General – Page 4 – Class Action Defense

June 5, 2024June 5, 2024 by Class Action Defense

No Standing, No Settlement: Sixth Circuit Vacates Settlement In Class Action Lawsuit Challenging COVID-19 Vaccine Mandate

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

Duane Morris Takeaways: On June 3, 2024, in Albright et al v. Ascension Michigan et al, No. 23-1996 (6th Cir. June 3, 2024), a three-judge panel of the Sixth Circuit reversed and remanded a district court’s approval of a nationwide class action settlement because the plaintiffs lacked Article III standing. The case illustrates the fundamental requirement of federal court jurisdiction that all named plaintiffs have an alleged injury traceable to the settling defendants. The decision is required reading for litigants seeking court approval of a Rule 23 class action settlement.

Case Background

On July 12, 2022, over 100 current or former employees sued the Michigan-based Ascension healthcare organization for alleged violations of Title VII and Michigan state law occurring at its Michigan hospitals. The plaintiffs claimed that the defendant entities discriminated against them based on religion and unlawfully denied their request for a religious exemption from the organization’s mandatory COVID-19 vaccination policy. The plaintiffs sought to represent a Rule 23 class of solely-Michigan-based workers.

On April 24, 2023, the parties jointly moved the U.S. District Court for the Western District of Michigan for preliminary approval of a Rule 23 settlement. In the proposed settlement agreement, the settling parties expanded the scope of the lawsuit to the parent company of the Michigan defendant entities and 24 affiliate hospitals, clinics, and other entities in Alabama, Washington, D.C., Indiana, Kansas, Maryland, Michigan, Missouri, New York, Oklahoma, Texas, Tennessee and Wisconsin. Two days later, the district court preliminarily approved the settlement and issuance of notice to the class.

The settling parties filed an amended complaint to facilitate the proposed nationwide class action settlement of claims challenging the mandatory vaccination policy in place at Ascension’s various entities. The amended complaint reflected the same Michigan-based plaintiffs as the original complaint.

About 2,700 of the 4,000 workers who received notice opted-in to the settlement, with 281 workers opting out. Nine opt-ins who had worked for the newly-added entities objected to the settlement on August 23, 2023.

After a final fairness hearing held on October 5, 2023, the district court granted the settling parties’ motion for final approval of the settlement on November 2, 2023 over the objections of the nine objectors.

The objectors filed two notices of appeal to the Sixth Circuit, which were consolidated together. In addition to opposing the settlement on standing grounds, the objectors argued that, by expanding the scope of the settlement class to a nationwide group, the proposed settlement diluted the value of back pay payouts each class member would receive.

The Sixth Circuit’s Ruling

The panel judges of the Sixth Circuit, in a brief unpublished opinion, unanimously ruled that the settlement failed on standing grounds.

For Article III standing to exist, the defendant’s alleged actions must have caused the plaintiff to suffer a concrete “injury-in-fact.” In a class action, for any defendant, at least one named plaintiff must have an injury traceable to the defendant.

Writing for the panel, Circuit Judge Cole reasoned that the named plaintiffs had no injury traceable to the 25 entities added to the lawsuit for settlement purposes. In expanding the scope of the defending entities without “add[ing] any new named plaintiffs to match the additional affiliate defendants,” the settling parties failed to establish subject matter jurisdiction for the district court to approve the settlement. Id. at 3.

Absent standing, the Sixth Circuit concluded that the 95 Michigan-based named plaintiffs could not settle claims on behalf of thousands of other employees who had worked for Ascension entities outside of Michigan.

Accordingly, the Sixth Circuit vacated the district court’s orders approving the class-wide settlement, certifying the settlement class, and awarding attorneys’ fees and expenses to plaintiffs’ counsel. The Sixth Circuit remanded the case to the district court for further proceedings.

Implications For Employers

The ruling in Ascension illustrates that standing challenges to putative class actions are a powerful tool not only at the pleading stage, but at all phases of class action litigation.

