Duane Morris Takeaways: The American Tort Reform Association (“ATRA”) annually publishes its “Judicial Hellholes Report,” focusing on litigation issues and identifying jurisdictions likely to have unfair and biased administration of justice. The ATRA recently published its 2024-2025 Report and one of the top-ranking states from 2023 maintained its #1 position for 2024 – Pennsylvania, specifically the Pennsylvania Supreme Court and the Philadelphia Court of Common Pleas – as the most challenging venue for defendants. Readers can find a copy here and the executive summary here.
The Judicial Hellholes Report is an important read for corporate counsel facing class action litigation because it identifies jurisdictions that are generally unfavorable to defendants. The Report defines a “judicial hellhole” as a jurisdiction where judges in civil cases systematically apply laws and procedures in an unfair and unbalanced manner, generally to the disadvantage of defendants. The Report is a “must read” for anyone litigating class actions and making decisions about venue strategy.
The 2024 Hellholes
In its recently released annual report, the ATRA identified 10 jurisdictions on its 2024 hellholes list – which, in order, include: (1) Pennsylvania (especially in the Philadelphia Court of Common Pleas and the Supreme Court of Pennsylvania); (2) New York City (with unique state laws and lawsuit abuses); (3) South Carolina (particularly due to a bias against corporate defendants in asbestos litigation); (4) George (tied for #1 in 2023, the state has seen nuclear verdicts and endless liabilities for defendants); (5) California (with a huge overall volume of lawsuits, huge verdicts, Private Attorney General Act (PAGA) litigation, lemon law litigation, and high-stakes environmental litigation); (6) Cook County, Illinois (with no-injury claims filed under the state’s Biometric Information Protection Act (BIPA) and being a hotbed for asbestos litigation); (7) St. Louis, Missouri (with focuses on junk science in the courtrooms and nuclear verdicts); (8) the Michigan Supreme Court (particularly due to liability-expanding decisions and pro-plaintiff legislative activity); (9) King County, Washington (a first appearance on the list due to trial courts conducting unfair group trials, allowing junk science into evidence, and swapping to other state laws when favorable to plaintiffs); and (10) Louisiana (with long-running costal litigation and nuclear verdicts against defendants).
According to the ATRA’s analysis, these venues are less than optimal for corporate defendants and often attract plaintiffs’ attorneys, particularly for the filing of class action lawsuits. As a result, corporate counsel should take particular care if they encounter a class action lawsuit filed in one of these venues.
The 2025 “Watch List”
The ATRA also included one jurisdiction on its “watch list” — the Texas Court of Appeals for the Fifth District, which had three noteworthy decisions overturned by the Texas Supreme Court that would have expanded liability to defendants. The ATRA emphasized the need for oversight of this appellate court to ensure that it does not deviate from Texas precedent.
The 2025 “Dishonorable Mentions”
The ATRA included a few jurisdictions on its “dishonorable mentions” list, for making unsound decisions, engaging in abusive practices, or other actions that “erode the fairness of a state’s civil justice system.” The venues on the list include the Maryland Supreme Court, following a ruling which rejected a higher standard for expert evidence; Tennessee, as a new hotspot for abusive Americans with Disabilities Act Litigation; and Illinois courts where asbestos claims remain prevalent.
Points Of Lights
In addition, the ATRA recognized that several jurisdictions made significant positive improvements this year, highlighting decisions by the Third Circuit, which ruled that lawsuits alleging insufficient warnings on product labels, even with federal approval, cannot proceed; the Kentucky Court of Appeals, which overturned a previous problematic ruling for defendants; and the Utah Supreme Court, which upheld the state’s statute of repose for medical liability lawsuits.
Implications For Employers
The Judicial Hellholes Report often mirrors the experience of companies in high-stakes class actions, as Pennsylvania, New York, South Carolina, Georgia, California, Illinois, Missouri, Michigan, Washington, and Louisiana are among the leading states where plaintiffs’ lawyers file class actions. These jurisdictions are linked by class certification standards that are more plaintiff-friendly and more generous damages recovery possibilities under state laws.
Duane Morris Takeaway:This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Gregory Tsonis with their discussion of a proposed rule from the U.S. Department of Labor (“DOL”), entitled “Employment of Workers With Disabilities Under Section 14(c) of the Fair Labor Standards Act,” that would put an stop to the issuance of new certificates that allow employers to pay workers with disabilities a subminimum wage.
Jennifer Riley: Thank you for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is Greg Tsonis. Thank you for being on the podcast, Greg.
Greg Tsonis: Welcome, Jen, glad to be here.
Jennifer: So, big news this week from the U.S. Department of Labor. It has announced a major move to end the ability of employers to pay workers with disabilities below the federal minimum wage. This has been in the works for a while, though, right Greg?
Greg: Yes, it’s definitely been a long time coming. So, this rule is aiming to end the use of Section 14(c) of the Fair Labor Standards Act, the FLSA, which has allowed employers to pay workers with disabilities below the federal minimum wage way back since the 1930s, actually. So, this new proposal would stop the issuance of new certificates under that provision and existing employers with those certificates would have up to three years to phase out paying subminimum wages.
