Duane Morris Takeaway: The surge of class action litigation filed under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., over the last several years persisted in 2023, with class action litigators in the plaintiffs’ bar continuing to focus on challenges ERISA fiduciaries’ management of 401(k) and other retirement plans. Plaintiffs continue to assert that ERISA fiduciaries breached their fiduciary duties of prudence and loyalty by, among other things, offering expensive or underperforming investment options and charging participants excessive recordkeeping and administrative fees. Hundreds fee and expense class actions have been filed since 2020, driven by a number of familiar plaintiffs’ class action law firms alongside some new entrants into the space.
To that end, the class action team at Duane Morris is pleased to present a new publication – the 2024 edition of the ERISA Class Action Review. We hope it will demystify some of the complexities of ERISA 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 consumer fraud class action litigation.
Click here to download a copy of the Duane Morris ERISA Class Action Review – 2024 eBook.
Stay tuned for more ERISA class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire
Duane Morris Takeaways: On March 26, 2024, Judge Stephen R. Bough of the U.S. District Court for the Western District of Missouri denied HomeServices of America’s (“HomeServices”) motion to decertify a class of home sellers alleging that that Defendants violated the Sherman Act by entering into a conspiracy to follow and enforce a rule adopted by the National Association of Realtors (“NAR”) that had the effect of raising commission rates in Moehrl et al. v. The National Association of Realtors et al., No. 1:19-CV-01610 (W.D. Mo. Mar. 26, 2024). HomeServices argued that the class of plaintiffs fail to satisfy Rule 23(b)(3) because trial showed that individual facts and proof predominated over common issues. The Court accepted Plaintiffs’ arguments that its expert sufficiently demonstrated a but-for world through common evidence, satisfying the predominance requirement of Rule 23(b).
Moerhl is required reading for any corporate counsel handling antirust class actions involving price-fixing allegations.
Case Background
Plaintiffs are home sellers. The Defendants relevant to the motion at bar are HomeServcies, BHH Affiliates, LLC, and HSF Affiliates, LLC. Plaintiffs alleged that Defendants violated the Sherman Act by entering into a conspiracy to follow and enforce a rule adopted by NAR, which had the purpose and effect of raising, inflating, or stabilizing buyer broker commission rates paid by home sellers from April 29, 2015, through June 30, 2022. The Court certified the class of plaintiffs on April 22, 2022, and the Eighth Circuit denied Rule 23 review requested by Defendants. In October 2023, a jury awarded $1.8 billion to the class against NAR, HomeServices, and Keller Williams, though Keller Williams had previously settled out of the litigation.
Last month, NAR entered into a groundbreaking $418 million settlement to resolve all related litigation.
The Court’s Ruling
The Court was unconvinced by HomeServices’ arguments and stuck with its initial analysis in granting class certification.
The Court reasoned that the Class’ economic expert opined that commission rates were uniformly high because of the cooperative compensation rule, without which a seller would not pay the commission of the buyer’s broker. According to the Court, trial testimony from the Class Plaintiffs further established that commission rates were uniformly high due to the cooperative compensation rule and that the higher commissions were paid during the entire class period. The Court further found that the damages model of Plaintiffs’ expert sufficiently relied on common proof by calculating the specific amount of damages for each class home sale transaction.
Implications For Defendants
Moehrl is another example of a federal antitrust class certification decision that turned on whether evidence of common, injury-producing conduct existed. The Court credited evidence capable of showing the impact of the anticompetitive conduct across all class member at trial.
By Ryan T. Garippo, Nicolette J. Zulli, and Gerald L. Maatman, Jr.
Duane Morris Takeaways: On March 29, 2024, in EEOC v. Phoebe Putney Memorial Hospital, Inc., No. 1:17-CV-201 (M.D. Ga. Mar. 29, 2024), Judge Leslie Gardner of the U.S. District Court for the Middle District of Georgia held that even minimal evidence for the EEOC’s claims may be sufficient to find that its failed lawsuit is not frivolous. Consequently, employers may be forced to pay their own attorneys’ fees even where the claims against them are lost at trial by the Commission. The decision in EEOC v. Phoebe Putney Memorial Hospital, Inc., is well worth a read by corporate counsel facing government enforcement litigation.