Prior to resolving any Rule 23 claims — particularly for nationwide settlements — it is essential for counsel defending class actions to vet the standing of each named plaintiff. Otherwise, just as the litigants in Ascension experienced, even a settlement approved in final form by a district court is vulnerable to being unraveled on appeal.

May 28, 2024 by Class Action Defense

The Duane Morris Class Action Review – 2024 Receives Major Accolades From Readers

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

Duane Morris Takeaway: In its review of the Duane Morris Class Action Review – 2024, EPLiC Magazine called it the “the Bible” on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.

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 that “The Review must-have resource for in-depth analysis of class actions in general and workplace litigation in particular.”

EPLiC continued that “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 to see in 2023 in terms of filings by the plaintiffs’ class action bar and governmental enforcement agencies likes the Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).”

So how do we do it?

The answer is pretty simple – we live, eat, and breathe class action law 24/7/365.

Every day, morning, and evening, we check the previous day’s filings of class action rulings relative to antitrust class actions, appeals in class actions, arbitration issues in class actions, Class Action Fairness Act issues in class actions, civil rights class actions, consumer fraud class actions, data breach class actions, EEOC-initiated litigation, employment discrimination class actions, Employee Retirement Income Security Act class actions, Fair Credit Reporting Act class actions, wage & hour class actions, labor class actions, privacy class actions, procedural issues in class actions, product liability & mass tort class actions, Racketeer Influenced and Corrupt Organization Act class actions, securities fraud class actions, settlement issues in class actions, state court class actions, Telephone Consumer Protection Act class actions, and Worker Adjustment and Retraining Act class actions. The Review also has focused appendices on significant sanctions in class actions, the largest attorneys’ fee awards, major settlements across all areas of litigation, the Illinois Biometric Information Privacy Act and the California Private Attorneys General Act.

We conduct due diligence reviews on a national basis for all of these areas, in both federal courts and in the courts of all 50 states. Then we read and analyze every ruling on Rule 23 certification motions and subsidiary issues throughout federal and state trial and appellate courts. The information is organized in our customized database, which is used to provide the Review’s one-of-a-kind analysis and commentary.

The result is a compendium of class action law unlike any other. Thanks for the kudos EPLiC – we sincerely appreciate it!

We look forward to providing the 2025 Review to all of our loyal readers in early January. In the meantime, check out our first-ever 2024 1st Quarter Class Action Settlement Review blog post here!

May 21, 2024May 21, 2024 by Class Action Defense

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

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

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

Case Background

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

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

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

Court of Appeals Opinion

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

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

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

Implications For Employers

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

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

May 6, 2024 by Class Action Defense

Class Action Issues In 2024 – Report From The Beard Group Class Action Conference In New York City

By Gerald L. Maatman, Jr., Jennifer A. Riley, Greg Slotnick, and Maria Caceres-Boneau

Duane Morris Takeaways: On May 6, 2024, the Beard Group sponsored the Class Action Money & Ethics Conference in New York City. The agenda is here. During the conference, over 150 attendees discussed key issues impacting class action litigation in 2024. We were privileged to chair the Conference and present the keynote address on class action litigation trends for the past year and what 2024 has in store for Corporate America. The discussion at the program underscores the cutting-edge issues facing companies in this area of law.

Key Trends For The Past Year

In our keynote address, we discussed the top ten developments in the class action litigation space. The leading trends center on the new era of heightened risks and elevated exposures that pivot on record-breaking settlement numbers; the high conversion numbers for class certification motions into certified classes, and the rise in privacy and data breach class actions.

On the settlement front, 2022 saw $66 billion in total proceeds when measured by the top ten settlements in all areas of law. In 2023, that figure totaled $51 billion, for a combined total of $117 billion over the past 24 months.

The pace of class action settlements thus far in 2024 shows no signs of slowing down. In the first four months of the year, three settlements of over $1 billion are in the books and the total (just for the top five settlements in each area) are at $19.8 billion.

In terms of class certification motions, the Plaintiffs bar successfully secured certification in 74% of cases over the past year. Those figures ranged from nearly 97% in securities fraud lawsuits to 14% in data breach cases. That said, the plaintiffs’ bar has proven its track record to convert class action lawsuit filings in to certified classes at a high rate.

