Class Action Defense

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

DMCAR Trend #10 – Arbitration Agreements Remained An Effective Tool To Cut Off Class Actions

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

Duane Morris Takeaway: Of all defenses, a defendant’s ability to enforce an arbitration agreement containing a class or collective action waiver may have had the single greatest impact in terms of shifting the pendulum of class action litigation. With its decision in Epic Systems Corp. v. Lewis, et al., 138 S. Ct. 1612 (2018), the U.S. Supreme Court cleared the last hurdle to widespread adoption of such agreements. In response, more companies of all types and sizes updated their onboarding materials, terms of use, and other types of agreements to require that employees and consumers resolve any disputes in arbitration on an individual basis. To date, companies have enjoyed a high rate of success enforcing those agreements and using them to thwart class actions out of the gate.

Watch below as Duane Morris partner Jerry Maatman discusses the arbitration defense and how it impacted class action litigation in 2023.

Statistically, corporate defendants fared well in asserting the defense. Across various areas of class action litigation, the defense won approximately 66% of motions to compel arbitration (approximately 123 motions across 187 cases) over the past year. Such numbers are similar to the numbers we saw in 2022, where defendants succeeded on 67% of motions to compel arbitration (roughly 64 motions granted in 96 cases).

The following graph shows this trend:

Despite a tumultuous year in 2022, the arbitration defense in 2023 remained one of the most powerful weapons in the defense toolkit in terms of avoid class and collective actions.

In 2022, the U.S. Supreme Court limited application of the FAA to workers who participate in interstate transportation and, perhaps more significantly, on the legislative front, Congress significantly limited the availability of arbitration for cases alleging sexual harassment or sexual assault. Congress passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (the Ending Forced Arbitration Act or EFAA), and President Biden signed the Act into law on March 3, 2022.

The EFAA amended the FAA and provided plaintiffs the discretion to enforce pre-dispute arbitration provisions in cases where they allege conduct constituting “a sexual harassment dispute or a sexual assault dispute” or are the named representatives in “a class or in a collective action alleging such conduct.” In other words, the Act did not render such agreements invalid, but allowed the party bringing the sexual assault or sexual harassment claims to elect to enforce them or to avoid them.

It is likely that defendants have not yet felt the impact of either development.

The Impact Of The EFAA

Despite this setback for the arbitration defense in 2022, companies continued to enjoy a high rate of success enforcing these agreements and using them to thwart class actions in 2023. Since the EFAA became effective on March 3, 2022, courts have issued only 34 published decisions on plaintiffs’ attempts to use the EFAA to avoid arbitration. Plaintiffs succeeded in enforcing the EFAA and keeping claims in court, in whole or in part, in only about 9 of those rulings.

Many of the decisions denying enforcement of the EFAA turned on the fact that the EFAA is not retroactive. Congress provided that the provisions of the Ending Forced Arbitration Act would “apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act [March 3, 2022].” Thus, although courts have disagreed as to when disputes or claims “arise or accrue” for purposes of the EFAA, in many cases, all potential dates pre-dated March 3, 2022, and, therefore, courts concluded that the Act did not apply.

Many courts recognized an exception in cases where plaintiffs were able to allege a “continuing violation” that extended past March 3, 2022, generally finding that the EFAA allowed such claims to remain in court. In Betancourt, et al. v. Rivian Automotive, No. 22-CV-1299, 2023 WL 5352892, at *1 (C.D. Ill. Aug. 21, 2023), for example, plaintiff filed a class action lawsuit alleging that she was regularly subjected to unwanted sexual advances during her employment from December 6, 2021, through “about June 1, 2022,” and, despite making reports to several supervisory level employees, defendant failed to remedy the conduct. The defendant invoked its arbitration agreement with the plaintiff, which included a class and collective action waiver, and the plaintiff claimed that the agreement was unenforceable due to the EFAA. Id. at *2. Acknowledging that the EFFA does not apply retroactively, the court considered whether the action accrued before March 3, 2022, and held that it did not. The court reasoned that the plaintiff alleged a continuing violation, which was ongoing on the date the EFAA was enacted, and, therefore, the arbitration agreement and class action waiver were unenforceable. Id. at *5.

Approximately 12 of the decisions turned on court interpretations regarding the scope of the EFAA, and we observed the beginnings of a patchwork quilt of interpretations as to the scope of the claims subject to the EFFA. In Johnson, et al. v. Everyrealm, Inc., 657 F. Supp. 3d 535 (S.D.N.Y. 2023), for instance, the plaintiff brought claims for race discrimination, pay discrimination, sexual harassment, retaliation, and intentional infliction of emotional distress, among other things, and the defendant moved to dismiss the sexual harassment claim and to compel arbitration of the remainder. The court denied the motion. It noted that, in its operative language, the EFAA makes a pre-dispute arbitration agreement invalid and unenforceable “with respect to a case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute.” Id. at 558 (quoting 9 U.S.C. § 402(a) (emphasis added)). It found such text “clear, unambiguous, and decisive as to the issue.” Id. As a result, the district court concluded that plaintiff pled a plausible claim of sexual harassment in violation of New York law and “construe[d] the EFAA to render an arbitration clause unenforceable as to the entire case involving a viably pled sexual harassment dispute, as opposed to merely the claims in the case that pertain to the alleged sexual harassment.” Id. at 541.

