Class Action Defense

April 18, 2024 by Class Action Defense

Introducing The Duane Morris Antitrust Class Action Review – 2024!

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Sean P. McConnell

Duane Morris Takeaway: Class action litigation involving antitrust claims had several key developments in 2023, despite a relative lack of actual verdicts. Because antitrust remedies often allow recovery of treble damages, the incentive to settle these cases is often paramount. Additionally, plaintiffs are entitled to reasonable attorneys’ fees that may be substantial because of the complexity of this kind of litigation. As a result, most antitrust class actions are settled before trial, and one of the most crucial phase in these cases is class certification. Thus, the order granting or denying a motion to certify a class in these cases is critical.

The class action team at Duane Morris is pleased to present a new publication – the 2024 edition of the Antitrust Class Action Review. We hope it will demystify some of the complexities of antitrust class action litigation and keep corporate counsel updated on the ever-evolving nuances of these issues. We hope this book – manifesting the collective experience and expertise of our class action defense group – will assist our clients by identifying developing trends in the case law and offering practical approaches in dealing with antitrust class action litigation.

Click here to download a copy of the Duane Morris Antitrust Class Action Review – 2024 eBook.

Stay tuned for more Antitrust class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.

April 17, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 51: 2024 Preview: TCPA Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Derek Franklin with their discussion of 2023 developments and trends in TCPA class action litigation as detailed in the recently published Duane Morris TCPA 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

Jennifer Riley: Welcome to our listeners! Thank you for being here for our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is associate Derek Franklin. Thank you for being on the podcast.

Derek: Thank you Jen! Happy to be part of the podcast.

Jen: Today on the podcast we are discussing the recent publication of the inaugural edition of the Duane Morris Telephone Consumer Protection Act (or TCPA) Class Action Review. Listeners can find the eBook publication on our blog, the Duane Morris Class Action Defense blog. Derek, can you tell listeners a bit about the publication?

Derek: Absolutely Jen. The TCPA has long been a focus of litigation, particularly for class actions. To that end, the class action team at Duane Morris is pleased to present the TCPA Class Action Review – 2024. This publication analyzes the key TCPA-related rulings and developments in 2023 and the significant legal decisions and trends impacting this type of class action litigation for 2024. We hope that companies will benefit from this resource in their compliance with these evolving laws and standards.

Jen: In 2023, courts across the country issued a mixed bag of results leading to major victories for both plaintiffs and defendants. Derek, how often were classes certified in TCPA actions in 2023?

Derek: There were wins on both sides, but the plaintiffs’ bar came away ahead in terms of getting classes certified. Courts granted motions for class certification nearly 70% of the time, and denied class certification motions only 30% of the time in 2023.

Jen: Interesting and a fairly high certification rate for these cases. Another notable legal issue that courts grappled with in the context of the TCPA during 2023 is the threshold for what can constitute a concrete injury for purpose of having Article III standing to bring a viable claim. Were there any notable rulings in 2023 that discussed Article III standing?

Derek: Yes Jen, there were several rulings that discussed these very issues in the TCPA Class Action Review. In Drazen, et al. v. Pinto, for example, the Eleventh Circuit ultimately concluded that a single unwanted text message may not “be highly offensive to the ordinary reasonable man,” but it was nonetheless offensive to some degree to a reasonable person. The Eleventh Circuit ruled that the harm of receiving one text message shared a close relationship with the harm underlying the tort of intrusion upon seclusion, and thus, receipt of an unwanted text message causes a concrete injury sufficient to confer Article III standing.

Jen: Thanks so much Derek, I anticipate that these standing questions will remain hotly debated in the courts in 2024. The Review also talks about the top TCPA settlements in 2023. How did plaintiffs do in securing settlement funds last year?

Derek: Plaintiffs did very well in securing high dollar settlements in 2023. The top 10 TCPA class action settlements totaled $103.45 million.

Jen: We will continue to track those settlement numbers in 2024, as record-breaking settlement amounts have been a huge trend we have tracked the last two years. Thanks Derek for being here today, and thank you to the loyal listeners for tuning in! Listeners please stop by the blog for a free copy of the TCPA Class Action Review e-book!

Derek: Thanks for having me Jen and thanks to all the listeners!

