathan K. Norimoto, Nick Baltaxe

Duane Morris Takeaways: On January 28, 2024, in Chavez, et al. v. San Francisco Bay Area Rapid Transit District, No. 22-CV-06119, 2024 U.S. Dist. LEXIS 14785 (N.D. Cal. Jan. 28, 2024), Judge William Alsup of the U.S. District Court for the Northern District of California denied class certification for a failure to accommodate religious beliefs claim premised on a workplace COVID-19 vaccine mandate.  Specifically, the Court held that the putative class was not certifiable as the class failed to meet Rule 23(b)(3)’s predominance and superiority requirements. The decision is a good roadmap for employers dealing with the continuing fall-out of the COVID-19 pandemic. 

Background Of The Case

Defendant San Francisco Bay Area Rapid Transit (“BART”) implemented a workplace policy mandating that all employees needed a COVID-19 vaccination by December 21, 2021.  Id. at 2.  In response, BART received 188 requests for religious exemption and accommodation.  Id.  While some employees did not complete the exemption application process, 148 employees submitted applications to BART, noting varying belief systems such as “Christianity,” “Catholic,” “Islamism,” or even personal belief systems such as being “anti tyranny [sic].”  Id. at 3.  A panel of BART employees then reviewed each application individually and conducted further interviews with the applicants before deciding to grant or deny the request.  Id. at 5.

Of the 148 completed applications, BART granted 70 religious exemptions and denied 78.  Id.  Those who were denied were given the option to either comply with the mandate, retire, voluntarily resign, or be terminated.  Id. In total, 36 employees either retired, resigned, or were terminated.  Id.  BART considered accommodation for the 70 employees who were granted exemptions, but ultimately did not provide any accommodations as they could not “identify a reasonable accommodation that did not place an undue hardship on the District.”  Id. at 6.  Of the 70 applicants who were denied accommodation, 37 resigned, retired, or were terminated.  Id.  BART additionally received 25 requests for medical exemptions, and eight medical exemptions were granted, with those employees being placed on unpaid leave that only ended upon vaccination.  Id. 

Plaintiff Gabriel Chavez and 16 other named plaintiffs filed a class action complaint alleging that BART’s policy violated Title VII, the First Amendment right to free exercise of religion under 42 U.S.C. § 1983, and California’s Fair Employment and Housing Act (“FEHA”).  Id. at 7.  Plaintiff sought to certify a class pursuant to Rule 23(b)(3) composed of “all employees employed by BART who (1) have been ordered to submit to a COVID-19 vaccination, (2) have sincerely held religious beliefs which prevent them from taking the vaccine, (3) have submitted a request for a religious exemption, and (4) were denied a religious accommodation.”  Id.  Plaintiff also proposed a second, alternative class consisting of all employees employed by BART who “(1) have been ordered to submit to a COVID-19 vaccination, (2) have sincerely held religious beliefs which prevent them from taking the vaccine, (3) have submitted a request for religious exemption and religious accommodation, and (4) whose request for a religious exemption were denied.”  Id. 

The Court’s Ruling

The Court examined the class certification requirements under Rule 23(b)(3), which provide that a plaintiff must establish “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”  Id. at *8.  The Court held that Plaintiffs’ proposed class, as well as the proposed alternative class, did not satisfy the predominance and superiority requirements, and denied Plaintiffs’ certification motion.  Id. at 23.

First, the Court examined the requirement of common issues predominating over any questions affecting only individual members.  Id. at 11-20.  With respect to Plaintiffs’ Title VII and FEHA claims, the Court noted that whether or not an individual had a bona fide religious belief – a requirement for both claims – there were too many individual systems of belief to examine.  Id. at 12.  The Court held that nearly every named plaintiffs’ application contained a distinct system of belief, and any examination of whether or not a request rested on a “bona fide religious belief” would necessarily require an individual inquiry into each plaintiffs’ belief system.  Id.  The Court expressed doubt that the various written or interview responses of one plaintiff will have any evidentiary impact on the bona fide religious belief of the class as a whole.  Id. 