In Mera, et al. v. SA Hospitality Group, LLC, No. 1:23 Civ. 03492 (S.D.N.Y. June 3, 2023), by contrast, plaintiff brought claims for unpaid wages under the FLSA and the New York Labor Law (NYLL), as well as claims for sexual orientation discrimination and hostile work environment. The employer moved to compel arbitration, and the court found the agreement unenforceable as to his hostile work environment claims but enforceable as to his FLSA and NYLL claims. The plaintiff argued that, under the EFAA, the arbitration agreement was unenforceable as to his entire “case,” including his unrelated wage and hour claims under the FLSA and the NYLL, which he brought on behalf of a broad group of individuals. Id. at *3. The court disagreed. It held that, under the EFAA, an arbitration agreement executed by an individual alleging sexual harassment is unenforceable only with respect to the claims in the case that relate to the sexual harassment dispute, since “[t]o hold otherwise would permit a plaintiff to elude a binding arbitration agreement with respect to wholly unrelated claims affecting a broad group of individuals having nothing to do with the particular sexual harassment affecting the plaintiff alone.” Id.

The Impact Of The Transportation Worker Exemption

Despite the U.S. Supreme Court’s clarification of the transportation worker exemption to the FAA in 2022, lower courts continue to grapple and disagree about its scope, effectively holding a potential wave of workplace litigation against transportation, logistics, and delivery companies in check.

In the first and arguably the largest door-opener to the courthouse for the plaintiffs’ class action bar during 2022, the Supreme Court narrowed the application of the Federal Arbitration Act by expanding its so-called “transportation worker exemption” in Southwest Airlines Co. v. Saxon, 142 S.Ct. 1783 (2022). The plaintiff, a ramp supervisor, brought a collective action lawsuit against Southwest for alleged failure to pay overtime. Id. at 1787. Southwest moved to enforce its workplace arbitration agreement under the FAA. In response, the plaintiff claimed that she belonged to a class of workers engaged in foreign or interstate commerce and, therefore, fell within §1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Id. The Supreme Court granted review and went on to hold that “any class of workers” directly involved in transporting goods across state or international borders falls within the exemption. Id. at 1789. It had no problem finding the plaintiff part of such a class: “We have said that it is ‘too plain to require discussion that the loading or unloading of an interstate shipment by the employees of a carrier is so closely related to interstate transportation as to be practically a part of it.’ . . . We think it equally plan that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods.” Id. (citation omitted).

Despite this decision clarifying the exemption, lower courts remained steeped in disputes, often generating irreconcilable differences of opinion over which workers signed arbitration agreements enforceable under the FAA and which did not. In Fraga v. Premium Retail Services, Inc., No. 1:21-CV-10751, 2023 WL 8435180 (D. Mass. Dec. 5, 2023), for example, after the parties litigated the enforceability of the arbitration agreement for more than two years, and the dispute resulted in three full scale judicial opinions, a two-day evidentiary hearing with 6 witnesses, and hundreds of pages of exhibits, the court determined that the plaintiff’s work, which involved sorting, loading, and transporting materials to retailers located within or outside Massachusetts “was not performed frequently and was not closely related to interstate transportation” so as to bring him within the exemption. Id. at *6.

Similarly, in Nunes, et al. v. LaserShip, Inc., No. 1:22-CV-2953, 2023 WL 6326615 (N.D. Ga. Sept. 28, 2023), the plaintiffs opposed a motion to compel arbitration contending that last-mile delivery drivers are engaged in interstate commerce because the goods they transport have traveled interstate and remain in the stream of commerce until delivered. The court disagreed. Whereas it found “no doubt” that the plaintiffs belong to a “class of workers employed in the transportation industry” because they locally transported packages from a warehouse to commercial and residential buildings, it concluded that plaintiffs “do not actually engage in interstate commerce.” Rather, their job entailed sorting and loading packages from the local warehouse and delivering the goods locally. Thus, the court determined that the plaintiffs were “too far removed from interstate activity,” and did not fall within § 1’s exemption.

By contrast, in Webb, et al. v. Rejoice Delivers, 2023 WL 8438577 (N.D. Cal. Dec. 5, 2023), the court found the opposite. The plaintiff picked up packages from local Amazon facilities and delivered the packages locally. The court, however, noted that, before reaching the local Amazon facilities, the goods had been ordered from Amazon’s website and taken to the local facilities by shipping trucks. As a result, the court held that, because plaintiff “pick[ed] up packages that ha[d] been distributed to Amazon warehouses, certainly across state lines, and transport[ed] them for the last leg of the shipment to their destination,” his work was “a part of a continuous interstate transportation” of goods, so that he was engaged in interstate commerce for the purposes of the FAA § 1 exemption. Id. at *7.

The U.S. Supreme Court is poised to offer more clarity as to this issue in Bissonnette, et al. v. LePage Bakeries Park St., LLC, No. 23-51 (U.S. Sept. 29, 2023). On September 29, 2023, the U.S. Supreme Court granted certiorari in to address the exemption. In Bissonnette, two workers who delivered breads and cakes sued a bakery claiming that it misclassified them as independent contractors and, therefore, denied them minimum wage and overtime. The workers asserted that the transportation worker exemption applied because they handled goods traveling in interstate commerce, but the Second Circuit affirmed the district court’s ruling granting defendant’s motion to compel arbitration.

The question presented to the U.S. Supreme Court involves whether, to be exempt from the FAA, a class of workers actively engaged in interstate transportation also must be employed by a company in the transportation industry. Thus, the Supreme Court’s ruling could provide additional clarity in narrowing or expanding the scope of the exemption, potentially opening the doors to additional class claims.