Jennifer: Right. I think a lot of people are surprised to see this move happening now, especially since it’s coming at the end of President Biden’s administration. What does the timeline look like for this rule?
Greg: Yeah, good question. So right now, the rule is in the proposed stage. So there’s a comment period that just started and runs through January 17th of next year. We’ll be hearing a lot of feedback from various stakeholders in that time. After that, the next steps will be determined, based on the comments that are received and what they say. But here’s the kicker – since it’s so close to Inauguration Day, it’s likely that the next administration will have a big role in finalizing that rule.
Jennifer: That’s right. And as we saw with some other issues under Biden’s administration, regulations like this can face challenges, especially if they come out toward the end of a presidency. But the push to end this practice has been building for a while, wouldn’t you say?
Greg: Absolutely. So, this is actually one of the farthest steps the federal government has taken to end Section 14(c). Democrats have been trying to get rid of it for years with legislation like Raise the Wage Act and the transformation to Competitive Integrated Employment Act. Both are still pending. But the platform for the Democratic party, both in 2020 and in 2024, has included a commitment to end subminimum wages for people with disabilities, and even some Republicans have backed this idea, especially in the Senate.
Jennifer: That’s true. Speaking of lawmakers, we have seen varying amounts of support. There was a pretty positive reception from some key figures in the Republican side as well as in the Democrat side. For instance, Representative Bobby Scott praised the announcement, calling it a step toward fairness. He made it clear that all workers, regardless of disability, should be treated with dignity and receive at least the minimum wage.
Greg: Exactly. He’s been an advocate for this for a long time, and his comments really emphasize the broader shift toward equality in the workforce. Democratic Senator Patty Murray also weighed in saying that paying workers with disabilities less than the minimum wage is discriminatory, and that this rule is a major step toward better economic outcomes for people with disabilities.
Jennifer: Right. But, as to be expected, there’s also pushback from some lawmakers going the other way. Republican Representative Virginia Foxx, for instance, was pretty vocal against the rule. She called it misguided and irresponsible, saying that the 14(c) program actually protects job opportunities for individuals with disabilities. She even pointed out that in states where the program was phased out, many workers ended up jobless or even isolated.
Greg: Yes, and that’s a real concern for some. Representative Foxx and others argue by eliminating 14(c), you could have unintended consequences. They believe that the program has helped individuals with disabilities gain employment in a way that would be difficult in a competitive market. Some critics are worried that this change could lead to job loss and greater social isolation for those workers who rely on these programs.
Jennifer: Right. It’s definitely a tough issue with strong opinions on both sides. But if the rule does go through, it could be a big shift in the rights and protections for people with disabilities. The government has already taken steps to end subminimum wage for federal contractors, and some states have banned it, too. So, it’s clear that momentum is building to move away from this practice.
Greg: Yeah, it’s been a major point of debate for years, and with the public comments coming in now, we’re likely to see even more perspectives emerge. There are certainly valid concerns about the potential impact on job opportunities. But at the same time, we’ve seen a shift in how workers with disabilities are treated in the broader workforce. Ending subminimum wage could create more opportunities for integration and fair pay.
Jennifer: It will definitely be interesting to see how this plays out with the comment period and potential changes from the next administration. There’s a lot of uncertainty about how quickly this rule will become a reality. But it’s definitely something to watch closely.
Greg: For sure, it’s a defining issue for both the disability rights community and the broader workforce, and whichever way it goes, it will have lasting implications for how workers with disabilities are treated in the job market. The next few months will be crucial in shaping that future.
Jennifer: Thanks, Greg, for breaking this down. It’s certainly going to be a topic that gets a lot of attention over the coming months. We will be sure to keep our listeners updated. Thanks for being here today, Greg, and thank you to everyone in the audience for tuning in.
Greg: Thanks for having me, Jen, and thank you to the listeners.
Duane Morris Takeaway: Happy Holidays to our loyal readers of the Duane Morris Class Action Defense Blog! Our elves are busy at work this holiday season in wrapping up our start-of-the-year kick-off publication – the Duane Morris Class Action Review – 2025. We will go to press in early January and launch the 2025 Review from our blog and our book launch website.
The 2025 Review builds on the success of our previous editions and represents our twentieth annual study of the class action space. At over 600 pages, the 2025 Review has more analysis than ever before, with discussion of over 1,250 class certification rulings from federal and state courts over this past year. The Review will be available for download as an E-Book too.
The Review is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America, including the substantive areas of antitrust, appeals, the Class Action Fairness Act, civil rights, consumer fraud, data breach, EEOC-Initiated and government enforcement litigation, employment discrimination, the Employee Retirement Income Security Act of 1974, the Fair Credit Reporting Act, labor, privacy, procedural issues, product liability and mass torts, the Racketeer Influenced and Corrupt Organizations Act, securities fraud, state court class actions, the Telephone Consumer Protection Act, wage & hour class and collective actions, and the Worker Adjustment and Retraining Notification Act. The Review also highlights key rulings on attorneys’ fee awards in class actions, motions granting and denying sanctions in class actions, and the top-class action settlements in each area. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2025.
