Class Action Defense

August 23, 2023 by Class Action Defense

All About Second Chances: Federal District Court Reverses Summary Judgment Ruling Despite EEOC’s “Egregious” Failure To Address Defendant’s Argument

By Gerald L. Maatman, Jr., Gregory Tsonis, and Brittany Wunderlich

Duane Morris Takeaways: On August 21, 2023, Judge Barbara Rothstein of the U.S. District Court for the Western District of Washington granted the EEOC’s motion for reconsideration, reversing its decision granting summary judgment to defendant Telecare Mental Health Services of Washington, Inc.’s (“Telecare”) in a disability discrimination case entitled EEOC v. Telecare Mental Health Services of Washington, Case No. 2:21-CV-1339 (W.D. Wash. Aug. 21, 2023). Despite giving the EEOC multiple opportunities to submit evidence rebutting Telecare’s argument that the claimant was not qualified for the position to which he applied, and the EEOC’s failure to do so prior to its motion for reconsideration, the Court ultimately found from the EEOC’s belated evidence that a disputed material fact existed that must be resolved by a jury. The ruling demonstrates the difficulty in achieving summary judgment in an discrimination case, as well as the reluctance of courts to bar discrimination claims entirely. For employers handling EEOC litigation, this ruling is instructive, as successful motions for reconsideration are rare, and reversals of summary judgment even rarer.

The court noted that when ruling on Telecare’s motion for summary judgment, it gave the EEOC multiple opportunities to submit evidence rebutting Telecare’s argument that the claimant was not qualified for the position in which he applied. The court further chastised the EEOC for submitting such evidence for the first time in its motion for reconsideration, calling the EEOC’s failure “particularly egregious.” Despite the EEOC submitting such evidence for the first time in its motion for reconsideration, the district court ultimately reinstated the claimant’s claim after finding that an issue of material disputed fact existed.

Case Background

In 2019, claimant Jason Hautala applied for a position as a registered nurse at a Telecare facility that assisted the mentally ill. While Telecare extended an offer of employment to the claimant, the offer was conditioned on the requirement that Hautala pass a physical examination to determine his fitness for the position. Telecare ultimately rescinded its offer because the claimant had a permanent leg injury, which made him unable to perform the basic functions of a registered nurse.

The EEOC filed suit on behalf of Hautala under the Americans with Disabilities Act (ADA) claiming that Telecare discriminated against him because of his disability. Telecare moved for summary judgment, arguing in part that Hautala was not a “qualified individual” for the position under the ADA based on comments he made that reflected a negative attitude towards the mentally ill. Telecare alleged Hautala made statements including “in my youth, I used to enjoy a crazy person takedown, but as I get older, I enjoy these things less and less” and “fighting off meth heads isn’t as much fun in my 50s as it was in my 30s.” Id. at 3. In support of its motion, Telecare submitted evidence that compassion toward patients with mental illness was an essential job function, and that Telecare would not hire someone who referred to patients as “crazy” or “meth heads.” The EEOC, in its opposition brief, failed to address Telecare’s argument or offer any contrary evidence.

The Court gave the EEOC a second chance to present evidence rebutting Telecare’s argument, requesting supplemental briefing on Telecare’s argument that Hautala was not a “qualified individual” for the position. Despite the second opportunity to rebut Telecare’s position, the EEOC offered no contrary evidence and argued only that the comments, “as after-acquired evidence, could not be considered as a post hoc justification” for Telecare’s failure to hire Hautala. Id. at 4.

Accordingly, the Court granted Telecare’s motion for summary judgment, holding that the EEOC failed to allege facts sufficient to support its prima facie case of discrimination under the ADA. In particular, the Court found that the claimant was not a qualified individual for the nursing position he applied for given Telecare’s undisputed evidence that Hautala had made the “troubling” and “inappropriate” comments, that compassion for patients suffering from mental illness was a necessary qualification for the position, and that the comments “conclusively demonstrated a lack of such compassion.” Id.

The EEOC’s Motion For Reconsideration

The EEOC subsequently filed a motion for reconsideration of the summary judgment ruling in Telecare’s favor. In doing so, the EEOC for the first time provided evidence that Telecare was aware of Hautala’s views towards the mentally ill, and argued that a material issue of fact required reinstating Hautala’s ADA claims.

The EEOC contended that it was entitled to reconsideration because subjective criteria (i.e., whether the claimant possessed the requisite compassion for the job) could not be considered as part of its prima facie case. In rejecting this argument, the Court found the McDonnel Douglas burden-shifting framework inapplicable because Telecare admitted it did not hire Hautala based upon his disability, nor was the subjective criteria at issue “hotly contested” like the criteria in the EEOC’s cited precedent.

However, the Court found the EEOC’s second argument for reconsideration more convincing. The EEOC argued that there was a disputed issue of fact as to whether Telecare knew of the claimant’s view on mentally ill patients during the application process, thereby contradicting Telecare’s argument that Hautera’s comments were disqualifying for the position. The EEOC submitted as evidence an email from Telecare’s employees following Hautera’s interview in which they acknowledged Hautera’s comments, but nonetheless “advanced Hautala in the application process.” Id. at 9. As a result, in order to “avoid the potential for manifest error” and “in the interests of justice,” the Court concluded that summary judgement on the issue of whether Hautala was a qualified individual was not appropriate and that “[d]enying Claimant Hautala a chance to have his substantive disability discrimination claims heard based on the EEOC’s failure to timely present the issue is a potential injustice that is easily avoided.” Id. The Court, however, made clear that it was “not absolving” the EEOC “of its obligation to prove that Hautala was a qualified individual with a disability,” only that a factual dispute exists as to whether Telecare “would actually have considered the comments disqualifying.” Id. at 10.

Though the Court ultimately reinstated the EEOC’s claim, Judge Rothstein chastised the EEOC for not citing this evidence in its summary judgment briefing, noting that the EEOC’s failure to cite to such evidence was “particularly egregious” given that the Court gave the EEOC a second chance to do so. Noting that the parties filed over 1,000 pages of exhibits in support for their motions, the Court chastised the EEOC for failing to cite the evidence in its summary judgment briefs and noted that “[j]udges are not like pigs, hunting for truffles buried in briefs’ or on the record.” Id. at 9.

Implications For Employers

This decision demonstrates the reluctance of courts to bar discrimination claims asserted by the EEOC even after severe and “egregious” missteps in litigation. This latitude afforded to the EEOC, coupled with the resources available to the government in EEOC-initiated actions, requires close coordination with experienced counsel to defeat discrimination lawsuits at the pleading stage. Employers faced with such claims should work closely with their counsel to ensure a comprehensive litigation strategy that maximizes the potential for defeating claims before the necessity of going to trial.

August 23, 2023 by Gerald L. Maatman, Jr.

