Category: General

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

Duane Morris Takeaway: The final trend in our DMCAR series outlines how the California Private Attorneys General Act (PAGA) inspired more representative lawsuits than any other statute in America over the past three years. According to the California Department of Industrial Relations, the number of PAGA notices filed in 2025 approached 9,900, which surpasses the 9,464 PAGA notices in 2024.

DMCAR co-editor Jennifer Riley outlines this trend in the following video:

The so-called PAGA reform legislation passed in 2024 by California lawmakers seemingly did little to nothing to curb interest in these cases.

The PAGA created a scheme to “deputize” private citizens to sue their employers for penalties associated with violations of the California Labor Code on behalf of other “aggrieved employees,” as well as the State. A PAGA plaintiff may pursue claims on a representative basis, i.e., on behalf of other allegedly aggrieved employees, but need not satisfy the class action requirements of Rule 23.

Thus, the PAGA provides the plaintiffs’ class action bar a mechanism to harness the risk and leverage of a representative proceeding without the threat of removal to federal court under the CAFA and without the burden of meeting the requirements for class certification.

The PAGA’s popularity in recent years, however, also flows from its status as one of the most viable workarounds to workplace arbitration agreements. Thus, it presents one of the most pervasive litigation risks to companies doing business in California.

1. The Growth Of PAGA Notices Continues

According to data maintained by the California Department of Industrial Relations, the number of PAGA notices filed with the LWDA has increased exponentially over the past two decades.

The number grew from 11 notices in 2006, to 1,606 in 2013, and then underwent three sizable jumps – to 4,530 in 2014, to 5,732 in 2018, and to 7,464 in 2023, each coinciding with a significant shift in the legal landscape regarding arbitration. In 2024, notices exceeded 9,464 for the first time and, in 2025, the number of PAGA notices reached a new all-time high of approximately 9,981.

Employers saw the largest single year increase in 2014, when the number of notices increased from 1,605 in 2013 to 4,532 notices in 2014, an increase of 182%.

The most significant drop in the past two decades occurred in 2022, when notices fell from 6,502 in 2021 to 5,817 in 2022, before their resurgence in 2023 and continued growth in 2024 and 2025. The following chart illustrates this trend.

These numbers closely tie to the shifting impact of workplace arbitration programs, in that each of the major shifts coincides with the timing of a significant expansion or pull back in the law governing the enforcement of arbitration agreements.

PAGA reform seemingly has had little to no impact on the growth on PAGA filings. On June 18, 2024, Governor Newsom announced that labor and business groups had inked a deal to alter the PAGA in return for removing the referendum to repeal the PAGA from the November 2024 ballot. The California Legislature quickly moved to approve two bills (AB 2288 and Senate Bill 92). The alterations included reforms to the penalty structure, new defenses for employers, changes to the PAGA’s standing requirements, and a new “cure” process for both small and large employers, among other changes. These reforms affect all PAGA notices filed on or after June 19, 2024, with some exceptions. As noted above, however, PAGA reform did little to quell PAGA filings.

2. Could PAGA Activity Skyrocket?

As noted above, the PAGA emerged as one of the most popular tools of the plaintiffs’ class action bar in recent years due to its potential immunity from workplace arbitration agreements. The California Supreme Court is poised to consider the viability of so-called “headless” PAGA actions in 2026 – i.e., actions that lack or disclaim any individual PAGA claim (often because the plaintiff signed an arbitration agreement covering such claim) and seek to pursue only the representative PAGA component on behalf of other allegedly aggrieved employees.

The growing adoption of arbitration programs led the plaintiffs’ class action bar to identify various workarounds, and the PAGA emerged as one of the most viable in 2016 when the California Supreme Court issued its decision in Iskanian v. CLS Transportation Los Angeles, 59 Cal.4th 348 (Cal. 2014). In that case, the California Supreme Court held that representative action waivers in arbitration agreements are “contrary to public policy and unenforceable as a matter of state law.” Id. at 384. In so holding, Iskanian essentially immunized PAGA claims from arbitration and permitted plaintiffs to pursue representative actions under PAGA unhindered by arbitration agreements or commitments to arbitrate on an individual basis. The decision undoubtedly fueled the filing of PAGA notices in 2014, which catapulted from 1,606 in 2013 to 4,530 in 2014.