Case Background
In 2015, Phoebe Putney Memorial Hospital, Inc. (“Phoebe”) hired Wendy Kelley (“Kelley”) as a medical records analyst for a shift that typically ran from Monday through Friday. Kelley, however, understood that she needed to work weekends from time to time. Hence, when another employee went on maternity leave, Phoebe asked Kelley to cover some Saturday shifts. Instead, Kelley met with her doctor the next day to discuss an ongoing generalized anxiety disorder diagnosis.
Among other things, Kelley’s doctor recommended that she “take Saturdays and Sundays off work when she had to take an increased dose [of medication] at the end of a stressful workweek.” Id. at 6. As a result, Kelley submitted a request under the Americans with Disabilities Act (“ADA”) and asked not to work weekends. Phoebe explained that it is “a hospital and [it is] open on the weekend” and it could not accommodate the request. Id. at 8. Phoebe did, however, offer Kelley two days off in a row to give her time to take her medication. At the time, it appeared that this solution would work for everyone. Kelley then submitted another request for time off — this time for two weeks straight — citing her generalized anxiety disorder. Phoebe denied that request and explained that it could not cover her shifts. Kelley then refused to come into work. Accordingly, Phoebe terminated Kelley’s employment.
The Equal Employment Opportunity Commission (“EEOC”), on behalf of Kelley, filed a lawsuit alleging a violation of the ADA. The EEOC asserted that Phoebe fired Kelley because of a perceived disability. Ultimately, Phoebe filed a motion for summary judgment, which was denied, and the EEOC went to trial on Kelley’s claims. The jury sided with Phoebe on the basis that “Kelley’s request for accommodation was not made in good faith,” among other findings. Id. at 1. This verdict prompted Phoebe to file a motion for attorneys’ fees and costs that argued the entire lawsuit was frivolous.
The Court’s Decision
Judge Gardner denied Phoebe’s request for its attorneys’ fees and costs.
The Court explained that attorneys’ fees in ADA cases can be awarded only if the claim itself is frivolous. Courts consider three factors to make such a determination, including “(1) whether the plaintiff established a prima facie case; (2) whether the defendant offered to settle; and (3) whether the trial court dismissed the case prior to trial or held a full-blown trial on the merits” along with other considerations in the Eleventh Circuit. Sullivanv. Sch. Bd. Of Pinellas Cnty., 773 F. 2d 1182, 1189 (11th Cir. 1985) (citations omitted). Additionally, even if a plaintiff’s evidence is “weak,” she may be able to defeat a request for attorneys’ fees if there is “any evidence to support [her] claims.” Id.
Based on these principles, the Court held that Kelley’s testimony, even if weak or unpersuasive, was sufficient to establish her prima facie case for the EEOC’s claim of an ADA violation. The Court relied on that testimony to deny summary judgment. The Court stated as long as Kelley had “any evidence” for her claim, the lawsuit was not frivolous. That testimony, along with some medical records, qualified as such evidence. Further, the Court explicitly noted that Phoebe “did not offer to settle” and, therefore, the Court could not determine that this factor cut in Phoebe’s favor. Id. at 8.
Implications Of The Decision
The EEOC is an aggressive litigant. This decision demonstrates that even when the Commission loses its claims, companies nevertheless may have to foot the bill for their attorneys’ fees. Establishing an entitlement to attorneys’ fees is an uphill climb.
By Haley Ferise, Kathryn Brown, and Gerald L. Maatman, Jr.
