Class Action Defense

May 20, 2024 by Class Action Defense

Eleventh Circuit Vacates Approval Of GoDaddy TCPA Class Action Settlement

By Gerald L. Maatman, Jr., Jennifer A. Riley, Emilee Crowther, and Zachary J. McCormack

Duane Morris Takeaways: In Drazen v. Pinto, No. 21-10199, 2024 U.S. App. 2024 LEXIS 11590 (11th Cir. May 13, 2024), the Eleventh Circuit vacated a district court’s final approval of a settlement of a class action alleging GoDaddy, Inc. violated the Telephone Consumer Protection Act (“TCPA”) by sending unwanted marketing texts and phone calls through a prohibited automatic telephone dialing system (“ATDS”). The Eleventh Circuit held the district court abused its discretion by approving the class-wide settlement, which would have provided up to $35 million to pay class members’ claims and up to $10.5 million to class counsel in attorneys’ fees. The Eleventh Circuit opined that the district court erred by overlooking evidence of collusion between class counsel and GoDaddy’s attorneys.

The Eleventh Circuit concluded that the district court inappropriately certified the class, and should not have approved the proposed settlement agreement and granted class counsel’s motion for attorneys’ fees. In doing so, the district court overlooked evidence of collusion between class counsel and GoDaddy’s attorneys, treated the settlement as a common fund instead of a claims-made resulution, and improperly calculated attorney fees after erroneously concluding it was not a coupon settlement. The Eleventh Circuit remanded the case back to the district court for further proceedings.

The Eleventh Circuit’s 123-page opinion offers a treasure trove of insights regarding the need for constant vigilance when it comes to TCPA compliance — particularly for employers involved in these types of class actions.

Case Background

GoDaddy, Inc., a publicly traded multi-billion-dollar U.S. corporation, provides services – including domain registration, website hosting, payment processing, and marketing support – to entrepreneurs around the globe. Id. at *2. The Drazen litigation consisted of three consolidated TCPA class action lawsuits brought against GoDaddy alleging the company sent unwanted marketing texts and phone calls through ATDS. Id. at *13. The parties eventually negotiated a settlement agreement where GoDaddy would provide up to $35 million to pay class members’ claims and up to $10.5 million to class counsel in attorneys’ fees. Id. at *41. The plaintiffs moved the district court to certify a Rule 23(b)(3) class for settlement purposes, to preliminarily approve the negotiated settlement agreement, and to approve the draft notice of proposed settlement to class members. Id. at *21. The district court granted preliminary approval of the settlement and directed that notice of the proposed settlement be given to the class. Id. at *22.

Shortly after counsel emailed the notice to the class, the Supreme Court granted certiorari in Facebook, Inc. v. Duguid, 592 U.S. 395, 401-02 (2021), which took up the same principal issue in the plaintiffs’ consolidated actions: whether a device must have certain capabilities to constitute an auto dialer under the TCPA. Class counsel, anticipating an impending Supreme Court ruling in Facebook that could impact a settlement, urged the district court to enter a final judgment approving the settlement and grant its attorneys’ fees motion. Id. at *7.

The district court granted class counsel’s motion over the objection of Juan Pinto, an individual class member, who argued (i) the district court prematurely ruled on attorneys’ fees before the deadline for objections, and (ii) the fees awarded were far in excess of what class members would receive, making the settlement unfair, unreasonable, and inadequate. Id. at *8. Over the objections of this individual class member, the district court approved the settlement, and Juan Pinto appealed. Id. at *9.

The Eleventh Circuit’s Decision

The Eleventh Circuit concluded the district court abused its discretion in approving the class-wide settlement agreement. Among other oversight, the district court failed to account for the 2018 amendments to Rule 23(e)(2), it overlooked evidence indicating that the settlement agreement was the product of collusion, and that the notice of the proposed settlement failed to inform the absent class members of the claims, issues, or defenses in plaintiff’s cases as required by Rule 23(c)(2)(B)(iii), fundamental due process, and the district court’s fiduciary obligation to the absent class members. Id. at *9. The Eleventh Circuit highlighted various errors committed by the district court in its 123-page opinion, but focused primarily on three areas.

First, the Eleventh Circuit concluded that it was improper for the district court to determine the settlement as fair, reasonable, and adequate without considering Rule 23(e)(2)(A). Id. at *59. The district court also overlooked evidence indicating that the settlement agreement was the product of collusion, such as the overbroad, sweeping release provision and inadequate relief provided to the class relative to what class counsel and GoDaddy received. Id. at *60. Rule 23 and due process require that, in finalizing a class settlement, the parties and the district court must give absent class members a meaningful opportunity to opt-out or challenge the class settlement. Id. at * 66.

Second, the Eleventh Circuit determined that the notice of the proposed settlement failed to inform the absent class members of the “claims, issues, or defenses” in the plaintiffs’ cases as required by Rule 23(c)(2)(B)(iii), fundamental due process, and the district court’s fiduciary obligation to the absent class members. Id. at *71. The Eleventh Circuit adopted the interpretation of Rule 23(c)(2)(B)(iii) as “conjunctive”, and that class members must be informed not only of the claims asserted, but also of the dispositive issue in Facebook and how its decision would affect the case. Id. at *77. The Eleventh Circuit’s opinion further suggested that additional notice should have been provided regarding this development.

Third, the Eleventh Circuit found that the district court erred in three ways when it calculated attorney’s fees considering it: (1) misapplied Rule 23(h), (2) treated the settlement as a common fund when it was claims-made, and (3) determined that this was not a settlement involving coupons under the Class Action Fairness Act (“CAFA”) and thus declined to examine class counsel’s motion for attorney’s fees with CAFA-mandated scrutiny and procedures. Id. at *9. First, the district court failed to give absent class members advance notice of class counsel’s fee motion, which disregarded the manifest intent of Rule 23(h). Id. at *79. The schedule proposed by the parties and adopted by the district court provided class members with only 7 days to review the attorney’s fees motion before the objection deadline, and the notice did not specify when that motion would be filed, which the Eleventh Circuit strongly criticized. Id. at *80. Second, although labeled a “common fund,” the settlement really involved a “claims made” structure where class counsel may recover the full amount of the attorneys’ fees sought; the class members, however, recover only if they submit claims. Id. at *79. Finally, the district court declined to apply class CAFA-mandated scrutiny and procedures, which was an error as the settlement allowed the class members to choose a cash award instead of a voucher. Id. at *89.

For these reasons, the Eleventh Circuit vacated the judgment, and remanded to the district court for further proceedings.

Implications Of The Decision

The Eleventh Circuit’s opinion depicts the latest legal developments in the constantly changing TCPA landscape, and the need to structure class settlement agreements in a way that obtains peace and withstands judicial scrutiny. In an effort to avoid expensive repercussions, employers and corporate counsel must exercise caution when drafting settlement documents in class-wide resolutions. Corporate counsel should take note of the dangers of the TCPA, as well as the potential pitfalls in faulty class action settlement agreements, and continue to monitor this space for future developments.

May 19, 2024May 19, 2024 by Class Action Defense

South Carolina Federal Court Denies Class Certification In Massive Data Breach Class Action

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther

Duane Morris Takeaways: In a data breach lawsuit entitled In Re Blackbaud, Inc., Customer Data Breach Litigation, MDL No.2972, Case No. 3:20-MN-02972, 2024 WL 2155221 (D.S.C. May 14, 2024), Judge Joseph F. Anderson, Jr. of the U.S. District Court for the District of South Carolina denied Plaintiff’s motion for class certification. The Court found that the Plaintiffs failed to meet their burden of proof as to ascertainability since they could not demonstrate an administratively reasonable method by which to ascertain the estimated 1.5 billion putative class members. This case serves as an important reminder that a plaintiff’s failure to provide a court with an administratively reasonable way to ascertain a class can be an effective tool when combatting class certification motions.

Case Background

Defendant Blackbaud, Inc. provides data collection and storage services to a wide variety of organizations (“customers”). Id. at 2. Defendant collects and stores personally identifiable information and protected health information of individuals on behalf of its clients. Id.