The PAGA suffered its first setback as an arbitration work-around in 2022 with the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022). In Viking River, the U.S. Supreme Court held that, to the extent Iskanian precludes division of PAGA actions into individual and non-individual claims, and thereby “prohibit[s] parties from contracting around this joinder device,” the FAA preempts such rule. Id. As a result, the U.S. Supreme Court held that the lower court should have compelled arbitration of the plaintiff’s individual PAGA claim and should have dismissed the PAGA representative claim. Id.

The set-back was short lived as, in 2023, the California Supreme Court minimized the impact of the Viking River decision. In Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (Cal. 2023), the California Supreme Court took up the issue of whether, under California law, a PAGA plaintiff who’s individual PAGA claim is compelled to arbitration retains standing to bring a representative PAGA claim. The California Supreme Court answered the question in the affirmative. It held that, once a PAGA plaintiff is compelled to arbitrate his or her individual PAGA claim, so long as he or she is found to be an “aggrieved employee,” the plaintiff retains standing to maintain a non-individual PAGA claim in court. Id. at 1105.

By deciding that an individual who signs an arbitration agreement can return to court after arbitration to pursue a representative proceeding under the PAGA, the California Supreme Court relegated arbitration agreements to a mere hurdle rather than a bar to PAGA representative actions. Still, the plaintiffs’ bar has continued its attempt to eliminate the arbitration defense altogether to streamline their ability to proceed with representative actions in court. One emerging tool is the so-called “headless” PAGA action.

While such a tool seemingly runs counter to the ruling in Adolph and other cases, which have held that a PAGA claim necessarily consists of both and individual and representative portions, the California Court of Appeal gave it life in April 2024 with its decision in Balderas v. Fresh Start Harvesting, 101 Cal. App. 5th 533 (2024). In that opinion, the California Court of Appeal denied a motion to compel arbitration, holding that a plaintiff could maintain a representative PAGA action, even without an individual PAGA claim, so long as the plaintiff alleges that he or she suffered a Labor Code violation.

Appellate courts have taken different views as to this strategy over the past year. On July 7, 2025, for instance, in CRST Expedited, Inc. v. Superior Court Of Fresno County, 112 Cal. App. 5th 872 (Cal. App. 2025), the Court of Appeal for the Fifth District concluded that a worker’s dismissal of his individual PAGA claim did not bar him from pursuing a representative PAGA claim. The trial court granted the worker’s unopposed motion to dismiss his individual PAGA claim, and the defendant then sought dismissal of the non-individual PAGA claim on the ground that the plaintiff lacked standing to proceed. The trial court denied the motion. On appeal, the Court of Appeal concluded that the PAGA statute is ambiguous on this point and, faced with an ambiguous statute, opined that the primary objective of the PAGA statute is to maximize enforcement of labor laws and deter employer violations. As such, it held that requiring arbitration of individual claims before pursuing non-individual claims would undermine those enforcement efforts and that, to achieve effective enforcement, the PAGA statute should be interpreted to allow “PAGA plaintiffs and their counsel the flexibility to choose among bringing a PAGA action that seeks to recover of civil penalties on (1) the LWDA’s individual PAGA claims, (2) the LWDA’s non-individual PAGA claims, or (3) both.” Id. at 917.

In Williams, et al. v. Alacrity Solutions Group, LLC, 2025 Cal. LEXIS 4161 (Cal. App. July 9, 2025), the Court of Appeal for the Second District reached the opposite conclusion. The plaintiff, a former insurance adjuster, filed an action alleging that the defendant failed to pay overtime compensation. Although the plaintiff separated from his employment in January 2022, the plaintiff waited until March 2023 to file a PAGA notice with the LWDA. The plaintiff thereafter filed suit solely on behalf of other current and former employees and did not seek penalties on his own behalf. The trial court dismissed the plaintiff’s action holding that, because the plaintiff filed his PAGA notice more than a year after his employment ended, his individual claim was time-barred and, without a timely individual claim, he could not maintain a PAGA representative claim. The Court of Appeal affirmed the trial court’s ruling. It explained that a PAGA plaintiff must have a timely claim for violations he or she personally suffered. The plaintiff filed a petition for review with the California Supreme Court, and the California Supreme Court granted and deferred the appeal pending consideration and disposition of related issues in Leeper, et al. v. Shipt, 331 Cal. Rptr. 3d 450 (Cal. 2025)

In Leeper, the Court of Appeal for the Second District reached a similar conclusion. The plaintiff, a former Shipt worker, alleged that Shipt misclassified her and others as independent contractors in violation of state wage & hour laws. The trial court denied the defendant’s motion to compel arbitration ruling that, because the plaintiff sought only non-individual civil penalties, there were no individual claims to arbitrate. On appeal, the Court of Appeal reversed. It reasoned that every PAGA action inherently includes an individual claim, alongside the representative claim. The Court of Appeal opined that the statutory language of the PAGA states that a PAGA action is one brought both on behalf of the plaintiff (the individual claim) and on behalf of others (the representative claim). On request for review, the California Supreme Court agreed to review the Court of Appeal’s order and to address the following questions: (i) Does every PAGA necessarily include both individual and non-individual PAGA claims, regardless of whether the complaint specifically alleges individual claims; and (ii) can a plaintiff choose to bring only a non-individual PAGA action? 