Next, the Court held that BART’s undue hardship showing required an individualized inquiry of factual issues.  Id.  The Court noted that the potential class members are drawn from a large diversity of jobs – over a dozen unique jobs – and that accommodations reasonably considered for a “train conductor’s request bear no relation to the job functions and reasonable accommodations BART must consider when evaluating the exemption request of a manager of technology programs, a fire protection worker, or a police officer, or a senior operations supervisor liaison.”  Id. 13-14.  Further, the Court found that the inclusion of some union employees in the putative class also required individualized inquiries as the union’s contracted-for-rights “grant impacted workers certain rights, such as seniority, that BART is not required to transgress upon.”  Id. at 14.  Moreover, the Court indicated that a significant portion of the class would not be impacted by an “undue hardship” analysis, as 78 of the proposed members were not even considered for accommodation.   Id. at 15.  The Court did acknowledge that some aspects of the undue hardship consideration may be more amenable to common proof, but in light of the putative class’s “job diversity,” it reasoned that any undue hardship analysis “cannot be understood without an interrogation of individual employees’ job duties.”  Id.  at 16.

As to the Free Exercise of Religion Claims, the Court determined that those claims could not satisfy the predominance requirement.  In doing so, it noted that “the sincerity and religious nature of plaintiffs’ belief is . . . an individualized issue.”  Id. at 20.  The Court found that each of the plaintiffs cited a “myriad” of religious and of personal experiences, along with refusal due to “CDC VARS data and concerns regarding health consequences, the Organization of American States Declaration of Rights of Indigenous Peoples, Senate Bill 1383 and Senate Bill 1159, among others.”  Id.  The Court concluded that the need to determine whether plaintiffs have met the bona fide religious belief threshold required individualized inquiries, which ultimately foreclosed class certification.  Id.

Finally, the Court found that the putative class did not satisfy Rule 23(b)(3)’s superiority requirement.  The Court reasoned that class members have “significant interest in the individual control of their claims.”  Id. at 21-22.  As an example, it noted that two potential class members have already brought individual actions against BART, and that seventeen other employees had filed suit in a third case.  Id. at 22. The Court held that “[p]utative class members’ demonstrated interest in bringing and controlling these various litigations further reflects the significant monetary and emotional stakes at issue, and counsels against certification.”  Id.  In closing, the Court noted that given “the wide range of individual issues and proof” there will also likely be difficulties in managing the class action.  Id.

Implications For Employers

The ruling in Chavez, et al. v. San Francisco Bay Area Rapid Transit District confirms that the need for individualized inquiries is a strong impediment to certifying a class action premised on COVID-19 vaccine accommodation theories of liability. This ruling stresses the specific importance of these individualized inquiries in the context of religious accommodations, which have recently been the subject of significant litigation after many employers implemented COVID-19 vaccine mandates in the workplace

Federal Illinois Court Rejects Plaintiff’s Renewed Motion For Class Certification Seeking A ‘Second Bite At The Apple’

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

Duane Morris Takeaways: On January 29, 2024, in Hossfeld v. Allstate Insurance Co., No. 1:20-CV-07091 (N.D. Ill. Jan. 29, 2024), Judge Joan B. Gottschall of the U.S. District Court for the Northern District of Illinois denied a renewed motion for class certification brought by plaintiffs accusing Allstate of violating telemarketing laws by allowing an outside party to solicit ‘do-not-call’ listees on its behalf.   After denying the plaintiff’s initial motion of class certification a year earlier, Judge Gottschall denied the plaintiff’s second motion for class certification because the plaintiff failed to show a material change of circumstances in the time since the first certification motion that warranted a different ruling.  The decision is required reading for corporate defendants seeking to quell efforts by plaintiffs to take a second shot at obtaining class certification after a failed earlier attempt.

Case Background

Plaintiff Robert Hossfeld filed a lawsuit against Allstate Insurance Co. alleging that Allstate violated the Telephone Consumer Protection Act (“TCPA”) by providing a telemarketer that Allstate contracted with a list of consumer leads identifying individuals such as Plaintiff who requested to be placed on Allstate’s internal ‘do-not-call’ list.  Id. at 2.

In May 2022, Plaintiff filed a motion for class certification pursuant to Rule 23 of the Federal Rules of Civil Procedure.  In March 2023, the Court denied Plaintiff’s motion on the grounds that Plaintiff failed to show a large enough class to make joinder impractical.  Id. at 2-3.  In the order denying the motion, the Court did not include language stating that its denial of Plaintiff’s certification bid was “with prejudice.”  Id. at 8.