We are humbled and honored by the recent review of the Duane Morris Class Action Review – 2024 by Employment Practices Liability Consultant Magazine (“EPLiC”) – the review is here. EPLiC said, “The Duane Morris Class Action Review is ‘the Bible’ on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.” EPLiC continued, “The review is a must-have resource for in-depth analysis of class actions in general and workplace litigation in particular. The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting corporate America and provides insight as to what companies and corporate counsel can expect in terms of filings by the plaintiffs’ class action bar and government enforcement agencies like the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”
We look forward to providing the 2025 edition of the Review to all our loyal readers in early January. Stay tuned and Happy Holidays!
Duane Morris Takeaways: Jennifer A. Riley, the Vice-Chair of the Duane Morris Class Action Defense Group recently spoke at 21st National Class Action Conference organized by the Barreau du Québec (Québec Bar Association). As the sole guest presenter from the United States on employment class actions, she spoke on cross-border class action defense strategies.
This week I had the pleasure of speaking at the Colloque national sur l’action collective, the National Class Action Conference in Montreal, Quebec.
The conference was the 21 National Class Action Conference organized by the Barreau du Québec (Québec Bar Association) and was held on November 27 and 28 at the Palais des congrès de Montréal.
One of the largest international conferences on class actions, the event brought together nearly 60 speakers and moderators from Canada, the United States, and Europe.
The Conference
The organizers compiled a wide range of knowledge and experience on cutting edge class action topics, including recent trends, emerging issues, and the proliferation of industry-wide class actions.
The presenters covered the latest developments in class action trends across Canada, the United States, and Europe. They discussed trends and legal developments in consumer, privacy, and employment class actions, and reviewed the growth of AI class actions, which have exploded in terms of filings from 2021 (2 filings) to 2024 (32 filings).
I had the pleasure of discussing developments on the employment class action front and providing a sneak peek at 2024 filing, settlement, and certification numbers.
Class Action Trends
In terms of overall settlement numbers, in 2023, the largest settlements across all substantive areas of class actions in the U.S. totaled more than $51.4 billion. In 2024, settlements are on track to exceed $37 billion, representing a continued use of the class action mechanism to effective a massive redistribution of wealth.
Plaintiffs’ success on the certification front is continuing to fuel this trend. In 2023, plaintiffs certified class actions at high rates by winning 324 out of 451 rulings (72%). In the employment space, such numbers were equally high, as plaintiffs converted 82% of rulings in the ERISA space, prevailed on 75% of motions for conditional certification of FLSA collective actions, and prevailed on 50% of certification rulings in discrimination class actions.
In 2024, the numbers remain plaintiff-friendly. So far in 2024, we have logged 363 decisions of U.S. courts on motions for class certification. Courts have granted 232 of those motions, for a certification rate of 64%. Although the overall rate might trend down from 2023, the 2024 numbers are showing more consistency across substantive areas.
In the employment space, plaintiffs’ success on certification motions has surpassed the 2023 numbers. So far in 2024, plaintiffs have prevailed on 81% of rulings on motions for FLSA conditional certification, 80% of rulings on motions to certify WARN classes, 67% of motions to certify ERISA classes, and 53% of motions to certify discrimination classes.
Conclusion
Overall, the conference presented a one-of-a-kind opportunity to share class action experiences and knowledge across jurisdictions. It provided a unique look at the areas of consistency in terms of the focus of the plaintiffs’ class action bar across jurisdictions and an interesting overview of the deviations the plaintiffs class action bar has implemented as it has molded to the unique contours of the prevailing laws across jurisdictions.
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik
Duane Morris Takeaway: Thank you to all the loyal blog readers and followers who joined us last week for our Year-End EEOC Strategy And Litigation Review webinar! In this 30-minute program, Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik analyzed the enforcement lawsuit filings in the Commission’s fiscal year 2024, discussed the EEOC’s latest strategic priorities, and provided insights into how the 2024 presidential election could transform the agency’s operations and directives going into 2025.
If you were unable to attend the webinar, it is now available on our podcast channel. Click to watch below and stay tuned for important EEOC trends and developments throughout the year.
Duane Morris Takeaways: The Trial Lawyers of Mass Torts (TLMT) – an organization of plaintiffs’ class action lawyers – hosted their annual educational conference this week in Cabo, Mexico. TLMT invited Gerald L. Maatman, Jr. of Duane Morris, the co-author of the Annual Class Action Review, as one of the sole representatives of the class action defense bar to provide defendant-side perspectives on class action and mass tort litigation.
The TLMT brings together top practitioners on both sides of the bar as well as the judiciary to tackle contemporary issues in complex litigation, focusing on class actions and mass torts. The conference featured numerous prominent federal judges who handle leading MDL proceedings and class actions, including Judge Charles Breyer, Northern District of California, Judge Karen Caldwell, Eastern District of Kentucky, Judge Edward Chen, Northern District of California, Judge Vince Chhabria, Northern District of California, Judge Jacqueline Corley, Northern District of California, Judge James Donato, Northern District of California, Judge Nancy Rosenstengel, Southern District of Illinois, Judge David Proctor, Northern District of Alabama, Judge Richard Seeborg, Northern District of California, Judge Jane Milazzo, Eastern District of Louisiana, and Judge Joy Flowers Conti, Western District of Pennsylvania. In addition, Judges Amul Thapar and Rachel Bloomekatz of the U.S. Court of Appeals for the Sixth Circuit gave presentations.