Key Takeaways From The EEOC’s Strategic Plan For Fiscal Years 2022-2026

By Gerald L. Maatman, Jr., Alex W. Karasik, and George J. Schaller

Duane Morris Takeaways: On August 22, 2023, the EEOC announced the approval its Strategic Plan (“SP”) for Fiscal Years 2022-2026. The Strategic Plan can be accessed here. The SP furthers the EEOC’s mission of preventing and remedying unlawful employment discrimination and advancing equal employment opportunity for all. The SP focuses on: (1) Enforcement; (2) Education and Outreach; and (3) Organizational Excellence. The SP also provides performance measures for each strategic goal. For corporate counsel involved in employment-related compliance and EEOC litigation, the new SP is required reading.

The EEOC’s Strategic Priorities

Enforcement

The EEOC continues to promote equitable employment initiatives through its enforcement authority. The SP highlights the EEOC’s primary mission of preventing unlawful employment discrimination through its administrative and litigation enforcement mechanisms, and adjudicatory and oversight processes. The main strategic focus for employing these mechanisms is through fair and efficient enforcement based on the circumstances of each charge or complaint while maintaining a balance of meaningful relief for victims of discrimination.

As to enforcement, the SP provides a broad overview of the EEOC’s efforts to allocate its resources to ensure its efforts in stopping unlawful employment discrimination. To that end, the EEOC indicates that it will continue its targeting of systemic discrimination through training staff on systemic cases and devoting additional resources to systemic litigation enforcement. The SP included several performance measures for achieving enforcement goals, including measures on conciliation and litigation resolution, favorably resolving lawsuits, and increasing capacity for systemic investigations.

Education and Outreach

The SP prioritizes education and outreach for deterring employment discrimination before it occurs. The SP focuses on providing education and outreach programs, projects, and events as cost-effective tools for enforcement. Primarily these programs are aimed at individuals who historically have been subjected to employment discrimination. Part of the EEOC’s education and outreach involves expanding use of technology through social media, ensuring the EEOC website is more user-friendly and accessible, and leveraging technology to reach the agency’s audience.

These efforts to improve on education and outreach are aimed at promoting public awareness of employment discrimination laws while maintaining information and guidance for employers, federal agencies, unions, and staffing agencies. The SP provides an in-depth list of measuring education and outreach by utilizing technology to expand the EEOC’s audience and ensuring accessible delivery of information through events, programs, and up-to-date website accessibility and functionality.

Organizational Excellence

The SP makes clear that organizational excellence is the cornerstone of achieving the EEOC’s strategic goals. The SP confirms that the EEOC aims to improve on its culture of accountability, inclusivity, and accessibility. In addition, the EEOC seeks to continue protecting the public and advancing civil rights in the workplace by ensuring its resources are allocated properly to strengthen intake, outreach, education, enforcement, and service.

The EEOC’s organizational excellence strategic goal has two prongs, including improving the training of EEOC employees and enhancing the EEOC’s infrastructure. For employees, the EEOC seeks to foster enhanced diversity, equity, inclusion, and accessibility in the workplace, maintain employee retention, and implement leadership and succession plans. Relative to the agency’s infrastructure, the SP embraces the increased use of technology through analytics, and management of fiscal resources promote the agency’s mission of serving the public.

Implications For Employers

The EEOC’s SP is an important publication for employers since it previews immediate action areas. The SP’s focus on systemic discrimination, conciliation, and litigation, and increasing the Commission’s capacity for litigating alleged systemic violations shows the EEOC is ramping up to improve handling all aspects of charges. The EEOC’s increased focus on technology and employment discrimination awareness similarly shows accessibility will continue to be a pillar of the agency. Accordingly, prudent employers should be mindful of these strategic priorities, and prepare themselves for continued EEOC enforcement.

August 20, 2023 by Class Action Defense

Experian Deftly Dodges Class Certification Via Innovative Summary Judgment Argument Under The Fair Credit Reporting Act

By Gerald L. Maatman, Jr., Zachary J. McCormack, and Emilee N. Crowther

Duane Morris Takeaways: In Nelson v. Experian Information Solutions, Inc., No. 4:21-CV-894, 2023 WL 5284831 (N.D. Ala. Aug. 16, 2023), Judge Corey L. Maze of the U.S. District Court for the Northern District of Alabama granted Defendant Experian Information Solutions, Inc.’s (“Experian”) Motion for Summary Judgment, and denied as moot Plaintiff’s Motion for Class Certification. Judge Maze reasoned that summary judgment was appropriate because it was not objectively unreasonable for Experian to believe it was not required to reinvestigate the accuracy of Nelson’s name, addresses, and social security number (“SSN”) on her credit report under Section 1681i of the Fair Credit Reporting Act (“FCRA”). This ruling not only provides guidance into the duties of Credit Reporting Agencies (“CRA”) in the Eleventh Circuit to conduct “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report, but also demonstrates how an effectively timed summary judgment motion can preclude class certification.

Case Background

Experian is a multinational data analytics and CRA company that collects and aggregates credit information for millions of individual consumers and businesses. Nelson discovered inaccuracies in her Experian credit report, namely, that her maiden name was misspelled, two addresses that were not hers were listed on her report, and the last digit of her SSN was incorrect. Nelson made three attempts to contact Experian to correct the inaccurate information, and even though Experian removed all of the inaccurate information aside from one address (associated with an open credit account), Experian did not inform Nelson, or the furnishers of the information, that the inaccurate information had been removed. Thereafter, Nelson filed a class action against Experian in 2021 for negligent and willful non-compliance with the FCRA.

Following discovery Experian moved for summary judgment against Nelson under several theories, including: (1) it accurately reported the inaccurate information it received; (2) it did not cause Nelson’s injury, if any; (3) 15 U.S.C. § 1681i’s reinvestigation requirement does not apply to personal identification information; and (4) Experian is not liable for its employees’ unauthorized acts. Nelson concurrently moved for class certification under Rule 23.

The Court’s Decision

The Court denied Nelson’s motion for class certification. Instead, it granted Experian’s motion for summary judgment.

The FRCA’s Reinvestigation Requirement

Section 1681i of the FRCA requires a CRA to conduct a reasonable reinvestigation only if a consumer disputes “the completeness or accuracy of any item of information contained in a consumer’s file.” 15 U.S.C. § 1681i. Both Nelson and Experian agreed that the Court must grant summary judgment if it found 15 U.S.C. § 1681i imposed no duty on Experian to reinvestigate Nelson’s dispute over inaccurate personal identification information.