If the California Supreme Court sides with the plaintiffs on these issues and allows plaintiffs to maintain “headless” or representative-only PAGA claims, it will allow plaintiffs with arbitration agreements to bypass arbitration and to avoid the risk that they might not succeed on their individual PAGA claims. If plaintiffs can avoid arbitration altogether, such a ruling surely would bolster PAGA’s popularity as an arbitration work-around. Either way, given the technical requirements of California wage & hour law, coupled with the potentially crushing statutory penalties available to successful plaintiffs, employers should anticipate continued growth of PAGA lawsuits in 2026.

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

The Duane Morris Class Action Review serves as a desk reference on all things class action. General editor Jerry Maatman discusses the origins of the Review and the scope of the findings in the 2026 edition.

By Gerald L. Maatman, Jr.

Duane Morris Takeaways: Recently we had the privilege of attending this year’s annual ABA conference on class action litigation. Cutting-edge issues under Rule 23 were the focus of discussion among session leaders and attendees. The consistent theme is that case law precedents are in a state of constant flux – and the “new normal” is “change…”

Key cutting-edge issues are summarized below in terms of top-class action issues for 2025.

Data Breach Class Actions

The focal point in class actions over data breaches is discovery of consultant work in the aftermath of a breach and whether the work product is privileged or not. Plaintiffs’ advocates asserted that discovery of facts is always allowed and that companies have complete control over the technology environment when remediation efforts are undertaken in the wake of a data breach. Defense proponents contended that such consulting expert work is a prime example of protected work product. Case law, however, is somewhat all over the lot and data breach litigation is increasing in scope and complexity.

This issue underscores what class action practitioners agreed upon – data breach class actions are exceedingly complex, raises vexing choice-of-law issues under state law, and are challenging in terms of managing the litigation process.

Trials In Class Actions

Once a rarity, trials in class actions are beginning to become more mainstream. A panel session on trying a class actions discussed how challenging such a trial is given the stakes and financial exposures in “big” lawsuits.

As an adjunct professor of law at Northwestern, I teach trial advocacy. The skillsets taught in my law school class resonated in this session – have an “elevator” presentation for the jury that boils down the complexities of the case into an easily understood explanation of the plaintiffs’ theories and the defendant’s defenses. Both plaintiffs and defense lawyers agreed that the ability to craft an effective “elevator” speech pays dividends in the successful prosecution and/or defense of a class action in a trial setting.

As a federal judge on the panel advised, “less is more” in terms of trying a complex dispute in a manner that engages the attention of a jury (and a judge).

Unresolved Rule 23 Issues

While many areas of class-wide ligation are in flux, the number one issue prompted agreement from all practitioners – the unresolved issue from Lab. Corp. v. Davis on the impact of uninjured class members on class certification and damages models prepared by experts in class cases. The “uninjured class member” issue continues to drive diverse outcomes and uncertainty relative to the concepts of Article III standing and predominance under Rule 23(b)(3).

Attendees agreed that the issue is ripe for U.S. Supreme Court review after the dismissal of the certiorari grant for jurisdictional issue in Lab. Corp.

Collective Action Certification Standards

The standard for conditional certification of a collective action under the Fair Labor Standards Act is in flux. In essence, there are four distinct standards depending on what circuit law applies. The majority standard is based on Lusardi v. Xerox Corp., 99 F.R.D. 89 (D.N.J. 1983).

For decades, many federal courts have relied on the two-step Lusardi approach for collective action certification. Under the Lusardi standard for conditional certification, plaintiffs only had to make a “modest factual showing” that they were victims of a common illegal policy or plan. Most courts applying this standard refused to weigh evidence or consider opposing evidence presented by the defendant. Such lenient notice standards allow plaintiffs to expand the size of a wage & hour lawsuit, significantly increasing pressure to settle, regardless of the action’s actual merits.