The opening sessions focused on mass tort claims brought in MDL’s and cutting-edge class actions for data breaches and privacy violations.
I had the honor and privilege of speaking on the class action developments panel that included Judge Beth Freeman and Judge Rita Lin of the U.S. District Court of the Northern District of California and Judge Kenly Kiya Kato of the U.S. District Court for the Central District of California. Our panel addressed a wide variety of cutting-edge class action issues running the gamut from standing to settlements, and experts to arbitration.
Standing Issues
The requirement of a named plaintiff to possess legal standing often rears its head early on in a class action. The stakes can be high and case determinative, and also impact selection of forum considerations (e.g., where a motion to dismiss for lack of standing results in the remand of the class action to state court). The Judges further pointed out that standing can impact case management issues and the scope of discovery, which are important to companies due to the sheer size of class actions and the costs to defend them. Interestingly, the Judges opined that bifurcation of discovery into a class certification stage and a merits stage – while previously popular in the class action space – has largely fallen out of favor as a viable case management tool.
Settlements
Rule 23 requires courts to pass on and approve settlements. The Judges remarked that precertification settlements are more difficult to adjudicate but remain a viable exit ramp for many class actions.
The Judges agreed with my commentary on how the approach to settlement issues – especially for pre-certification settlements – is one of the most widely-varying areas from judge-to-judge and venue-to-venue in terms of judicial decision-making. Like buying real estate, “location, location, and location” means everything in terms of the way settlements are approached from a case law standpoint, which vary in state and federal courts and with respect to the pertinent case law in each location.
Experts & Certification
The Judges agreed that expert testimony is often the most crucial factor in the certification battle. The costs can be immense, but a win or loss on class certification can represent monetary exposure (or a lost opportunity) of substantial economic benefit (or loss). In sum, the stakes are exceedingly high and scrimping on expert fees may be short-sighted.
Arbitration
The Judges had interesting views on the interrelationship of arbitration and class action litigation. While the statistical findings of our Duane Morris Annual Class Action Review – 2024 demonstrate that corporate defendants won motions to compel arbitration (of class action claims on an individual basis) at a rate of 66% over the past year, nearly a third were denied – and often for a multitude of reasons. The Judges agreed on the high-stakes nature of such motions and how case-specific facts drive the extent to which discovery should be allowed on key factual and legal disputes over arbitration agreements. They also observed how mass arbitration has “weaponized” arbitration programs in certain situations where arbitration has virtually replaced Rule 23 as a method for adjudication of large-scale disputes or in situations involving hundreds or thousands of claimants.
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex Karasik
Mark your calendars for our bi-annual program analyzing the latest EEOC developments: Friday, November 22, 2024 from 11:00 a.m. to 11:30 a.m. Central. Reserve your virtual seat for the program here.
Join Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik for a live panel analyzing the EEOC’s latest strategic priorities and the agency’s lawsuit filings in fiscal year 2024. Our virtual program will empower corporate counsel, human resource professionals, and business leaders with key insights into the EEOC’s latest enforcement initiatives and provide strategies designed to minimize the risk of drawing the agency’s scrutiny.
Earlier this year we published the second edition of the Duane Morris EEOC Litigation Review – 2024, an essential desk reference on EEOC-initiated litigation that can be viewed on any device, and is fully searchable. The Review analyzes the impact of the EEOC’s six enforcement priorities as outlined in its Strategic Enforcement Plan on employers’ business planning and how the direction of the Commission’s Plan should influence key employer decisions. Bookmark or download the EEOC Litigation Review – 2024 here.
Duane Morris Takeaway:This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates Gregory Slotnick and Nicolette Zulli with their analysis of a recent ruling issued by a New York Federal Court yet again denying a request to approve a settlement between the EEOC and a union that would have ended a decades-old EEOC race discrimination suit.
Learn more and register for our Year-End EEOC Strategy And Litigation Review webinar here.
Episode Transcript
Jerry Maatman: Thank you, loyal blog readers and listeners, for joining us on this episode of the Class Action Weekly Wire. I’m joined by my colleagues, Nico Zulli and Greg Slotnick, who are here to talk today about a most interesting consent decree and settlement approval process. Welcome to the show.
Gregory Slotnick: Thanks very much, Jerry. It’s great to be here.
Nicolette Zulli: Thanks so much, Jerry. Nice to join you.
Jerry: We’re going to talk today about a lawsuit that’s one of the longest running lawsuits in the federal court system. It’s still in the federal courts, and it was filed in 1971 – it’s a case involving employment discrimination. Both the EEOC and the defendant in the case appeared in federal court in New York, in the Southern District of New York on November 6, and sought settlement approval with respect to the ongoing nature of the consent decree, Greg, can you tell us a little bit about the background of the litigation and how it’s come to pass and run since 1971?