Between February and May 2020, a cybercriminal breached Defendant’s systems, capturing 90,000 backup files containing data belonging to 13,000 of Defendant’s customers, and data belonging to approximately 1.5 billion individuals worldwide. Id. at 3-4.

Various plaintiffs filed suits nationwide, and on December 15, 2020, all of the lawsuits were combined into a multidistrict litigation in the District of South Carolina. Id. at 5. Thereafter, the Plaintiffs moved to certify one main nationwide class, and four other sub-classes, including two in California, one in New York, and one in Florida. Id. at 5-6.

The Court’s Decision

The Court denied Plaintiffs’ motion for class certification. It held that Plaintiffs failed to meet their burden of proof as to Rule 23’s ascertainability requirement. Id. at 1. As a threshold requirement to any class certification, a plaintiff must demonstrate that a class is “ascertainable”, i.e., “that there will be an administratively feasible way for the court to determine whether a particular individual is a class member.” Id. at 16.

Plaintiffs argued four primary points in support of ascertainability, including: (i) the method proposed by their expert; (ii) Defendant’s ability to create a fact sheet about the named Plaintiffs; (iii) Defendant’s ability to give notice to its customers; and (iv) Defendant’s use of a program called Wirewheel. Id. at 17.

As to Plaintiffs’ first point, the Court granted Defendant’s motion to exclude the Plaintiffs’ expert’s testimony on the grounds that the expert failed to sufficiently test his method, was unable to replicate his method, failed to sufficiently document his method, and could not provide the Court with an error rate consistent with generally accepted statistical practices. Id. at 18.

As to Plaintiffs’ second point, the Court found that the Defendant’s ability to create a fact sheet containing information about 34 named Plaintiffs did not weigh in favor of ascertainability, as the Defendant’s process was “not proof that Plaintiffs [could] undertake the larger task of ascertaining the proposed classes and sub-classes” for 1.5 billion individuals. Id. at 45-46. In its decision, the Court placed particular emphasis on the fact that Plaintiffs had not “tested, briefed, or otherwise demonstrated how they would collect information from putative plaintiffs to conduct a process similar to the process Defendant undertook” in creating its fact sheet. Id. at 40-41.

As to Plaintiff’s third point, the Court similarly found that the Defendant’s ability to give notice of the breach did not weigh in favor of ascertainability, because “[t]he steps Defendant took to give notice to its customers [is] not comparable to the steps Plaintiffs would need to take to ascertain a class.” Id. at 48-49. The Court emphasized the distinction between Defendant’s task to provide notice to its 13,000 customers versus Plaintiffs’ task to identify all of the 1.5 billion individual constituents of Defendant’s customers. Id. at 46, 49.

As to Plaintiff’s fourth and final point, the Court again held that it did not weigh in favor of ascertainability, as “the Defendant’s ability to utilize a singular, live database that it maintains for the sole purpose of responding to [certain] requests does not in any way indicate that Defendant is necessarily able to restore and query 90,000 backup files of databases that were customized, maintained, and controlled by 13,000 separate customers.” Id. at 49-50.

In sum, the Court found that the Plaintiffs failed to demonstrate that their “proposed classes and sub-classes” were able to be ascertained “without significant individualized inquiry at a scale that [was] not administratively feasible for Plaintiffs, th[e] Court, Defendant, or any individuals or entities acting at their direction to undertake.” Id.

Implications For Companies

The Court’s ruling in In Re Blackbaud, Inc., Customer Data Breach Litigation underscores the importance of ascertainability in large-scale data breach class actions. The reality is that companies across the world face threats of large scale cyber-attacks to capture their data daily, whether it be through their own servers or through the technologies and tools they utilize. Since a majority of these cyber threats focus on personally identifiable information or personal health information, each data breach could now potentially affect millions (or billions) of individuals.

It is natural for a company to experience trepidation in light of these threats and the likelihood of a class action that could follow. However, it is important to remember that in any class action, Rule 23 requires a plaintiff to demonstrate that putative class members are identifiable without extensive and individualized fact-finding. The broader the swath Plaintiff wants to brush, the harder it will be for that Plaintiff to demonstrate and plausibly claim to the Court that their class is ascertainable.

May 16, 2024 by Class Action Defense

U.S. Supreme Court Settles Circuit Split And Holds That District Courts Granting Motions To Compel Arbitration Do Not Have Discretion To Dismiss Underlying Lawsuits And Must Stay Them

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

Duane Morris Takeaways: On May 16, 2024, the U.S. Supreme Court issued a unanimous decision holding that when a district court determines that the claims in a lawsuit are arbitrable and a party has requested a stay of litigation, the district court does not have discretion to dismiss the lawsuit. The decision resolves a split amongst the federal circuit courts over whether Section 3 of the Federal Arbitration Act (“FAA”) mandates a stay in such circumstances by use of the word “shall” in that provision. The Supreme Court reasoned from established canons of statutory interpretation as well as the structure and purpose of the FAA compelled the result in the case. The decision will likely result in a situation where disputes between parties in an arbitral proceeding will more often be brought to the attention of the district court to resolve.

Case Background

The case arrived at the Supreme Court via the Ninth Circuit which considered in Forrest v. Spizzirri, 62 F.4th 1201 (9th Cir. 2023), whether, under the FAA, a lawsuit should be dismissed or stayed after all the plaintiff’s claims are compelled to arbitration.

The plaintiffs were delivery drivers who sought to maintain wage-and-hour claims against their former employer for allegedly misclassifying them as independent contractors. Although the plaintiffs agreed their claims were subject to arbitration, they disagreed that their lawsuit should be dismissed and asked the district court to instead stay the case pending arbitration. According to the plaintiffs, the FAA mandates a stay to protect rights in the existing lawsuit and preserve judicial supervision while an arbitration is ongoing. The district court disagreed. It dismissed the lawsuit without prejudice, and the Ninth Circuit affirmed. Although Section 3 of FAA states that the court “shall” stay the trial of an action pending arbitration, the Ninth Circuit held that district courts have discretion to instead dismiss a lawsuit after all claims have been ordered to arbitration.

The U.S. Supreme Court’s Decision

The Supreme Court unanimously reversed the Ninth Circuit and embraced the position the plaintiff delivery drivers took in the district court – that their lawsuit should be stayed and not dismissed pending arbitration. Justice Sotomayor wrote the opinion for the Supreme Court.

The Opinion is concise, tightly reasoned, and less than six pages long. The Supreme Court begins its analysis – after describing the parties and how the case arrived on their docket – with a straightforward statement of the conclusion that “[i]n this statutory interpretation case, text, structure, and propose all point to the same conclusion,” which is that “a district court does not have discretion to dismiss a suit on the basis that all the claims are subject to arbitration.” (Slip Op. at 3.) Then, the Opinion explores each of those sources of interpretation and explains why they lead to the outcome reached.

The text of the FAA on this issue appears in Section 3, and it states that when any issue in a lawsuit is subject to arbitration, the district court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” (Slip Op. at 4.) The Supreme Court concluded that “shall” is “plain statutory text [that] requires a court to stay the proceeding.” (Id.) The Supreme Court noted that the word “shall” also appears “in neighboring sections of the FAA” and it previously found those sections “created a mandatory obligation that left no place for the exercise of discretion by a district court.” (Id.) The Supreme Court concluded that “The same is true here.” (Id.)

Moreover, “just as ‘shall’ means ‘shall,’ ‘stay’ means ‘stay,” according to the Court. (Id.) Therefore, it rejected the argument of the employer that stopping the parallel in-court proceedings during the arbitration is what matters, and it is equally achieved by an order of dismissal without prejudice. The Supreme Court noted that in 1910, when Congress passed the FAA, Black’s Law Dictionary defined a “stay” as a temporary suspension of legal proceedings, which is at odds with an outright dismissal. (Id. at 4-5.)