Nelson asserted “any item of information contained in a consumer’s file” included, at the very least, her name, address, and SSN, because the term “file” as defined by the FRCA includes “all of the information on that consumer recorded and retained by a [CRA].” Id. at 5; 15 U.S.C. § 1681a(g). However, Experian countered that the FRCA’s disclosure provision requires CRAs to disclose six categories of information if requested by the consumer, including the first category of “all information in the consumer’s file.” Id.; 15 U.S.C. § 1681g(a). Experian argued, and the Court agreed, that Congress’ addition of five subcategories of information after the broad phrase “all information in the consumer’s file” established that “Congress did not literally mean all information in the consumer’s file when it defined ‘file’ to mean ‘all information in the consumer’s file.’” Id. at 6.

Experian further argued that under 15 U.S.C. § 1681a(g), the word “any” in “any item of information contained in a consumer’s file” is limited to information that might be, or has been, furnished in a consumer report. Id. at 6-7. Since personal identification information like a consumer’s name, address, and SSN do not bear on an individual’s creditworthiness, Experian contended that such information did not itself constitute a credit report. Id. at 7. The Court disagreed with Experian’s argument. It held that the FRCA’s plain language and canons of construction “forbid the use of credit worthiness as the limitation on information contained in both the consumer’s credit report and the consumer’s file.” Id. at 8.

Ultimately, the Court found that, according to 15 U.S.C. §§1681c(h), 1681g(a)(1), and 1681u, names, addresses, and SSNs fit within the phrase “any item of information contained in a consumer’s file,” and Experian thus had a duty to reinvestigate the accuracy of Nelson’s name, addresses, and SSN when Nelson filed a direct dispute under that provision. Id. at 9-10.

Reasonable Belief

The Court noted that the existence of a duty to reinvestigate “is not enough to prove a violation of the FCRA” — Nelson also had to establish that Experian either negligently or willfully failed to satisfy its duty to reinvestigate by showing that Experian’s interpretation of the FCRA was objectively unreasonable. Id. at 10; see also, Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 68-70 (2007).

Experian argued that its understanding of 15 U.S.C. § 1861i counseled that disclosures and reinvestigations should be limited to information that bared on the consumer’s credit worthiness. In support of its position, Experian pointed to two federal circuit opinions, as well as regulations from the Consumer Financial Protection Bureau and the Federal Trade Commission, all establishing that the term “file” should only contain what was included in a consumer report.

Considering no case law told Experian that its interpretation was wrong, and other circuits’ precedent and CFPB and FTC regulations suggested that Experian could be right, the Court ruled that no jury could find that Experian negligently or willfully violated the FCRA, and that Experian’s interpretation of the FCRA was objectively reasonable.

Implications For CRAs

This ruling provides guidance for CRAs regarding how the Eleventh Circuit will treat “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report. Considering Experian’s favorable ruling precluded class certification, Experian avoided expensive litigation and numerous claims involving issues similar to Nelson’s class action. Considering this is the first case of its kind, other federal courts may take note in FCRA class actions.

August 18, 2023August 18, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 26: Product Liability & Mass Tort Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Ethan Feldman with their analysis of key trends in product liability / mass tort class action litigation in 2022.

Episode Transcript

Jerry Maatman: Welcome loyal blog readers to our Friday series of podcasts, the Class Action Weekly Wire. I’m Jerry Maatman, partner at Duane Morris, and joining me today is my associate Ethan Feldman, and we’re here to talk about products liability and mass torts. Welcome, Ethan.

Ethan Feldman: Great to be here. Thank you for having me, Jerry.

Jerry: I’ve read somewhere in various accounts that 2022 was a phenomenal incredible year for the class action space when it came to products liability and mass torts. How would you sum up what happened in the last 12 months?

Ethan: It’s definitely been busy – it always is. Last year we saw a lot of settlements in the opioid arena, they totaled around $50 billion – that’s with the B billion – due to a bunch of multi-billion dollar settlements coming out of multi-district litigations. A lot of the lawsuits were brought by state and local governments against the manufacturers and distributors. One of the main players in there was Purdue Pharma, the manufacturer of OxyCotin. That entity agreed to pay $12 billion in settlements. A the end of May 2023, the Second Circuit approved a plan under the under which the Sackler family – the owners of Purdue Pharma – actually would give up ownership of the company and contribute $11.5 billion in cash over time to distribute to a fund to prevent and treat addiction. Of those funds $750 million is slated to go to individual victims and payouts are expected in the range of about $3,500 to $50,000. The retailers were also involved – CVS, Walgreens, and Walmart agreed to settle their claims for about $14 billion with the state and local governments. Oher manufacturers, Teva and Allergan, reached settlements not to exceed $4.25 billion and $2.37 billion, paid out over 13 years. Some other distributors involved McKesson, Cardinal Health, Amerisource Bergen, agreed to pay not more than $20 billion over 18 years. There were also 40 states that have their own specific agreements about apportionments between state and local counties that have opted into the settlement – they’re all very different, the general theme is that

it’s determined by population, that’s how the apportion is going to be governed.

Jerry: Absolutely eye-popping numbers. To my way of thinking, the only analog in the recent American jurisprudence would be two decades ago when attorneys general settled big tobacco product liability and mass tort case cases. So is there anything left or are we going to continue to see the tale of opioid litigation settlements in 2023?

Ethan: I think there’s going to be some more in 2023 there’s a website Opioidsettlementtracker.com which reports that there’s some settlement amounts between U.S. governments – not federal, the state and local like I talked about, so I think we’re going to start to see some of some of those come to fruition in 2023.

Jerry: Really quite a story and a headline for 2022 and 2023. For our listeners could you articulate in the class action space the difference between uh product liability as opposed to mass torts and how they’re different and how uh they’re they are related?

Ethan: So they’re definitely related but they’re also very different. Generally if you take the sphere of product liability, you can divide that up into two categories. There’s the injury claims and then there’s the labeling claims, you can also think of the labeling claims as false advertising. The injury claims are best suited for the mass tort actions and the labeling claims more so lead to class actions. The injury mass tort actions usually can’t satisfy the Rule 23 evidentiary requirements or the similar state procedural laws for that matter just due to the individualized nature of plaintiff-specific circumstances that require individual proof of the injury. For example, you get a mass tort action that you know plaintiffs claim they took a medication that causes all different kinds of cancers, those individual claims would require different types of proof that would likely prevent class certification. Those types of claims are often are defeated at the at the class certification stage, you know they do lend themselves however to multi-district litigation and other coordinated proceedings that you can find in the states that involve the same products, same descendants, and the same set of operative facts.

Jerry: That’s a great description of both the differences and the relatedness of them. When I teach my law class at Northwestern, the kind of the theme of a class action is the ability to put one person on the stand they tell their story and it transposes to everyone else, and when you’re dealing with mass torts and personal injury claims everybody’s damages tend to be different although those cases tend to be ripe for issue certification where liability issues might be dealt with on a class-wide basis but injuries in individual hearings. You mentioned MDLs, or multi-district litigation, could you explain for our listeners the role that MDLs have in this space?