Duane Morris Takeaways:On March 26, 2024, in EEOC v. Ferrellgas LP, No. 23-1719 (6th Cir. Mar. 26, 2024), the Sixth Circuit affirmed the decision of the U.S. District Court for the Eastern District of Michigan to enforce an EEOC subpoena over an employer’s objections. Although the employer raised both procedural and substantive grounds to challenge the pre-lawsuit subpoena, but both the District Court and the Sixth Circuit rejected those arguments. The ruling ought to be a required read for corporate counsel facing EEOC subpoenas issued as part of pre-lawsuit administrative investigations.
Case Background
April Wells, a Black woman, was a driver for a propane distribution company. She alleged in a discrimination charge filed with the Equal Employment Opportunity Commission that she was subjected to sex discrimination based on (i) her over qualification for the position for which she was hired as compared to that for which she applied, (ii) her compensation that was allegedly lower than that of her male counterparts, and (iii) her termination. She later amended the complaint to include race discrimination claims.
The EEOC began its investigation of Wells’ claims by sending the company two requests for information (RFIs). The employer refused to fully respond to the RFIs on grounds that the scope was overbroad. As is its usual approach, in October 2022, the EEOC issued a subpoena for information the company’s hiring practices. The company objected that the subpoena was unsigned, overly broad, unduly burdensome, and not relevant to the matters arising from the charge. A month later, the EEOC sent a second subpoena, in response to which the employer reiterated its objections.
In December 2022, the EEOC applied for an order to show cause as to why the subpoena should not be enforced, which was granted with a deadline of February 24, 2023. The company responded that (i) the EEOC improperly served the subpoena on the wrong corporate entity and therefore the company had not forfeited its right to challenge the subpoena, (ii) the EEOC could not show the relevance of its subpoena, and (iii) gathering and producing the information sought would be “unduly burdensome.” Id. at 4. The District Court rejected all of the company’s arguments, and it subsequently appealed.
The Sixth Circuit Decision
On appeal, the Sixth Circuit affirmed.
On appeal, the employer raised a new issue of improper service, claiming that the EEOC was required to mail the subpoena to the company itself or utilize another method enumerated in the National Labor Relations Act (NLRA), as the EEOC is authorized to do under Title VII. The Sixth Circuit found that, after directing the EEOC to communicate with its defense counsel, the company could not defeat service via its outside counsel that complied with its own request and that the company’s strict interpretation of the NLRA was erroneously narrow.
In response to the company’s argument that EEOC’s addressing its subpoena to the wrong corporate entity rendered the subpoena invalid, the Sixth Circuit ruled that such an error did not prevent the employer from raising its objections sooner and that the error was harmless, thereby not “preclud[ing] the district court from enforcing the subpoena.” Id.at 7.
At the same time, the Sixth Circuit rejected the EEOC’s argument that the employer had forfeited the right to object to the subpoena because of the company’s allegations the “the EEOC … failed to properly serve a facially valid subpoena.” Therefore, it addressed the company’s substantive objections. The Sixth Circuit reasoned that the District Court did not “abuse its discretion in rejecting” the employer’s arguments that the subpoena was “overbroad and unduly burdensome.” Id. at 11-12. The Sixth Circuit explained that Wells’ charge of discrimination did in fact concern hiring practices in light of her allegations related to discriminatory remarks in the interview process and that, even if the charge did not directly concern hiring practices, information about hiring processes “could cast light on whether [the employer] discriminated against other job applicants.” Id. at 12-13.
Finally, the Sixth Circuit agreed with the District Court that the company did not meet its burden in demonstrating that compliance with the subpoena presented an undue hardship.
Implications Of The Decision
Employers facing administrative subpoenas from the EEOC should be aware that clerical errors or even questionable service likely will not be sufficient to defeat the subpoenas. A better practice is to raise substantive objections to such subpoenas in a timely and formal manner.