As for the structure and purpose of the FAA, the Supreme Court found that they also supported interpreting Section 3 as mandating stays in this situation. The fact that Congress chose to provide an automatic interlocutory appeal of a denial of a motion to compel arbitration in Section 16, but did not do so for grants of motions to compel arbitration supports the conclusion that Congress intended to move arbitrable disputes out of courts and into arbitration as quickly and easily as possible. (Id. at 5-6.) But a dismissal triggers the right to an immediate appeal, which Congress clearly sought to avoid in drafting Section 16 of the FAA.

Finally, the Supreme Court explained that stays are preferable to dismissal orders in arbitration cases because they will allow federal courts to maintain jurisdiction to resolve disputes between the parties that may arise more smoothly. (Id.)

Implications Of The Decision

This decision by the U.S. Supreme Court precluding district courts from dismissing suits without prejudice after granting motions to compel arbitration will have the benefit of providing a uniform national standard in this ever important area of the law. It also may well have the effect the Court seems to desire, e.g., ensuring that arbitrations are able to proceed quickly and smoothly by ensuring the district judge remains in the background to resolve disputes as they arise. But that same virtue could amount to a vice, in that it may create an incentive for participants in arbitration to attempt to avoid the arbitrator by going to the court. The following months should provide a hint of whether the Court’s predictions come true.

May 16, 2024May 16, 2024 by Class Action Defense

State AGs Sue EEOC For Abortion-Related Accommodation Requirements In PWFA Final Rule

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

Duane Morris Takeaways: On April 25, 2024, a group of seventeen (17) state attorneys’ general sued the EEOC for its April 19, 2024 Final Rule (the “Final Rule”) outlining the Commission’s regulations regarding the newly enacted Pregnant Workers Fairness Act of 2022 (“PWFA”). The case – captioned States of Tennessee et al. v. Equal Employment Opportunity Commission, Case No. 2:24-CV-00084 (E.D. Ark. Apr. 25, 2024) – is filed in the U.S. District Court for the Eastern District of Arkansas and alleges the EEOC’s Final Rule violates the Administrative Procedure Act (the “APA”) and the U.S. Constitution based on the fact that it defines a “related medical condition” to include an abortion. This new lawsuit may shape up to be a significant challenge to the EEOC’s authority to enforce its newest federal anti-discrimination statute in its enforcement toolkit.

Background

The PWFA requires employers to provide a reasonable accommodation to qualified employees or applicants that have known limitations related to, affected by, or arising out of pregnancy, childbirth, or “related medical conditions,” unless the accommodations will cause the employer undue hardship. See 42 U.SC. § 2000gg(4). Modeled after the Americans with Disabilities Act (the “ADA”), the PWFA contains the familiar language of requiring “reasonable accommodations” absent a showing of “undue hardship” and the law officially went into effect on June 27, 2023. On April 19, 2024, the EEOC issued its four hundred and eight (408) page Final Rule and guidance implementing the PWFA. The Commission voted 3-2, along party lines, to pass the Final Rule and the regulation officially goes into effect on June 18, 2024.

Under the Final Rule, the Commission describes “related medical conditions” to include “lactation, miscarriage, stillbirth, having or choosing not to have an abortion, preeclampsia, gestational diabetes, and HELLP (hemolysis, elevated liver enzymes and low platelets syndrome).” 29 C.F.R. 1636 at 17. The Final Rule expressly states that “it does not regulate the provision of abortion services or affect whether and under what circumstances an abortion should be permitted. The PWFA does not require any employee to have—or not to have—an abortion, does not require taxpayers to pay for any abortions, and does not compel health care providers to provide any abortions.” Id. at 29.

The Complaint

On April 25, 2024, ten (10) days after the EEOC issued its final regulations, a coalition of states with Republican-led attorneys general, including the AG’s of Tennessee, Arkansas, Alabama, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Missouri, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Utah and West Virginia commenced a lawsuit in the Eastern District of Arkansas against the EEOC on the basis that its Final Rule included abortion to be a related medical condition. The complaint begins with declaring that although the PWFA passed with bipartisan support, “in a new rule, a bare 3-2 majority of unelected commissioners at the Equal Employment Opportunity Commission (EEOC) seeks to hijack these new protections for pregnancies by requiring employers to accommodate workers’ abortions-something Congress did not authorize.” Compl. at 1. The Complaint further claims that if the Rule stands, plaintiff states, and others, would be compelled to “facilitate workers’ abortions or face federal suit-even those elective abortions of healthy pregnancies that are illegal under state law.” Id.

The fifty-one (51) page Complaint alleges a variety of violations of the APA and the U.S. Constitution. With respect to the APA violations, the attorneys general assert, amongst other things, that the EEOC’s final rule contravenes the text of the PWFA, conflicts with federal statutory prohibitions on abortion funding, and is arbitrary and capricious. The Complaint’s constitutional objections to the EEOC’s final rule include allegations that that the Final Rule violates principles of federalism, state sovereignty, the First Amendment, Article II and the separation of powers doctrine. The Complaint concludes by asking the Court, amongst other requested relief, to enter a preliminary injunction against the Commission, or any other agency or federal employee, from enforcing or implementing the Final Rule’s abortion-accommodation, pending the Court’s final judgement on the plaintiffs’ claims, and vacating and setting aside the Final rule as unlawful. Id. at 46.

Implications

In the last several years, the APA has been a popular vehicle for states to challenge rules promulgated by administrative agencies. The EEOC in particular is no stranger to having its enforcement authority challenged by both private and public entities. Nevertheless, it remains to be seen whether the state AGs will ultimately be successful in requiring the Commission to roll back its own guidance with respect to the abortion-related accommodations currently present within its Final Rule. If the plaintiffs are successful, it could serve as a basis for challenging the Commission’s ability to enforce and promulgate future rules relating to the other federal antidiscrimination statutes the EEOC enforces.

May 16, 2024May 29, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 55: California Supreme Court Recognizes Good Faith Defense – Landmark Win For Employers

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Shireen Wetmore and special counsel Eden Anderson with their discussion of landmark ruling issued last week by the California Supreme Court and its developing impact on wage & hour class and collective action litigation in the Golden State.

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: Thank you loyal blog readers, welcome to our weekly podcast, the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today from sunny California are my colleagues, Shireen Wetmore and Eden Anderson. Thanks so much for being on today’s podcast.

Eden Anderson: Thanks Jerry. I’m very happy to be here.

Shireen Wetmore: Jerry, thanks for having me.

Jerry: Today, we’re focusing on a recent California Supreme Court ruling in a case called Naranjo v. Spectrum Security Services. It is a gift to employers, because typically news from the California Supreme Court is not always a thumbs up for employers. But in this case we’re going to discuss and explore what it means for employers, and why this decision is so important for employers facing California Labor Code claims. Eden, you briefed this case and you won it before the California Supreme Court – could you give us a little background on what was before the Court in this case?

Eden: Of course Jerry. The procedural history here is a bit convoluted, and involves a couple trips to the California Supreme Court. Mr. Naranjo worked as a security officer for Spectrum. But he was not guarding property. Spectrum contracts with federal agencies, including the U.S. Marshals Service, FBI, Federal Bureau of Prisons, ICE, and DEA, to provide guarded transport for federal prisoners and detainees. The federal contracts required continuous custody of the prisoner. So, because of the nature of the work, Spectrum just paid its officers continuously through their shifts and did not provide an unpaid 30-minute meal period.

And so way back in 2004, Mr. Naranjo filed a class action alleging claims under California law for meal period violations, and he also asserted derivative claims for statutory penalties for failure to pay all wages due at termination, which is a claim asserted under Section 203 of the Labor Code; and a claim for statutory penalties for wage statement inaccuracies or violations, which is a claim asserted under Section 226(e) of the Labor Code. These claims were all certified as a class and proceeded to trial.

At trial, Spectrum asserted a number of defenses premised on the fact that its officers worked alongside federal employees on federal lands, arguing that California meal period requirements just didn’t apply, and ultimately, those defenses were rejected by the trial court.