Ethan: So, in 2022 the JPML – the Judicial Panel on Multi-District Litigation – reported there are 172 pending MDLs across the country. 21 of those had over 1,000 pending actions, and another 24 of them had 100 and 1,000 actions. The biggest was the 3M ear plug litigation, which had over 250,000 claimants. MDL proceedings make up roughly 50% of all the federal dockets. So the MDL actions can often, like we spoke about, contain the individualized product claims distinct from the class claims. For example, in addition to the class claims there’s current litigation over nicotine products which has a personal injury aspect of it, which include allegations that exposure to nicotine can alter brain development.

Jerry: You know, that the 3M ear plug litigation got a lot of play in the media last year. Could you explain for our listeners what’s going on in that MDL?

Ethan: That MDL called In Re 3M Combat Arms Earplug Products Liability Litigation is currently pending in the United States District Court in the Northern District of Florida. There’s been a bunch of bellwether trials there, the verdicts were all over the place. We saw a plaintiff verdict for $77 million and you also see defense verdicts. That docket has you know over 3,500 filings, it was initially formed in 2019, and has even seen recent transfers into the MDL today four years later. Right now those proceedings are stayed due to bankruptcy filed by a defendant that was acquired by 3M during the manufacturing of the earplugs that are at issue, plaintiffs of course want to lift the stay for certain claims that don’t involve that defendant. That master long-form complaint actually contains 16 different causes of action, violations of states consumer protection laws, but the main point of the complaint is that defendants knew the earplugs were defective, made statements that misrepresented their effectiveness, and relying on those misrepresentations – the plaintiffs use the earplugs and develop the hearing disorders because of that. There’s also accounts for negligence and strict liability under a design defect series as well.

Jerry: Well, thanks for that cogent description. What are other hot areas in the products liability and mass tour arena? I gave a presentation at a class action conference last month in New York, a two-day conference, and day two was all about what was called the Camp Lejeune mass tort litigation in terms of uh what’s going on in the Eastern District of North Carolina – would that be an area that our listeners should look to in 2023 for big developments in this space?

Ethan: Yeah, absolutely. I think you’re referencing to PFOA litigation – I’m going to do my best to pronounce it – perfluorooctanoic acid, it’s very well known as PFOA litigation. These are used in a wide variety of products, they’re often called forever chemicals because they take a long time to decompose. There’s types of lawsuits that defendants should have known that the PFOAs have the potential to cause bodily injury and there’s also been several lawsuits brought on behalf of states by the Attorneys General for water contamination and things like that. There’s always going to be pharmaceutical litigation and medical device litigation, but the hotbed right now seems to be the PFOA litigation.

Jerry: These are great insights and analysis, Ethan. Thank you very much for joining us on the Class Action Weekly Wire, and to our loyal blog listeners thank you for tuning in to our Friday podcast. Have a great day.

August 11, 2023 by Alex W. Karasik

EEOC Settles Its First Discrimination Lawsuit Involving Artificial Intelligence Hiring Software

By Alex W. Karasik, Gerald L. Maatman, Jr. and George J. Schaller

Duane Morris Takeaways: InEqual Employment Opportunity Commission v. ITutorGroup, Inc., et al., No. 1:22-CV-2565 (E.D.N.Y. Aug. 9, 2023), the EEOC and a tutoring company filed a Joint Settlement Agreement and Consent Decree in the U.S. District Court for the Eastern District of New York, memorializing a $365,000 settlement for claims involving hiring software that automatically rejected applicants based on their age. This is first EEOC settlement involving artificial intelligence (“AI”) software bias. As we previously blogged about here, eradicating discrimination stemming from AI software is an EEOC priority that is here to stay. For employers who utilize AI software in their hiring processes, this settlement highlights the potential risk of legal and monetary exposure when AI software generates hiring decisions that disparately impact applicants from protected classes.

Case Background

Defendants iTutorGroup, Inc., Shanghai Ping’An Intelligent Education Technology Co., LTD, and Tutor Group Limited (collectively “Defendants”) hired tutors to provide English-language tutoring to adults and children in China. Id. at *3. Defendants received tutor applications through their website. The sole qualification to be hired as a tutor for Defendants is a bachelor’s degree. Additionally, as part of the application process, applicants provide their date of birth.

On May 5, 2022, the EEOC filed a lawsuit on behalf of Wendy Pincus, the Charging Party, who was over the age of 55 at the time she submitted her application. The EEOC alleged that Charging Party provided her date of birth on her application and was immediately rejected. Accordingly, the EEOC alleged that Defendants violated the Age Discrimination in Employment Act of 1967 (“ADEA”) for programming its hiring software to reject female applicants over 55 years old and male applicants over 60 years old. Id. at *1. Specifically, the EEOC alleged that in early 2020, Defendants failed to hire Charging Party, Wendy Pincus, and more than 200 other qualified applicants age 55 and older from the United States because of their age. Id.

The Consent Decree

On August 9, 2023, the parties filed a “Joint Notice Of Settlement Agreement And Requested Approval And Execution Of Consent Decree,” (the “Consent Decree.”). Id. The Consent Decree confirmed that the parties agreed to settle for $365,000, to be distributed to tutor applicants who were allegedly rejected by Defendants because of their age, during the time period of March 2020 through April 2020. Id. at 15. The settlement payments will be split evenly between compensatory damages and backpay. Id. at 16.

In terms of non-monetary relief, the Consent Decree also requires Defendants to provide anti-discrimination policies and complaint procedures applicable to screening, hiring, and supervision of tutors and tutor applicants. Id. at 9. Further, the Consent Decree requires Defendants to provide training programs on an annual basis for all supervisors and managers involved in the hiring process. Id. at 12-13. The Consent Decree, which will remain in effect for five years, also contains reporting requirements and record-keeping requirements. Most notably, the Consent Decree contains a monitoring requirement, which allows the EEOC to inspect the premises and records of the Defendants, and conduct interviews with the Defendant’s officers, agents, employees, and independent contractors to ensure compliance.

Implications For Employers

To best deter EEOC-initiated litigation involving AI in the hiring context, employers should review their AI software upon implementation to ensure applicants are not excluded based on any protected class. Employers should also regularly audit the use of these programs to make sure the AI software is not resulting in adverse impact on applicants in protected-category groups.

This significant settlement should serve as a cautionary tale for businesses who use AI in hiring and are not actively monitoring its impact. The EEOC’s commitment to its Artificial In telligence and Algorithmic Fairness Initiative is in full force. If businesses have not been paying attention, now is the time to start.

August 11, 2023August 11, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 25: Sanctions Issues In Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Rebecca Bjork with their discussion and analysis of key sanctions issued in class action litigation throughout 2022.

Jerry Maatman: Hello everyone and thank you for being here in our weekly installment each Friday of the Class Action Weekly Wire. Joining me today is Rebecca Bjork of our Washington D.C. office who is a special counsel in our Workplace Class Action Group.