Gregory: Absolutely, Jerry. Just a few years ago the case was filed – as you mentioned, the dispute started in 1971, when the United States sued Local 580 of the International Association of Bridge, Structural, and Ornamental Ironworkers alleging that an apprenticeship program that it ran, titled the Joint Apprentice-Journeymen Educational Fund of Ironworkers Local 580, which I’ll refer to as AJEF, and Allied Building Metal Industries, an association of metalworking companies that employ Local 580 Union members in New York City, discriminated against applicants on the basis of their race in violation of Title VII of the 1964 Civil Rights Act. So in 1974, exactly 50 years ago, the EEOC was substituted in for the United States as the plaintiff in the case.
As a result of the litigation, the EEOC entered into a consent decree with the defendants back in 1978 to resolve the Commission’s claims and the consent decree was thereafter approved by the court. 10 years later, Local 580 and AJEF were found in contempt of the consent decree, and remedial orders were entered to enforce compliance. These remedial orders included, among other things, appointment of a special master, new rules related to job referrals, the development of a new information tracking system, and some other record keeping requirements. The court entered another remedial order in an attempt to ameliorate the racial disparity in working hours, further revised Local 580’s job referral system, and require its contractors to make at least 65% of their new hires through this new system.
Jerry: Thanks, Greg, that’s a great overview. It sounds to me it’s very much like modern-day EEOC consent decrees. I have a lot of experience in negotiating those that run the gamut in terms of obligations and duties of employers across the board in terms of human resource issues. Nico, what happened in terms of compliance here, and how did the parties find themselves back in court before the judge?
Nicolette: Well, the parties did not comply. Two decades later, in 2011, the court issued its most recent contempt order against the union for failure to adhere to the court-mandated system. Thereafter, the court again rejected the parties’ joint motion to provide adequate information, and the parties subsequently filed a joint motion in June 2023 requesting approval of a proposed consent decree that would wind down the court supervision of the parties’ obligations, and thereafter terminate judicial oversight of the defendants after a three-year period.
Jerry: It’s really interesting – many people think, I believe mistakenly, that getting approval of a consent decree or a class action settlement agreements like a rubber stamp. It’s anything but that. In this case, the judge in the Southern District of New York, Judge Lewis Kaplan, issued one of the strongly-worded orders I’ve ever read in terms of denying entry of the consent decree on November 6, in terms of the parties’ compliance, or lack thereof. What sort of problems did Judge Kaplan identify?
Nicolette: So, Jerry, the judge denied the second joint motion for largely the same reasons that it denied the first joint motion for approval of the consent decree. Namely, because of (1) the parties’ failure to provide the data underlying employment opportunities for Black and Hispanic union members, and then (2) the lack of detailed accounting of the parties’ efforts to achieve proportionate working hours. The court went on to state its belief that, based on the parties’ recent filings as part of their second joint motion for approval, the data and information in question do not exist at all. The court dispatched with the parties’ expert testimony, observing that the expert had only used data after June 19th of 2018, despite the fact that his report was meant to analyze a decade-long period from 2009 to 2019. Further, according to the court, the expert witness attempted to use incomplete data from a source other than the union’s own records. However, the expert concluded that even this data contained “critical limitations” and could not provide “any meaningful value” to his report. Accordingly, the court held that “one year of partial data is not sufficient to justify a conclusion that defendants and contractors no longer discriminate against Black and Hispanic Union members and now are committed to providing them with equal employment opportunities.” So, indeed, this is particularly true given the long and well-documented history of discrimination by the defendants, as well as the existence of current evidence suggesting that Black and Hispanic workers still are not receiving the same hours of work as other union members.
Gregory: Thanks, Nico, and not only that the court was also critical of the parties’ attempt to dispute whether the court’s previous order placed an affirmative obligation on Local 580 to address the hours disparities between its minority and non-minority members, the court concluded that, based on the clear order of the text, defendants were obligated to work proactively to ensure proportionate employment opportunities for those Black and Hispanic union members. The court also added that, it “will not reward defendants for their apparent indifference to minority workers and to the law by entering into a less stringent regime with the aim of winding down any and all supervision in only three years.” So, obviously the court was not happy with the way that this was going.
The court also concluded that by stating that approval of the proposed consent decree would harm the public interest, since the existing orders “can produce the desired results if adequately pursued,” and it also concluded that “entry of the Proposed Consent Decree – which would decrease oversight and reduce the obligations imposed upon defendants known to be in violation of Court orders and demonstrably unwilling to eradicate racial disparities – would disserve the public interest.”
Jerry: I’m a student of history, and it seems remarkable to me that Richard Nixon would have been sitting in the White House at the time that this litigation started, and that the Allies invaded Europe on D-Day, and it took them a year to plan that – and here we’re 50 years into this litigation. What are the takeaways for employers that are facing consent decrees or facing class action settlement agreements that federal court judges have the power to review, approve, and manage?
Nicolette: To your earlier point, Jerry, while it may strike, you know, an employer initially as sort of a rubber stamp issue – it’s certainly this case illustrates that it’s not, and this case, furthermore, illustrates the risks employers face when they fail to comply with court-mandated record-keeping requirements in connection with EEOC consent decrees, and the possible longevity of these consent decrees in the event the court is not satisfied, as was the case here, with compliance and enforcement of the same. The court stated that perpetual oversight is normally disfavored, but still necessary if the parties fail to comply with the court’s express orders.