In the privacy and data breach space, such claims became ubiquitous in 2023, with a virtual explosion in those types of lawsuits. While certification rates were quite low in data breach situations, the plaintiffs’ bar secured certification in privacy class actions at a higher rate.

Data Breach Panel

An interesting panel discussion – consisting primarily of plaintiffs’ lawyers – ensued after the keynote address on wiretapping class claims under the Video Privacy Protection Act and data privacy class action litigation. They reflected on the patchwork quilt of rulings in these areas over the past year and the low certification rates due to problems in surmounting standing issues based on lack of injury-in-fact showings.

The panelists predicted a subtle shift in privacy and data breach lawsuits to effectuate a “work around” to these impediments. Multiple plaintiffs’ counsel predicted more reliance on state law claims and litigation of class-wide claims in state court.

Panel On Use Of Qualified Settlement Funds

A panel of plaintiffs and defense lawyers addressed best practices in establishing and working on class-wide settlement with qualified settlement funds (QSF).

Several settlement administrators joined the panel and discussed new challenges in handling QSF funds posed by fraud (both by claimants and cyber criminals), as well as better interest rates that result in generation of more money for distribution.

Panel On Class Notice Strategies

The next panel focused on trends for class notice in 2024 and how artificial intelligence is now mainstream in terms of its use to facilitate the notice send to class members. The panelists expressed how these practices are quite innovative and rapidly evolving. Notice through social media and/or texts or email also is considerable cheaper than U.S. Mail, which is driving down settlement administration costs.

The challenge, however, is to prevent fraudulent claims from individuals seeking a share of the settlement pot. As to take rates, social media advertising is driving the rates upward, but the rates in data breach cases remain low at 2% to 5% (as compared to other types of settlements).- Class member demographics also impact the take rate, as older individuals are apt to view social media notice as “junk mail” or a scam. Conversely, staying ahead of fraudsters has created an imperative for settlement administrators (e.g., where settlement shares are claimed by an IP address of a bot).

Panel On Fraud In The Class Action Process

Another panel discussed the rise of fraudsters in the class action space. Some involve “deep fakes” of persons who seek to assert false claims as named plaintiffs or class members. Others involve cyber-criminals who infiltrate the settlement administration process and seek class settlement shares on a false basis.

Judicial responses have run the gamut from shutting down the settlement administration process and rebooting it with enhanced security measures to referrals to law enforcement personnel to combat fraud. Panelists predicted that judges are apt to ratchet up the scrutiny of final settlement approval of class actions, and possibly promote direct mail notice over digital communications.

ESG Class Action Litigation Panel

Class actions over environmental. social, and governance issues went mainstream in the past year. Panelists tracking these cases predicted that ESG class actions will continue to increase, especially as the plaintiffs’ bar refines their theories of recovery and begin to monetize their claims.

in particular, securities fraud class actions over DEI commitments are increasing as a result of the U.S. Supreme Court’s recent decision in Students For Fair Admissions, Inc., et al. v. President And Fellows Of Harvard College, Case No. 20-1199 (U.S. June 29, 2023). Both plaintiffs’ lawyers and defense counsel anticipate more litigation in this space.

Panel On “Lead Generation” Techniques In Mass Torts & Class Actions

The final panel explored new strategies utilized by the plaintiffs’ bar in reaching out to potential litigants in mass tort and class action litigation situations. The numbers behind the advertising – on television, social media, and radio – top $1.1 billion on an annual basis. On average, plaintiffs’ law firms run over 45,000 advertisements per day across the country with mass tort cases constituting the majority of ad placements.

The panelists opined that nuclear verdicts, large class action settlements, and social inflations are the main factors fueling the advertising. They concluded that these forms of advertising are a staple of the litigation system and not going away anytime soon.

Implications For Companies

Class action litigation is a fact of life for corporations operating in the United States. Today’s conference underscored that change is inevitable, and class actions litigation is no exception.