Rebecca Bjork: Thanks – great to be here, Jerry.

Jerry: Today we have a little bit of a different topic – an important one and one that tends to rear itself from time to time in class action litigation, and that’s the topic of sanctions – either sanctions against the plaintiffs’ lawyer who brought the case or sanctions against defense counsel involved in the class action litigation. One of the chapters of our Duane Morris Class Action Review details the largest sanctions awards and rulings throughout the United States each year. Rebecca, what are some of the reasons that you’ve seen in the case law about why courts would ever enter sanctions in a class action?

Rebecca: Well, by way of background, sanctions really are simply thought of as penalties – in civil cases, they are typically in the form of a monetary fine, usually issued in response to violating some sort of court procedures or abusing the judicial process. And of course the most extreme sanction imposed in civil cases is dismissal with prejudice of the filing party’s claim – or on the other hand, dismissal of the answer of the responding party – so then the case would have no further movement going forward and it would be over with judgment against the party that was being sanctioned.

This actually happened in one case last year, Gui Zhen Zhu, et al. v. Matsu Corp., where the judge struck the defendants’ answer and entered a default judgment against them – and this was in a wage and hour collective action – and the reason for the sanction under Rule 37(b) was that their counsel disobeyed a court order to provide a class list for the provision of notice of the collective action under the Fair Labor Standards Act by the deadline that the court had set, and in addition the counsel had withdrawn his appearance without securing substitute counsel for the collective.

Jerry: It’s interesting – I’ve always thought that because sanctions are such an odious sort of end result of a lawsuit, that the losing party in the end of the sanctions are order often makes an appeal – and to me, one of the key decisions that I read in 2022 was the Tenth Circuit decision in the case of O’Rourke, et al. v. Dominion Voting Systems, Inc., which was a case where various citizens had sued saying that the presidential election was a fraud and that their votes weren’t counted. The defendants had to respond to the lawsuit, filed a motion to dismiss for lack of standing, judge granted it and found that in essence the lawsuit was frivolous, shouldn’t have been brought, that the arguments of the plaintiffs in terms of their standing were just entirely frivolous, and to the extent that even during oral argument they admitted as much and the district court judge entered sanctions of $187,000. The Tenth Circuit opinion affirming that decision in terms of the sanction order makes for very interesting reading – it’s almost a road map of what lawyers should not do, and a road map in terms of what lawsuits should not be brought because there’s no basis in law or fact for them to be brought – and you know kind of that notion of making a bad situation even worse where a district court sanction order is then broadcast nationwide in a court of appeals decision, which is exactly what happened, and it was picked up in the media and it’s become quite an important case. I think if you’re corporate counsel and you wanted to read one sanctions order – that Tenth Circuit decision would be kind of required reading in terms of the sanctions area.

Rebecca: That’s absolutely right, and if you’re a class action attorney you should probably be aware of the fact that sanctions can be awarded if settlement agreements are violated, and this happened last year in a case called Asset Acceptance, LLC, et al. v. Caszatt. The court granted a motion not only for sanctions but also for civil contempt and awarded the counterclaim defendant a payment of $387,314.04 in remedial damages to class members who were wrongly subject to collections. This was a debt collection class action, and the counterclaim plaintiffs’ counsel also had to pay the defendant’s attorneys’ fees, more than $1.1 million, and an additional monetary sanction of close to $1.2 million if they fail to pay within 30 days of the deadline set by the court.

Jerry: That’s a great point, Rebecca. In my experience another fertile ground where sanctions tend to be in the mix is with discovery and as we all know in class actions, discovery tends to be very laborious, very expensive – and if you’re a defendant it involves production of massive amounts of material, either written or electronically stored information. I read with interest the Hudgins, et al. v. Total Quality Logistics, LLC decision last year where there was a sanction order entered with respect to the manner and method by which the defendant had approached discovery, and the magistrate judge giving the defendant opportunity after opportunity and basically saying ‘I have no alternative but to sanction you and to impose monetary costs upon you because of the cavalier attitude and the positions you took in discovery.’ In my experience, magistrate judges lording over discovery – especially in federal court and especially in class actions – are getting very serious about that because of the potential costs and delays that are involved in games that are played with discovery.

Rebecca: That’s absolutely right, and not only monetary sanctions in the context of discovery are important to keep your eyes on, but also barring the use of evidence in the trial of the case. That happened in a case last year, L.D., et al. v. United Behavior Health, a class action alleging not paying sufficiently for out-of-network claims for substance use disorder and mental health treatments for people who were insured by the defendant. What happened in that case was that plaintiffs filed a motion for sanctions after the defendant submitted tens of thousands of documents in discovery after the discovery deadline had elapsed, and the court granted the plaintiffs’ motion and barred the defendant from using documents, audio records, an Excel spreadsheet – all of the information that they had failed to produce before the close of discovery.

Jerry: That’s a great example because sanctions or threats of sanctions are also used as a weapon, often by the plaintiffs’ bar against the defendants since discovery tends to be more focused on the defendants because they have the information, the data. In terms of the array of case law rulings in 2022, by your way of thinking, were there any notable rulings where judges backed up what defendants did and denied plaintiffs’ motions for sanctions in a class action?

Rebecca: Sure, absolutely there are instances where sanctions are denied even when a rule or proper procedure is violated if the defendant can show the court that there was no bad faith or willfulness on their part. This happened in a case in the state of Pennsylvania where it was involving people who were wards of the state who had profound intellectual disabilities, and they filed a class action alleging their civil rights were being violated. The name of the case is Jennings, et al. v. Wolf, and they failed to disclose an expert but released the expert’s report one day after the deadline. Plaintiffs still had four months left to rebut the testimony and they did, so the testimony didn’t come as a surprise to them, so the court found that there was no evidence of bad faith in order to apply any sanctions in that instance.

In a similar case, it wasn’t necessarily an issue of lack of bad faith that the defendant was able to convince the judge that they were not obligated under law to do what the plaintiffs’ side was asking them to do in a class action, and in this case it was producing the list of all putative class members’ names and addresses prior to certification. This was Holland-Hewitt, et al. v. Allstate Life Insurance Co., and again that court found that sanctions were not warranted in that situation.

Jerry: Well those are great insights and analysis Rebecca, I know you’re a subject matter expert in this area and I’m sure we’ll see more in 2023 since by their very nature, class actions involve very significant issues and lots of discoveries, so I’m sure corporate counsel will see other threats of sanctions and sanctions rulings down the line. Thank you loyal blog readers for joining us for our Friday weekly podcast – signing off, thanks so much.