Gregory: I think that employers and businesses should definitely heed the court’s warning and ensure that relevant data and information that applies to analyzing potential discrimination of any kind is collected and preserved in the normal course of business, regardless of litigation. I think companies should apply this principle also, regardless of whether or not they’re subject to a court order or any other oversight for compliance with practices that are required to fight against and eliminate discrimination. I think the case also serves as a critical reminder that when an agency files a lawsuit in federal court – as you said, Jerry – the parties can’t, just, you know, simply agree on their own to settle claims. And it’s not just a rubber stamp, it really does have meaning. So, this is especially so where defendants time and time again fail to abide by the court’s orders. And then, as this litigation demonstrates, federal judges really have a ton of patience, including decades of it, for some of them to ensure that litigants actually adhere to these mandated requirements in order to justify dismissal.
Jerry: Thanks to your observations and thought leadership in this space. It strikes me that it’s like a contract, and the federal judge is there to make sure it’s enforced and abided by, and all the i’s are dotted, and all the t’s are crossed. Well, thank you, loyal blog readers, for joining us for this installment of the Class Action Weekly Wire. And please mark your calendars for Friday, November 22, when we have our annual EEOC webinar for all things involving the litigation enforcement program of the Commission. Thanks so much, Nico, thank you, Greg, for joining us this week.
Gregory: Absolutely, thanks so much for having me, Jerry. It was great to be on the pod, and, thanks to all the loyal listeners.
Nicolette: Thanks so much, Jerry, and, thanks to the listeners.
By Gerald L. Maatman, Jr., Gregory S. Slotnick, and Christian J. Palacios
Duane Morris Takeaways: On November 6, 2024, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York once again denied a request to approve a settlement between the U.S. Equal Employment Opportunity Commission (“EEOC” or the “Commission”) and a union that would have ended a fifty-three (53) year old race discrimination lawsuit. In a strongly-worded opinion, the Court found that, despite a number of approval requests, the parties still could not provide it with data necessary to demonstrate that race-based hiring and employment disparities (concerning Black and Hispanic union members) had been eliminated. The case, captioned EEOC v. Int. Ass’n of Bridge Structural and Ornamental Ironworkers Local 580 et al., Case No. 71 Civ. 2877, 2024 U.S. Dist. LEXIS 202057 (S.D.N.Y. Nov. 6, 2024), is significant because it illustrates the importance of complying with recordkeeping requirements and other court-mandated activities in consent decrees, as well as the potential consequences for failure to do so. In the event an employer and, as applicable, a union or group of plaintiff-employees, are unable to convince the court that they are meeting their obligations under a consent order, even the Commission’s support may be unsuccessful in convincing a court to end longstanding court-supervision of agreed-upon remedial measures.
Case Background
In 1971, the United States sued Local 580 of the International Association of Bridge, Structural, and Ornamental Ironworkers (“Local 580”), alleging that an apprenticeship program that it ran, titled the Joint Apprentice-Journeymen Educational Fund of Ironworkers Local 580 (“AJEF”), and Allied Building Metal Industries (“Allied”), an association of metalworking companies that employ Local 580 members in New York City, discriminated against applicants on the basis of their race, in violation of Title VII of the 1964 Civil Rights Act. Id. at *1. In 1974, the EEOC was substituted for the United States as plaintiff. Id. at *2.
As a result of the litigation, the EEOC entered into a consent decree with the defendants in 1978 to resolve the Commission’s claims, and the consent decree was thereafter approved by the Court. Id. Ten years later, Local 580 and AJEF were found in contempt of the consent decree, and remedial orders were subsequently entered to enforce compliance, requiring, inter alia, appointment of a special master, new rules related to job referrals, the development of a new “information tracking system” and certain other recordkeeping requirements. Id. at *3. In 1991, the Court entered another remedial order in an attempt to ameliorate the racial disparity in working hours, further revise Local 580’s job referral system, and require its contractors to make at least 65% of their hires through the new system. Id. Two decades later, in 2011, the Court issued its most recent contempt order against the union for failure to adhere to the court-mandated system. Id. In a joint motion filed by the parties in June 2023 (shortly after the Court rejected the parties’ initial joint motion filing for failure to provide adequate information), the defendants and the EEOC requested approval of a proposed consent decree that would wind down the Court’s supervision of the parties’ obligations, and thereafter terminate judicial oversight of defendants, after a three-year period. Id. at *6.
On November 6, 2024, U.S. District Judge Lewis A. Kaplan penned a strongly-worded order denying the parties’ motion.
The Court’s Ruling
The Court began its analysis by confirming its denial of the parties’ second joint motion for largely the same reasons that it denied the first joint motion for approval of the consent decree; namely because of: (1) the parties’ failure to provide the data underlying employment opportunities for Black and Hispanic union members, and (2) the lack of detailed accounting of the parties’ efforts to achieve proportionate working hours. Id. at *9-10. The Court also stated its belief that based on the parties’ recent filings as part of their second joint motion for approval, the data and information in question do not exist. Id. at *10.