April 29, 2024 by Class Action Defense

Join Us! Duane Morris Invitation: Chicago Developments In Workplace Law And Practice Seminar

Duane Morris Takeaway: Join Duane Morris attorneys in Chicago for this special event! Duane Morris’ annual Developments in Workplace Law and Practice seminar series provides our clients and friends with a comprehensive update of important employment, labor relations, benefits and immigration law developments over the past year, as well as imminent changes that may seriously impact their businesses. Emphasis is placed on understanding the practical implications of these developments and the key strategies that immediately can be implemented to deal with them efficiently and effectively. This session encourages lively, thought-provoking discussions. Participants will have the opportunity to network with their peers and the presenters before and after the event. The program is of particular interest to business owners and executives, in-house counsel and HR professionals.

This program is open to all – click here to attend in person!

About the Chicago Program

Join Dan Canales, Alex Karasik, Jennifer Long, Jerry Maatman, John Reade, Jen Riley, Lisa Spiegel and Brandon Spurlock for a discussion of the following topics:

What’s New for Illinois Employers in 2024 and Beyond?

Hear all about current updates for Illinois employers including the latest regulatory guidance on mandatory paid leave requirements, how to prepare for mandatory pay transparency requirements beginning in 2025, the latest requirements impacting employers using temporary labor, and other anticipated employee-friendly changes in the legislative pipeline for 2025 and beyond.

Learn how recent federal developments impact your employment practices, including the Department of Labor’s regulatory action on independent contractor and employee misclassification, the NLRB’s recent regulatory action on joint employer issues, how OSHA’s new union representative walkaround rule impacts non-union employers, and other nationwide trends in state and local legislation.

Class Action Review: Top Developments Employers Should Expect for 2024 and Beyond

Class action litigation presents one of the most significant risks to corporations today. Learn the latest highlights in class action trends, decisions and settlements in crucial areas impacting Corporate America, including civil rights, employment discrimination, wage payment, labor and other class and collective actions brought by current and former employees. We will also share our insight on what companies and corporate counsel can expect to see in 2024 and beyond.

Digital Developments: What Businesses Need to Know About AI, Privacy and Data Breach Class Actions

Emerging technologies such as AI, biometric timekeeping software and cloud storage of data have exploded onto the scene of the modern workplace. Hear the latest developments about:

How employers are handling the emergence of AI
How courts are adjudicating privacy class actions following two major Illinois Supreme Court decisions involving the Biometric Information Privacy Act (BIPA)
What employers need to know about the latest trend in class action litigation: data breach claims

Employee Benefits Update

The rules governing employee benefit plans are always changing and it is no different in 2024. We will discuss the biggest issues that employers should keep in mind this year – including:

Health and welfare plan fiduciary developments
Recent guidance under SECURE 2.0 that impacts all 401(k) plan
Updates on ERISA retirement plan litigation and the steps that employers can take to minimize their potential exposure

The Latest Updates for Employers on Immigration Sponsorship and Immigration Related Investigations

Employer sponsorship of employees for work authorization and green cards can be a long, complex process. Over time, organizations, jobs, locations, and employees all change. Learn what rights employers have during the sponsorship process to stop, change or redirect sponsorship efforts and how those decisions will impact the sponsored employees.

USCIS, ICE and the DOJ regularly investigate employers for immigration-related compliance during visa sponsorship, and immigration-related discrimination during the I-9 and E-Verify processes. These investigations can be onerous with unexpected government visits to employer locations, large document productions and significant fines for civil liability. Get the latest updates for employer compliance in these situations.

April 18, 2024 by Class Action Defense

Ninth Circuit Holds That Business Entities Cannot Qualify As Transportation Workers Exempt From The Federal Arbitration Act

By Eden E. Anderson, Rebecca S. Bjork, and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On April 10, 2024, the Ninth Circuit held in Fli-Lo Falcon, LLC v. Amazon.com, Case No. 22-35818 (9th Cir. Apr. 10, 2024), that business entities are not covered by the Federal Arbitration Act’s (“FAA”) transportation worker exemption. The Ninth Circuit stated, “[w]hile a natural person such as an independent contractor may be a transportation worker, a non-natural person such as a business entity that employs or contracts with transportation workers, is not.” Id. at 12. The Ninth Circuit’s opinion is a must read for companies seeking to solidify their arbitration programs and manage their litigation risks.