But, the judge found that the defenses had been asserted in good faith and were objectively reasonable, and the judge held that Spectrum’s good faith served as a defense to the Section 203 waiting time penalties claim, but not the Section 226(e) wage statement claim, and the difference in outcome was tied to different statutory language in those sections. As a result, Spectrum was found liable not just for the underlying meal period infractions, but for an additional $1.1 million in statutory penalties and attorneys’ fees.

Jerry: That’s a very interesting outcome in the practical, real world in which companies and employers are endeavoring to comply with requirements of the California Labor Code. What’s the distinction between the waiting time penalties and the wage statement violations?

Eden: Section 203 of the Labor Code imposes liability for a “willful” failure to pay all wages due at termination, and Section 226(e) imposes liability for a “knowing and intentional failure” to provide an accurate wage statement. So, the trial court felt that “willful” and “knowing and intentional” meant different things.

Jerry: Well, the $1.1 million dollar statutory penalty was a whopper. I take it the decision was appealed – what happened at the California Court of Appeal?

Eden: Well, the Court of Appeal did not actually address the statutory language issue. Instead, it held that meal period premiums were not “wages,” and because they weren’t wages, Labor Code Sections 203 and 226 didn’t apply at all.

But the California Supreme Court then granted review and disagreed. It held in 2022 that meal period premiums and also rest period premiums are wages that must be fully paid at termination, and which also have to appear on a wage statement. So then, the California Supreme Court remanded the case to the Court of Appeal to revisit the Labor Code Sections 203 and 226 claims.

On remand, the Court of Appeal found that Spectrum’s defenses had been asserted in good faith and that a good faith dispute as to liability furnished a defense both to claims. The Court of Appeal also held that Spectrum could not have known that a meal period premium had to appear on a wage statement because the law as to whether a meal period premium was a wage or penalty was not clear until the 2022 decision.

Naranjo then sought review, and the California Supreme Court again took up the case, this time to determine whether a good faith defense applies to wage statement claims under Labor Code Section 226(e).

And that brings us to last week’s ruling that we are discussing today.

Jerry: Well, thanks so much, Eden, that’s a great overview, and in essence a scorecard for employers closely watching this case in terms of how it got up to the California Supreme Court and how the ruling emanated. Shireen, how did the California Supreme Court answer that essential question, and what does the decision mean for employers who are facing these sorts of claims?

Shireen: Thanks, Jerry. Great question. So this ruling has huge ramifications for pending wage statement claims, and we see them routinely asserted in wage and hour class actions, but they also serve as a basis for claims and civil penalties in PAGA actions. And it’s an exceptionally rare pro employer decision, which is why we’re all so jazzed about it. But the court held that an employer’s objectively reasonable good faith belief that it complied with the law serves as a defense to liability for penalties in an inaccurate wage statement under Labor Code 226(e).

So what does that mean? It means that if an employer has objectively reasonable defense to liability as to the underlying claim for unpaid wages, it will not also be liable for additional wage statement penalties, even if the defense is ultimately rejected. Which is what happened here. So if an employer is found to be liable for the underlying claim, still going to get out of those penalties – that is a huge benefit for employers. So, an employer tried to comply with the law. Their conduct and defenses were objectively reasonable. They shouldn’t be facing liability on the wage statement penalties – or if the law as to whether wages were even due was in some way unclear at the time, that too serves as a potential defense to a wage statement penalty claim. Just a reminder, our audience definitely already knows this, but a good faith defense does not include ignorance of the law. But it’s still a really significant win for California employers, because, as you were saying earlier, employers work really hard to try to comply with the very complex world that is California Labor Code wage & hour requirements. And these wage statement claims they can, as was the case here, add hundreds of thousands of dollars in exposure in a class action. It’s often the tail wagging the dog on an otherwise limited claim for damages in these cases. And so the Naranjo decision means that employers who act in good faith have a really important defense, and should not be facing liability for wage statement penalties going forward.

Jerry: Seems to me this is a huge win. I’ve always thought employers don’t wake up every morning and think about how am I going to steal wages from my employees. Rather they’re thinking about, how am I going to comply with the law? And this gives them a huge incentive and a huge defense in class actions involving California labor code violations.

Conversely, how will this impact PAGA claims were those sorts of penalties are being sought by plaintiffs’ counsel?

Shireen: Well, that’s a great question, and it kind of remains to be seen. The impact of the decision is something we anticipate parties are going to be arguing about, continuing to argue about, maybe expediting some of the arguments they are making. From our perspective, it would make no sense to award civil penalties under PAGA if the employer is not liable for statutory penalties under the wage statement statute that forms the basis for the PAGA claim. But plaintiffs are likely going to try to limit the decision. They’re going to argue that the good faith defense only applies to Section 226(e) and not to their PAGA claim. So this is something we’re going to be closely watching and duking out – possibly with Eden briefing up to the California Supreme Court again.

Jerry: Well, congratulations to the defense team here, kudos to you in terms of pushing the edges of the law and coming up with defenses that work for our clients and for employers in general in California. And thanks so much to both of you for joining this week’s podcast.

Shireen: Jerry, thanks for having us.

Eden: Thank you, everyone. Glad to be part of the podcast and this big win for California employers.

May 16, 2024 by Class Action Defense

EEOC Loses Big At The Seventh Circuit In Systemic Race Discrimination Case

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

Duane Morris Takeaways: On May 9, 2024, a Seventh Circuit panel held that the Equal Employment Opportunity Commission (“EEOC”) failed to prove the existence of a hostile work environment based on racial discrimination in EEOC v. Village At Hamilton Pointe LLC, No. 22-2806, 2024 WL 2074326 (7th Cir. May 9, 2024). While the EEOC is likely to continue to bring such claims, especially since such cases constitute one of its prime areas of focus, the decision in EEOC v. Village At Hamilton Pointe LLC further illuminates the high burden to prevailing on a hostile work environment claim.

Case Background

The EEOC brought claims on behalf of fifty-two African-American employees who were employed by the Village at Hamilton Pointe, LLC (“Hamilton Pointe”) and an affiliated entity. Both entities operate a “long-term care facility” that provides “nursing, rehabilitation, and assisted living services.” Id. at *1. Although specific allegations differed as to each claimant, the EEOC generally alleged the existence of a pervasive or severe hostile work environment at Hamilton Pointe.

In support of its claims, the EEOC argued that Hamilton Pointe had instituted a racial preference policy. The EEOC introduced evidence that African-American employees were called “racial slurs on multiple occasions” by residents. The EEOC alleged that rather than discouraging such conduct, Hamilton Pointe took steps to facilitate the discrimination. For example, the EEOC introduced evidence into the record that certain shifts would contain instructions, such as “no blacks allowed,” when scheduling employees.

On September 20, 2020, the district court entered a partial grant of summary judgment in favor of Hamilton Pointe on fifteen employees’ claims, and held as a matter of law that there was no “severe or pervasive harassment because of [the employees’] race.” Id.. The EEOC then took another class of plaintiffs’ claims to trial, did not prevail as to the majority of this group of claimants, and only one was awarded damages by the jury. Id. at *1. The EEOC’s appeal of the partial summary judgment grant ensued and led to this decision by the Seventh Circuit.

Seventh Circuit Ruling

In an opinion of 82 pages, Judge Kenneth Ripple, writing for the Seventh Circuit panel, summarized the state of hostile work environment law and concluded that the EEOC “must show that the alleged harassment was so severe or pervasive that it altered the conditions of his employment.” Id. at *3. And, under the circumstances presented by the case, the Seventh Circuit concluded that “the evidence of record does not support, under established principles of law, a case of racial harassment that was so severe or pervasive as to alter the conditions of employment for any of these claimants.” Id. at *28.

To reach its conclusion, the Seventh Circuit needed to distinguish its previous decision in Chaney v. Plainfield from claimant’s allegations. 612 F. 3d 908,915 (7th Cir. 2010). In Chaney, it held that an employer’s policy of honoring residents’ racial preferences in assigning caregivers was grounds for a hostile work environment claim. Notably, however, the employer in Chaney “did not deny that it maintained a policy of fulfilling patients’ racial preferences.” Id. at *7. The Seventh Circuit then concluded that this case “therefore must be distinguished from Chaney,” for a variety of fact-specific reasons each unique to each claimant.