Given the absence of that language, Plaintiff filed a renewed motion for class certification in May 2023 asking the Court to reconsider its earlier class certification ruling.  Plaintiff asserted that he “reviewed the infirmities relied upon by the Court in its original opinion denying his first motion for class certification, and modified the class definitions and arguments to address them.”  Id. at 5.  Allstate moved to strike Plaintiff’s second motion for class certification, arguing that Plaintiff should not be given a “second bite at the apple.”  Id. at 1.

The Court’s Rejection Of Second Motion For Class Certification

On January 29, 2024, the Court issued a 9-page decision granting Allstate’s motion to strike Plaintiff’s second class certification motion.  Id.  The Court’s decision analyzed Plaintiff’s second class certification motion under two applicable standards, including: (1) principles governing a pre-judgment motion for reconsideration under Rules 54(b) and 59(c); and (2) the Rule 23(c)(1) standard for revising an order granting or denying class certification.  Id. at 4.  The Court rejected Plaintiff’s arguments under both standards.

First, the Court determined that Plaintiff did not satisfy the reconsideration standards under Rules 54(b) and 59(e) because he failed to “present either newly discovered evidence or establish a manifest error of law or fact.”  Id. at 5.  The Court noted as part of this conclusion that, “although [Plaintiff] has submitted evidence not previously presented to the court, he [did] not contend that this evidence was unavailable to him when he filed his first class certification motion or that the court made a manifest error of fact or law when it denied his first class certification motion.  Id. at 5-6.

Second, the Court found that Plaintiff’s did not make a necessary showing to reverse the Court’s earlier denial of class certification under Rule 23.  Citing Seventh Circuit precedent in Chapman v. First Index, Inc., 796 F.3d 783, 785 (7th Cir. 2015), which affirmed the denial of a second class certification motion where there was no showing of “a material change of circumstances to justify revisiting the first class certification ruling,” the Court in Hossfeld rejected Plaintiff’s argument for the same reason.  Id. at 7.  As the Court explained, Plaintiff did not dispute that the newly-included arguments and supporting evidence in his second class certification motion were available at the time of his first motion.  Id. at 9.  Thus, the Court concluded that Plaintiff did not show “a material change in circumstances needed to obtain a second bite at the proverbial apple.”  Id.

Based on rejecting Plaintiff’s arguments under both applicable legal standards, the Court granted Allstate’s motion to strike Plaintiff’s second motion for class certification.  Id.

Implications For Companies

This opinion represents a helpful roadmap for employers to fend off attempts by plaintiffs to revive a failed class certification bid.  The decision is a strong source of persuasive authority supporting that a plaintiff cannot successfully move a second time for class certification absent either “a manifest error of law or fact” in the court’s first class certification ruling, or newly-discovered evidence unavailable at the time of the first class certification bid representing a “material change in circumstances.”  Id. at 5, 9.  For these reasons as well, the ruling underscores the importance of not saving potentially supportive arguments and evidence during an initial class certification battle in case of a “second bite at the apple” that may not come.

Ninth Circuit Vacates Class Certification Denial In Fresno State Title IX Lawsuit

By Gerald L. Maatman, Jr., Nathan N. Norimoto, Nick Baltaxe

Duane Morris Takeaways: On January 17, 2024, in Anders, et al. v. California State University Fresno, et al., No. 23-15265, 2024 U.S. App. LEXIS 1063 (9th Cir. Jan. 17, 2024), the Ninth Circuit vacated the U.S. District Court for the Eastern District of California’s decision to deny Plaintiffs’ renewed motion for class certification.  Specifically, the Ninth Circuit held that the District Court erred by finding the named plaintiffs would not be adequate class representatives due a “speculative” conflict of interest that could develop at the remedy stage of the litigation.  The Ninth Circuit remanded the action to the District Court for further proceedings.  The ruling is required reading on the procedural aspects of class certification in discrimination cases in general, and with respect to how actual or perceived conflicts on interest in particular implicate the Rule 23 (a)(4) analysis.