The Court dispatched with the parties’ expert testimony, observing that the expert had only used data after June 19, 2018, despite the fact that his report was meant to analyze a decade-long period, from 2009 to 2019. Id. at *11-12. Further, according to the Court, the expert witness attempted to use incomplete data from a source other than the union’s own records; however, the expert concluded that even this data contained “critical limitations” and could not provide “any meaningful value” to his report. Id. at *12.
Accordingly, the Court held that “one year of partial data is not sufficient to justify a conclusion that defendants and contractors no longer discriminate against Black and Hispanic union members and now are committed to providing them with equal employment opportunities. Indeed, this is particularly true given the long and well-documented history of discrimination by defendants, as well as the existence of current evidence suggesting that Black and Hispanic workers still are not receiving the same hours of work as other union members.” Id. at *14. The Court was also critical of the parties’ attempt to dispute whether the Court’s previous Order placed an affirmative obligation on Local 580 to address the hours disparities between its minority and non-minority members, concluding that based on the clear text of the Order, defendants were obligated to work proactively to ensure proportionate employment opportunities for Black and Hispanic members. Id. at *17-18. The Court added that it “will not reward defendants for their apparent indifference to minority workers and to the law by entering into a less stringent regime with the aim of winding down any and all supervision in only three years.” Id. at *24.
Finally, the Court concluded that approval of the proposed consent decree would harm the public interest since the existing orders “can produce the desired results if adequately pursued” and “entry of the Proposed Consent Decree — which would decrease oversight and reduce the obligations imposed upon defendants known to be in violation of Court orders and demonstrably unwilling to eradicate racial disparities — would disserve the public interest.” Id. at *28.
Implications for Employers
Given the age of this case, it is possible that by the time the Commission and Local 580 successfully petition the Court for approval, this will have been one of the longest-lasting consent decrees in the Commission’s history and American jurisprudence. This litigation is already over half a century old, and the Court’s ruling makes clear that the parties still have much more work to do before it will grant their requested wind-down of judicial oversight. This case illustrates the risks employers face when they fail to comply with court-mandated record-keeping requirements in connection with EEOC consent decrees, and the possible longevity of these consent decrees in the event the Court is not satisfied with compliance and enforcement of same.
As the Court noted, although “[p]erpetual court oversight is to be disfavored…[t]he case at hand…presents a situation where, despite repeated claims that the need for judicial oversight is gone, the Parties have admitted to continued and persistent racial disparities.” Id. The Court here pointed directly to the parties’ failure to abide by its express orders to collect relevant data for purposes of analyzing progress and compliance, and held that without this data, “the Parties have failed to show that the racial discrimination which first gave rise to the need for court oversight has been eliminated…”. Id. at *28-29.
Employers and businesses should heed the Court’s warning and ensure relevant data and information applicable to analyzing potential discrimination of any kind is collected and preserved in the normal course of business. Companies should apply this principle regardless of whether or not the company is already subject to a court order or any other oversight for compliance with practices required to fight against and eliminate discrimination. The case also serves as a critical reminder that once an agency files a lawsuit in federal court, the parties may not be able to simply agree on their own to settle claims, especially where defendants fail to abide by the Court’s orders. As this litigation demonstrates, federal judges have ample patience – decades of it – to ensure litigants adhere to mandated requirements justifying dismissal.
Duane Morris Takeaway:This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman, special counsel Justin Donoho, and associate Ryan Garippo with their analysis of a recent ruling issued by the Supreme Judicial Court of Massachusetts dismissing plaintiffs’ wiretap claim in an advertising technology (“adtech”) class action, providing corporate defendants with a welcome beacon in the recent influx of adtech class action litigation.
Jerry Maatman: Thank you everyone for being here for the next episode of our weekly podcast series, the Class Action Weekly Wire. I’m Jerry Maatman of Duane Morris and joining me today are Justin and Ryan, my colleagues, to discuss all things class action. Thanks so much for being on the podcast this week.
Justin Donoho: Thanks, Jerry. Great to be here.
Ryan Garippo: Thanks for having me, Jerry.
Jerry: Today we wanted to talk about a recent ruling that’s been making the rounds in the legal media in the wake of exploding advertising technology, or something known as “adtech”, class actions. These are cases being filed across the country in both federal and state court, and invoking both criminal and civil, federal and state wiretap laws and provisions, and seeking millions, if not billions, of dollars in damages of civil remedies in class actions. Plaintiffs nationwide are filing these types of lawsuits, alleging that Meta Pixel, Google Analytics, and other similar software embedded in defendants’ websites secretly capture a browser’s data and send it to Meta, Google, or other online advertising agencies. Justin, I know that you’re focused very much on adtech and litigation in this space – tell us a little bit about the boom in this sort of legal claim.