Although the Seventh Circuit did not explicitly overrule Chaney, it took stock of three decisions from another federal circuit reaching the opposite conclusion. 246 F. 3d 758, 759 (5th Cir. 2001). Specifically, it noted the Fifth Circuit’s decision in Cain v. Blackwell that affirmed a grant of summary judgment on a hostile work environment claims based on sexual harassment directed at a home caregiver by a patient. Similar rulings were reached in EEOC v. Nexion Health at Broadway, Inc., 199 F. App’x 351, 352 (5th Cir. 2006), and Gardner v. CLC of Pascagoula, LLC, 915 F. 3d 320, 326 (5th Cir. 2019).

The Seventh Circuit explained that the Fifth Circuit case law does not create a categorical bar on hostile work environment claims arising from harassment by patients, but rather, “whether a reasonable health care worker in such an environment would consider the patient’s behavior to have made the work hostile or abrasive, taking into consideration the special circumstances necessarily involved with caring for patients with these afflictions.” Village At Hamilton Pointe LLC, 2024 WL 2074326, at *7-8. Although not explicitly stated, the Seventh Circuit seemed to favorably endorse the Fifth Circuit’s reasoning going forward. In light of these background principles, the Seventh Circuit did not find that the claims here (such as the use of racial epithets and racial preferences by patients) rose to the level of severe or pervasive conduct to warrant hostile work environment liability. Accordingly, it affirmed the district court’s grant of summary judgment.

Implications For Employers

All charges of racial discrimination are matters that employers should take seriously.

Moreover, the EEOC can be a relentless opponent and we do not expect this opinion to deter the agency from pursuing similar claims in the future. Indeed, this case is only one example of the EEOC pushing for favorable results in federal circuit courts across the country. In this case, for example, the agency litigated its claims for seven years prior to the Seventh Circuit’s affirmance.

For today, however, the EEOC’s efforts in the Seventh Circuit were stalled. Corporate counsel should take note of these developments and continue to monitor EEOC activity in this space for future updates.

May 14, 2024 by Class Action Defense

Webinar Replay: Mid-Year Review Of EEOC Litigation And Strategy

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 attended yesterday’s Mid-Year Review Of EEOC Litigation And Strategy webinar! We had more attendees than ever before join partners Alex Karasik, Jerry Maatman and Jennifer Riley for the live panel discussion to analyze the EEOC’s latest strategic priorities and review the first six months of lawsuit filings in the Commission’s fiscal year 2024. The virtual program was a must see for corporate counsel, human resource professionals and business leaders, and provided valuable insights into the EEOC’s latest enforcement initiatives and strategies designed to minimize the risk of drawing the Commission’s scrutiny.

If you were unable to attend the webinar, it is now available on our podcast channel! Click to watch below and we will be sure to keep readers updated on important EEOC trends and developments throughout the year!

May 14, 2024 by Class Action Defense

Class Action Settlement Numbers Remain Robust For 2024

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

Duane Morris Takeaways: Corporate defendants saw unprecedented settlement numbers across all areas of class action litigation in 2022 and 2023. The cumulative value of the top ten settlements across all substantive areas of class action litigation hit near record highs in 2023, second only to the settlement numbers observed in 2022. When the numbers for 2022 and 2023 are combined, the totals signal that corporate defendants have entered a new era of heightened risks and higher stakes in the valuation of class actions. On an aggregate basis, across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.4 billion in settlements in 2023, almost as high as the record-setting $66 billion in 2022. Combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence.

So far, 2024 is on pace with the numbers of the previous two years. As of the end of the first quarter of 2024, the aggregate settlement total across all areas of class action litigation and government enforcement lawsuits is $19.8 billion (in accounting for the top 5 settlements in the various substantive areas of law). It is anticipated that these numbers will increase across the board by the end of the year.

More Billion Dollar Class Action Settlements

So far this year, there are three settlements over the billion-dollar mark. Last year, parties resolved 14 class actions for $1 billion or more in settlements, making 24 billion-dollar settlements in the last two years. Reminiscent of the Big Tobacco settlements nearly two decades ago, 2022 and 2023 marked the most extensive set of billion-dollar class action settlements and transfer of wealth in the history of the American court system.

The Scorecard On Leading Class Actions Settlements Thus Far in 2024

The plaintiffs’ class action bar has scored rich settlements thus far in 2024 in virtually every area of class action litigation. The following list shows the totals of the top 5 settlements in 2024 so far in key areas of class action litigation:

$13.73 Billion – Products liability/mass tort class actions
$1.65 Billion – Antitrust class actions
$1.21 Billion – Securities fraud class actions
$558 Million – Consumer fraud class actions
$388.95 Million – Data breach class actions
$288 Million – ERISA class actions
$265.5 Million – Privacy class actions
$141 Million – Discrimination class actions
$139.3 Million – Wage & hour class and collective actions
$47.45 Million – Labor class actions
$47.3 Million – Government enforcement actions
$47.25 Million – Civil rights class actions
$28.93 Million – TCPA class actions
$23.71 Million – Fair Credit Reporting Act class actions

The high dollar settlements of the past two years suggested that the plaintiffs’ bar would continue to be equally, if not more aggressive, with their case filings and settlement positions. From the 2024 data, it certainly looks to be the case as we end the first part of the year.

Top Class & Collective Action Litigation Settlements In 2024

Top Antitrust Class Action Settlements In 2024

$418 million – Burnett, et al. v. The National Association Of Realtors, Case No. 19-CV-332 (N.D. Ill. Mar. 15, 2024) (settlement agreement reached in a class action to resolve claims that broker commission rules caused home sellers across the country to pay inflated fees).
$385 million – In Re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, Case No. 13-MD-2445 (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action to resolve claims brought by states, insurers, and buyers of a new dissolvable strip version of Suboxone to the market, encouraging the move from tablets to strips by allegedly misrepresenting to the U.S. Food and Drug Administration that the tablets posed a risk to children of accidental consumption).
$335 million – Le, et al. v. Zuffa LLC, Case No. 15-CV-1045 (D. Nev. Mar. May 6, 2024) (preliminary settlement approval sought in a class action to resolve claims that fighters’ wages were suppressed by up to $1.6 billion).
$265 million – In Re Generic Pharmaceuticals Pricing Antitrust Litigation, Case No. 16-MD-2724 (E.D. Penn. May 9, 2024) (preliminary settlement approval sought for a class action to resolve claims by direct purchasers, end-payors and states alleging that multiple makers of generic drugs conspired to keep the prices on their products high, in violation of state laws and the federal Sherman Act).
$250 million – Burnett, et al. v. The National Association Of Realtors, Case No. 19-CV-332 (N.D. Ill. Apr. 26, 2024) (settlement agreement reached with defendant Berkshire Hathaway in a class action to resolve claims that broker commission rules caused home sellers across the country to pay inflated fees).

Top Civil Rights Class Action Settlements In 2024

$17.5 million – Clark, et al. v. City Of New York, Case No. 18 Civ. 2334 (S.D.N.Y. Apr. 5, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the city policy department’s policy requiring all arrested individuals to have their photograph taken without a head covering violated the Religious Land Use and Institutionalized Persons Act).
$13.7 million – Sow, et al. v. New York, Case No. 21 Civ. 533, (S.D.N.Y. Feb. 22, 2024) (final settlement approval granted for a class action resolving claims by individuals who were arrested or arrested and subjected to force by the New York City Police Department during protests in 2020 following the murder of George Floyd).
$10 million – Adberg, et al. v City Of Seattle, Case No. 20-2-14351-1 (Wash. Super. Ct. Jan. 30, 2024) (settlement reached to end a lawsuit brought by more than 50 protesters who say they were brutalized by its police force during Black Lives Matter demonstrations in the summer of 2020).
$4.8 million – Students For Fair Admissions, Inc., et al. v. University Of North Carolina, Case No. 14-CV-954 (M.D.N.C. Jan. 29, 2024) (the University of North Carolina agreed to cover the fees and expenses of a group founded by affirmative action advocates that won a U.S. Supreme Court challenge to the school’s consideration of race in student admissions).
$1.25 million – National Coalition On Black Civic Participation, et al. v. Wohl, Case No. 20 Civ. 8668 (S.D.N.Y. Apr. 8, 2024) (consent decree entered resolving a lawsuit brought by Black voters claiming that a pair of conservative conspiracy theorists engaged in a robocall campaign that spread lies about voting by mail to Black voters ahead of the 2020 election).