April 17, 2024 by Class Action Defense

U.S. Supreme Court Holds That Application Of The FAA’s Transportation Worker Exemption Turns Upon The Work Performed And Not The Employer’s Industry

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

Duane Morris Takeaways: On April 12, 2024, the U.S. Supreme Court issued its decision in Bissonnette v. LePage Bakeries Park St., LLC, Case No. 23-51 (U.S. Apr. 12, 2024), holding that application of the transportation worker exemption in the Federal Arbitration Act (“FAA”) turns upon the work performed by the plaintiff and not the employer’s industry. The Supreme Court made clear, however, that this work-focused test should not bring within the exemption large swaths of workers who in some manner engage with products in the flow of commerce. The Supreme Court opined that the worker at issue must play a “direct” and “necessary” role in the free flow of goods across borders. Id. at 9. For employers with workplace arbitration agreements, the Supreme Court’s ruling is a required read.

Case Background

The defendant in Bissonnette produced and marketed baked goods, with its products made in 19 states and distributed across the country. The plaintiffs were franchisees who contracted with the defendant to distribute the products in local markets. The plaintiffs also advertised the products, identified retail buyers, and performed services for those retailers, including stocking and inventory. When the plaintiffs filed a putative wage and hour class action, the defendant sought to compel arbitration and to dismiss the class claims, citing a contractual arbitration provision with a class action waiver.

The district court granted the motion and the Second Circuit affirmed. The Second Circuit reasoned that, because the plaintiffs’ work was performed in the baking industry and not the transportation industry, the FAA’s transportation worker exemption did not apply. The transportation worker exemption provides that the FAA “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.

Immediately after that decision, the U.S. Supreme Court issued its decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), wherein it held that the test to be employed in assessing application of the transportation worker exemption is based on the work performed by the plaintiff and not the employer’s industry. Nonetheless, on panel re-hearing, the Second Circuit adhered to its prior decision on the grounds that the transportation worker exemption still did not apply because the defendant’s business was to distribute baked goods into commerce and not transportation services.

The U.S. Supreme Court then granted review.

The Supreme Court’s Decision

As it did in Saxon, the Supreme Court emphasized in Bissonnette that the test for application of the transportation worker exemption focuses on the work performed by the plaintiff and not the employer’s industry. Addressing the employer’s argument that such a test would make virtually all workers who load or unload goods, such as pet shop employees and grocery store clerks, exempt transportation workers, the Supreme Court disagreed. It determined that the exemption has never been interpreted to apply in such a limitless basis. The Supreme Court emphasized that, for the exemption to apply, the worker “must at least play a direct and necessary role in the free flow of goods across borders.” Bissonnette, at 9. The Supreme Court thus vacated the order compelling arbitration and remanded for further proceedings.

Implications Of The Decision

Seemingly feeling its decision in Saxon was being misapplied, the Supreme Court’s ruling in Bissonnette confirms that the FAA’s transportation worker exemption turns upon the work the plaintiff performs and not on the employer’s industry. Thus, an employer cannot seek to compel arbitration and avoid application of the transportation worker exemption by arguing that it is not in the transportation industry. Rather, an employer’s arguments against application of the exemption must focus on the work the plaintiff performs.

April 15, 2024 by Alex W. Karasik

EEOC Mid-Year Lawsuit Filing Update For Fiscal Year 2024

By Alex W. Karasik, Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaways: The EEOC’s fiscal year (“FY 2024”) spans from October 1, 2023 to September 30, 2024. Through the midway point of FY 2024, EEOC enforcement litigation filings have been noticeably down. In the first six months of FY 2023, there were 29 new lawsuits filed by the Commission, while only 14 lawsuits were filed through the midway point of FY 2024.

Traditionally, the second half of the EEOC’s fiscal year – and particularly in the final months of August and September – are when the majority of filings occur. Even so, an analysis of the types of lawsuits filed, and the locations where they are filed, is informative for employers in terms of what to expect during the fiscal year-end lawsuit filing rush in September.

Cases Filed By EEOC District Offices

In addition to tracking the total number of filings, we closely monitor which of the EEOC’s 15 district offices are most active in terms of filing new cases over the course of the fiscal year. Some districts tend to be more aggressive than others, and some focus on different case filing priorities. The following chart shows the number of lawsuit filings by EEOC district office.