By Gerald L. Maatman, Jr., Alex W. Karasik, and Christian J. Palacios
Duane Morris Takeaways: In EEOC v. Keystone RV Company, Case No. 3:22-CV-831 (N.D. Ind. Mar. 27, 2024), Judge Damon R. Leichty of the U.S. District Court for the Northern District of Indiana held that an employer was liable under the Americans with Disabilities Act (“ADA”) for failing to accommodate a former employee after the company terminated the worker for attendance issues stemming from his novel medical condition. This rare summary judgement victory in favor of the Commission illustrates the importance of employers engaging in an interactive process with their employees to provide them with reasonable accommodations under federal anti-discrimination laws, and the legal liability associated with non-compliance.
Background
The Charging party, Brandon Meeks, was diagnosed with cystinuria at the age of 19, a rare chronic illness that caused kidney stones to develop with irregular frequency. Roughly once every two years, he developed a large kidney stone that required surgical removal. In 2019 Meeks was hired as a painter at Keystone’s Wakarusa, Indiana plant, where he painted the base coat on RV wheels. Keystone had an attendance policy whereby it would terminate an employee who accrued seven “attendance points” (absences) within a year, and allowed an employee to miss up to three consecutive days from one doctor’s note and accrue just one attendance point without applying for an ADA accommodation. Id. at 2. According to the record, Mr. Meeks was a “diligent and hard worker,” but he accrued several attendance points for absences related to his medical condition, including a visit to his urologist, and treatment for kidney stone pain. Id.
On November 13, 2019, Meeks collapsed in a restroom due to excruciating pain. He was promptly rushed to the hospital and informed by a doctor that he had a “golf-ball-sized kidney stone” in his left kidney that would need to be surgically removed. Id. at 3. Meeks informed Keystone that he would require two weeks off of work to schedule and recover from surgery, which his employer agreed to given that Keystone’s Wakarusa plant closed down for several weeks from December to January and Meeks would only need a single day off of work. Prior to this request, Meeks had accrued 6 attendance points. Id. at 4. When Meeks returned to work on January 13, 2020, he informed Keystone he would need time off for another surgery scheduled on January 24, 2020. Meeks’ manager forecasted to him that he would be terminated if he missed work, and could reapply for employed 60 days later, per company policy. Id. According to the manager, Meeks did not provide a return to work date in connection with his second surgery request. According to Meeks, he knew he could likely return to work on January 27, 2020, but he never communicated this timeline to Keystone because his employer “never asked.” Id. After Meeks underwent his second surgery, on January 24, 2020, his mother drove him to the plant to pick up his paycheck, upon which he was sent to the corporate office and informed he was terminated due to his attendance points. Meeks subsequently filed a Charge with the EEOC. After its investigation, the EEOC brought suit on his behalf. On March 27, 2024, Judge Leichty granted summary judgement in favor of the Commission.
The District Court’s Ruling
Judge Leichty began his 19-page ruling by observing that this case illustrated one reason “why the ADA existed.” Id. at 1. Judge Leichty observed that “[n]o one can reasonably dispute that Mr. Meeks was a qualified individual with a disability. Keystone knew of the disability. And Keystone failed to accommodate the disability reasonably. A reasonable jury could not find otherwise on this record.” Id. at 7.
As the record reflected, the Court reasoned that Keystone clearly could have accommodated providing Meeks with two weeks leave, and yet it had not done so. The Court was unpersuaded by Keystone’s arguments that Meeks did not effectively communicate with his employer, and prior to his January surgery, he did not provide Keystone with an estimated return date. Rather, the Court determined that Keystone had an affirmative obligation to initiate an interactive process with its employees, and had historical knowledge of Meeks’ disability; because of this, the fault was theirs alone. Thus, “[a] reasonable jury could not lay the fault at Mr. Meeks’ feet,” and the Court granted summary judgement in the EEOC’s favor on ADA liability. Id. at 10-11.
Judge Leichty scheduled a trial at a later date to assess the question of damages, as factual disputes remained regarding Meeks’ reasonable diligence at finding comparable employment.