Top Consumer Fraud Class Action Settlements In 2024

$145 million – In Re Kia Hyundai Vehicle Theft Marketing, Sales Practices, And Products Liability Litigation, Case No. 22-ML-3052 (N.D. Cal. July 15, 2024) (final settlement approval sought in a class action resolving claims that that consumers were left vulnerable to theft and damage due to vehicles being improperly manufactured with design flaws).
$125 million – National Veterans Legal Services Program, et al. v. United States Of America, Case No. 16-CV-745 (D.D.C. Mar. 20, 2024) (final settlement approval granted in a class action resolving claims challenging the legality of “excessive” PACER fees).
$108 million – Elder, et al. v. Reliance Worldwide Corp., Case No. 20-CV-1596 (N.D. Ga. Jan. 9, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the defendants made and sold water heater connector hoses with defective rubber linings).
$100 million – Esposito, et al. v. Cellco Partnership d/b/a Verizon Wireless, Case No. MID-L-6360-23 (N.J. Super. Mar. 22, 2024) (final settlement approval granted in a class action to resolve claims that the company misled its customers by not disclosing certain fees in its postpaid wireless service plans).
$80 million – Sorace, et al. v. Wells Fargo Bank NA, Case No. 20-CV-4318 (E.D. Penn. Feb. 15, 2024) (final settlement approval granted in a class action to resolve claims that the bank failed to send reasonable and authenticated notices to customers whose vehicles were repossessed).

Top Data Breach Class Action Settlements In 2024

$350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal Apr. 9, 2024) (preliminary settlement approval granted in a class action alleging that a software glitch led to a data breach in which Google+ users’ personal data was exposed for three years).
$15 million – Salinas, et al. v. Block Inc., Case No. 22-CV-4823 (N.D. Cal. June 3, 2024) (preliminary settlement approval sought in a class action to resolve claims that a December 2021 data breach at the companies exposed personally identifiable information, account numbers and trading activity of 8.2 million people).
$8.7 million – Sherwood, et al. v. Horizon Actuarial Services LLC, Case No. 22-CV-1495 (N.D. Ga. Apr. 2, 2024) (final settlement approval granted for a class action to resolve claims that employer benefit plan members’ sensitive data was exposed in a massive breach at a consulting company).
$8 million – In Re Orrick, Herrington & Sutcliffe LLP Data Breach Litigation, Case No. 23-CV-4089 (N.D. Cal. Apr. 11, 2024) (preliminary settlement approval sought in a class action to resolve claims brought by clients of a law firm alleging their personal information was compromised in a March 2023 data breach of some of the firm’s client data).
$7.25 million – In Re Lincare Holdings Inc. Data Breach Litigation, Case No. 22-CV-1472 (M.D. Fla. June 12, 2024) (final settlement approval sought/scheduled for a class action to resolve claims that the company failed to protect consumers from a 2021 data breach).

Top Discrimination Class Action Settlements In 2024

$54 million – California Civil Rights Department v. Activision Blizzard Inc., Case No. 21STCV26571 (Cal. Super. Jan. 17, 2024) (consent decree entered for an action to resolve claims that the company engaged in gender discrimination, pay inequities, and fostered a culture of sexual harassment in the workplace).
$30 million – Employees’ Retirement System Of Rhode Island v. Paul Marciano, et al., Case No. 2022-0839 (Del. Chan. Jan. 4, 2024) (final settlement approval granted for a class action to resolve claims of decades of alleged sexual misconduct by one of the company’s co-founders).
$25 million – Jewett, et al. v. Oracle America Inc., Case No. 17-CIV-02669 (Cal. Super. Ct. Feb. 11, 2024) (preliminary settlement agreement sought in a class action to resolve claims that female employees were paid less than male employees).
$18 million – Forsyth, et al. v. HP Inc., Case No. 16-CV-4775 (N.D. Cal. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims alleging that the company unlawfully pushed out hundreds of older workers as part of a workforce reduction plan in violation of the ADEA).
$14 million – Randle, et al. v. SunTrust Bank Inc., Case No. 18-CV-1525 (D.D.C. Feb. 21, 2024) (final settlement approval granted in a class action to resolve claims brought by Black financial advisors alleging the bank blocked them from working with lucrative clients because of their race).

Top Government Enforcement Class Action Settlements In 2024

$16.5 million – In The Matter Of Avast Ltd., Case No. 202-3033 (FTC Jan. 19, 2024) (consent decree entered following a Federal Trade Commission lawsuit alleging that the company sold personal information to more than 100 third parties despite promising to protect consumers from online tracking).
$16 million – U.S. Department Of Labor v. Disaster Management Group LLC (DOL Jan. 24, 2024) (consent order entered following investigations into 62 government subcontractors hired to construct temporary housing and provide services to Afghan refugees at Joint Base McGuire-Dix-Lakehurst in New Jersey).
$8.7 million – EEOC v. DHL Express (USA) Inc., Case No. 10-CV-6139 (N.D. Ill. Apr. 24, 2024) (consent decree entered resolving a lawsuit filed alleging that the company gave Black workers more difficult and dangerous work assignments than white employees).
$3.2 million – U.S. Department Of Labor v. Geronimo Wall Systems LLC, Case No. 24-CV-607 (D. Ariz. Apr. 2, 2024), U.S. Department Of Labor v. BCK Coatings Inc., Case No. 24-CV-2049 (D. Ariz. Apr. 2, 2024), U.S. Department Of Labor vs. 4-E Painting LLC, Case No. CV-24-CV-605 (D. Ariz. Apr. 11, 2024) & U.S. Department Of Labor v. Liberty Constructors LLC, Case No. 24-CV-606 (D. Ariz. Mar. 24, 2024) (consent decrees entered following investigations into four companies by the Wage & Hour Division which the companies willfully and recklessly shortchanged the affected workers and violated the overtime and minimum wage provisions of the FLSA).
$2.9 million – In Re Chipotle Mexican Grill Inc. d/b/a Chipotle Mexican Grill 1083, et al., Case Nos. CAS-2020-00215, CAS-2020-00216-R & CAS-2022-00297-R (Seattle Office of Labor Standards Mar. 8, 2024) (consent decree entered following a city agency investigation into eight Chipotle restaurants in Seattle to resolve the city’s investigation into employees’ allegations that the employer violated local ordinances governing sick pay and scheduling).

Top ERISA Class Action Settlements In 2024

$169 million – Electrical Welfare Trust Fund, et al. v. United States, Case No. 19-CV-353, (Fed. Claims Ct. Feb. 21, 2024) (preliminary settlement approval granted in a class action alleging that the government illegally exacted certain contributions from SISAs under it for benefit year 2014).
$61 million – In Re GE ERISA Litigation, Case No. 17-CV-12123 (D. Mass. Mar. 7, 2024) (final settlement approval granted in consolidated class actions alleging that the company violated the ERISA by directing employee retirement savings into underperforming GE Asset Management funds to generate fees for the subsidiary before it was sold).
$20 million – Durance, et al. v. Retirement Plan Committee Of Talen Energy Corp., Case No. 20-CV-5975 (E.D. Penn. Feb. 22, 2024) (preliminary settlement approval granted for a class action resolving claims from employees alleging that that they were owed early retirement pension benefits and pension supplements due to a change in control).
$19 million – Krohnengold, et al. v. New York Life Insurance Co., Case No. 21-CV-1778 (S.D.N.Y. Feb. 26, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company unlawfully kept underperforming proprietary investment options in two employee retirement plans).
$19 million – Colon, et al. v. Johnson, Case No. 22-CV-888 (M.D. Fla. Mar. 27, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company and executives enacted a scheme that diverted workers’ retirement benefits to shell companies and private equity firm Palm Beach Capital).