The most noticeable trend of the first six months of FY 2024 is that the Atlanta and Philadelphia District Offices already filed three lawsuits each. Houston, Indianapolis, and New York each have two lawsuit filings, and Dallas and Chicago have one each. That means that many of the district offices have yet to file a lawsuit at all in FY 2024. But for employers in the Atlanta and Philadelphia metropolitan areas, these early tea leaves suggest that a higher likelihood of pending charges may turn into federal lawsuits by the end of Summer to next Fall.

Analysis Of The Types Of Lawsuits Filed In First Half Of FY 2024

We also analyzed the types of lawsuits the EEOC filed throughout the first six months, in terms of the statutes and theories of discrimination alleged, in order to determine how the EEOC is shifting its strategic priorities. The chart below shows the EEOC filings by allegation type.

The percentage of each type of filing has remained fairly consistent over the past several years. However, in FY 2024, nearly every filing has contained Title VII claims, with 12 of the 14, or 87% alleging these violations. This is a major increase over past years — in FY 2023, Title VII claims in 59% of all filings, 69% in FY 2022, and 62%. ADA cases were alleged in three lawsuits filed, for 21% of the cases, a decrease from the EEOC’s FY 2023 filings of 31%, 18% in FY 2022, and 36% in FY 2021. There was also an ADEA claim in one of the lawsuits and Pregnancy Discrimination Act claim in another.

The graph set out below shows the number of lawsuits filed according to the statute under which they were filed (Title VII, Americans With Disabilities Act, Pregnancy Discrimination Act, Equal Pay Act, and Age Discrimination in Employment Act) and, for Title VII cases, the theory of discrimination alleged.

The industries impacted by EEOC-initiated litigation have also remained consistent in FY 2024. The chart below details that hospitality, healthcare, and retail employers have maintained their lead as corporate defendants in the last 18 months of EEOC-initiated litigation.

Notable 2024 Lawsuit Filings

Gender Identity Discrimination

In EEOC v. Sis-Bro, Inc., Case No. 24-CV-968 (S.D. Ill. Mar. 28, 2024), the EEOC brought suit alleging that the farm violated federal law when it allowed an employee to be harassed because of her sex and gender identity after she began transitioning genders. The EEOC contended that the employee was subjected to frequent, derogatory comments about the employee’s gender identity; the co-owner refused to call the targeted employee by her name and referred to her by her former name; repeatedly told her she was “a guy”; and criticized her use of employer-provided health insurance and leave for gender affirming care, in violation of Title VII of the Civil Rights Act.

Disability Discrimination

In EEOC v. Atlantic Property Management, Case No. 24-CV-10370 (D. Mass. Oct. 4, 2023), the EEOC filed an action on behalf of a new hire who the company allegedly rescinded a job offer following the employee’s cancer diagnosis. The EEOC alleged that the individual was offered employment as an executive administrative assistant to the president and vice president of the two companies. Shortly after the offer of employment, the employee was diagnosed with breast cancer. Her doctor confirmed she was able to perform all aspects of her position, but she would need to receive treatment weekly resulting in a need for some limited time off from work. When she provided her doctor’s note to the companies, the president decided to withdraw her job offer without any discussion with the employee, which the EEOC alleged violated the ADA.

Race / National Origin Discrimination

In EEOC v. Bob’s Tire Company, Case No. 24-CV-10077 (D. Mass. Jan. 10, 2024), the EEOC filed an action alleging that the company violated Title VII of the Civil Rights Act by subjecting employees to egregious and constant harassment, including the owner telling Hispanic employees to “go back to [their] country”; calling Guatemalan employees “f—ing Guatemalans”; donning a U.S. Immigration and Customs Enforcement hat to intimidate Hispanic employees; and calling employees homophobic slurs. Additionally, the EEOC contended that employees were also harassed by a co-worker because of their sex, race, and national origin, and at least one employee complained to the owner, who retaliated against this complaining employee by mocking him for being in a romantic and/or sexual relationship with the harassing co-worker.

These filings illustrate that the EEOC will likely continue to prioritize sex, disability, and race discrimination claims in the second half of FY 2024.