In the past four years, the Fifth and Sixth Circuit Courts of Appeal have found that Lusardi’s two step approach is inconsistent with the text of the FLSA. Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430 (5th Cir. 2021); Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023). In Swales, 985 F.3d at 443, the Fifth Circuit rejected Lusardi’s two-step approach outright, and required its district courts to “rigorously enforce” the FLSA’s similarity requirement at the outset of the litigation in a one-step approach. Similarly, in Clark, 68 F.4th at 1011, the Sixth Circuit adopted a comparable, but slightly more lenient standard, requiring the employee to show a “strong likelihood” that others are similarly situated to him or her before the district court can send notice.

In contrast, the Second, Ninth, Tenth, and Eleventh Circuits continue to either follow or allow the district court to adopt the two-step framework outlined in Lusardi.  Harrington v. Cracker Barrel Old Country Store, Inc., 142 F.4th 678 (9th Cir. 2025); Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095 (10th Cir. 2001); Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010); Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001). 

The Seventh Circuit, in a recent opinion written by Judge Thomas Kirsch, rejected the Lusardi framework but declined to go as far as Clark or Swales. The Seventh Circuit observed that the notice process should be facilitated by three guiding principles: (1) the timing and accuracy of notice; (2) judicial neutrality; and (3) the prevention of abuses of joinder.  Richards v. Eli Lilly, 2025 U.S. App. LEXIS 19667, at *14 7(th Cir. Aug. 5, 2025).  It reasoned that the Lusardi standard threatened the latter two principles by “incentivizing defendants to settle early rather than attempt to ‘decertify’ at step two . . . transforming what should be a neutral case management tool into a vehicle for strongarming settlements and soliciting claims.” Id. at * 17. Thus, the Seventh Circuit rejected Lusardi, but what to do in the alternative was a more difficult question.

The Seventh Circuit decided that rather than endorse the rigid standards of Clark or Swales, its approach would be guided by “flexibility” and an analysis that is not an “all-or-nothing determination.” Id. at *19. Indeed, a plaintiff must now “make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated.” Id. at *21. Or, in other words, a plaintiff must “produce some evidence suggesting that they and the members of the proposed collective are victims of a common unlawful employment practice or policy.” Id, at *21-22. To counter a plaintiff’s evidence, an employer “must be permitted to submit rebuttal evidence and, in assessing whether a material dispute exists, courts must consider the extent to which plaintiffs engage with opposing evidence.” Id. at *22. It is not clear, however, the burden a plaintiff must satisfy to refute the defendant’s evidence to move forward. 

This brewing circuit split suggest that U.S. Supreme Court review is necessary to resolve this important issue.

By Gerald L. Maatman, Jr., George J. Schaller, and Andrew P. Quay

Duane Morris Takeaways:  On September 19, 2025, in Vidal, et al. v. The Hershey Co., No. 24-CV-60831, 2025 U.S. Dist. LEXIS 184308 (S.D. Fla. Sept. 19, 2025), Judge Melissa Damian of the U.S. District Court for the Southern District of Florida dismissed a class action complaint alleging violations of the Florida Deceptive and Unfair Trade Practices Act for deceptive candy packing.  The Court held the plaintiff-consumers failed to plausibly allege an economic injury, and therefore, lacked Article III standing.  Plaintiffs’ allegations that they were “disappointed” with the lack of carved designs on Halloween-themed candy and blanket assertions that they “paid a premium” was not enough to sustain an economic injury. 

The decision illustrates that conclusory statements, without an economic injury, are not enough to confer Article III standing.  Though the ruling demonstrates “spooky” claims for deceptive labeling and deceptive advertising can support a potential class action, the Plaintiffs here could not show they sustained an economic injury. 

Case Background

Plaintiffs Nathan Vidal and Eduardo Granados, on behalf of themselves and a putative class of consumers, filed a class action complaint against The Hershey Company (“Hershey”).  Plaintiffs alleged  they purchased certain decorative Reese’s products in Florida and that these products “misled” them in violation of the Florida Deceptive and Unfair Trade Practices Act.  Id. at *4

Plaintiffs asserted they would not have purchased Reese’s Peanut Butter Pumpkins and Reese’s White Pumpkins had they known that the products did not contain detailed carvings of eyes and a mouth as pictured on the packaging.  Id. at *3-4.  Plaintiffs maintained “Hershey [] deceived reasonable consumers … into believing the [p]roducts were something that they were not.”  Id. at *5.  In true Halloween horror story fashion, Plaintiffs claimed that without the carvings and designs the products were “worthless” and that they would not have purchased them.  Id. at *14. 