Implications For Employers
As the ruling in EEOC v. Keystone RV Company illustrates, it is imperative that employers engage in an interactive process with employees with respect to disability accommodations, provided the employer has reason to know of the employee’s disability. Significantly, a formal ADA request is not necessary on the part of the employee for a court to find an employer at fault for a breakdown of the interactive process. Because of this, employers should have robust policies in place to proactively provide their employees with reasonable accommodations for their disabilities. To do otherwise risks receiving a pre-liability judgement in favor of a federal, state, or municipal regulatory agency tasked with enforcing anti-discrimination legislation.
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Sharon Caffrey
Duane Morris Takeaways:Clients, ranging from some of the world’s largest manufacturers and insurance companies to startup companies and individual inventors, turn to Duane Morris for counsel and representation in claims involving products liability and toxic torts. For years, Duane Morris has worked with clients to develop cost-containment and strategic litigation plans designed to minimize the risk, business disruption and potentially staggering cost of products liability and toxic tort litigation. Our goal is to provide value by acting as proactive counselors and advisors, rather than simply responding to particular problems in isolation. To that end, the class action team at Duane Morris is pleased to present the Product Liability And Mass Torts Class Action Review – 2024. This new publication analyzes the key rulings and developments in 2023 and the significant legal decisions and trends impacting both product liability class action litigation and mass tort litigation for 2024. We hope that companies and employers will benefit from this resource and assist them with their compliance with these evolving laws and standards.
Click here to download a copy of the Product Liability And Mass Torts Class Action Review – 2024 eBook.
Stay tuned for more product liability and mass tort class action analysis coming soon on our weekly podcast, the Class Action Weekly Wire.
Duane Morris Takeaways: On March 25, 2024, the California Court of Appeal for the Second District held in Gramajo v. Joe’s Pizza on Sunset, Inc., Case Nos. B322992/B323024 (Cal. App. Mar. 25, 2024), that awards of attorneys’ fees and costs to prevailing plaintiffs in actions for unpaid minimum or overtime wages are mandatory. Consequently, a trial court lacks discretion to deny fees and costs recovery, even when a plaintiff engages in bad faith litigation tactics and recovers a negligible amount. On a bright note, mandatory fee and cost awards must still be reasonable, and a trial court retains discretion to reduce the amount sought if it is unreasonable.
Case Background
Elinton Gramajo worked as a pizza delivery driver. He sued his employer for failing to pay him minimum and overtime wages, failing to provide meal and rest breaks, failing to reimburse business expenses, and other related claims. He sought a total recovery of $26,159.23. Coincidentally, that amount was just above the $25,000 jurisdictional threshold for an unlimited civil proceeding. After four years of litigation, the case proceeded to trial. A jury found in Gramajo’s favor, but only on his claims for unpaid minimum and overtime wages. The jury awarded him just $7,659.63.
Gramajo then sought to recover a whopping $296,920 in attorneys’ fees, and $26,932.84 in costs. The trial court denied any recovery. It found that Gramajo acted in bad faith by artificially inflating his damages claim to justify filing the case as an unlimited civil proceeding. As evidence of bad faith, the trial court highlighted that, although Gramajo sought $10,822.16 in unreimbursed expenses, he submitted no evidence at trial to support that claim. He also alleged an equitable claim for injunctive relief, but then never pursued that claim. Additionally, the trial court found that the case had been “severely over litigated” with Gramajo noticing 14 depositions and serving 15 sets of written discovery requests, while ultimately using just 12 exhibits at trial. Id. at 4.
The trial court’s denial of Gramajo’s motion for fees and costs was premised upon § 1033(a) of the California Code of Civil Procedure, which vests discretion in a trial court to deny attorneys’ fees and costs recovery when a plaintiff recovers less than the $25,000 jurisdictional minimum for an unlimited civil case. Gramajo appealed.
The Court of Appeal’s Decision
On appeal, the California Court of Appeal for the Second District reversed.