August 10, 2023August 17, 2023 by Class Action Defense

Fighters Win Class Certification In Their Antitrust Wage-Suppression Battle With The UFC

By Gerald L. Maatman, Jr. and Sean McConnell

Duane Morris Takeaways: On August 9, 2023, Judge Richard F. Boulware II of the U.S. District Court for the District of Nevada granted Plaintiffs’ motion to certify a class of all persons who competed in one or more live professional UFC-promoted mixed-martial arts bouts taking place or broadcast in the United States from December 16, 2010 to June 30, 2017 in Le v. Zuffa, LLC, No. 2:15-CV-01045 (D. Nev. Aug. 9, 2023). The Court rejected defense arguments that class certification should be denied on the grounds that the statistical model of Plaintiffs’ expert was flawed because it failed to include everyone in the sport and failed to consider the ways promoters help fighters develop in to headliners. Instead, the Court found that these arguments were factual and merits-based, and therefore, were unavailing as a matter of law to defeat class certification. The Court also found defendants’ arguments unpersuasive relative to factual matters underlying the elements of Rule 23.

The ruling in Le v. Zuffa is required reading for any corporate counsel handling antitrust class action litigation involving wage-suppression issues.

Case Background

Plaintiffs are current or former UFC fighters. Defendant, Zuffa, LLC does business as UFC and is the preeminent MMA event promoter in the United States. Plaintiffs allege that UFC used exclusive contracts, market power, and a series of acquisitions to suppress wages paid to UFC fighters during the class period by up to $1.6 billion. Plaintiffs filed suit in December 2014 and defeated UFC’s motions for partial summary judgment in 2017. In February 2018, plaintiffs moved to certify two classes. The first consisted of all persons who competed in one or more live professional UFC-promoted MMA bouts taking place in the United States from December 16, 2010 to June 30, 2017. As discussed in more detail below, the Court certified this class. The second putative class consisted of all UFC fighters whose identity was expropriated or exploited by the UFC. Due to differences in identity rights allegedly at issue and a lack of connection between UFC’s anticompetitive scheme and any suppressed identity compensation, the Court did not certify the identity-based class.

Class Certification Granted

Plaintiffs’ expert advanced a statistical regression model to tie UFC’s alleged anticompetitive scheme to allegedly suppressed wages earned by UFC fighters. The model utilized a database that tracked any fighter that fought for an MMA promoter as well USA Today/MMA Junkie rankings to identify the top fifteen fighters in any of the ten major MMA weight classes.

Defendants opposed certification on grounds that these inputs were flawed because they were underinclusive and failed to account for all of the ways that promoters promote fighters. The Court rejected these arguments at the class certification stage on the grounds that they were factual and merits-based. The Court also found these arguments unpersuasive as to the facts in the record underlying the motion for class certification.

The Court concluded plaintiffs met the requirements of Rule 23(a) and Rule 23(b)(3). In doing so, the Court recognized a relevant antitrust market for elite fighter services. The Court also found that UFC dominated that market because it controls, or controlled, in excess of 70% of it. The Court also opined that UFC used exclusionary provisions in fighter contracts, coercive tactics, and acquisitions of competing promoters as part of an anticompetitive scheme to frustrate fighters’ ability to fight for rivals and suppress wages.

Implications for Employers

Le v. Zuffa is yet another example of a federal court class certification decision turning on the existence of common, injury-producing conduct. The Court credited evidence establishing UFC has anticompetitive power on the buyer-side market of purchasing fighter services and that it used this power to harm all UFC fighters.

August 9, 2023 by Class Action Defense

Georgia Federal Court Declines To Dismiss ERISA Prohibited Transaction Claims And Certifies Class Despite Differences In Class-wide Investment Choices

By Gerald L. Maatman, Jr., Brian W. Sullivan, and Jesse S. Stavis

Duane Morris Takeaways: On August 2, 2023, Judge Clay Land of the U.S. District Court for the Middle District of Georgia granted a motion to certify a class of participants in an ERISA class action involving an employer-sponsored defined contribution plan in Goodman v. Columbus Regional Healthcare System, Inc., No. 21-CV-15, 2023 WL 4935004 (M.D. Ga. Aug. 2, 2023). The Court rejected defense arguments to deny certification of one large class in favor of smaller sub-classes based on differences in the investment choices and resulting injuries of putative class members. Instead, the Court concluded that allegations that the asserted injuries were caused by Defendant’s common conduct warranted class certification without regard to such differences. For these reasons, the Goodman decision is instructive for ERISA plans and fiduciaries defending putative class claims under the ERISA.

Case Background

Plaintiffs were participants in a defined contribution plan (the “Plan”) sponsored by their employer, Defendant Columbus Regional Healthcare System, Inc. Plaintiffs alleged that Defendant violated its fiduciary duties under the ERISA by failing to prudently monitor and control the Plan’s investments and expenses and because it caused the Plan to engage in prohibited transactions with the Plan’s record-keeper and investment advisor (together, the “Service Providers”). Goodman, 2023 WL 4935004, at *1-2. Plaintiffs moved to certify a class under Rule 23(b)(1) consisting of all plan participants or beneficiaries of the plan with an account balance on or after February 2, 2015 through the termination of the Plan. Id.

Class Certification Granted

Plaintiffs sought to certify a class with respect to their three ERISA claims that Defendant violated its duty to prudently monitor investments and expenses and had engaged in prohibited transactions. Id. at *3. Defendant opposed certification on the grounds that “the class proposed by Plaintiffs is so broad that Plaintiffs did not meet their burden to establish standing, commonality, and typicality” as required by Rule 23. Id. at *4.

Addressing Defendant’s standing challenge first, the Court acknowledged that, to have standing, Plaintiffs and other Plan participants “must have suffered a decrease in value of their defined contribution accounts due to a breach of fiduciary duty.” Id. The Court rejected Defendant’s argument that “it is possible that some members of the putative class as presently defined did not suffer any loss due to the alleged breaches of fiduciary duties.” The Court reasoned that “this is not a standing problem but a liability issue.” Id. It explained that “[t]he possibility that some putative class members may not ultimately make a recovery does not eliminate standing for class certification purposes,” particularly where evidence of specific losses “should be readily ascertainable.” Id.

The Court likewise rejected Defendant’s arguments that Plaintiffs failed to establish the commonality or typicality requirements of Rule 23(a). The Court explained that commonality requires a showing that class members have suffered “the same injury” and that their claims depend on “common questions or law or fact” with common answers. Id. at *5. Typicality, the Court explained, requires evidence of “a sufficient nexus” between the claims of the Plaintiffs and those of the putative class as shown by claims or defenses arising “from the same event or pattern or practice” and “based on the same legal theory.” Id. Together, the Court opined that commonality and typicality require Plaintiffs and the class members to have the same interest and suffer the same injury, even though the Plaintiffs need not have suffered injury “at the same place and on the same day as the class members.” Id.