Hershey moved to dismiss for lack of subject-matter jurisdiction or, in the alternative, for failure to state a claim, Hersey also moved to strike Plaintiffs’ class action allegations.  Id. at *4. 

Hershey primarily argued Plaintiffs lacked standing because “they suffered no injury-in-fact.”   Id. at *6.  Hershey maintained Plaintiffs lacked standing because they only alleged an economic injury.  Hershey however contended Plaintiffs did not suffer an economic injury because they still received “delicious Reese’s candy.”  Id.  Even still, Hershey countered that most of the at-issue products, contained “DECORATING SUGGESTION” disclaimers and both carved and uncarved images.  Id. at * 7.  Hershey similarly highlighted that Plaintiffs did not allege the products were defective, inedible, did not meet taste/flavor expectations, or that they lost any economic value without the decorative carvings.  Id. at *14.

While Hershey’s motion was pending, Plaintiffs moved for class certification arguing they satisfied all the requirements under Rule 23 to certify a class of consumers who purchased any of the at-issue Reese’s products “based on a false and deceptive representation of an artistic carving” on the products packaging.  Id. at *5.

The Court’s Decision

The Court dismissed Plaintiffs’ complaint because they did not allege a concrete economic injury and therefore lacked standing to pursue their personal claims and class claims.

In dismissing Plaintiffs’ complaint, the Court reasoned the Eleventh Circuit’s analysis of standing emphasizes that “[e]conomic injuries are the ‘epitome’ of concrete injuries,” and that such an economic injury can be the “result of a deceptive or unfair practice” where an individual is “deprived of the benefit of her bargain.”  Id. at *15.  In analyzing the benefit of the bargain a plaintiff’s damages are calculated based on “the difference in the market value of the product or service in the condition in which it was delivered and its market value in the condition in which it should have been delivered according to the contract of the parties.”  Debernardis v. IQ Formulations, LLC, 942 F.3d 1076, 1084 (11th Cir. 2019) (citing Carriuolo v. Gen. Motors Co., 823 F.3d 977, 986-87 (11th Cir. 2016)). 

The Court relied on two analogous cases in considering Plaintiffs’ economic injury assertions.  The first case concerned “honey-lemon cough drops” that “soothe[] sore throats” and based on those representations the “plaintiff believed that the cough drops contained lemon ingredients and were capable of soothing bronchial passages.”  Id. at *17-18 (citing Valiente v. Publix Super Markets, Inc., 2023 U.S. Dist. LEXIS 91089 (S.D. Fla. May 24, 2023)).  The Court in Valiente held plaintiff failed to allege an economic injury because the plaintiff did not allege the cough drops were defective, did not work as advertised, or were otherwise so flawed to render them worthless.  Id.  at *18.

The second case concerned plaintiffs who alleged they “paid a premium price” for “protein-infused brownies” that contained less than the advertised protein content.  Id. at *18 (citing Melancon v. Alpha Prime Supps, LLC, 2025 U.S. Dist. LEXIS 21114 (S.D. Fla. Jan. 13, 2025).  The Court in Melancon held plaintiffs failed to allege they suffered an economic injury for the same reasons as Valiente and also failed to identify any competing products for the Court to plausibly conclude that plaintiffs suffered a concrete injury in fact.  Id.

Based on these cases, the Court agreed that “Plaintiffs here fail to allege Reese’s Products they purchased were defective or worthless.”  Id.  The Court explained “[p]ut simply, Plaintiffs do not allege that the products were unfit for consumption, did not taste as Plaintiffs expected, or otherwise were so flawed as to render them worthless.” Id. a

The Court reasoned Plaintiffs’ disappointment and conclusory allegations as to why they were deprived of the benefit of their bargain merely reflected their subjective, personal expectations of how the candies would or should have looked when unpackaged.  Id.  The Court held Plaintiffs’ failure to tie the value of the candies to their purported misrepresentation theory did not plausibly allege a concrete economic injury for purposes of Article III standing.  Id. at *19.  Further, the Court reasoned Plaintiffs made no allegations that would allow any measurement of “the difference between the value of the Reese’s Products with or without the decorative carvings.” Id. 

The Court also determined Plaintiffs’ “[c]omplaint contain[ed] nothing more than allegations of Plaintiff’s subjective belief that they paid a price premium” and these blanket allegations were not enough to allege a concrete injury.  Id. at *19-20. 