March 2024 Release Of Enforcement Statistics

On March 12, 2024, the EEOC published its fiscal year 2023 Annual Performance Report (FY 2023 APR), highlighting the Commission’s recovery of $665 million in monetary relief for over 22,000 workers, a near 30% increase for workers over Fiscal Year 2022. This annual publication from the EEOC is noteworthy for employers in terms of recognizing the EEOC’s reach, understanding financial exposure for workplace discrimination claims, and identifying areas where the EEOC may focus its litigation efforts in the coming year. It is a must read for corporate counsel, HR professional, and business leaders.

As we blogged about here, the Commission reported having one of the most litigious years in recent memory in FY 2023, with 142 new lawsuits filed, marking a 50% increase from FY 2022. Among these new lawsuits, 86 were filed on behalf of individuals, 32 were non-systemic suits involving multiple victims, and 25 were systemic suits addressing discriminatory policies or affecting multiple victims. The EEOC also touted that it obtained $22.6 million for 968 individuals in litigation, while resolving 98 lawsuits and achieving favorable results in 91% of all federal district court resolutions.

These numbers show the EEOC is still aggressively litigating discrimination claims, and despite the slow start in FY 2024, we anticipate the EEOC will turn up the jets in the second half of the fiscal year.

Strategic Priorities

The Commission also reported significant progress in its “priority areas” for 2023, which included combatting systemic discrimination, preventing workplace harassment, advancing racial justice, remedying retaliation, advancing pay equity, promoting diversity, equity, inclusion and accessibility (“DEIA”) in the workplace, and, significantly, embracing the use of technology, including artificial intelligence, machine learning, and other automated systems in employment decisions.

In 2023, the EEOC resolved over 370 systemic investigations on the merits, resulting in over $29 million in monetary benefits for victims of discrimination. The Commission also reported that its litigation program achieved a 100% success rate in its systemic case resolutions, obtaining over $11 million for 806 systemic discrimination victims, as well as substantial equitable relief. Further, the Commission made outreach and education programs a priority in 2023, and specifically sought to reach vulnerable workers and underserved communities, including immigrant and farmworker communities, hosting over 680 events for these groups and partnering with over 1,120 organizations, reaching over 107,000 attendees.

These statistics confirm the Commission’s prowess, dictating that employers should take heed in the coming months as the EEOC seeks to match these gaudy figures.

Other Notable Developments

Beyond touting its monetary successes, and litigation accomplishments, the FY 2023 APR also highlights the newly enacted Pregnant Workers Fairness Act (“PWFA”), which provides workers with limitations related to pregnancy, childbirth, or related medical conditions the ability to obtain reasonable accommodations, absent undue hardship to the employer.

The Commission began accepting PWFA charges on June 27, 2023 (the law’s effective date) and has conducted broad public outreach relating to employers’ compliance obligations under the new law.

Takeaways For Employers

By all accounts, FY 2023 was a record-breaking year for the EEOC. As demonstrated in the report, the Commission has pursued an increasingly aggressive and ambitious litigation strategy to achieve its regulatory goals. The data confirms that the EEOC had a great deal of success in obtaining financially significant monetary awards.

Although the early numbers are lagging as compared with last year, we anticipate that the EEOC will continue to aggressively pursue its strategic priority areas in FY 2024. There is no reason to believe that the annual “September surge” is not coming, in what could be another precedent-setting year. We will continue to monitor EEOC litigation activity on a daily basis, and look forward to providing our blog readers with up-to-date analysis on the latest developments.

Finally, we are thrilled to announce that will be providing a webinar on May 13, 2024, to further analyze the above data. Employers will gain insight on what they should be doing to ready themselves for the remainder of FY 2024. Save the date and stay tuned!

April 15, 2024 by Class Action Defense

Pennsylvania Federal Court Dismisses Data Privacy Class Action Based On Lack Of Standing

By Gerald L. Maatman, Jr., Jesse S. Stavis, and Ryan T. Garippo

Duane Morris Takeaways: On April 5, 2024, Judge Marilyn J. Horan of the U.S. District Court for the Western District of Pennsylvania granted defendant Spirit Airlines’ motion to dismiss in Smidga et al. v. Spirit Airlines, No: 2:22-CV-0157 (W.D. Pa. Apr. 5, 2024). Plaintiffs alleged that Spirit had invaded their privacy and violated state wiretapping laws by recording data regarding visits to Spirit’s website, but the Court held that they failed to plead a concrete injury sufficient to establish Article III standing. The ruling should serve as a reminder of the importance of considering challenges to standing, particularly in data privacy class actions where alleged injuries are often abstract and speculative.