Given the impact of the arbitration defense, in 2024, companies are apt face additional hurdles, on the judicial or the legislative front, as the plaintiffs’ bar continues to look for workarounds. In particular, as more plaintiffs can assert claims that post-date the EFAA, we expect to see additional litigation and more decisions over the interpretation of the EFAA, including whether the Act’s use of the word “case” renders the statute applicable to all claims in the case, including claims other than sexual harassment and sexual assault, and whether the statute, therefore, will allow for a broader shield to the arbitration defense.

That said, the future viability of the arbitration defense remains an open question, as advocacy groups, government regulators, and political figures push for a ban on class action waivers in arbitration.

February 9, 2024 by Alex W. Karasik

Spygate 2.0? New England Patriots Sued In VPPA Privacy Class Action

By Alex W. Karasik and Gerald L. Maatman, Jr.

Duane Morris Takeaways: On February 1, 2024, a football fan filed a class action lawsuit against the New England Patriots in a Massachusetts federal court, alleging that the football team’s mobile app (the “App”) knowingly disclosed users’ location data and personal information to third-parties in alleged violation of the Video Privacy Protection Act (“VPPA”). This lawsuit marks the latest high-profile VPPA class action lawsuit filing, which have significantly spiked in the last two years.

Although the recent tide of VPPA class action court rulings has generally tipped in favor of defendants, the plaintiffs’ class action bar is still exploring novel theories to bring these high-stakes cases. Companies must therefore pay close attention to privacy-related issues involving mobile applications, including what data is collected and to whom it is transmitted.

The VPPA

Congress passed the VPPA in 1988. The statute imposes liability on, “[a] video tape service provider who knowingly discloses, to any person, personally identifiable information concerning any consumer of such provider.” 18 U.S.C. § 2710(b)(1). A “video tape service provider” is defined as “any person, engaged in the business, in or affecting interstate or foreign commerce, of rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials.” Id. 3-4 (citations omitted). “Personally identifiable information” (“PII”) is defined as “information which identifies a person as having requested or obtained specific video materials or services from a video service provider.” Id. In essence, the statute purports to account for advancements in video-delivery technology by defining a “video tape service provider” broadly to include any business engaged in the “rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials.” Id.

The New VPPA Class Action Lawsuit

Plaintiff alleges that he downloaded and installed the App to his mobile phone and regularly used it to access video content. Id. at 2. When downloading the App, users are presented with an option to sign into an existing account, create a new account, or continue without signing in by selecting “MAYBE LATER.” Id. at 4-5. Plaintiff alleges that consumers who select “MAYBE LATER” are not presented with the App’s Terms of Use or Privacy Policy. And even if users select “JOIN NOW”, they are redirected to a login screen where they have the option to log in, but are not required to view or assent to any terms of use or privacy policy unless they take additional steps to create an account. Id. at 5.

In terms of data collection, the lawsuit alleges that when a user opens a video on the App, the App sends the content type, video title, and a persistent identifier to the user’s device. The App then transmits to third parties the user’s information, including location (in geographical coordinates and altitude), advertising ID, and video content consumption. Id. at 6. According to the complaint, the New England Patriots allegedly leverage users’ geolocation so it can maximize advertising revenue and, to that end, uniquely identify its users. For Android software users, the complaint alleges that the Patriots unique advertising ID called an Android Advertising ID (“AAID”) for each of its users with third-parties, which enables a third party to track the user’s movements, habits, and activity on mobile applications. Id. at 10.

Accordingly, the lawsuit alleges that through the New England Patriots’ dissemination of consumers’ PII, third parties such as Google can collect and store billions of metrics and events and make it easier for clients to make data-driven decisions, and these reports are continuously updated and metrics are reported as they occur. Id at 16. Plaintiff seeks to represent a class defined as “All persons in the United States who used the Patriots App to watch videos and had their personally identifiable information — including but not limited to the videos they watched, their geolocation, and their unique advertising IDs — transmitted to one or more third parties.” Id. On behalf of the class, Plaintiff seeks an award of damages, including, but not limited to, actual, consequential, punitive, statutory, and nominal damages.

Implications For Businesses

This lawsuit represents another example of class action plaintiffs’ lawyers using traditional state and federal laws – including the long dormant VPPA – to seek relief for alleged privacy violations. In applying modern technologies to older laws like the VPPA (passed in 1988), courts have grappled with issues such as the determination of who qualifies as a “video tape service provider” or a “consumer” under the statute. It will be interesting to follow this lawsuit to see whether the Court follows the recent trend of courts dismissing VPPA class actions.

That said, this high-profile filing also suggests that companies should regularly update their online consent provisions as needed to specifically address the VPPA. Businesses that pro-actively implement compliance mechanisms will thank themselves later in terms of preventing class action litigation.

February 9, 2024 by Class Action Defense

Third Circuit Breathes New Life Into EEOC Enforcement Lawsuit

By Gerald L. Maatman, Jr., Elisabeth Bassani, and Danielle Dwyer

Duane Morris Takeaways: On February 1, 2024, in EEOC v. Center One, LLC, Nos. 22-2943 & 22-2944 (3d Cir. Feb. 1, 2024), the Third Circuit held that a District Court erred when it granted summary judgment for an employer and dismissed a case brought by the U.S. Equal Employment Opportunity Commission (EEOC) on behalf of a Jewish employee who claimed he was forced to quit after his employer denied him time off for religious holidays. The decision is a reminder of employers’ obligations to reasonably accommodate employees’ sincerely held religious beliefs, practices or observances.