Case Background

Plaintiffs Taylor Anders, Hennessey Evans, Abbigayle Roberts, Megan Walaitis, Tara Weir, and Courtney Walburger were all former members of the California State University, Fresno (“Fresno State”) women’s lacrosse team.  Id. at *2.  Plaintiffs brought class claims alleging effective accommodation and equal treatment under Title IX.  Id.  Plaintiffs sought an injunction that would prohibit Fresno State “from eliminating Fresno State’s women’s lacrosse team (or any other women’s varsity intercollegiate athletic opportunities at Fresno State) unless and until Fresno State is and will be in compliance with Title IX.”  Id. at *5, fn. 4.

Plaintiffs “sought certification of classes consisting of current and future female students at Fresno State who have participated in or are able and ready to participate in women’s varsity intercollegiate athletics at Fresno State.”  Id. at *3.  The District Court denied Plaintiffs’ class certification motion in its entirety on the basis that the Plaintiffs were not adequate class representatives under Rule 23(a)(4), as their affiliation and contentions favored the women’s lacrosse team over other women’s varsity sports.  Id.  Plaintiffs appealed to the Ninth Circuit.

The Ninth Circuit’s Ruling

The Ninth Circuit vacated the District Court’s decision to deny class certification of the effective accommodation and equal treatment claims.  Id. at *6. 

First, the Ninth Circuit noted that to defeat adequacy under Rule 23(a)(4), any conflict of interest between the named Plaintiffs and the putative class members must be “actual” and not “speculative,” which only exists if the remedy sought precludes “structural assurance of fair and adequate representation for the diverse groups and individuals affected.”  Id. at *4.

With respect to Plaintiffs’ effective accommodation claim, the Ninth Circuit opined that the District Court erred in finding Plaintiffs would not be adequate class representatives due to a “conflict of interest with members of their proposed class” because the District Court only “speculat[ed] as to conflicts that may develop at the remedy stage.”  Id.  For example, if Fresno State “reinstate[s] at least one women’s sports team,” the Ninth Circuit reasoned that it was only speculation that “plaintiffs would be able to advocate for the reinstatement of the women’s lacrosse team at the expense of other women’s teams.”  Id. at *4-*5.  At the remedies stage, however, the Ninth Circuit determined that Fresno State “can comply with Title IX without reinstating women’s sports teams by leveling down programs instead of ratcheting them up to achieve substantial proportionality between male and female athletics opportunities.”  Id. at *5 (internal quotation marks and citation omitted).  Further, the Ninth Circuit pointed out that if Fresno State reinstates women’s sports teams at the remedies stage, the District Court did not identify any “evidence suggesting plaintiffs would have input into which teams are to be reinstated.”  Id.

In addition, the Ninth Circuit held that the District Court erred by failing to “independently analyze the equal treatment claim,” and evaluate whether a conflict of interest exists with the respect to the claim.  Id. at *5.  The Ninth Circuit directed the District Court to analyze the Plaintiffs’ equal treatment claim in light of the “conclusion that the injunctive relief Plaintiffs seek under their effective accommodation claim does not necessarily require reinstatement of the women’s lacrosse team” and to “specifically assess whether a conflict exists under the equal treatment claim.”  Id. at *5-*6.

In conclusion, the Ninth Circuit vacated the denial of class certification and remanded to the District Court for further proceedings on the class certification issue.  Id. at *6.

Key Takeaways

The Ninth Circuit’s decision in Anders makes it easier for plaintiffs to certify a class in the Title IX context by messaging that challenges to the adequacy of a class representative in a Title IX lawsuit must be based on an actual conflict of interest.  Importantly, any challenges to class certification based on the fairness of a potential remedy will likely fail as too “speculative.”  Any entity that must comply with Title IX, and finds itself the potential victim of a class action based on Title IX, should keep this distinction in mind.

 

Hawaii Federal Court Denies Motion To Certify Covid-19 Vaccination Class Action Brought Under Title VII And The ADA

By Gerald L. Maatman, Jr., Nick Baltaxe, and Nathan K. Norimoto

Duane Morris Takeaways: In O’Hailpin v. Hawaiian Airlines Inc., No. 22-CV-00532, 2023 U.S. Dist. LEXIS 220734 (D. Haw. Dec. 12, 2023), Judge Jill Otake of the U.S. District Court for the District of Hawaii denied a motion for class certification brought by current and former employees of Hawaiian Airlines alleging discrimination under Title VII and the ADA against individuals who requested medical or religious accommodations from their employers’ COVID-19 vaccination policy. The decision is pro-defendant and well worth a read in terms of strategies to oppose and prevent class certification of employment discrimination claims.