Accordingly, the Court dismissed Plaintiffs’ complaint finding “Plaintiffs lack Article III standing to assert a claim for relief” individually or on behalf of a purported class.  Id. at *20.  The Court dismissed Plaintiffs’ complaint without prejudice preserving Plaintiffs’ ability to move for leave to amend within 15 days from the date of the Court’s Order.  Id. at *23.  

Implications For Companies

Companies faced with consumer fraud class action lawsuits alleging theories of false advertising and deceptive practices related to their products must consider standing at the outset of any litigation. 

Vidal illustrates the importance of analyzing Article III standing issues in every lawsuit.  The Vidal Plaintiffs did not allege a sufficient economic injury based on their personal expectations of how Halloween-themed candies should have looked and did not allege the candies were defective, flawed, or reduced the actual value of the product.  Accordingly, the Court subjected their claims to dismissal.

Companies should not treat defective or false advertising product class action claims lightly, and if faced with such a lawsuit, Companies must consider all available defenses. 

By Gerald L. Maatman, Jr., Kevin E. Vance, and Ryan T. Garippo

Duane Morris Takeaways:  On June 17, 2025, in Smith, et al. v. Costa Del Mar, Inc., No. 18-CV-1011, 2025 WL 1697161 (M.D. Fla. June 17, 2025), Judge Timothy Corrigan of the U.S. District Court for the Middle District of Florida dismissed a Magnuson-Moss Warranty Act (“MMWA”) class claim following a multi-million-dollar settlement between the parties due to lack of subject matter jurisdiction.  Although the opinion may seem like a win for the company on its face, this decision only places further limitations on corporate defendants’ ability to access the federal forum and makes it more difficult for such defendants to get a fair trial where class-wide relief is alleged.

Background

Costa Del Mar, Inc. (“Costa”) “is a sunglasses manufacturer that represented to buyers that sunglasses were backed by lifetime warranties.”  Smith v. Miorelli, 93 F.4th 1206, 1209 (11th Cir. 2024).  Plaintiffs, who were Costa customers, filed three separate class action lawsuits alleging that the “lifetime warranties required Costa to repair their sunglasses either free-of-charge or for a nominal fee.”  Id.  Rather than repairing the sunglasses for a nominal fee, the plaintiffs alleged that Costa charged them, in some cases, up to $105.18 to repair their sunglasses which was paid by the plaintiffs.

After years of litigation, the plaintiffs ultimately filed an amended complaint “to facilitate a settlement agreement that would resolve the claims in all three cases” based on a MMWA class claim.  Id. at 1210.   To that end, the parties moved for approval of a class action settlement that would have provided “over $60 million of value to the class in the form of product vouchers and attorneys’ fees” as well as injunctive relief.  Id. (quotations omitted).  The district court preliminarily approved the parties’ settlement agreement pursuant to Federal Rule of Civil Procedure 23(e).  But, the preliminary approval order was not the end of the story.

Several objectors challenged the district court’s order on the basis that “any award of attorneys’ fees to class counsel must be based on the value of product vouchers that are actually redeemed, not the value of vouchers that would be distributed.”  Miorelli, 93 F.4th at 1211.  The district court, however, overruled these objections and awarded class counsel $8 million dollars in attorneys’ fees. 

The objectors appealed and argued, inter alia, that the district court abused its discretion to approve a settlement for injunctive relief because the plaintiffs lacked Article III standing under the U.S. Constitution.  As the objectors saw it, the plaintiffs did not have an ongoing injury-in-fact, sufficient to support injunctive relief, where they had already paid the fees for their sunglasses.  The Eleventh Circuit agreed with the objectors and reversed the district court’s preliminary approval order.  In so doing, it also noted that “[t]he parties have raised other jurisdictional issues that the district court should consider in the first instance” because the Class Action Fairness Act of 2005 (“CAFA”) potentially “does not provide an alternative basis for a federal court to exercise subject matter jurisdiction over a case brought under the MMWA.“  Id. at 1213, n. 8.  So, the case was remanded to the district court for further consideration of that question.

The Court’s Opinion

On remand, the district court had the “unenviable task of advising the parties that, notwithstanding the nearly seven years of litigation that have transpired since this case was filed, it is due to be dismissed for lack of subject matter jurisdiction.”  Smith, 2025 WL 1697161, at *1.

The district court noted that “[t]he MMWA vests federal district courts with subject matter jurisdiction to hear claims brought under the Act.”  Id. at *2.  But, a district court only has federal question jurisdiction under the MMWA if there are more than 100 named plaintiffs.  Id. at *2 (citing 15 U.S.C. § 2310(d)(3)).  Because plaintiffs could not satisfy this requirement, they relied solely on the federal court’s ability to hear the case under CAFA.