Background Of The Case

The EEOC, on behalf of Demetrius Ford, alleged that Ford’s employer, Center One, discriminated against him based on his religion and constructively discharged him in violation of Title VII because it refused to accommodate his request for time off for high holidays. Specifically, the EEOC asserted that Center One assigned Ford “demeritorious attendance points” because he missed work to observe Rosh Hashanah and subsequently refused to permit him time off for future high holidays without an “official” letter from his congregation attesting to his need to be absent. Id. at 5. Center One also scheduled a meeting with Ford to discuss his attendance issues on Yom Kippur, despite acknowledging it knew it was a high holy day in Judaism. Ford submitted an email exchange with a leader from a congregation in response to Center One’s request for documentation, but Center One told Ford that it needed something more “official.” Id. Ford eventually tendered his resignation, explaining that he was not able to obtain an “official clergy letter.” Id. at 6.

The District Court granted summary judgment to Center One, holding that a mere accrual of attendance points for missing work did not constitute an adverse employment action, and that Ford was not constructively discharged.

The Third Circuit’s Ruling

On appeal, the Third Circuit unanimously vacated the District Court’s ruling and remanded for further proceedings. It held that the EEOC and Ford presented enough evidence for a jury to decide if Ford was constructively discharged. Notably, the Third Circuit agreed with the District Court in finding that accruing attendance points — without any other changes to the compensation, terms, conditions, or privileges of employment — did not constitute an adverse employment action.

But, because there was no dispute that Center One required Ford to work on Rosh Hashanah and Yom Kippur and that Center One asked Ford for an “official” letter from his congregation attesting to his need to take off on high holidays, the Third Circuit opined that a jury could find that Center One’s conduct created an intolerable work environment. It specifically noted that a requirement for “official clergy verification was at odds with the EEOC’s Guidance on religious discrimination, as well as our precedent.” Id. at 8. The Third Circuit also cautioned that “[t]he doctrine of constructive discharge does not require an employee who is seeking religious accommodation to either violate the tenets of his faith or suffer the indignity and emotional discomfort of awaiting his inevitable termination.” Id.

Implications For Employers

The ruling in EEOC v. Center One LLC reminds employers that they need to reasonably accommodate an employee’s sincerely held religious beliefs, practices, or observances. Such accommodations are required unless an employer can show that the accommodation would create an undue hardship. The decison also cautions employers that while they can request documentation in support of an accommodation, they cannot require an official letter from a clergy member, spiritual leader, or other congregant.

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

Colorado Federal Court Rules That The EEOC May Seek Back Pay Claims In ADA Lawsuit Against Trucking Company

By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller

Duane Morris Takeaways: In Equal Employment Opportunity Commission v. Western Distributing Co., No. 1:16-CV-01727, 2024 U.S. Dist. LEXIS 17225 (D. Colo. Jan. 31, 2024), Judge William J. Martinez of the U.S. District Court for the District of Colorado denied Defendant’s motion to dismiss for lack of standing and granted in part and denied in part Defendant’s motion to reconsider. Both post-trial motions involved disparate impact claims for qualified disabled employees concerning Defendant’s return-to-work policies. For employers facing EEOC-initiated lawsuits under the Americans with Disabilities Act of 1990 (the “ADA”) concerning employment policies, this decision is instructive in terms of the record evidence and filings courts will consider when deciding post-trial motions.

Case Background

On July 7, 2016, the EEOC filed suit on behalf of individuals with disabilities who worked for Defendant Western Distributing Co. (“Western”), a trucking company. The EEOC alleged Western’s employment policies disparately impacted these individuals under the ADA.

Western’s policies required employees to return to work on a “full-duty” basis after medical leave; required certain drivers to static push and pull 130 pounds of weight; and required certain drivers to be able to static push and pull 130 pounds of weight at 58 inches above the ground. Id. at 2.

In January 2023, a jury decided that Western’s “full-duty” policy had a disparate impact on disabled drivers. The post-trial motions resulted from the jury’s decision and Western moved to dismiss for lack of standing (“Standing Motion”) and moved to reconsider the Court’s denial of its yet-to-be-filed Rule 50(b) motion (“Motion to Reconsider”).

Standing Motion

The Court denied Western’s Standing Motion. In reviewing Western’s arguments, the Court determined Western put “great weight … on: (1) Senior U.S. District Judge Lewis T. Babcock’s Bifurcation Order; and (2) several statements by the EEOC’s counsel and the Court during the trial.” Id. at 2.

The Court found the obvious purpose of the bifurcation order was “(1) to give the parties a clear procedure for trying this action; and (2) to give the jury issues it can legally decide and reserve for the Court issues upon which it must rule.” Id. at 3. The Court reasoned that Judge Babcock’s bifurcation order “clearly contemplate[d] separate fact finding on ‘all individual claims and resultant damages’” and construing the order otherwise would be “unjust and border on absurd.” Id. at 4.

As to the statements during trial, the Court concluded that “back pay is viewed as equitable relief . . . to be decided by the judge.” Id. at 3. Therefore, the Court opined that it “will not ascribe to it the power to foreclose retrospective relief to which the EEOC and aggrieved individuals might be entitled. Nor will the Court rule such relief is improper simply because the EEOC did not present any damages evidence to a jury that could not award equitable back pay.” Id. at 4.

Motion to Reconsider

The Court granted Western’s request to reconsider arguments raised in its initial Rule 50(a) motion. The Court addressed Western’s arguments and denied each in full.

First, Western argued “the EEOC waived its Disparate Impact Claim to the extent it was based on the “full-duty policy” by failing to include this claim in its proposed “Challenge Standards” instruction. Id. at 5.

