Class Action Defense

April 19, 2024April 19, 2024 by Class Action Defense

Ninth Circuit Strikes Down Defendant’s Attempt At “Super Snap Removals”

By: Gerald L. Maatman, Jr., Sarah Gilbert, and Nick Baltaxe

Duane Morris Takeaways: In a consolidated appeal – entitled Casola v. Dexcom, Inc., Bottiglier v. Dexcom, Inc., and Pfeifer v. Dexcom, Inc., Nos. 23-55403, 23-55435 & 23-55437 (9th Cir. Apr. 10, 2024) – the Ninth Circuit held that it lacked jurisdiction to review the District Court’s remand orders in three cases, Defendant-Appellant Dexcom, Inc (“Dexcom”) challenged the District Court’s decision to remand each of the cases under the forum defendant rule, which prohibits removal based on diversity jurisdiction if any of the parties in interest “properly joined and served as defendants is a citizen of the state in which such action is bought.” 28 U.S.C. § 1441(b)(2). Dexcom argued that the forum defendant rule did not apply as it had filed the removal notice before it had been “joined and served,” a gambit known as a “snap removal.” The Ninth Circuit held that Dexcom’s attempt to avoid the forum defendant rule by removing before it had been served was ineffectual and it dismissed the appeals for lack of jurisdiction.

Case Background

Plaintiffs Casola, Bottiglier, and Pfeifer brought similar product liability suits against Defendant Dexcom in late 2022 in the Superior Court of California, County of San Diego. Id. at 6. Plaintiff Casola submitted her complaint electronically on November 23, 2022, and Dexcom received notice of that submission via the Courthouse News Service, an organization that publishes daily reports about civil litigation. Id. at 7. On Monday, November 28, 2022, before the Court had officially “filed” the Complaint or issued a summons, Dexcom filed a Notice of Removal, invoking diversity jurisdiction. Id. Dexcom followed a similar strategy for the complaints filed by Plaintiffs Bottiglier and Pfeife by filing “snap removals” before the case was officially filed. Id. at n. 4.

On December 29, 2022, 31 days after the original Notice of Removals were filed, Plaintiffs filed motions for remand, framing the remand on the basis of “subject matter jurisdiction” in an attempt to avoid the 30-day deadline for remand. Id. at 9. Plaintiffs argued that the District Court lacked subject-matter jurisdiction because Dexcom’s notices were “legally void” since they were filed before the complaint had been processed, while also asserting that remand was proper due to the forum defendant rule. Id. In March of 2023, after additional briefing from both parties, the District Court granted the remand motions, holding that the remand was proper due to the forum defendant rule. Id. Importantly, the District Court rejected Dexcom’s argument that Plaintiffs had waived their forum-defendant objections by filing their remand motions 31 days after the removal was filed because the notices of removal were “defective,” which did not start the 30-day window. Id.

Dexcom appealed these remand orders. Id.

The Ninth Circuit’s Decision

The Ninth Circuit addressed whether the District Court had the power to remand each of the cases on the basis of a non-jurisdictional defect, i.e., the forum-defendant rule, that was asserted more than 30 days after the notice of removal was filed. To do so, the Ninth Circuit addressed three subsidiary issues.

First, the Ninth Circuit agreed that Dexcom’s Notice of Removals were premature. Id. at 14. Specifically, the Ninth Circuit held that, for purposes of removability, the complaint was filed in California state court when it was processed and acknowledged as officially filed by the clerk. Id. at 15. The Ninth Circuit noted that the Complaint is not filed when it is electronically submitted because the clerk must then review the submission for compliance with local court rules, ensure that filing fees are paid, and can even reject the submission if defective. Id. at 19. On that basis, the Ninth Circuit disagreed with Dexcom’s position that the complaints were deemed filed upon electronic submission. Id. at 24.

The Ninth Circuit also addressed Dexcom’s policy argument that the it should avoid adopting different rules for the timing of filing of a complaint for removal purposes on the one hand, and statute of limitations and similar timeliness purposes on the other. Specifically, Dexcom argued that rejection of its position that the Complaint is filed on delivery will lead to situations where a complaint could be treated as filed for the purposes of the statute of limitations but not filed for purposes of removal. Id. at 28. The Ninth Circuit found this argument unpersuasive. The Ninth Circuit noted that the stakes here are minimal, as the 30-day deadline for removal only starts upon service of the Complaint. Id. Additionally, the Ninth Circuit opined that “snap removals” are still viable in some district courts in California, so adopting Dexcom’s position would give in-forum defendants with access to services like Courthouse News Services a safe harbor in which to remove while not concerning themselves with service of the Complaint. Id. at 30.