Case Background

Like many companies, Spirit Airlines uses session replay code to track users’ activity on its website in order to optimize user experience. Session replay code allows a website operator to track mouse movements, clicks, text entries, and other data concerning a visitor’s activity on a website. According to Spirit, all data that is collected is thoroughly anonymized.

The plaintiffs in this putative class action alleged that Spirit violated numerous state wiretapping and invasion of privacy laws by recording their identities, travel plans, and contact information. One of the plaintiffs also alleged that she had entered credit card information into the website. All three plaintiffs claimed that the invasion of privacy had caused them mental anguish and suffering as well as lost economic value in their information.

Spirit moved to dismiss based on a lack of standing under Rule 12(b)(1) and failure to state a claim under Rule 12(b)(6).

The Court’s Ruling

The Court dismissed all claims without prejudice. It held that the plaintiffs had failed to establish standing. Under Article III of the U. S. Constitution, a plaintiff must establish that he or she has standing to sue in order to proceed with a lawsuit. The standing analysis asks whether: “(1) the plaintiff suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

Spirit argued that the plaintiffs had failed to identify an injury in fact because they did not suffer any concrete injury from the recording of session data. The court accepted this argument, noting that absent a concrete injury, a violation of a statute alone is insufficient to establish standing: “Congress [or a state legislature] may not simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.” Smidga et. al v. Spirit Airlines, Inc., No. 2:22-CV-1578, 2024 WL 1485853, at *3 (W.D. Pa. Apr. 5, 2024) (internal citations and quotation marks omitted).

Judge Horan cited over fifteen recent cases where federal courts denied standing in similar circumstances to demonstrate that the mere recording of anonymized data does not satisfy the constitutional standing requirement. Further, the Court reasoned that a website’s “collection of basic contact information” is also insufficient. Id. at *4. However, the Court did note that recording credit card data without a user’s authorization might be sufficient to establish standing. Id. at *5. In Smidga, one plaintiff alleged that she had entered her credit card information, but Spirit insisted that no personally identifying information had been stored. Because plaintiffs bear the burden to prove standing, the Court found that the mere assertion that a plaintiff entered her credit card information into a website was — absent allegations that her personalized data was tied to that information — insufficient to confer Article III standing.

Having dismissed the case for lack of standing, the Court did not analyze Spirit’s arguments under Rule 12(b)(6) for failure to state a claim. The court did, however, grant the plaintiffs leave to amend their complaint.

Implications For Companies

The success or failure of a class action often comes down to whether the putative class can achieve certification under Rule 23. Nonetheless, Rule 23 challenges are not the only weapon in a defendant’s arsenal. Indeed, a Rule 12(b)(1) challenge to standing is often an effective and efficient way to quickly dispose of a claim. This strategy is a particularly potent defense in the data privacy space, as the harms that are alleged in these cases are often abstract and speculative. The ruling in Smidga shows that even if a defendant allegedly violated a state privacy or wiretapping law, a plaintiff must still demonstrate that he or she has actually been harmed.

April 11, 2024 by Class Action Defense

Introducing The All-New Duane Morris TCPA Class Action Review – 2024!

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

Duane Morris Takeaway: The Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., has long been a focus of consumer litigation, particularly for class actions. Since the TCPA was enacted 30 years ago, the methods and technology that businesses use to engage and interact with customers has evolved and changed. The trend of states enacting or amending their own mini-TCPAs shows no signs of slowing down, making this subject area a likely continued focus for the plaintiffs’ class action bar in years to come.

To that end, the class action team at Duane Morris is pleased to present a new publication – the 2024 edition of the TCPA Class Action Review. We hope it will demystify some of the complexities of TCPA class action litigation and keep corporate counsel updated on the ever-evolving nuances of these issues. We hope this book – manifesting the collective experience and expertise of our class action defense group – will assist our clients by identifying developing trends in the case law and offering practical approaches in dealing with TCPA class action litigation.