It held that § 1194(a) of the California Labor Code applied, and not § 1033(a) of the Code of Civil Procedure. Section 1194(a) of the Labor Code provides than a plaintiff who prevails in an action for unpaid minimum or overtime wages “is entitled to recover in a civil action . . . reasonable attorneys’ fees, and costs of suit.” The Court of Appeal reasoned that § 1194(a) mandates a fee award to a prevailing plaintiff who alleges unpaid minimum and/or overtime wages, and that it was more specific than § 1033(a) of the Code of Civil Procedure, and more recently enacted.
On a bright note, the Court of Appeal cautioned that its reversal “should not be read as license for attorneys litigating minimum and overtime wages cases to over-file their cases or request unreasonable and excessive cost awards free of consequence” and that § 1194(a) mandates only the recovery of a “reasonable fee and cost award.” Id. at 15. While remanding that issue to the trial court, the Court of Appeal highlighted an example of a fee award it deemed reasonable. It noted that, in Harrington v. Payroll Entertainment Services, Inc., 160 Cal.App.4th 590 (2008), the plaintiff recovered just $10,500 in unpaid overtime wages and was awarded attorneys’ fees of just $500.
Implications Of The Decision
While it is an unfortunate outcome that attorneys’ fees and costs awards in overtime and minimum wage cases are mandatory to a prevailing plaintiff, and not entirely discretionary, the silver lining in Gramajo is that a trial court at least retains discretion to award only what is reasonable.
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Alessandra Mungioli with their discussion of 2023 developments and trends in consumer fraud class action litigation as detailed in the recently published Duane Morris Consumer Fraud Class Action Review – 2024.
Jerry Maatman: Welcome loyal blog listeners. Thank you for being on our weekly podcast, the Class Action Weekly Wire. My name is Jerry Maatman, I’m a partner at Duane Morris, and joining me today is my colleague, Alessandra. Thank you for being on our podcast to talk about thought leadership with respect to class actions.
Alessandra Mungioli: Thank you, Jerry. I’m glad to be here.
Jerry: Today we’re going to discuss our recent publication, our e-book on the Duane Morris Consumer Fraud Class Action Review. Listeners can find this book on our blog. Could you tell us a little bit about what readers can expect from this e-book?
Alessandra: Absolutely Jerry. Class action litigation in the consumer fraud space remains a key focus of the plaintiff’s bar. A wide variety of conduct gives rise to consumer fraud claims which typically involve a class of consumers who believe they were participating in a legitimate business transaction, but due to a merchant or a company’s alleged deceptive or fraudulent practices, the consumers were actually being defrauded.
Every state has consumer protection laws, and consumer fraud class actions require courts to analyze these statutes, both with respect to plaintiffs’ claims and also with respect to choice of law analyses when a complaint seeks to impose liability that is predicated on multiple states’ consumer protection laws.
To assist corporate counsel and business leaders with navigating consumer fraud class action litigation, the class action team here at Duane Morris has put together the Consumer Fraud Class Action Review, which analyzes significant rulings, major settlements, and identifies key trends that are apt to impact companies in 2024.
Jerry: This is a great, essential desk reference for practitioners and corporate counsel alike dealing with class actions in this space. Difficult to do in a short podcast, but what are some of the key takeaways in that desk reference?
Alessandra: Just as the type of actionable conduct varies, so, too, do the industries within which consumer fraud claims abound. In the last several years, for example, the beauty and cosmetics industry saw a boom in consumer fraud class actions as consumers demanded increased transparency regarding the ingredients in their cosmetic products and the products’ effects. In 2023, consumer fraud class actions ran the gamut of false advertising and false labeling claims as well.
Artificial intelligence also made its way into the class action arena in the consumer fraud space for the first time in 2023. In MillerKing, LLC, et al. v. DoNotPay Inc., the plaintiff, a Chicago law firm, filed a class action alleging the defendant, an online subscription service that uses “robot lawyers” programmed with AI, was not licensed to practice law and therefore brought claims for consumer fraud, deceptive practices, and breach of trademark. The defendant moved to dismiss the action on the basis that the plaintiff failed to establish an injury-in-fact sufficient to confer standing, which the court granted. The plaintiff asserted that the conduct caused “irreparable harm to many citizens, as well as to the judicial system itself,” and constituted “an infringement upon the rights of those who are properly licensed,” such as “attorneys and law firms.” The court found that the plaintiff failed to demonstrate any real injury per its claims, and granted the defendant’s motion to dismiss.