Ordinarily, a plaintiff can a bring a class action in federal court, that otherwise must be heard in state court, where the requirements of CAFA are met.  Subject to some exceptions, these requirements are that there must be: (a) at least 100 class members; (b) that there is minimal diversity between the parties; and (c) the amount in controversy exceeds $5 million dollars.  28 U.S.C. § 1332(d)(2).

The MMWA often presents a rare exception to that rule.  As the district court explained, the Third and Ninth Circuits, as well as numerous federal district courts, have “determined that CAFA does not provide an independent basis for jurisdiction for an MMWA claim.”  Smith, 2025 WL 1697161, *2.  The district court noted that this opinion is not shared unanimously by its sister districts, but nonetheless agreed “that CAFA does not provide an independent basis for subject matter jurisdiction.” Id.

As a result, the district court held that “because there are fewer than 100 named plaintiffs” and the CAFA was not an independent basis for federal subject matter jurisdiction “plaintiff fails to meet the federal court jurisdictional requirements.”  Id. at *3.  Accordingly, after seven years of litigation and after a settlement agreement had been reached, the district court simply dismissed the case outright.

Implications For Companies

On its face, the Smith decision may seem like a great result for the company in this litigation because, after all, the lawsuit was dismissed in its entirety which is presumably what the company wanted all along.  But, a more nuanced analysis reveals hidden traps for companies faced with class action litigation.

The result of this decision is not that this claim will never be heard at all, but rather that the case will not proceed in federal court.  Indeed, the Smith plaintiff explicitly “stated he intended to refile this suit in state court if the Court determined it did not have subject matter jurisdiction.”  Id. at *3, n. 6.

In general, it is not uncommon for a company to “prefer[] the federal courts because it fears a corporate defendant . . . will not get a fair trial in state court.”  See, e.g., Hosein v. CDL West 45th Street, LLC, No. 12 Civ. 06903, 2013 WL 4780051, at *3 (S.D.N.Y. June 12, 2013).  The Smith opinion adds a barrier to corporate defendants to avail themselves of the federal forum, and even goes so far as to place additional barriers on a defendant’s ability to settle claims against it.

If corporate counsel is concerned about their organizations being dragged into a class action, in a less-than-favorable state forum, then they should continue to monitor this blog for potential options or contact experienced outside counsel to discuss such matters.

By Shannon Noelle

On June 9-10, NYU hosted its 77^th annual conference on Labor & Employment Law, a non-partisan forum for stakeholders and experts to discuss current labor and employment policy and law.  We were privileged to attend the conference as an invited guest of sponsor and leading industry expert firm Resolution Economics. 

The conference spanned two days, with keynote addresses from Honorable Jonathan Snare, Deputy Solicitor of Labor, U.S. Department of Labor, and Marvin E Kaplan the National Labor Relations Board (NLRB) Chair.  The conference featured panels on topics such as the US Workforce, Reimagining Labor in a Conservative Era, Reimagining Civil Service, Federal Labor Preemption of State Captive Audience, Just Cause and Sectoral Bargaining Laws, Equal Access to Justice Reform Act, Facilitating Lawful Immigration (with speaker Ted Chiappari, Partner at Duane Morris,), Labor Union Political Activism, Future of the National Labor Relations Act, Restructuring the NLRB, AI Issues, Emerging Issues in Employment Arbitration, Employment Discrimination Law and Disparate Impact, and Restrictive Covenants.  

Future of the Department of Labor

Deputy Solicitor Snare opened the conference stating that the DOL’s new perspective is “personnel as policy” indicating that the Department has onboarded individuals with extensive and varied experience to bring insight and perspective to the Department’s new enforcement directives.  He stated that the Department’s enforcement priorities include “helping employers minimize unintentional errors,” child labor law enforcement, and speedy recovery of back way.  With regard to the test for independent contractor status, the DOL will rely on Fact Sheet #13 containing the “economic reality” framework and the 2019 Opinion Letter on Independent Contractors and Virtual Marketplace Companies.   In analyzing joint employer status, Deputy Solicitor Snare advised practitioners to look at the analysis in effect under the prior Trump administration for guidance which set out a 4-factor control test.  Solicitor Snare indicated that the overtime rule implemented in 2024 and joint employer analysis are currently under review by the Department. 