The Court determined its order one month before trial on the EEOC’s motion for partial summary judgment included both the “full-duty and maximum leave policies ‘[as] two of the thirteen discriminatory standards, criteria, or methods of administration that form the basis of the Disparate Impact Claim.’” Id. at 6. The Court also reasoned that Western was aware of the need to defend against the full-duty policy given the “significant body of evidence Western in fact prepared and marshaled to do just that.” Id.

Second, Western sought reconsideration concerning the adequacy of the evidence the EEOC presented at trial with respect to the existence of the full-duty policy and its disparate impact on qualified individuals with disabilities. Id. at 7. The Court denied Western’s request to re-weigh the evidence as the jury during trial “was attentive, engaged, and clearly thoughtful in issuing a narrow verdict.” Id. at 8. As to the disparate impact portion, the Court highlighted that this portion was “a retread of one of Western’s rejected summary judgment arguments.” Id. at 7. Therefore, the Court decided it would “not functionally reverse its own legal conclusions reached during the summary judgment phase.” Id. at 8.

For the same reasons, the Court denied Western’s third argument regarding statistical evidence of the 130-pound push/pull tests as a “re-tread” of an issue already decided on summary judgment. Id. Finally, the Court denied Western’s argument because it “[was] merely a short summary of the arguments raised in the Standing Motion.” Id.

Implications For Employers

Employers that are confronted with EEOC-initiated litigation involving employment policies should note that the Court relied heavily on the established record including prior issued orders, previous motions raising the same or similar arguments, and statements made by counsel at trial.

Further, from a practical standpoint, employers should carefully evaluate employment policies that may impact individuals with disabilities, as courts and juries are apt to scrutinize these materials.

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

Three Months After Class Certification Was Denied, New Mexico Federal Court Allows Sixteen FedEx Delivery Drivers To Intervene In A Class Action

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

Duane Morris Takeaways: In Martinez v. Fedex Ground Package System, Inc., No. 20-CV-1052, 2024 WL 418801 (D.N.M. Feb. 5, 2024), Judge Steven C. Yarbrough of the U.S. District Court for the District of New Mexico granted the intervention motion of 16 putative class members to join the lawsuit, The Court held that the plaintiff-intervenors met the standard for permissive intervention under Rule 24(b)(2). The Court’s decision in this case serves as an important reminder that Rule 23 and Rule 24 employ two separate commonality standards, and that class action cases are not automatically over when a court denies class certification.

Case Background

On October 12, 2020, Plaintiffs Fernandez Martinez and Shawnee Barrett (collectively, “Plaintiffs”) filed suit against Defendant Fedex Ground Package System, Inc. (“Fedex”), alleging that Fedex misclassified them as independent contractors and failed to pay them and putative class members overtime wages in violation of the New Mexico Minimum Wage Act (“NMMWA”).

On November 8, 2022, Plaintiffs moved to certify a class of all current or former New Mexico FedEx drivers who were paid a day rate without overtime compensation. On October 27, 2023, the Court denied Plaintiffs’ motion on the basis that Plaintiffs failed to demonstrate that common questions predominated over individualized issues pursuant to Rule 23(b)(3). Martinez v. FedEx Ground Package Sys., No. 20-CV-1052, 2023 WL 7114678 (D.N.M. Oct. 27, 2023).

On December 15, 2023, a group of 16 putative class members (the “Intervenors”) filed a motion to intervene as plaintiffs in the Lawsuit under Rule 24. Martinez, 2024 WL 418801, at 1. In their motion, the Intervenors alleged that they, like Plaintiffs, were “current or former New Mexico FedEx delivery drivers who were paid the same amount of money regardless of how many hours they worked in a day, resulting in no premium payment for overtime hours worked in violation of the [NMMWA].” Id.

The Court’s Decision

The Court granted the Intervenors’ motion. Id. at 2. It held that the Intervenors presented sufficient “questions of law and fact in common with the main action” under Rule 24. Id.

The Court noted that permissive intervention under Rule 24 is appropriate where (i) a federal statute creates a conditional right, or (ii) where the “intervenor has a claim or defense that shares with the main action a common question of law or fact.” Id.

In its opposition, FedEx asserted that because the Intervenors were employed by independent service providers (“ISPs”) to deliver packages on behalf of FedEx, and were not employed by FedEx directly, FedEx was not liable under the NMMWA for allegedly unpaid overtime. Id. Further, FedEx argued that the commonality requirement of Rule 24 was not met because the Court already found the absence of a common question when it denied class certification. Id.

While the Court recognized that it denied class certification under Rule 23’s commonality requirement, it was not persuaded by FedEx’s arguments. The Court underscored that under Rule 24, “rather than asking whether a question is susceptible to resolution ‘in one stroke,’ courts must ask whether intervenors present ‘questions of law and fact in common with’ the main action.” Id.

The Court concluded that the “existing plaintiffs and every intervenor [would] assert that certain common aspects of [FedEx’s] contracts with ISPs [made FedEx] a joint employer and, consequently, jointly liable for any [NMMWA] violations.” Id. Accordingly, the Court ruled that the Intervenors satisfied the Rule 24 commonality standard and were permitted to join the lawsuit as plaintiffs. Id. at 3.

Implications For Companies

The decision in Martinez v. FedEx serves as an important reminder for defendants that class actions are not necessarily over once class certification is denied – and some members of the putative class may take a run at joining the lawsuit per Rule 24. Additionally, it underscores the distinct commonality analyses under Rule 23 and Rule 24.

February 8, 2024February 8, 2024 by Class Action Defense

Thank You For A Successful Duane Morris Class Action Review – 2024 Book Launch Event!

Thank you to all our clients who attended the in-person book launch of the Duane Morris Class Action Review in Philadelphia last week, as well as our nationwide audience who participated via Zoom.