Applying these principles, the Court rejected Defendant’s suggestions “that there must be a separate sub-class for each allegedly imprudent investment and that the named Plaintiffs cannot establish typicality for allegedly imprudent investments options in which they did not invest.” Id. Instead, the Court held that this “level of granularity” was not “required at the class certification stage” where Plaintiffs had alleged that Defendant employed “flawed selection and monitoring practices” that were the same for class members across all investment options. Id. The same was true of “the excessive fee and prohibited transaction claims,” which were based on Defendant’s “alleged failure to insist” that the Service Providers charge “no more than reasonable fees, which resulted in harm to Plan participants” invested in relevant funds.

As such, the Court concluded that “the alleged cause of the injury remains the same across all funds.” Id. On these allegations, the Court found that there were common questions capable of class-wide resolution and for which Plaintiffs’ claims were typical of the class – whether Defendant breached its fiduciary duties by offering imprudent investments and by allowing the Service Providers to collect unreasonable fees. The Court determined that more granular issues concerning the specific investments and injuries of particular class members “relate to the degree of injury and level of recovery” such that the Court did “not see the benefit of dividing the proposed class into sub-classes by investment option.” Id. at 5-6. For these reasons, the Court granted Plaintiffs’ motion to certify the class.

Implications for Employers and Plan Administrators

Goodman is typical of federal court decisions in the last several years addressing motions to certify classes in cases asserting breach of fiduciary duty claims under the ERISA. The ruling underscores that the focus for class certification of such claims remains on the existence of common, injury-producing conduct rather than the similarity of the resulting injuries. Courts generally will not decline to certify a class based on differences in the investment options chosen or injuries suffered by class members so long as those investments or injuries are linked by a defendant’s common conduct, at even high levels.

August 8, 2023 by Class Action Defense

Seventh Circuit Saves EEOC’s Disability Discrimination Lawsuit

By Gerald L. Maatman, Jr., Alex W. Karasik, and Zev Grumet-Morris

Duane Morris Takeaways: In EEOC v. Charter Communications, LLC, Case No 22-1231, 2023 U.S. App. LEXIS 19528 (7th Cir. July 28, 2023), the Seventh Circuit reversed and remanded a district court’s grant of summary judgment in favor of the employer in an EEOC enforcement lawsuit, holding that an employee was possibly entitled to a modified work schedule as an accommodation to make his commute safer.

This is a significant ruling in the context of EEOC-initiated ADA litigation, as employers may potentially see an increase in litigation related to denials of commute-related accommodation requests.

Case Background

The Charging Party, James Kimmons (“Kimmons’”), alleged that his employer, Charter Communications (“Defendant”) violated the Americans with Disabilities Act (“ADA”) by refusing to accommodate his request for a temporary modified work schedule. Kimmons, who suffers from cataracts, sought a temporary schedule modification allowing him to begin and end his workday two-hours earlier in order to avoid nighttime driving. While originally granting the 30-day request, Defendant ultimately declined to extend this accommodation for an additional 30-days while Kimmons sought closer living arrangements.

Kimmons filed a charge of discrimination with the EEOC. After conciliation efforts failed, the EEOC filed a lawsuit on Kimmons’ behalf. The district court granted summary judgment for Defendant, repeating the oft-cited understanding that employees are responsible for their own commute to and from the workplace. The district court further held that Kimmons’ disability did not affect his ability to perform the essential functions of his job. Id. at *6.

The EEOC thereafter appealed to the Seventh Circuit.

The Seventh Circuit’s Decision

The Seventh Circuit reversed the district court’s grant of Defendant’s motion for summary judgment. In reaching this conclusion, the Seventh Circuit opined that the main question was whether the employee was entitled to a modified work schedule as an accommodation to make his commute safer. The Seventh Circuit concluded that the answer is “maybe.” Id. at *6.

As a threshold question, the Seventh Circuit examined the threshold question of whether an employee’s work-schedule was inherently outside the scope of the ADA. Relying on decisions within its jurisdiction and those of its sister courts, the Seventh Circuit declined to offer a bright line rule. Instead, it concluded that the inquiry was fact-intensive and necessarily unbefitting for summary judgment resolution. Specifically, while acknowledging that “getting to and from work is in most cases the responsibility of an employee, not the employer,” the Seventh Circuit reasoned that an employee’s disability could interfere with that commute, thereby entitling him to a work-schedule accommodation “if commuting to work is a prerequisite to an essential job function, such as attendance in the workplace, and if the accommodation is reasonable. Id. at *3.

Further, the Seventh Circuit determined that a trier of fact could find Kimmons’ travel to his workplace a prerequisite essential to his job duties, which demanded regular attendance. Moreover, whether or not Kimmons’ cataracts constituted a disability was a question of fact, it was not unreasonable to believe it negatively impacted his evening commutes. And because Defendant failed to establish how Kimmons’ schedule modification imposed an undue burden on its operations, the accommodation was not inherently unreasonable sufficient to warrant dismissal of the litigation. While businesses are not compelled to exhaust every avenue to improve trivial comforts of its disabled workforce, the Seventh Circuit emphasized that it will consider the precise accommodation at issue when evaluating these efforts. Id. at *21

Finally, the Seventh Circuit opined that it, “do[es] not intend to endorse an interpretation of the ADA where ‘no good deed goes unpunished.’” Id. at *23. The Seventh Circuit additionally clarified that the employer need not provide the exact accommodation the employee requests. However, the Seventh Circuit held that a qualified individual’s disability substantially interferes with his ability to get to work and attendance at work is an essential function, an employer may sometimes be required to provide a commute-related accommodation, if reasonable under the circumstance. Id. at *26. Accordingly, the Seventh Circuit reversed the district court’s grant of Defendant’s motion for summary judgment and remanded to the district court.

Implications For Employers

This is a novel ruling in that it opens the possibility for employers to be held liable for accommodations related work scheduled based on commuting concerns. While the Seventh Circuit made abundantly clear that it did not want to establish a bright-line rule, this decision demonstrates that in some situations, employers could potentially be responsible for granting accommodation requests related to work schedules and commutes. Employers should thus continue to closely consider all accommodation requests, even those that may seem outside of the scope of day-to-day job duties.

August 6, 2023August 6, 2023 by Class Action Defense

Louisiana Federal Court Grants Defendants’ Motion To Decertify Collective Action And Evidences A New Fifth Circuit Regime Post-Swales

By Gerald L. Maatman, Jr. and Emilee N. Crowther

Duane Morris Takeaways: In Moore v. MW Servicing, LLC, No. 20-CV-217 (E.D. La. Aug. 2, 2023), Judge Greg Guidry of the U.S. District Court for the Eastern District of Louisiana granted Defendants Motion to Decertify Plaintiffs’ Collective Action, holding that, pursuant to Swales v. KLLM Transportation Services, L.L.C., 985 F.3d 430 (5th Cir. 2021), Plaintiffs had not met their burden of establishing they were “similarly situated” to the opt-ins during the decertification stage. The decision in Moore evidences the new Fifth Circuit regime in certifying/decertifying collective actions post-Swales, in that it properly places the “similarly situated” burden in Plaintiff’s court at all relevant times. The ruling should be required reading for all businesses defending wage & hour litigation in the states comprising the Fifth Circuit.