On the topic of OSHA enforcement priorities, Solicitor Snare referenced the recent Sea World fine and citation from 2024 for $16,5550 after a trainer was injured by a killer whale during a training session.   Solicitor Snare discussed the general duty clause in connection with this citation, found in Section 5(a(1) of the Occupational Safety and Health Act, requiring employers to furnish a place of employment free from recognized hazards that cause or are likely to cause, death or serious physical harm to employees, stating that this duty is not qualified under common law by the assumption of the risk or contributory negligence doctrine. 

There was also discussion of the Department’s implementation on May 15, 2025 of the non-enforcement policy regarding the 2024 Mental Health Parity and Addiction Equity Act (MHPAEA).   Solicitor Snare stated that this policy would “cut regulatory red tape” and give workers better access to mental health and substance abuse treatment as compliance with the former law was “burdensome.”   And, finally, Solicitor Snare discussed the Department’s initiative to improve pharmaceutical pricing transparency and provide Crypto guidance.  

Future of the NLRA and Restructuring the NLRB

The panel on the future of the NLRA and restructuring the NLRB advocated for restructuring the Board as opposed to dissolution, acknowledging that Board law on the National Labor Relations Act (NLRA) changing with each administration lacks clarity and consistency but also noting the utility of a quasi-judicial body continuing to provide guidance and decisions on labor disputes.  The panel discussed the upcoming decision regarding President Trump’s removal of Democrat Board member Gwynne Wilcox without cause—which reduced the Board to two members lacking the necessary 3-member quorum to issue decisions as to unfair labor practices—as likely to redefine Board authority and the Presidential executive power across the federal government.  The panel concluded that, no matter how the issue is decided, it presents an opportunity for both labor and management to consider how to refashion the Board into an exclusively adjudicatory agency likely to pass constitutional requirements and, at the same time, reduce the incidence of policy oscillation that has plagued the agency for decades. 

Acting General Counsel for the NLRB William Cowen expressed cautious optimism that a recent proposal to fund the agency at 4.7% below its current level would be “adequate for us to do our jobs” and expressed that he sees “ a way through this.” 

Samuel Estreicher, NYU Law professor, Roger King, HR Policy Association senior counsel, and David Sherwyn, Cornell University professor, discussed their proposal for restructuring the NLRB (recently detailed in a paper published by the University of Pennsylvania Carey School of Law) refashioning the board as a six-member court consisting of two Democrats, two Republicans, and two nonpartisans.  Further requirements for board members under this proposal would be that they cannot have represented labor or management interests for a six-year period prior to nomination to the Board to show a “propensity for independence.”  This requirement is to ameliorate the policy oscillation and lack of consistency in board law and to lend credibility to the agency.  The article authors indicated that they have gotten reasonable interest and traction from lawmakers and are actively in discussions regarding their proposal. 

Developments in AI

On the topic of AI, panelists discussed the proliferation of generative AI in the last 18 months which is used across the employment life cycle in sourcing, recruiting, predicting high potential employees, employees likely to leave, and even AI that generates job descriptions.   Experts indicated that the federal regulatory landscape is evolving with the Trump administration expected to roll out an action plan by the end of July.  Several recent reports discuss a Trump administration proposal, included in a House-passed budget reconciliation bill, that would implement a 10-year federal preemption or moratorium on state and local AI laws and regulations.  Thus, federal regulation of the AI space is expected to be on the radar of practitioners and experts alike.  

Implications for Companies

Employers must stay compliant with existing law (despite shifting prosecutorial priorities current labor and employment laws remain in effect) and monitor legal developments on the horizon.  Employers must remain vigilant in their compliance efforts and seek legal guidance for assistance in navigating this rapidly changing legal landscape.

Duane Morris partners Jennifer Riley and Jerry Maatman were recognized in the latest 2025 edition of the Mondaq Thought Leadership Awards. Riley won the top award as the #1 rated thought leader in the Data Protection and Privacy space in the United States. Maatman finished in the #2 slot. The rankings showcase the most popular articles across 16 areas of law published by authors around the globe between October 2024 and March 2025. We’d like to express our gratitude to our loyal blog readers and podcast listeners for this distinction and your continued support.

Jennifer Riley’s video episode “DMCAR Trend #7 – Data Breaches Gives Rise To An Unprecedented Number Of Class Action Filings” was ranked #1 across all data protection content on the platform.

Ranked #2 was Jerry Maatman’s launch announcement of Duane Morris’ Data Breach Class Action Review – 2025. Bookmark or download our virtual data breach desk reference, which is fully searchable and viewable from any device.

Stay tuned – coming soon to the Duane Morris Class Action Defense Blog is our mid-year class action report including key analysis of developments in the data privacy class action landscape.