Case Background

The plaintiffs in Fli-Lo Falcon were delivery service partners (“DSPs”) that contracted with Amazon to deliver packages. To join the DSP program, an individual needed to first create a business entity. When plaintiffs filed a putative class action against Amazon, it sought to compel arbitration pursuant to an arbitration clause in the DSP agreements. The district court compelled arbitration and dismissed the case, and the Ninth Circuit affirmed.

The Basis Of The Ninth Circuit’s Decision

A critical issue in the case was whether the FAA’s transportation worker exemption applied to the plaintiffs. The Ninth Circuit held it did not because the transportation worker exemption “does not extend to business entities.” Id. at 12. The Ninth Circuit reasoned that the language of the exemption compelled this conclusion. Section 1 of the FAA provides that it “shall not apply to contracts of employment of seamen, railroad employees, or any other class of worker engaged in interstate commerce.” 9 U.S.C. § 1. Applying the statutory canon of construction ejusdem generis, which instructs that general words be construed to embrace only objects similar in nature to those objects specifically enumerated, the Ninth Circuit reasoned that the word “workers” in § 1 could not be construed to include a business entity, given the § 1’s earlier reference to “seamen” and “railroad employees.” Id. at 12. Thus, the Ninth Circuit opined that “[w]hile a natural person such as an independent contractor may be a transportation worker, a non-natural person such as a business entity that employs or contracts with transportation workers, is not.” Id.

Relatedly, the Ninth Circuit also held that “‘contracts of employment’ in the transportation worker exemption do not extend to commercial contracts.” Id. at 14. In reaching this conclusion, the Ninth Circuit cited the language of the transportation worker exemption, which exempts “contracts of employment of . . . any other class of workers.” The Ninth Circuit emphasized that, “for a contract to be a contract of employment covered by § 1, it must have a qualifying worker as one of the parties.” Id.

In a concurring opinion, Circuit Judge Holly Thomas disagreed that business entities can never be subject to the transportation worker exemption. Plaintiffs’ expressed concern that “companies could then contract around the FAA’s exemption by forcing their transportation workers to create sham corporations, then contracting with those corporations rather than employing the workers directly” resonated with Judge Thomas. Id. at 25. However, Judge Thomas concurred in the result as to the plaintiffs because “Plaintiffs are not sham corporations, but bona fide business entities and their relationship is not an employment relationship, but a commercial one.” Id.

Implications Of The Ruling

In spite of the concurring opinion of Circuit Judge Thomas, it is now the law in the Ninth Circuit that the transportation worker exemption does not apply to a business entity. The opinion sets up a split of authority in the federal circuits, and it remains to be seen if a petition for writ of certiorari will be pursued with the U.S. Supreme Court.

April 8, 2024 by Gerald L. Maatman, Jr.

BIPA Plaintiffs Ring The Bell In Class Certification Victory Over Amazon

By Gerald L. Maatman, Jr., Tyler Zmick, and Christian J. Palacios

Duane Morris Takeaways: In Svoboda v. Amazon, Case No. 21-C-5336, 2024 U.S. Dist. LEXIS 58867 (N.D. Ill. Mar. 30, 2024), Judge Jorge L. Alonso of the U.S. District Court for the Northern District of Illinois granted class certification to a class of plaintiffs who alleged that Amazon’s “virtual try-on” (“VTO”) technology violated the Illinois Biometric Information Privacy Act (“BIPA”). In doing so, Judge Alonso dealt Amazon a significant blow in its efforts to block the certification of a purported class of claimants that might number in the millions (with pre-certification discovery already establishing that there were over 160,000 persons who used Amazon’s VTO technology during the relevant class period). This decision is the most recent success by the plaintiffs’ bar in a string of victories for class action privacy lawsuits across Illinois and illustrates that even the largest and most sophisticated companies in the world face legal exposure in connection with their biometric retention and application practices.