Justin: Yeah, this adtech software is a common feature on millions of corporate, governmental, and other websites today – over 10 million. In adtech class actions, the main event is often a claim brought under a federal or state wiretap act, a consumer fraud act, or the Video Privacy Protection Act, because that is what enables plaintiffs to seek millions and billions of dollars in statutory damages, even for midsize companies, on the theory that hundreds of thousands of website visitors, times $10,000 per claimant in statutory damages under the Federal Wiretap Act, for example, equals billions. Plaintiffs have filed the bulk of these types of lawsuits to date against healthcare providers, but they have filed suits against companies that span nearly every industry – including retailers, consumer products, and universities. Several of these cases have resulted in multi-million dollar settlements, several have been dismissed, and the vast majority remain undecided.
Jerry: Well, it seems to follow that mantra of the plaintiff’s bar to file the case, certify the case, and then monetize it, and haul down millions of dollars in damages in across-the-board massive settlements. But today we wanted to talk about what seems to be a ray of light, a helpful decision from the state of Massachusetts, in a case called Vita, et al. v. New England Baptist Hospital. Ryan, could you share with our listeners and readers the background on the Vita case?
Ryan: Absolutely, Jerry. So in Vita, the plaintiff brought suit against the hospital. According to the plaintiff, the hospital installed Meta Pixel and Google Analytics on its public-facing website, and the installation of that technology transmitted information to Meta and Google allegedly without the plaintiff’s consent, including the title and URL of the hospital pages that the plaintiffs visited, any hospital department that she selected, any search terms she entered, filtering criteria – particularly where she used the “Find a Doctor” webpage and whether or not she navigated to the hospital’s patient portal. Although, just to be clear, the contents of the records or the communications within that portal were not alleged in the complaint. Based on these allegations, the plaintiff claimed that the hospital aided Meta and Google to intercept her communications in violation of the Massachusetts Wiretap Act. The hospital moved to dismiss, arguing that the interactions with the hospital’s website did not fall within the meaning of “wire communication[s]” protected by the Massachusetts statute. The trial court denied that motion and sent it directly to the Massachusetts Supreme Judicial Court, which accepted the direct appeal.
Jerry: What were the stakes before the Massachusetts High Court – in terms of if the trial court’s ruling in favor of the plaintiff stood – what could the plaintiffs hope to gain in a case like this?
Ryan: Well, the Massachusetts Wiretap Act makes it a crime to commit an interception, meaning secretly here record or aid another in secretly hearing or record the contents of any oral or wire communication. And because violators are punishable by a fine of up to $10,000, imprisonment for up to 5 years, or a combination of fines and imprisonment, the Massachusetts Wiretap Act gave plaintiffs a private right of action for any aggrieved person. Pretty substantial damages – each civil claimant is entitled to statutory damages of “$100 per day for each violation or $1,000, whichever is higher.”
Jerry: Seems like the stakes were very high. What did the highest court of Massachusetts ultimately rule in terms of this cause of action and whether or not it was viable in a class action setting?
Justin: The Supreme Judicial Court ultimately agreed with the hospital, and ordered dismissal of the plaintiffs’ wiretap claim. The plaintiff contended that the meaning of “communication” under that statute is broad enough to encompass all interactions with the hospital’s websites when those websites were visited by her, and an alleged class of other website visitors. The Supreme Judicial Court held that “the statutory term ‘communication’ is ambiguous as applies to the web browsing activities allegedly intercepted” and neither the plain text of the statute, nor dictionary definitions make clear whether “communication” includes that, rather the legislative history, they said, was concerned with a different type of surveillance. Namely, one to one telephone lines trying to intercept – back in 1968, when the statute was created. So, the court ultimately applied the rule of lenity, finding that the statutory term was ambiguous – it emphasized that throughout its entire opinion, and ultimately that was the basis for its decision, the rule of lenity, because this is a criminal statute, and so the tie basically goes to the person who’s going to be punished with these severe penalties.
Jerry: Seems like this is a very powerful precedent for the defense bar in terms of the antidote, and a viable argument to try and take down these adtech class actions. What do you see as the future here, Ryan, in this particular space?
Ryan: I think that’s right, Jerry. Right now, there are hundreds of adtech class actions featuring claims under the Federal Wiretap Act, the Video Privacy Protection Act, and other similar state laws, that seek millions and billions of dollars in statutory damages under this theory. We’ve talked about some of these rulings on our blog, the Duane Morris Class Action Defense Blog, and courts have dismissed some of these claims, but some of them not, and have allowed them to proceed. But this new ruling will be very helpful for corporate defendants in this space.
Justin: Yes, those differing rulings that you’re talking about, Ryan, exactly show the point that these different courts are giving different interpretations to the same statutory terms that suggest that these terms are ambiguous, too, similar to the ones found in a different statute in Vita. And so the ruling here in Vita, though, is important because it instructs that under similar circumstances the rule of lenity also applies to these ambiguous terms, too, thereby entitling defendants to the benefit of any rational doubt in the construction of the statute, and accordingly defeating plaintiffs’ mammoth statutory damages claims.
Jerry: Well, thank you. It certainly seems like a beacon of light for companies in this space attempting to defend themselves in adtech class action litigation. Thank you, Ryan, and thank you, Justin, for lending your expertise and thought leadership in this area and for breaking this down for our readers and listeners.
Justin: Thanks for having me, Jerry, and thanks listeners.
Ryan: Thanks a lot everyone. Great to be here as always.