Finally, the Ninth Circuit addressed whether or not the premature notices of removal nonetheless started the 30-day clock for non-jurisdictional objections to removal. The Ninth Circuit determined that, if the notices of removal were defective for merely procedural or technical reasons, they may have held that the defectiveness did not block the 30-day window from starting. Id. at 32. However, the Ninth Circuit instead held that these notices of removal had a foundational defect, which rendered them legally null and void. Id. at 33. The Ninth Circuit maintained that because there was no pending civil action to be removed, the notices of removal did not confer jurisdiction on the District Court. Id. While that defect was cured by Dexcom’s subsequent filing of supplemental notices of removal, the Ninth Circuit found that the 30-day clock would have started on the date of supplemental filing, not the original date of filing. Id.

In sum, the Ninth Circuit made it clear that it did not decide whether or not Dexcom violated the forum-defendant rule. Id. at 34. Additionally, the Ninth Circuit refused to address whether or not pre-service “snap removals” are proper, even though the District Court had impliedly held that pre-service “snap removals” are improper. Id.

Implications For Companies

While the Ninth Circuit did not address the applicability of pre-service “snap removals,” it has effectively closed the door on pre-filing “snap removals.”

While companies may prefer to have cases heard in the federal courts, this decision makes it clear that the removal must be lodged after the Complaint is filed and acknowledged by the clerk. A failure to follow this guideline will lead to remand of the claims.

April 19, 2024 by Class Action Defense

U.S. Supreme Court Declines Review of Class Certifications in Antitrust ATM Fee Dispute

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

Duane Morris Takeaways: On April 15, 2024, in Visa Inc., et al., v. National ATM Council, Inc., et al., No. 23-814 (Apr. 15, 2024), the U.S. Supreme Court declined a petition for review submitted by Visa Inc. (“Visa”) and Mastercard Inc. (“Mastercard”) urging the Supreme Court to resolve a circuit split over the correct standard of review courts should use when evaluating motions for class certification. Mastercard and Visa argued that the U.S. Court of Appeals for the D.C. Circuit erred by only requiring plaintiffs to show that questions common to the class predominate and allowing the fact finder to later address issues related to uninjured class members. The Supreme Court denied the petition for review.

The D.C. Circuit’s ruling in Visa v. National ATM Council is required reading for any corporate counsel handling antitrust class actions involving price-fixing allegations and underscores the importance of the standard of review used by courts when considering class certification.

Case Background

Plaintiffs are ATM operators. Defendants are global payment technology companies. Plaintiffs alleged that Defendants instituted ATM fee non-discrimination rules that violated federal antitrust laws by prohibited ATM operators from charging customers different access fees for transactions on different ATM networks. Specifically, Plaintiffs alleged that the rules allowed Defendants to charge supracompetitive transaction fees and foreclose competition from other networks.

The D.C. Circuit’s Ruling

The Supreme Court declined Defendants’ petition for review of the D.C. Circuit’s affirmation of the certification of three different classes. Two consumer classes were certified on grounds that they were forced to pay supracompetitive ATM surcharges and a class of ATM operators was certified on grounds that that they could not use competing ATM networks. According to Defendants, the D.C. Circuit used a lower standard for class certification similar to one utilized by the Eighth and Ninth Circuits, whereas the Second, Third, Fifth, and Eleventh Circuits employ a more rigorous “careful consideration” standard regarding Plaintiffs’ burden to establish predominance.

By denying review, this issue remain unresolved in terms of Rule 23 class certification standards.

Implications For Defendants

Visa v. National ATM Council is an important example of the importance of Plaintiffs’ ability to show that questions common to the class predominate to earn class certification.

To the extent that the conflict between the two standards implemented across the circuit courts becomes more distinct, the U.S. Supreme Court may eventually weigh in to resolve it.

April 18, 2024 by Class Action Defense

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

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

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

Case Background

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

The Basis Of The Ninth Circuit’s Decision

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

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

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

Implications Of The Ruling

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

April 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.