Background

Amazon sells products to consumers on its mobile website and shopping application. Its “virtual try-on” technology allows users to virtually try on makeup and eyewear, and is exclusively available on mobile devices. VTOs are software programs that use augmented reality to overlay makeup and eyewear products on an image or video of a face, which allows shoppers to see what the product might look like prior to deciding whether to purchase it. During the relevant class period, there were two VTOs at issue, one of which was developed by a third party (ModiFace), and another which was developed in-house by Amazon that later replaced ModiFace. Id. at 4. Amazon’s VTOs come in two forms, including: (1) VTO technology available for lip products, and; (2) VTOs available for glasses. The ModiFace VTO is available for lip liner, eye shadow, eye liner, and hair color. Amazon licenses, rather than owns ModiFace VTO. Id. at 5.

Both Amazon and ModiFace VTOs essentially works the same for every user. In order to access Amazon’s virtual try-on technology, the user first begins by clicking a “try on” button on an Amazon product page (the use of this try-on feature is entirely optional and does not serve as a barrier to the customer actually purchasing the product). The first time the customer uses Amazon VTO, she is shown a pop-up screen that states, “Amazon uses your camera to virtually place products such as sunglasses and lipstick on your face using Augmented Reality. All information remains on your device and is not otherwise stored, processed or shared by Amazon.” Only after granting permission can the customer use the VTO technology to virtually try on the product. Users may select “live mode” or “photo upload mode” to superimpose the try-on product on an image of their own face. For both modes, the VTOs use software to detect users’ facial features and use that facial data in order to determine where to overlay the virtual products. Id. at 5.

Based on these facts, plaintiffs brought a class action lawsuit against Amazon, which alleged that the online retailer violated the BIPA’s requirements by collecting, capturing, storing or otherwise obtaining the facial geometry and associated personal identifying information of thousands (if not millions) of Illinois residents who used Amazon’s VTO applications from computers and other devices without first providing notice and the required information, obtaining informed written consent, or creating written publicly-available data retention and destruction guidelines. Id. Plaintiffs sought to certify a class of all individuals who used a virtual try-on feature on Amazon’s mobile website or app while in Illinois on or after September 7, 2016. Significantly, pre-certification discovery established that at least 163,738 people used virtual try-on technology on Amazon’s platforms while in Illinois during the class period. Id. at 6.

The Court’s Ruling

In ruling in favor of the plaintiffs, Judge Alonso systematically rejected each of Amazon’s arguments as to why plaintiffs failed to satisfy Rule 23’s requirements for class certification. Given the size of the purported class, Amazon did not attempt to contest the numerosity requirement. With respect to the adequacy requirement, Amazon argued that the named plaintiffs were inadequate and atypical because they alleged they used VTO for lipstick, and not eyewear or eye makeup (while the majority of the proposed class was comprised of individuals who used VTO for eyewear). Amazon further argued that the named plaintiffs had a conflicting interest with the class members who used VTO for eyewear, because the BIPA’s healthcare exception bars claims arising from the virtual try-on of eyewear. Id. at 12. The Court rejected this argument. It found that there was no evidence that the named plaintiffs’ interests were antagonistic, or directly conflicted with those members who used VTO to try on eyewear, and Amazon’s concern that plaintiffs lacked an incentive to vigorously contest the healthcare exception defense was merely speculative. Id. The Court was also satisfied that the plaintiffs’ claims arose from the same course of conduct that gave rise to other class members’ claims (such as Amazon’s purported collection, capture, possession, and use of facial templates via its VTOs) and thus the typicality requirement was satisfied. Id. at 15.

Similarly, the Court reasoned that common questions of law or fact predominated over any questions affecting individual members, and a class action was superior to other available methods for fairly and efficiently adjudicating the controversy. Id. at 17. Amazon asserted that there was no reliable way to identify class members who used VTO in Illinois during the class period, and thus, individualized inquiries predominated rendering the case unmanageable. Id. at 21. The Court rejected this argument. It agreed with the plaintiffs that Illinois billing addresses, IP addresses from which VTO was used, and geo-location data all served as a way of identifying class members. Amazon raised other arguments about the difficulty of identifying potential class members, but Judge Alonzo rejected all of these arguments, observing that plaintiffs did not need to identify every member of the class at the certification stage. Id. at 23.