In case you missed it, watch a video of the live presentation below, featuring Duane Morris partners and editors of the Review, Jerry Maatman and Jennifer Riley, with Equal Employment Opportunity Commissioner Keith Sonderling.

Please also view pictures from the in person Book Launch event below. We would love to see you at the event in 2025!

Duane Morris Chairman and CEO Matt Taylor delivers opening remarks.

Duane Morris Vice Chairman Tom Servodidio introduces the panel.

Introducing the Duane Morris Class Action Review - 2024. — Introducing the Duane Morris Class Action Review – 2024.

Review editors and authors Jerry Maatman and Jennifer Riley, guest speaker Commissioner Keith Sonderling of the EEOC.

Commissioner Keith Sonderling of the EEOC.

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

Announcing The Duane Morris EEOC Litigation Review – 2024

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

Duane Morris Takeaways: Given the importance of compliance with workplace anti-discrimination laws for our clients, we are pleased to present the second edition of the Duane Morris EEOC Litigation Review – 2024. The EEOC Litigation Review – 2024 analyzes the EEOC’s enforcement lawsuit filings in 2023 and the significant legal decisions and trends impacting EEOC litigation for 2024. We hope that employers will benefit from this deep dive into how the EEOC’s priorities reveal themselves through litigation. Click here for a copy of the EEOC Litigation Review – 2024 eBook. You can also watch our recent discussion with EEOC Commissioner Keith Sonderling at our Duane Morris Class Action Review Book Launch here.

The Review explains the impact of the EEOC’s six enforcement priorities as outlined in its Strategic Enforcement Plan on employers’ business planning and how the direction of the Commission’s Plan should influence key employer decisions. The Review also contains a compilation of significant rulings decided in 2023 that impacted EEOC-initiated litigation and a list of the most significant settlements in EEOC cases in 2023.

We hope readers will enjoy this new publication. We will continue to update blog readers on any important EEOC developments, and look forward to sharing further thoughts and analysis in 2024!

February 5, 2024 by Class Action Defense

California Federal Court Grants Class Certification To iPhone App Purchasers

By Gerald L. Maatman, Jr. and Sean P. McConnell

Duane Morris Takeaways: On February 2, 2024, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the District of Northern California granted Plaintiffs’ motion to certify a class of purchasers of one or more iOS applications or application licenses from Defendant Apple, Inc. (“Apple”) or who paid for one or more in-app purchases since July 10, 2008 in In Re Apple iPhone Antitrust Litigation, No. 4:11-CV-06714 (N.D. Cal. Feb. 2, 2024). The Court rejected defense arguments that class certification should be denied on the grounds that the model of Plaintiffs’ expert revealed millions of uninjured class members and that individual issues would predominate. Instead, the Court found that the model showed an estimated 7.9% of the class is uninjured and that with more complete data the model will be capable of showing antitrust impact on a class-wide basis.

In Re Apple iPhone Antitrust Litigation is required reading for any corporate counsel handling antitrust class action litigation involving claims by end consumers.

Case Background

Plaintiffs are purchasers of iPhone applications (apps), app subscriptions, and/or in-app content via the iPhone App Store. Defendant sells iPhones and requires app purchases to be made via the App Store. Plaintiffs claim that Apple charges App Store developers supracompetitive commissions that are passed on to consumers in the form of higher prices for app downloads, subscriptions, and in-app purchases. Plaintiffs assert claims under § 2 of the Sherman Act for unlawful monopolization and attempted monopolization of the iPhone applications aftermarket.

In a prior ruling, the Court denied class certification. It had concluded that Plaintiffs could not establish the predominance requirement under Rule 23(b)(3) because they had not demonstrated that damages from Apple’s alleged anticompetitive conduct could be proven on a class-wide basis. According to the Court, the methodology of Plaintiffs’ expert failed to reasonably ascertain how many class members were unharmed by the alleged conduct and individual questions would predominate.

The Court’s Class Certification Ruling

In response to the Court’s ruling, Plaintiffs narrowed their class definition to only include Apple account holders who have spent $10 or more on app or in-app content.

Using that new definition, Plaintiffs submitted revised and new expert reports estimating that the proposed class includes only 7.9% unharmed members and again moved for class certification under Rule 23(b)(3). Since the Court’s prior ruling, the Ninth Circuit also rejected the argument that “Rule 23 does not permit the certification of a class that potentially includes more than a de minimis number of uninjured class members.” Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC, 31 F. 4th 651, 669 (9th Cir. 2022). According to the Court, the revised model can show the impact of Apple’s allegedly anticompetitive conduct across all class members, and once Apple produces the rest of its app transactional data, the model will be able to calculate the exact extent of injury suffered by each class member. Under Olean, the Court opined that Plaintiffs meet the predominance requirement.

Implications For Defendants

In Re iPhone Antitrust Litigation is another example of a federal court class certification decision turning on the existence of common, injury-producing conduct. The Court credited evidence that may be over inclusive at class certification stage of the proceedings, but is nonetheless capable of showing the impact of the allegedly anticompetitive conduct across all class members at trial.

February 5, 2024 by Gerald L. Maatman, Jr.

California Federal Court Denies Class Certification Of COVID-19 Vaccine Mandate Claims

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

Duane Morris Takeaways: On January 28, 2024, in Chavez, et al. v. San Francisco Bay Area Rapid Transit District, No. 22-CV-06119, 2024 U.S. Dist. LEXIS 14785 (N.D. Cal. Jan. 28, 2024), Judge William Alsup of the U.S. District Court for the Northern District of California denied class certification for a failure to accommodate religious beliefs claim premised on a workplace COVID-19 vaccine mandate. Specifically, the Court held that the putative class was not certifiable as the class failed to meet Rule 23(b)(3)’s predominance and superiority requirements. The decision is a good roadmap for employers dealing with the continuing fall-out of the COVID-19 pandemic.