Case Background

Defendants MW Servicing, LLC, WBH Servicing, LLC, Bruno, Inc., and Joshua Bruno (“Defendants”) own and operate various properties in Louisiana. Plaintiffs Brittany Moore, Dmitry Feller, Jada Eugene, Christopher Willridge, and five opt-in Plaintiffs (“Plaintiffs”) worked for Defendants as property managers, leasing agents, leasing consultants, accounting managers, executive assistants, janitorial/maintenance workers, and babysitters.

Plaintiffs filed their a collective action (the “Complaint”) against Defendants on January 20, 2020, asserting Defendants failed to pay minimum wage under the Federal Labor Standards Act (“FLSA”), and failed to pay, or untimely paid, Plaintiffs their final checks under the Louisiana Wage Payment Act (“LWPA”).

The Lusardi v. Xerox Corporation Standard

At the time Plaintiffs filed their Complaint, the standard practice in federal courts to certify a collective action and send notice to potential opt-in plaintiffs followed the two-step process outlined in Lusardi v. Xerox Corporation, 116 F.R.D. 351 (D.N.J. 1987).

The first Lusardi step, also known as the “notice stage,” required courts to determine whether the named plaintiffs and potential opt-in plaintiffs were “similarly situated” solely on the basis of the pleadings and affidavits submitted by the parties. Id. at 360-61. Once the named plaintiffs met this lenient threshold, courts often granted conditional certification and notice was sent to the potential opt-ins. Id.

The second Lusardi step, also known as the “decertification stage,” permitted defendants to move to decertify the conditional certification, but shifted the burden of establishing that plaintiffs are not “similarly situated” to defendants. Id.

In Moore, Plaintiffs filed their motion for conditional certification on May 5, 2020. Almost a year later, on March 15, 2021, the Court granted Plaintiffs’ Motion for Conditional Certification.

The Fifth Circuit’s Departure From Lusardi “Notice Stage” In Swales

In Swales v. KLLM Transport Services, L.L.C., 985 F.3d 430, 441 (5th Cir. 2021), the Fifth Circuit rejected Lusardi’s “notice stage” approach. The Fifth Circuit held that the text of the FLSA did not require a certification phase, and courts should instead determine at the outset of the case “what facts and legal considerations are material to determining whether Plaintiff and the proposed class are similarly situated.” (emphasis added).

Importantly, in rejecting Lusardi’s “notice stage” approach, the Fifth Circuit held that the burden of establishing that the plaintiffs and opt-ins are “similarly situated” rests with plaintiffs at all relevant times. Id. at 443, n. 65 (“a plaintiff should not be able to simply dump information on the district court and expect the court to sift through it and make a determination as to similarity”).

On January 5, 2022, Defendants in Moore filed a motion to decertify the collective action. They asserted that Plaintiffs were not “similarly situated,” and the collective action should be decertified.

The Court’s Decision

On August 2, 2023, Judge Guidry granted Defendants motion to decertify on the grounds that Plaintiffs had not met their burden to establish they were “similarly situated” to the opt-ins. Moore, No. 20-217, at 7.

In reaching its decision, the Court acknowledged that while Swales rejected the traditional Lusardi “notice stage,” the Fifth Circuit clarified that the factors considered by courts in Lusardi’s “decertification stage” could “help inform or guide” courts “similarly situated analysis.” Id. at 3 (citing Loy v. Rehab Synergies, L.L.C., 71 F 4th 329, 336-37 (5th Cir. 2023)). Thus, even though Lusardi’s “notice stage” had been employed in this case, the Court elected to impose Swales for the decertification stage and required Plaintiffs to establish that they had met the “similarly situated” requirement of the FLSA. Id.

The court considered three factors, including: “(1) the disparate factual and employment settings of the individual plaintiffs; (2) the various defenses available to defendant which appear to be individual to each plaintiff; [and] (3) fairness and procedural considerations.” Id. at 3 (quoting Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1103 (10th Cir. 2001)).

As to the first factor, the Court noted substantial differences existed between the plaintiffs and opt-ins’ method of payment (salary versus hourly), employer (all worked for different entities), job titles, and the asserted wrongful acts of Defendants. Id. at 5-6. As to the second factor, the Court found that too many individualized claims remained in the matter (such as joint employment, good faith and willfulness, common policies, and salary status), which would necessarily require individualized defenses. Id. at 6. As to the final factor, while the Court acknowledged that the plaintiffs and opt-ins did have some overlapping common issues, “other methods of managing [the] litigation to the benefit of judicial efficiency” existed. Id.

Ultimately, the Court found that a single trial of all plaintiffs’ claims would “result in confusion both for the jury and management of the trial itself,” and granted Defendants’ motion to decertify the collective action. Id. at 7.

Implications for Employers

In the Fifth Circuit pre-Swales, plaintiffs’ counsel could readily establish that plaintiffs and opt-ins were “similarly situated” during the notice stage by presenting minimal evidence. After plaintiffs’ counsel met this low threshold and conditional certification was granted, employers were left with two options: (1) expend significant resources to conduct extensive discovery in pursuit of establishing that plaintiffs and opt-ins were not “similarly situated”; or (2) settle. Thus, until Swales, Plaintiffs’ counsel were able to utilize employers’ looming financial burden to unfairly obtain settlements on the basis of threadbare evidence.

Post-Swales, however, district courts in the Fifth Circuit are required to “rigorously scrutinize the realm of ‘similarly situated’ workers, [at] the outset of the case, not after a lenient, step-one ‘conditional certification.’” Swales, 985 F.3d at 434. By placing the FLSA’s “similarly situated” burden on Plaintiffs, this ensures that collective action complaints can no longer be used as fishing expeditions, and reduces the likelihood that frivolous lawsuits are filed.

Since Swales, the Sixth Circuit in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003, 1009 (6th Cir. 2023), similarly rejected Lusardi’s two-step certification approach, but elected not to adopt Swales “rigorous scrutiny” standard. Instead, the Sixth Circuit held that notice must only be sent to potential plaintiffs if they show “a ‘strong likelihood’ that those employees are similarly situated to the plaintiffs themselves.” Id. at 1011.

While at present only the Fifth and Sixth Circuits have departed from the longstanding Lusardi standard, other circuits may follow suit, and depending on how many circuits “jump ship” from Lusardi, the issue may soon be ripe for judicial review with the U.S. Supreme Court.