Finally, the Court dispatched with Amazon’s various affirmative defenses. In particular, Amazon argued that it had unique defenses for every member of the putative class, since damages were discretionary under the BIPA. The Court disagreed. It noted that the Illinois Supreme Court had determined that a trial court could fashion a damages award in a BIPA lawsuit that fairly compensated class members while deterring future violations, without destroying a defendant’s business. Id. at 25.

Implications for Employers

Employers should be well aware of the dangers associated with collecting or retaining individuals’ biometric information without BIPA-compliant policies in place. This case serves as a reminder that the larger the company, the larger the potential class size of a class or collective action. Although it remains to be seen the actual size of Svoboda v. Amazon, the class will likely number in the hundreds of thousands and this case should serve as a wake-up call for companies, regardless of scale, of the dangers of running afoul of the Prairie State’s privacy laws.

March 28, 2024 by Class Action Defense

Announcing The First Edition Of The Duane Morris Product Liability And Mass Torts Class Action Review

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

Duane Morris Takeaways: Clients, ranging from some of the world’s largest manufacturers and insurance companies to startup companies and individual inventors, turn to Duane Morris for counsel and representation in claims involving products liability and toxic torts. For years, Duane Morris has worked with clients to develop cost-containment and strategic litigation plans designed to minimize the risk, business disruption and potentially staggering cost of products liability and toxic tort litigation. Our goal is to provide value by acting as proactive counselors and advisors, rather than simply responding to particular problems in isolation. To that end, the class action team at Duane Morris is pleased to present the Product Liability And Mass Torts Class Action Review – 2024. This new publication analyzes the key rulings and developments in 2023 and the significant legal decisions and trends impacting both product liability class action litigation and mass tort litigation for 2024. We hope that companies and employers will benefit from this resource and assist them with their compliance with these evolving laws and standards.

Click here to download a copy of the Product Liability And Mass Torts Class Action Review – 2024 eBook.

Stay tuned for more product liability and mass tort class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.

March 27, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 49: 2024 Preview: Consumer Fraud Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Alessandra Mungioli with their discussion of 2023 developments and trends in consumer fraud class action litigation as detailed in the recently published Duane Morris Consumer Fraud Class Action Review – 2024.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Google Podcasts, the Samsung Podcasts app, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, YouTube or our RSS feed.

Episode Transcript

Jerry Maatman: Welcome loyal blog listeners. Thank you for being on our weekly podcast, the Class Action Weekly Wire. My name is Jerry Maatman, I’m a partner at Duane Morris, and joining me today is my colleague, Alessandra. Thank you for being on our podcast to talk about thought leadership with respect to class actions.

Alessandra Mungioli: Thank you, Jerry. I’m glad to be here.

Jerry: Today we’re going to discuss our recent publication, our e-book on the Duane Morris Consumer Fraud Class Action Review. Listeners can find this book on our blog. Could you tell us a little bit about what readers can expect from this e-book?

Alessandra: Absolutely Jerry. Class action litigation in the consumer fraud space remains a key focus of the plaintiff’s bar. A wide variety of conduct gives rise to consumer fraud claims which typically involve a class of consumers who believe they were participating in a legitimate business transaction, but due to a merchant or a company’s alleged deceptive or fraudulent practices, the consumers were actually being defrauded.

Every state has consumer protection laws, and consumer fraud class actions require courts to analyze these statutes, both with respect to plaintiffs’ claims and also with respect to choice of law analyses when a complaint seeks to impose liability that is predicated on multiple states’ consumer protection laws.

To assist corporate counsel and business leaders with navigating consumer fraud class action litigation, the class action team here at Duane Morris has put together the Consumer Fraud Class Action Review, which analyzes significant rulings, major settlements, and identifies key trends that are apt to impact companies in 2024.

Jerry: This is a great, essential desk reference for practitioners and corporate counsel alike dealing with class actions in this space. Difficult to do in a short podcast, but what are some of the key takeaways in that desk reference?