Background Of The Case

Defendant San Francisco Bay Area Rapid Transit (“BART”) implemented a workplace policy mandating that all employees needed a COVID-19 vaccination by December 21, 2021. Id. at 2. In response, BART received 188 requests for religious exemption and accommodation. Id. While some employees did not complete the exemption application process, 148 employees submitted applications to BART, noting varying belief systems such as “Christianity,” “Catholic,” “Islamism,” or even personal belief systems such as being “anti tyranny [sic].” Id. at 3. A panel of BART employees then reviewed each application individually and conducted further interviews with the applicants before deciding to grant or deny the request. Id. at 5.

Of the 148 completed applications, BART granted 70 religious exemptions and denied 78. Id. Those who were denied were given the option to either comply with the mandate, retire, voluntarily resign, or be terminated. Id. In total, 36 employees either retired, resigned, or were terminated. Id. BART considered accommodation for the 70 employees who were granted exemptions, but ultimately did not provide any accommodations as they could not “identify a reasonable accommodation that did not place an undue hardship on the District.” Id. at 6. Of the 70 applicants who were denied accommodation, 37 resigned, retired, or were terminated. Id. BART additionally received 25 requests for medical exemptions, and eight medical exemptions were granted, with those employees being placed on unpaid leave that only ended upon vaccination. Id.

Plaintiff Gabriel Chavez and 16 other named plaintiffs filed a class action complaint alleging that BART’s policy violated Title VII, the First Amendment right to free exercise of religion under 42 U.S.C. § 1983, and California’s Fair Employment and Housing Act (“FEHA”). Id. at 7. Plaintiff sought to certify a class pursuant to Rule 23(b)(3) composed of “all employees employed by BART who (1) have been ordered to submit to a COVID-19 vaccination, (2) have sincerely held religious beliefs which prevent them from taking the vaccine, (3) have submitted a request for a religious exemption, and (4) were denied a religious accommodation.” Id. Plaintiff also proposed a second, alternative class consisting of all employees employed by BART who “(1) have been ordered to submit to a COVID-19 vaccination, (2) have sincerely held religious beliefs which prevent them from taking the vaccine, (3) have submitted a request for religious exemption and religious accommodation, and (4) whose request for a religious exemption were denied.” Id.

The Court’s Ruling

The Court examined the class certification requirements under Rule 23(b)(3), which provide that a plaintiff must establish “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Id. at *8. The Court held that Plaintiffs’ proposed class, as well as the proposed alternative class, did not satisfy the predominance and superiority requirements, and denied Plaintiffs’ certification motion. Id. at 23.

First, the Court examined the requirement of common issues predominating over any questions affecting only individual members. Id. at 11-20. With respect to Plaintiffs’ Title VII and FEHA claims, the Court noted that whether or not an individual had a bona fide religious belief – a requirement for both claims – there were too many individual systems of belief to examine. Id. at 12. The Court held that nearly every named plaintiffs’ application contained a distinct system of belief, and any examination of whether or not a request rested on a “bona fide religious belief” would necessarily require an individual inquiry into each plaintiffs’ belief system. Id. The Court expressed doubt that the various written or interview responses of one plaintiff will have any evidentiary impact on the bona fide religious belief of the class as a whole. Id.

Next, the Court held that BART’s undue hardship showing required an individualized inquiry of factual issues. Id. The Court noted that the potential class members are drawn from a large diversity of jobs – over a dozen unique jobs – and that accommodations reasonably considered for a “train conductor’s request bear no relation to the job functions and reasonable accommodations BART must consider when evaluating the exemption request of a manager of technology programs, a fire protection worker, or a police officer, or a senior operations supervisor liaison.” Id. 13-14. Further, the Court found that the inclusion of some union employees in the putative class also required individualized inquiries as the union’s contracted-for-rights “grant impacted workers certain rights, such as seniority, that BART is not required to transgress upon.” Id. at 14. Moreover, the Court indicated that a significant portion of the class would not be impacted by an “undue hardship” analysis, as 78 of the proposed members were not even considered for accommodation. Id. at 15. The Court did acknowledge that some aspects of the undue hardship consideration may be more amenable to common proof, but in light of the putative class’s “job diversity,” it reasoned that any undue hardship analysis “cannot be understood without an interrogation of individual employees’ job duties.” Id. at 16.

As to the Free Exercise of Religion Claims, the Court determined that those claims could not satisfy the predominance requirement. In doing so, it noted that “the sincerity and religious nature of plaintiffs’ belief is . . . an individualized issue.” Id. at 20. The Court found that each of the plaintiffs cited a “myriad” of religious and of personal experiences, along with refusal due to “CDC VARS data and concerns regarding health consequences, the Organization of American States Declaration of Rights of Indigenous Peoples, Senate Bill 1383 and Senate Bill 1159, among others.” Id. The Court concluded that the need to determine whether plaintiffs have met the bona fide religious belief threshold required individualized inquiries, which ultimately foreclosed class certification. Id.