Click here to download a copy of the Duane Morris TCPA Class Action Review – 2024 eBook.

Stay tuned for more TCPA class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.

April 10, 2024April 10, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 50: 2024 Preview: ERISA Class Action Litigation

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

Episode Transcript

Jerry Maatman: Welcome to our listeners, thank you for being here 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, Jesse Stavis. Thank you for being on the podcast – this is episode 50 of the Class Action Weekly Wire, so we’re excited to have you with us today, Jesse.

Jesse Stavis: Thanks, Jerry, always happy to be part of the podcast.

Jerry: Today we’re discussing a recent publication of Duane Morris, the inaugural issue of the Duane Morris ERISA Class Action Review, and listeners, you can find that e-book publication on our blog, the Duane Morris Class Action Blog. Jesse, could you give our listeners an idea of what they can expect from this publication?

Jesse: Absolutely, Jerry. So in the last few years we’ve seen a surge in class action litigation filed under the Employee Retirement Income Security Act, or ERISA, and 2023 was more the same. The plaintiffs’ bar continues to focus on challenges to ERISA fiduciary’s management of 401(k) and other retirement plans. To that end, the class action team at Duane Morris is pleased to present the ERISA Class Action Review for 2024. This publication analyzes the key ERISA-related rulings and developments in 2023, and the significant legal decisions and trends impacting this type of class action litigation for 2024. We hope the companies will benefit from this resource as they figure out how to comply with this evolving law and standards.

Jerry: Well, Jesse, in 2023 courts throughout the country issued what I consider to be a mixed bag of rulings – major victories for the plaintiff side, and likewise major victories for the defense side. In terms of your analysis of the case law and what occurred last year, what do you think are the key takeaways in the publication for corporate counsel?

Jesse: Well, Jerry, I’d say that motions to dismiss still play an outsized role in ERISA class action litigation. And in this respect litigators on both sides of the V are still dealing with the fallout of the Supreme Court’s decision in a 2022 case called Hughes v. Northwestern University. There was a lot of anticipation that this case would clear up some thorny issues surrounding the pleading standards in ERISA cases. Ultimately, though, the court issued a relatively narrow ruling that left us with more questions than answers. As a result, pleading standards are still very much up in the air. Now, courts have varied in how they have addressed motions to dismiss, but, generally speaking, there’s been a lot of focus on the sufficiency of the comparators that plaintiffs provide. Without more guidance from the Supreme Court, these battles are likely to continue. I will say that there were quite a few significant rulings in ERISA class actions in 2023. On the whole, the plaintiffs’ bar continued to have success, particularly when it came to fending off defense challenges to standing under Rule 12(b)(1).

Jerry: Well, I know, Jesse. In our practice we download and monitor the filings in all 50 States and in all Federal courts in these subsystem areas of law. And certainly ERISA class based litigation is a growing area, and one of the trends that I thought was important, and one of the takeaways that are very interesting for corporate counsel is the enforceability of workplace arbitration programs that have class action waivers in them, and while that might defuse the so-called atomic bomb of a class action in other substantive areas in ERISA. It’s not only so could you explain kind of the rationale on the lines of the case law that you followed in 2023 on that issue.

Jesse: Yeah, I would definitely agree that we are seeing less of an appetite to enforce these class action waivers, and that the difficulty of enforcing this waivers means that we’re really likely to see increased activity this year. There’s a very high rate of class certification – these cases in 2023 was granted 82% of the time, and of course, certification is the Holy Grail for plaintiffs’ lawyers, and that makes these cases very lucrative for the plaintiffs’ bar. I anticipate that class certification is going to remain challenging to defeat outright, and that all has to do with the nature of these claims. So ERISA plaintiffs assert that discrete types of plan mismanagement led to common injuries affecting large numbers of planned participants, and that it did it in similar ways. And, as you know, Jerry, that’s a very good recipe for class certification and it’s a good incentive for plaintiffs’ lawyers to file more of these cases.

Jerry: You used an interesting phrase that I think is spot on – the Holy Grail of these cases is class certification as I view them. The plaintiffs’ bar files them, tries to certify them, and then monetize them, because they know if a case gets certified, it becomes very, very dangerous to try and settle it, inevitably following the wake of certification numbers. What did the space look like on the ERISA front in terms of class-wide settlements in 2023?