Alessandra: Just as the type of actionable conduct varies, so, too, do the industries within which consumer fraud claims abound. In the last several years, for example, the beauty and cosmetics industry saw a boom in consumer fraud class actions as consumers demanded increased transparency regarding the ingredients in their cosmetic products and the products’ effects. In 2023, consumer fraud class actions ran the gamut of false advertising and false labeling claims as well.

Artificial intelligence also made its way into the class action arena in the consumer fraud space for the first time in 2023. In MillerKing, LLC, et al. v. DoNotPay Inc., the plaintiff, a Chicago law firm, filed a class action alleging the defendant, an online subscription service that uses “robot lawyers” programmed with AI, was not licensed to practice law and therefore brought claims for consumer fraud, deceptive practices, and breach of trademark. The defendant moved to dismiss the action on the basis that the plaintiff failed to establish an injury-in-fact sufficient to confer standing, which the court granted. The plaintiff asserted that the conduct caused “irreparable harm to many citizens, as well as to the judicial system itself,” and constituted “an infringement upon the rights of those who are properly licensed,” such as “attorneys and law firms.” The court found that the plaintiff failed to demonstrate any real injury per its claims, and granted the defendant’s motion to dismiss.

Jerry: Well, robot lawyers and lawyer bots – that’s quite a development in 2023. How did the plaintiffs’ bar do in – what I consider the Holy Grail in this space – securing class certification, and then conversion of a certified class into a monetary class-wide settlement?

Alessandra: So settlements were very lucrative in 2023. The top 10 consumer fraud class action settlements in 2023 totaled $3.29 billion. And by comparison, the top 10 settlements in 2022 had totaled $8.5 billion, so we have seen a downward trend. Notably, five of these 10 settlements last year took place in California courts. The top settlements in 2023 resolved litigation stemming from a variety of different theories, from smartphone performance issues to the marketing of vape products. Last year, courts granted plaintiffs’ motions for class certification in consumer fraud lawsuits approximately 66% of the time. And the overall certification rate for class actions in 2023 was 72%.

Jerry: Well, that’s quite a litigation scorecard. And this is an area of interest that the class action team at Duane Morris will be following closely and blogging about in 2024. Well, thank you for being with us today and thank you loyal blog readers and listeners for joining our weekly podcast again. You can download the Duane Morris Consumer Fraud Class Action Review off our website. Have a great day!

Alessandra: Thank you!

March 26, 2024 by Class Action Defense

The Duane Morris Class Action Defense Blog’s 300th Post!

Duane Morris Takeaways: It has been a busy time for the Duane Morris Class Action Defense blog – it just recorded its 300th blog post!!!

Since our kick-off post, our data analytics show there have been over 50,000 views to blog posts, with thousands of our loyal subscribers reading about class action litigation developments. There are many highlights from the past 300 posts, but we wanted to provide just a few for you here. Click on the links below to see all the hot trends in class action litigation!

Overview Of The 300 Posts

We launched the second edition of the Duane Morris Class Action Review, which is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America. The Review has been prominently featured in the media and is a must-have for all human resources professionals, business leaders, and corporate counsel.

We will be publishing the 2025 Edition of the Review next January.

So far in 2024, we have published seven mini-books focused on specialized areas of law in class action litigation and on EEOC-Initiated litigation. Here are the links to our blog posts announcing the EEOC Litigation Review, the Data Breach Class Action Review, the Privacy Class Action Review, the Wage & Hour Class And Collective Action Review, the Discrimination Class Action Review, the Private Attorneys General Act Review, and the Consumer Fraud Class Action Review.

We also continued the success of the Duane Morris Class Action Weekly Wire podcast, in which we talk about hot class action rulings and developments in real time and in relatable ways for our viewers. Tune in on Wednesdays for new episodes, and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Google Podcasts, the Samsung Podcasts app, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, YouTube or our RSS feed.

Below are the top five most viewed blog posts – which had over 25,000 combined views!

Thank you loyal followers for making the Class Action Defense blog your pick for class action litigation related information, trends, and analysis. We truly appreciate it! Please keep coming back, we promise to keep the content fresh!