Finally, the Court found that the putative class did not satisfy Rule 23(b)(3)’s superiority requirement. The Court reasoned that class members have “significant interest in the individual control of their claims.” Id. at 21-22. As an example, it noted that two potential class members have already brought individual actions against BART, and that seventeen other employees had filed suit in a third case. Id. at 22. The Court held that “[p]utative class members’ demonstrated interest in bringing and controlling these various litigations further reflects the significant monetary and emotional stakes at issue, and counsels against certification.” Id. In closing, the Court noted that given “the wide range of individual issues and proof” there will also likely be difficulties in managing the class action. Id.

Implications For Employers

The ruling in Chavez, et al. v. San Francisco Bay Area Rapid Transit District confirms that the need for individualized inquiries is a strong impediment to certifying a class action premised on COVID-19 vaccine accommodation theories of liability. This ruling stresses the specific importance of these individualized inquiries in the context of religious accommodations, which have recently been the subject of significant litigation after many employers implemented COVID-19 vaccine mandates in the workplace

February 5, 2024 by Class Action Defense

Texas Federal Court Dismisses Video Privacy Protection Act Class Action Concerning Email Newsletter From University Of Texas

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

Duane Morris Takeaways: In Brown v. Learfield Communications, LLC, et al., No. 1:23-CV-00374, 2024 U.S. Dist. LEXIS 15587 (W.D. Tex. Jan. 29, 2024), Judge David A. Ezra of the U.S. District Court for the Western District of Texas granted Defendants Learfield Communications, LLC and Sidearm Sports, LLC’s Rule 12(b)(6) motion to dismiss Plaintiff’s Video Privacy Protection Act (VPPA) class claim. The Court held that Plaintiff failed to plead facts to support his claim under the VPPA because he did not allege that he was a subscriber to audio-visual goods or services themselves, just a newsletter that contained links to publicly-available content on The University of Texas’s website. Defendants in VPPA class actions can utilize this decision as a roadmap when preparing motions to dismiss.

Case Background

Defendants Learfield Communications, LLC and Sidearm Sports, LLC (collectively, “Defendants”) operated the University of Texas at Austin’s (“UT”) website (the “UT Website”). Id. at 2. The UT Website contains software that enables Facebook to track the activity of UT Website users on other websites. Id. Defendants invite UT Website visitors to subscribe to emailed newsletters. Id. at 3. The newsletters provide links to various videos, clips, and other content on the UT Website related to UT Athletics. Id. Plaintiff Adam Brown subscribes to UT’s emailed newsletter. Id.

In April 2023, Plaintiff filed a class action against Defendants UT, UT Athletics, Learfield, and Sidearm alleging that they violated the VPPA by purportedly exposing the subscribers’ personal identification information and gathering marketing data without consent. Id. at 4. In June 2023, UT and UT Athletics filed a motion to dismiss based on sovereign immunity. Id. at 2. The motion was granted in July. Id. In September, Defendants Learfield and Sidearm filed a motion to dismiss under 12(b)(1), 12(b)(6), and 12(b)(7). Id.

The Court’s Decision

The Court denied Defendants’ Rule 12(b)(1) and 12(b)(7) motions to dismiss. It held that neither Learfield or Sidearm was entitled to immunity as an “arm of the state,” and that neither UT or UT Athletics were indispensable parties to the lawsuit. Id. at 7-10.

The Court, however, granted Defendants’ Rule 12(b)(6) motion to dismiss on the basis that Plaintiff was not a “consumer” under the VPPA because he failed to allege a factual nexus between the subscription and Defendants’ allegedly actionable video content. Id. at 2, 19, 26.

To state a claim under the VPPA, the Court noted that a plaintiff must allege that a defendant “(1) is a video tape service provider; (2) who knowingly disclosed to any person; (3) personally identifiable information; (4) concerning any consumer.” Id. at 10-11; 18 U.S.C. 2710(b)(1). Under the VPPA, a “consumer” is “any renter, purchaser, or subscriber of goods or services from a video tape service provider.” 18 U.S.C. § 2710(a)(1).

The Court reasoned that the VPPA “only applies to consumers (including subscribers) of audio video services” because, when reading the term “consumer” in the full context of the VPPA, “a reasonable reader would understand the definition of ‘consumer’ to apply to a renter, purchaser or subscriber of audio-visual goods or services, and not goods or services writ large.” Id. at * 19 (emphasis original) (quoting Carter v. Scripps Networks, LLC, 2023 WL 3061858, at *6 (S.D.N.Y. Apr. 24, 2023)).

The Court concluded that Plaintiff was not a “consumer” under the VPPA because (i) the newsletter did not contain videos, just links to videos on the UT Website; and (ii) the linked videos were available for any member of the public to see on the UT Website, not just those who subscribed to the newsletter. Id. at 26-28. Accordingly, the Court ruled that Plaintiff was not a subscriber to audio-visual goods or services, just a newsletter. Id. at 28-29. Ultimately, because Plaintiff failed to allege facts to support a claim under the VPPA, the Court granted Defendants 12(b)(6) motion to dismiss. Id. at 29.

Implications For Companies

The decision in Brown v. Learfield serves as a roadmap for defendants in VPPA class actions to utilize when preparing motions to dismiss. This case is also important as it adds the Western District of Texas to a growing number of federal courts that strictly construe the VPPA to audio-visual materials, not links to publically-available videos in newsletters. See, e.g., Carter v. Scripps Networks, LLC, No. 22-CV-2031, 2023 WL 3061858, at *6 (S.D.N.Y. Apr. 24, 2023); Jefferson v. Healthline Media, Inc., No. 3:22-CV-05059, 2023 WL 3668522, at *3 (N.D. Cal. May 24, 2023); Gardener v. MeTV, No. 22-CV-5963, 2023 WL 4365901, at *4 (N.D. Ill. July 6, 2023).