Top FCRA, FDPCA, And FACTA Class Action Settlements In 2024

$9.75 million – Sullen, et al. v. Vivint, Inc.,Case No. 01-CV-2023-903893 (Ala. Cir. Ct. Apr. 23, 2024) (final settlement approval granted in a class action alleging that the company accessed credit information in violation of the Fair Credit Reporting Act and created Vivint accounts without authorization).
$6.76 million – Martinez, et al. v. Avantus LLC, Case No. 20-CV-1772 (D. Conn. Feb. 27, 2024) (final settlement approval granted in a class action alleging that the company violated federal law by including inaccurate information on mortgage borrowers’ credit reports).
$5.7 million – Steinberg, et al. v. Corelogic, Case No. 22-CV-498 (S.D. Cal. Apr. 9, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company violated the federal Fair Credit Reporting Act by listing consumers as deceased on credit reports when they were actually alive).
$877,000 – McKey, et al. v. TenantReports.com LLC, Case No. 22-CV-1908-GJP (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company prepared consumer background reports that included outdated criminal non-conviction information).
5. $630,000 – Forestal, et al. v. SH Group Operations LLC, Case No. 23-CA-013634 (Fla. Cir. Ct. May 22, 2024) (final settlement approval sought in a class action alleging that the company violated the Fair Credit Reporting Act when supplying and using consumer reports).

Top FLSA / Wage & Hour Class And Collective Settlements In 2024

$72.5 million – Utne, et al. v. Home Depot USA Inc., Case No. 16-CV-1854 (N.D. Cal. Mar. 8, 2024) (final settlement approval granted for a class action to resolve claims that the company failed to pay hourly wages, pay final wages on time, and provide accurate written wages).
$38 million – In The Matter Of The Investigation Of Letitia James, Attorney General Of The State Of New York Of Lyft Inc., AOD No. 23-041 (AG Labor Bureau Nov. 30, 2024) (the New York Attorney General took legal action against Lyft, claiming the ride-booking company withheld wages from drivers by deducting taxes and fees from their pay instead of having passengers pay those expenses and prevented drivers from receiving the benefits they were entitled to under New York law).
$15 million – Bolding, et al. v. Banner Bank, Case No. 17-CV-601 (W.D. Wash. Jan. 8, 2024) (final settlement approval sought in a class and collective action to resolve claims that the company misclassified mortgage loan officers as exempt employees and thereby failed to pay overtime compensation in violation of federal and state wage & hour laws.
$10.3 million – Ward, et al. v. United Airlines Inc., Case No. 15-CV-2309 (N.D. Cal. Jan. 24, 2024) (final settlement approval granted in a class action to resolve claims that the airline failed to include pilots’ hours and hourly rates on pay stubs in violation of federal and state wage & hour laws).
$3.5 million – Vasquez, et al. v. Leprino Foods Co., Case No. No. 1:17-cv-00796 (E.D. Cal. Feb. 12, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company failed to pay employees for on-call meal and rest breaks, second meal breaks, rounding of time punches, donning and doffing off the clock, wages, overtime and premium pay, accurate wage statements and final wages at termination in violation of state wage & hour law).

Top Labor Class Action Settlements In 2024

$20 million – In Re International Longshore and Warehouse Union, Case No. 23-BK-30662 (N.D. Cal. Bankr. Feb. 22, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the union of engaging in an unlawful boycott of the company during a labor dispute).
$20 million – Bauserman, et al. v. State Of Michigan Unemployment Insurance Agency, Case No. 15-000202 (Mich. Ct. Claims Jan. 29, 2024) (final settlement agreement granted in a class action to resolve claims over the Michigan Unemployment Insurance Agency’s use of a computer program to detect fraudulent claims, which resulted in thousands of false fraud determinations).
$2.5 million – Arrison, et al. v. Walmart Inc., Case No. 21-CV-481 (D. Ariz. Jan. 30, 2024) (settlement reached in a class action to resolve claims that the company should have paid nearly 80,000 workers for the time they spent undergoing COVID-19 screenings before clocking in for their shifts).
$2.5 million – Campa, et al. v. Board Of Trustees Of The Sheet Metal Workers Pension Plan Of Northern California, Case No. 23-CV-1760 (N.D. Cal. Apr. 18, 2024) (preliminary settlement approval sought in a class action to resolve clams that approximately 30 early retirees were not provided with the full retirement benefits they were promised.
$2.45 million – Hoeffner, et al. v. D’Amato, Case No. 09-CV-3160 (E.D.N.Y. Mar. 18, 2024) (preliminary settlement approval sought in a class action to resolve claims against two union benefit funds, that the funds illegally refused to transfer money to another set of funds after a merger of union locals).

Top Privacy Class Action Settlements In 2024

$90 million – In Re Facebook Internet Tracking Litigation, Case Nos. 22-16903 and 22-16904 (9th Cir. Feb. 21, 2024) (final settlement approval affirmed in a class action to resolve claims alleging that Facebook used cookies to track the internet activity of logged-out social network users who visited third-party websites containing Facebook “Like” button plugins).
$75 million – Rogers, et al. v. BNSF Railway Co., Case No. 19-CV-3083 (N.D. Ill. Feb. 27, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the company unlawfully scanned drivers’ fingerprints for identity verification purposes without written, informed permission or notice when they visited BNSF rail yards).
$52.5 million – Schreiber, et al. v. Mayo Foundation For Medical Education And Research, Case No. 22-CV-188 (W.D. Mich. May 25, 2024) (final settlement approval sought/scheduled in a class action to resolve claims that the company shared subscriber information with third parties without getting consumer consent).
$25 million – Peters, et al. v. Apple, Case No. 19STCV21787 (Cal. Super Ct. Apr. 2, 2024) (final settlement approval granted in a class action to resolve claims that the company misrepresented the ability to use its Family Sharing feature to share subscriptions to apps).
$23 million – Smith-Washington, et al. v. TaxAct Inc., Case No. 23-CV-830 (N.D. Cal. Feb. 27, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company shared confidential taxpayer information with Meta Platforms Inc. and Google).

Top Products Liability And Mass Tort Class Action Settlements In 2024

$10 billion – In Re Aqueous Film-Forming Foams Products Liability Litigation, MDL 2873 (D.S.C. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims with 3M by utilities that maintain it’s liable for the damage they have and will incur due to its signature PFAS that were used for decades in specialized fire suppressants, called aqueous film-forming foams (AFFF), that were sprayed directly into the environment and reached drinking water).
$1.185 billion – Camden, et al. v. E.I. DuPont de Nemours & Co., Case No. 23-CV-3230 (D.S.C. Feb. 8, 2024) (final settlement approval granted in a class action to resolve claims in a multidistrict litigation for the firefighting agent aqueous film forming foam (AFFF), which contains per- and polyfluoroalkyl substances (PFAS).
$1.1 billion – Philips Recalled CPAP, Bi-Level PAP, And Mechanical Ventilator Products Liability Litigation, Case No. 21-MC-1230 (W.D. Penn. Apr. 29, 2024) (settlement reached in a multi-district litigation claiming that degraded foam in breathing machines caused plaintiffs personal injuries or will require long-term medical monitoring).
$750 million – In Re Aqueous Film-Forming Foams Products Liability Litigation, Case No. 18-MN-2873 (D.S.C. Apr. 25, 2024) (preliminary settlement approval granted to resolve claims that Johnson Controls International PLC subsidiary Tyco Fire Products LP’s public water systems’ federal claims that some “forever chemicals” they detected in their supplies came from firefighting foam it made).
$700 million – In Re Johnson & Johnson Talcum Powder Products Marketing, Sales Practices And Products Liability Litigation, Case No. 16-MD-2738 (D.N.J. Jan. 24, 2024) (settlement reached in a multi-district litigation with 42 state attorneys general to resolve claims that Johnson & Johnson wrongfully marketed its talc-based baby powder by not warning about possible health risks).