Jesse: Well, plaintiffs did very well in securing high value settlements. In 2023, the top 10 ERISA class action settlements totaled $580.5 million – so we crossed the half billion dollar mark. And that’s a significant jump from 2022, when the top 10 ERISA class action settlements totaled $399.6 million.

Jerry: Well, those are record breaking numbers, and we’re following them in 2024. And my prognostication as they’re going to be even higher this year as compared to last year. Thank you, Jesse, and thank you to our loyal blog listeners for reading our publication and for tuning into this week’s podcast. Jesse, I sincerely appreciate you joining the show this week and for your thought leadership in this space.

Jesse: Absolutely. Thanks for having me, Jerry, and of course, thanks to all the listeners.

April 9, 2024 by Class Action Defense

Open the Gates! California Supreme Court Addresses Compensable Time At Security Checkpoints

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

Duane Morris Takeaways: In Huerta v. CSI Electrical Contractors, Case No. S275431, 2024 Cal. LEXIS 1446 (Cal. Mar. 25, 2024), the California Supreme Court held that time spent on an employer’s premises to undergo a security check could constitute compensable hours worked; that time spent traveling on an employer’s premises may be compensable as employer-mandated travel time; and that employees covered by the Labor Code’s “construction occupation” exception to meal periods may be entitled to minimum wage for the time spent working during an on-duty meal period. As a result, companies operating in California should review and adjust their pay policies on these issues to ensure complaint pay procedures.

Case Background

Plaintiff George Huerta worked at a solar power facility in Central California that was managed, in part, by Defendant CSI Electrical Contractors (“CSI”). Id. at 3. At the start and end of each shift, employees waited at the facility’s entrance to partake in a security check, which included rolling down a window and showing an ID badge, a visual inspection of the vehicle, and at times, a search of the vehicle. Id. Huerta alleged that CSI owed him compensation for the time spent waiting to pass through the security checkpoints. After passing through the checkpoint, Huerta then drove down the facility’s roads to reach the employee parking lot. Huerta, again, claimed he should have been compensated for the time spent driving from the facility’s entrance to the parking lot. Huerta was also covered by a collective bargaining agreement (“CBA”) that mandated an off-duty, unpaid 30-minute meal period. Id. CSI’s rules required workers to spend meal periods near their designated worksite for the shift, which Huerta alleged entitled him to additional compensation. Id. at 4-5.

Huerta filed a wage-and-hour class action against CSI seeking unpaid wages. He subsequently appealed his case to the Ninth Circuit, which, in turn, certified three questions to the California Supreme Court, including: (1) is time spent waiting to pass through a security checkpoint on an employer’s premises compensable time; (2) does time spent traveling from a security checkpoint to the employee parking lot constitute compensable time; (3) are workers entitled to paid meal periods when they are prohibited from leaving the jobsite during meal periods? Id. at 1, 5.

The California Supreme Court’s Decision

Industrial Welfare Commission (IWC) Wage Order No. 16-2001 (“Wage Order No. 16”) that governs wages, hours, and working conditions in the construction, drilling, logging, and mining industries covered Huerta’s work at the facility. Id. at 1. To answer the three certified questions, the California Supreme Court interpreted Wage Order No. 16 as follows:

First, the Supreme Court held that under Wage Order No. 16, the time an employee spends on an employer’s premise waiting to undergo a mandatory security check could constitute compensable “hours worked” depending on the amount of “control” exercised over the employee. Id. at 11. The Supreme Court noted that CSI required Huerta to participate in the security check; confined him to the premises until he finished the entrance and exit procedure; and made him perform “specific and supervised tasks” of waiting in his vehicle, rolling down his window, and allowing his personal vehicle to be searched by a guard. Id. at 9-10. Thus, CSI exercised a sufficient amount of “control” over Huerta to render the time spent passing through the security checkpoint compensable time worked under the Wage Order. Id. at 9.