Case Background

Riki O’Hailpin, along with eight other named plaintiffs (“Plaintiffs”), brought a putative class action against Defendant Hawaiian Airlines Inc. (“Hawaiian”), alleging that Hawaiian violated Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Americans with Disabilities Act (“ADA”) by discriminating against employees who requested medical or religious accommodations from Hawaiian’s Covid-19 vaccination policy.  In response to the Covid-19 pandemic, President Biden issued Executive Order No. 14042, a Federal Contractor Mandate that required certain employers to implement a mandatory vaccination policy.  Under the Federal Contractor Mandate and related guidelines, Hawaiian was required to have its unvaccinated employees masked and socially distanced in the workplace; thus, any exemptions to the vaccine policy would need to comply with those masking and distancing requirements.  Id. at *3.  Plaintiffs challenged Hawaiian’s policy that required all employees “to be vaccinated November 1, 2021 unless they had a reasonable accommodation for a disability as defined under the ADA or a sincerely held religious belief that conflicted with their ability to receive a Covid-19 vaccine.”  Id. at *3-4.

Hawaiian received 568 reasonable accommodation requests related to the vaccine policy, including 496 for religious accommodations and 72 for medical exemptions.  Id. at *3.  Hawaiian subsequently examined every work position and every work location to determine whether masking and distancing were feasible and concluded that, for a majority of the positions, they were not.  Hawaiian also implemented a “Transition Period Testing Program” that provided a deadline for unvaccinated employees to test and a 12-month unpaid leave of absence for those who did not get vaccinated and were not granted an accommodation.  Id. at *6.  The complaint alleged Hawaiian engaged in a “pattern and practice of discrimination” under Title VII and the ADA by denying medical and religious accommodation requests and that the Transition Period Testing Program was a pretext for denying accommodation requests.  Id. at *17.  Plaintiffs sought to represent all current and former Hawaiian employees whose religious and medical vaccine accommodation requests were denied under Hawaiian’s vaccination policy, and proposed a primary class of the approximately 500 employees whose accommodation requests were denied as well as sub-classes, broken down by medical and religious requests, of individuals whose requests were either denied or rescinded by Hawaiian.  Id. at *9.  Plaintiffs moved for class certification under Rule 23 of the Federal Rules of Civil Procedure.  Id.

Plaintiffs’ Motion For Class Certification

The Court evaluated Plaintiffs’ motion for class certification under Rule 23’s requirements of numerosity, adequacy, predominance, typicality, and commonality.  First, it expressed skepticism that one of Plaintiffs’ proposed sub-classes satisfied the numerosity requirement.  Id. at *12-13.  The Court concluded that certification of a sub-class of 14 individuals “whose medical exemption requests were rescinded, such that no final decision was reached … could likely be denied based on numerosity grounds alone.”  Id. at *13.  At the same time, the Court determined that Plaintiffs satisfied Rule 23’s adequacy of counsel requirement.  Id. at *13-14.  Hawaiian did not contest the requirement with respect to the named Plaintiffs and their counsel.  Id.  at *14.

The Court further evaluated whether Plaintiffs’ “pattern and practice” theory of liability met Rule 23’s commonality, typicality, and predominance requirements, with a specific focus on issues susceptible to “generalized proof” versus “individualized proof.”  Id. at *20-21.  The Court found that Plaintiffs could not satisfy the remaining Rule 23 requirements due to the individualized assessments into each medical and religious accommodation request to determine whether Hawaiian’s treatment of each request constituted actionable discrimination under Title VII and the ADA.  Id. at *23-57.

With respect to the sub-classes of individuals who were denied religious accommodation requests, the Court noted that the inquiries into each employee’s “sincerely held religious belief and secular preference” and/or whether the accommodation would cause an “undue hardship” to Hawaiian would require too many individualized assessments to satisfy predominance under Rule 23.  Id. at *27*42.  For example, the Court noted the analysis of whether the accommodation would impose an undue hardship on Hawaiian would include an individualized review of each position, location, union status, and the ability to mask and social distance.  Id. at *37-39.