Jerry: Well, robot lawyers and lawyer bots – that’s quite a development in 2023. How did the plaintiffs’ bar do in – what I consider the Holy Grail in this space – securing class certification, and then conversion of a certified class into a monetary class-wide settlement?
Alessandra: So settlements were very lucrative in 2023. The top 10 consumer fraud class action settlements in 2023 totaled $3.29 billion. And by comparison, the top 10 settlements in 2022 had totaled $8.5 billion, so we have seen a downward trend. Notably, five of these 10 settlements last year took place in California courts. The top settlements in 2023 resolved litigation stemming from a variety of different theories, from smartphone performance issues to the marketing of vape products. Last year, courts granted plaintiffs’ motions for class certification in consumer fraud lawsuits approximately 66% of the time. And the overall certification rate for class actions in 2023 was 72%.
Jerry: Well, that’s quite a litigation scorecard. And this is an area of interest that the class action team at Duane Morris will be following closely and blogging about in 2024. Well, thank you for being with us today and thank you loyal blog readers and listeners for joining our weekly podcast again. You can download the Duane Morris Consumer Fraud Class Action Review off our website. Have a great day!
Duane Morris Takeaways: It has been a busy time for the Duane Morris Class Action Defense blog – it just recorded its 300th blog post!!!
Since our kick-off post, our data analytics show there have been over 50,000 views to blog posts, with thousands of our loyal subscribers reading about class action litigation developments. There are many highlights from the past 300 posts, but we wanted to provide just a few for you here. Click on the links below to see all the hot trends in class action litigation!
Overview Of The 300 Posts
We launched the second edition of the Duane Morris Class Action Review, which is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting Corporate America. The Review has been prominently featured in the media and is a must-have for all human resources professionals, business leaders, and corporate counsel.
We will be publishing the 2025 Edition of the Review next January.
We also continued the success of the Duane Morris Class Action Weekly Wire podcast, in which we talk about hot class action rulings and developments in real time and in relatable ways for our viewers. Tune in on Wednesdays for new episodes, and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Google Podcasts, the Samsung Podcasts app, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, YouTube or our RSS feed.
Below are the top five most viewed blog posts – which had over 25,000 combined views!
Thank you loyal followers for making the Class Action Defense blog your pick for class action litigation related information, trends, and analysis. We truly appreciate it! Please keep coming back, we promise to keep the content fresh!
By Gerald L. Maatman, Jr., Natalie Bare, and Harrison Weimer
Duane Morris Takeaways: A recent ruling by Judge Joshua Wolson of the U.S. District Court for the Eastern District of Pennsylvania highlights important distinctions in how courts analyze conditional certification motions under the Fair Labor Standards Act (“FLSA”) and class certification motions under Rule 23 of the Federal Rules of Civil Procedure. In Fayad v. City of Philadelphia, Case No. 23-CV-32 (E.D. Pa. Mar. 18, 2024), the Court conditionally certified plaintiff’s FLSA overtime claims on behalf of a proposed collective action of paralegals at the City of Philadelphia District Attorney’s Office, but denied Rule 23 class certification of the same claims under the Pennsylvania Minimum Wage Act (“PMWA”). According to the Court, conditional certification was appropriate because the District Attorney’s Office had a uniform policy of classifying paralegals as administratively exempt under the FLSA and therefore not paying overtime wages. However, the same evidence fell short of clearing the higher hurdle posed by the predominance requirement of Rule 23. The decision reminds employers to factor these differing standards into their litigation strategy.