Top Securities Fraud Class Action Settlements In 2024

$490 million – In Re Apple Inc. Securities Litigation, Case No. 19-CV-2033 (N.D. Cal. Mar. 15, 2024) (preliminary settlement approval granted in a class action to resolve claims that Apple’s CEO Tim Cook defrauded shareholders by concealing falling demand for iPhones in China).
$350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal. Apr. 9, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company deceived them about a March 2018 software glitch that allegedly gave third-party app developers the ability to access the private profile data of 500,000 users of the Google Plus social media site).
$192.5 million – Chabot, et al. v. Walgreens Boots Alliance Inc., Case No. 18-CV-2118 (M.D. Penn. Feb. 7, 2024) (final settlement approval granted in a class action to resolve claims that the company’s executives lied about the likelihood of an ultimately unsuccessful merger between the two drugstore chains).
$97 million – Roofer’s Pension Fund, et al. v. Papa, Case No. 16-CV-2805 (D.N.J. Apr. 23, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company’s executives made misleading statements to defeat a potential $29 billion takeover attempt).
$85 million – Industriens Pensionsforsikring A/S, et al. v. Becton Dickinson and Co., Case No. 20-CV-2155 (D.N.J. Jan. 18, 2024) (preliminary settlement approval granted in a class action the investors reached with the medical technology company over securities fraud claims that it hid regulatory problems regarding sales of its Alaris infusion pump).

Top TCPA Class Action Settlements In 2024

$9.7 million – Berman, et al. v. Freedom Financial Network LLC, Case No. 18-CV-1060 (N.D. Cal. Feb. 16, 2024) (final settlement approval granted in a class action to resolve claims alleging that the debt consolidation company and its subsidiaries made telemarketing calls which violated the Telephone Consumer Protection Act).
$9 million – Moore, et al. v. Robinhood Financial LLC, Case No. 21-CV-1571 (W.D. Wash. July 16, 2024) (final settlement approval sought in a class action to resolve claims that the company’s referral text messages violated Washington telemarketing laws).
$7 million – Williams, et al. v. Choice Health Insurance LLC, Case No. 23-CV-292 (M.D. Ala. July 9, 2024) (final settlement approval sought in a class action to resolve claims that the company violated the TCPA with unsolicited marketing calls).
$2 million – Burnett, et al v. CallCore Media Inc., Case No. 21-CV-3176 (S.D. Tex. June 25, 2024) (final settlement approval sought in a class action to resolve claims the company placed prerecorded phone calls to consumers in violation of state laws and the federal TCPA).
$1.225 million – Lateano, et al. v. Chicago Cubs Baseball Club LLC, Case No. 23-CV-2757 (N.D. Ill. June 17, 2024) (final settlement approval sought in a class action to resolve claims that the Chicago Cubs sent text messages to customers without consent in violation of the TCPA).

May 9, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 54: Challenges Posed By Data Breach Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates Emilee Crowther and Ryan Garippo with their discussion of three recent data breach class action filings in the Northern District of Georgia and common challenges and trends they’ve identified in data breach class action litigation over the past 18 months.

Episode Transcript

Jerry Maatman: Thanks so much loyal blog readers and listeners, this is our next episode the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are Emily Crowther of our Austin office and Ryan Garippo of our Chicago office. Thanks so much to both of you for being on our podcast.

Emilee Crowther: Thank you, Jerry. I’m very happy to be here.

Ryan Garippo: Great to be here, Jerry. Thanks for having me.

Jerry: So today, our subject is the area of data breach class actions in general, and three new class actions recently filed in federal court in the Northern District of Georgia by employees, in essence, alleging that their personally identifying information was compromised during data breaches. Emilee, I know that you practice quite a bit in this space. Could you give us some information on these filings, and why they’re important to corporate counsel?

Emilee: Absolutely, Jerry. These actions were all filed by employees, as you stated: one against Arby’s fast food restaurant owner DRM, Inc., one against healthcare company Aveanna Healthcare, LLC, and then one other against automotive company Asbury Automotive Group, Inc. Each of these actions alleged that after companies were subjected to data breaches the employees’ personally identifying information was threatened by hackers, and the companies failed to take precautions to protect that information.

Jerry: We recently reported in the Duane Morris Class Action Review that among all areas of class action litigation, right now the hottest area is data breach class actions. Frankly, these lawsuits are exploding in popularity and certainly constitute a major area of focus for the plaintiffs’ bar. What is it about these cases that are attractive to the plaintiffs’ bar, and what is alleged in these new cases brought in federal court in Georgia?

Ryan: Well, Jerry, while these actions were filed separately, and the defendants businesses differ significantly, the proposed class actions all have similar allegations, including negligence, breach of warranty, and unjust enrichment. The plaintiffs in these class actions allege that they were employed at the companies, and that during their employment, their personal information, including their social security, numbers, birth dates, and driver’s license numbers, were collected by their employers. The plaintiffs asserted that the defendants failed to adhere to industry standards to protect their data which led to the data being obtained by hackers. So this information is interesting for the plaintiff’s bar, particularly because they can bring these allegations en masse and use these class actions to exert leverage against employers.

Jerry: You know, I’ve always thought the business model of plaintiffs’ class action lawyers is to file the case, certify the case, and monetize the case by getting a settlement. Yet our statistics in our Duane Morris Class Action Review showed that of all subset of areas, in the data breach space only 14% of motions for class certification were granted. Many motions to dismiss were granted, because plaintiffs weren’t able to articulate a sufficient injury-in-fact. Emilee, in these particular cases, how are the plaintiffs trying to get around those problems and what are they focusing on to establish standing through allegations of injury-in-fact?

Emilee: The plaintiffs allege that their personal information was captured in the spring, and that their personal identification information was therefore exposed to the cybercriminals at that time. The plaintiffs contend that, due to these cyber-attacks they have an increased vulnerability to identity theft. They also claim that they have spent time and money to mitigate risks, and that the actual value of their information has diminished as a result.

Ryan: Some plaintiffs have also asserted that they’ve been required to monitor their credit reports and are worried about future personal financial security. The plaintiffs also claim emotional distress from the dissemination of their personal information, because they will forever face an amplified risk of further misuse, fraud, and identity theft as a result of the defendants’ alleged conduct.

Jerry: Reminds me of the last class certification motion I argued in a data breach case, and that was the simple-notion judge – it was like a tree that fell in the forest, and nobody heard it. I still think that the plaintiffs’ bar is still finding ways to get around. Of course, the injury-in-fact requirement that comes from the famous Trans Union case decided by the U.S. Supreme Court. But thanks, Emilee and Ryan, for your analysis and your thought leadership in this particular area. Blog readers and listeners, hope you enjoyed this installment of the Class Action Weekly Wire, and thanks so much for tuning in.

Emilee: Thanks for having me, Jerry, and thank you, listeners.

Ryan: Thank you, everyone. Great to have an opportunity to be on the podcast.

May 8, 2024 by Duane Morris

California Employer’s Good Faith Defense to Wage Statement Penalties Recognized by State’s Supreme Court

On May 6, 2024, the California Supreme Court issued its decision in Naranjo v. Spectrum Security Services, Inc., Case No. S279397, handing California employers a significant victory. The court unanimously held that a good faith dispute defense applies to claims for penalties or damages for inaccurate wage statements under California Labor Code Section 226(e). The Naranjo decision, in a rare win for California employers, resolves a split in authority in the California Courts of Appeal and enables employers who act in good faith to defend against inaccurate wage statement penalties under Section 226(e). Note: Duane Morris served as appellate counsel for Spectrum in this case.

Read the full Alert on the Duane Morris LLP website.