Next, the Supreme Court held that under Wage Order No. 16, travel time may be compensable where (1) “the employer required the employee’s presence at an initial location before mandating travel to a subsequent location” and (2) “the employee’s presence was required for an employment-related reason other than accessing the worksite.” Id. at 18. Here, the Supreme Court offered an example of a worker who reported to an initial jobsite, retrieved work supplies, received the work order, and then traveled to a second jobsite. Id. at 16. Based on this example, the time spent travelling between jobsites represents compensable time. Id. Since Huerta and CSI offered contradictory evidence on this point, the Supreme Court declined to express a “view” on whether the facility’s security checkpoint was a “first location” that CSI mandated Huerta’s presence. Id. at 17.

Finally, the Supreme Court held that “an employee must be paid a minimum wage for meal periods when an employer’s prohibition on leaving the premises or a particular area forecloses the employee from engaging in activities he or she could otherwise engage in if permitted to leave,” even if the employee is covered by a CBA-meal period exception under a Wage Order. Id. at 33. The Supreme Court did not express any opinion on whether CSI’s rules for meal periods prohibited Huerta from the leaving the facility during his 30-minute meal periods, but noted that “if Huerta’s ‘unpaid meal period’ is compensable under the wage order as ‘hours worked,’ he is entitled to seek compensation for that time under Labor Code section 1194.” Id. at 35.

Implications For Employers

California continues to redefine what constitutes compensable time worked at the start and end of shifts. This decision is a must read for employers with mandatory security checkpoints, and such employers are advised to review their security protocols as it may constitute compensable hours worked.

April 9, 2024 by Gerald L. Maatman, Jr.

Texas Federal Court Throws Out Data Breach Class Action

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

Duane Morris Takeaways: In Austin v. Fleming, Nolen & Jez, LLP, No. 4:23-CV-00901, 2024 U.S. Dist. LEXIS 60696 (S.D. Tex. Apr. 2, 2024), Judge Andrew S. Hanen of the U.S. District Court for the Southern District of Texas granted Defendant’s motion for summary judgment in a data breach class action. The Court found that the time Plaintiff’s allegations about the time spent – (i) researching the data breach, (ii) exploring credit monitoring and identity theft options, (iii) self-monitoring her accounts, and (iv) seeking legal counsel – were not compensable damages and could not support her claims. This case serves as an important reminder that named Plaintiffs in data breach class actions must have suffered an actual, viable, concrete injury to sustain their claims.

Case Background

On February 6, 2023, a cybercriminal breached Defendant’s servers and obtained some of its confidential client data. Id. at *1. The cybercriminal then demanded Defendant pay money to avoid the publication of Defendant’s confidential client data on the dark web. Id. After Defendant sent out data breach notice letters to their potentially affected clientele, the named Plaintiff, a former client of Defendant, filed a class action complaint against Defendant asserting claims for negligence, breach of confidence, breach of implied contract, and breach of implied covenant of good faith and fair dealing. Id.

Defendant moved for summary judgment on the basis that Plaintiff had not, and could not, establish that she had suffered any damages as a result of the data breach. Id. In response, Plaintiff presented an affidavit from a putative class member who had suffered monetary damages due to identity theft. Id.

The Court’s Decision

The Court ruled that Plaintiff could not rely on a putative class member’s purported damages to support her claims prior to class certification, and as such, any evidence supporting the claims of other class members was “irrelevant.” Id. at 4. As a result, the Court only considered Defendant’s motion for summary judgment as it pertained to Plaintiff’s individual claim against the Defendant. Id.

The Court held that none of the following allegations of harm were sufficient for Plaintiff to maintain her claims — “time spent verifying the legitimacy and impact of the data breach, exploring credit monitoring and identity theft insurance options, self-monitoring her accounts and seeking legal counsel regarding her options for remedying and/or mitigating the effects of the data breach.” Id. at *5-6.

Accordingly, the Court found that because Plaintiff could not show “that she was injured by the data breach” or that “she suffered any damages,” summary judgment was proper. Id. at *6.

Implications For Companies

The Court’s ruling in Austin v. Fleming underscores the importance of damages and a viable injury-in-fact in data breach class actions. The first line of defense in any data breach class action challenging whether the named Plaintiff suffered an actual, concrete injury. Used effectively, companies can parlay a Plaintiff’s claimed damages in data breach class actions as quick off-ramp out of litigation.

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.