Case Background
On January 4, 2023, Plaintiff Marybelle Fayad, a former paralegal for the City of Philadelphia District Attorney’s Office, sued her former employer, alleging that it misclassified paralegals and those with similar job duties as exempt and failed to pay them overtime wages in violation of the FLSA and the PMWA.
Plaintiff moved for conditional certification under 29 U.S.C. § 216(b) of the FLSA and for class certification of the PMWA claims under Rule 23 based on deposition testimony from Unit supervisors, job descriptions, company policies, and declarations of putative plaintiffs establishing that the District Attorney’s Office uniformly classified paralegals (and others with similar job duties) as exempt. In opposing both motions, the District Attorney’s Office argued that due to the paralegals’ varying job duties, responsibilities, working conditions, hours, shifts, and units, they were not similarly situated and individualized issues would predominate.
The Court’s Ruling
On March 18, 2024, Judge Wolson granted Plaintiff’s FLSA conditional certification motion, but denied her Rule 23 class certification motion, explaining that, “Rule 23 class certification and FLSA collective action certification are fundamentally different creatures.” Id. at 20.
While Judge Wolson declined to include non-paralegals with “substantially similar job duties” in the collective action membership, he found that Plaintiff met her relatively light burden to make a “modest factual showing” that the paralegals were “similarly situated” because the “evidence shows the DAO has a policy of classifying paralegals as administratively exempt under the FLSA, and that it therefore fails to pay the paralegals overtime.” Id. at 20-21. The Court also noted that it would reach the same result applying a heightened intermediate standard.
Judge Wolson opined that Rule 23, however, requires more; specifically, it requires the Court to conduct a “rigorous assessment” of the available evidence and the methods by which the plaintiff proposes to use that evidence to prove the requirements of Rule 23, including the requirement that “questions of law or fact common to class members predominate over any questions affecting only individual members.” Id. at 22.
The Court explained that showing predominance required Plaintiff to “proffer class-wide evidence to show that a) the DAO improperly classified paralegals under the PMWA and b) the paralegals worked overtime hours.” Id. According to the Court, Plaintiff did the former but not the latter. Specifically, Plaintiff did not “proffer common proof to show that the DAO’s paralegals worked over forty hours in a given week.” Id. As a result, Judge Wolson concluded “individual issues will predominate” because there would be no way of knowing each paralegals hours worked without individual inquiry. Id.
The Court found Plaintiff’s testimony from one Unit supervisor fell short of the “common evidence” of hours the paralegals worked required to show predominance under Rule 23 because the testimony did not apply to all 200 paralegals employed by the District Attorney’s Office. This single supervisor’s testimony was not common evidence to prove injury in fact to all paralegals. Id.
The Court also explained that the common proof “doesn’t have to be time records, but it has to be ‘sufficient to show the amount of the employees’ work as a matter of just and reasonable inference.’” Id. Plaintiff offered no alternate to time records; rather, as the Court put it: “She just asks me to draw an inference from the absence of records.” Id. The Court clarified that demonstrating predominance does not require a plaintiff “to prove the measure of each paralegal’s damages,” but rather the plaintiff “must be able to demonstrate the fact of damage (meaning injury or impact) on a class-wide basis.” Id.
Implications For Employers
The Fayad decision underscores the low burden that plaintiffs must typically meet to demonstrate that their proposed FLSA plaintiffs are “similarly situated” for purposes of conditional certification. As we reported in the Duane Morris Class Action Review [https://blogs.duanemorris.com/classactiondefense/2024/01/09/it-is-here-the-duane-morris-class-action-review-2024/], courts granted 75% of FLSA conditional certification motions in 2023.
Employers facing both class and collective actions in the same litigation should be proactive and strategic in managing the timing of discovery and motion practice in light of the differences in how courts will analyze FLSA conditional certification motions versus Rule 23 class certification motions. The decision also provides a helpful analysis for employers opposing class certification of misclassification claims in cases where plaintiffs offer no common method of providing overtime work
By Gerald L. Maatman, Jr. and Jennifer A. Riley