For the medical accommodation sub-classes, the Court noted that the ADA extends “only to qualified individuals … who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.”  Id. at *44 (quoting 42 U.S.C. § 12111(8)).  For this reason, the Court opined that the reasonableness of the accommodation “is necessarily individualized, based on the person’s position and location, and the extent to which an accommodation would amount to an undue hardship on Hawaiian.”  Id. at *52.  In light of the individualized inquiries to determine the reasonableness of each accommodation (masking, social distancing, or testing) for each qualified individual, the Court determined that Plaintiffs did not meet their “burden to explain why commonality, typicality, and predominance are met” for the ADA subclasses.  Id. at *55-56.

Accordingly, the Court denied Plaintiffs’ motion for class certification and held that a class action was not “the superior way” for Plaintiffs’ claims to proceed.  Id. at *56.

Implications For Employers

This decision represents a helpful roadmap for employers to defend not only against potential Covid-19 vaccine-related class action complaints, but also against putative class actions brought under Title VII and the ADA.  The Court’s ruling underscores the importance of individualized inquiries for religious and medical accommodation requests under Title VII and the ADA, and offers tools to defend against the plaintiff’s burden of demonstrating predominance, typicality, and commonality at the class certification stage of the litigation.

California State Court Grants Class Certification For Wage & Hour Claims Against Cannabis Dispensaries

By Seth A. Goldberg and Nick Baltaxe

Duane Morris Takeaways: A California Superior Court recently granted class certification relative to a class of hundreds of employees against a group of dispensary defendants where the Plaintiffs presented sufficient evidence that the off-the-clock work claims, meal and rest period claims, and reimbursement of necessary business expenses claims predominated over individual inquiries and were typical of the class.  The Court did not rule on the merits of the integrated enterprise, alter ego, or joint employer arguments, nor did the Court agree with the Defendant’s arguments that the claims were not typical because the Plaintiffs were not employed by each Defendant. Nonetheless, the ruling is important for employers in general and cannabis dispensaries in particular.

Case Background and the Court’s Ruling

A group of dispensary and retail store employees at four different dispensaries owned by different entities asserted that they should be treated as a single enterprise. The Plaintiffs moved to certify a class of all current and former non-exempt, hourly employees of the Defendants from January 13, 2017 through the present. The Plaintiffs alleged that the putative class members were expected to work off-the-clock in order to set up their timekeeping program and their payroll program as well as review materials on the timekeeping program, before clocking-in on their personal cell phone. The Plaintiffs additionally contended that the Defendants failed to provide meal and rest periods, timely pay all wages on termination, or provide accurate itemized wage statements. The Plaintiffs also argued that because the four Defendants should be considered a single enterprise, they failed to comply with the higher minimum wage found in the City of Los Angeles Minimum Wage Ordinance.

The Court granted the Plaintiffs’ motion for class certification.  The Court noted that the Plaintiffs’ arguments  regarding the Defendants being an integrated enterprise could be established by common proof. At the class certification stage, the Court determined that the Defendants’ arguments went to the merits of the Plaintiffs’ claims and did not compel denial of the Plaintiffs’ motion.  The Court found that each of the Plaintiffs’ class claims were subject to common proof, that the Plaintiffs’ injuries were typical of the class, and that the Plaintiffs and their counsel were adequate to serve as class representative and class counsel.  Importantly, the Court reached this conclusion despite Defendants’ introduction of compliant policies and procedures relating to these wage & hour claims.

Key Takeaways

There are thousands of state-licensed cannabis operators in California, a state known for its ubiquitious wage & hour litigation, and thousands more across the 38 states in the US that have legalized cannabis for medical and/or adult-use purposes.  As the cannabis industry continues to mature and evolve, wage & hour class actions are likely to become more frequent in the cannabis industry, just as they have grown in other industries.  It is crucial that employers ensure that they follow federal and state wage & hour laws and provide their employees with complaint policies and procedures.  Arbitration agreements with class waivers also should be provided to each employee in states where applicable.  This becomes even more crucial in the cannabis space, where brands are expanding due to a high volume of M&A transactions and market consolidation.  Cannabis companies should continue to be cognizant of the strict wage & hour regulations in their states as the industry continues to grow.

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

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