Class Action Defense

August 4, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 24: WARN Act Class Actions

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Tyler Zmick with their discussion of recent developments in WARN class action litigation spurred by the COVID-19 pandemic and its impact on the global workforce.

Episode Transcript

Jennifer Riley: Thank you for being here again, for the next episode of our Friday weekly podcast, the Class Action Weekly Wire. I’m Jen Riley, partner at Duane Morris, and joining me today is Tyler Zmick. Thank you for being on the podcast, Tyler.

Tyler Zmick: Thank you, Jen. Great to be here, thanks for having me.

Jen: So today we wanted to discuss trends and important developments in Worker Adjustment and Retraining Notification Act, or WARN Act class action litigation. So class actions brought under the WARN Act remain an area of key focus for skilled class action litigators in the plaintiffs’ bar. In recent years, dozens of COVID-19-related lawsuits have been filed under the WARN Act, as well as under state counterparts to the WARN Act, and new class actions are being filed almost daily. The mass layoffs that arose in the aftermath of the pandemic and related to quarantines and those spawned countless WARN Act class actions, resulting in courts having issued several significant decisions in that area – in COVID-19-related WARN Act cases, including rulings that can shape the contours of future WARN Act class action litigation beyond the pandemic and for years to come.

Tyler, can you explain to our listeners some of the requirements for employers under the WARN Act?

Tyler: Absolutely. So, the WARN Act requires employers to give written notice to affected employees at least 60 days before conducting a plant closing or mass layoff at a single site of employment. Now as you’d expect, the statute has very specific definitions of each of those teams. A “plant closing” is the permanent or temporary shutdown of a single site of employment or one or more facilities or operating units within that site of employment where the shutdown results in an “employment loss” during any 30-day period for at least 50 full-time employees. A “mass layoff” is a reduction in force – sometimes called a “RIF” – that is not a plant closing and results in an employment loss at a single site of employment during any 30-day period for either A) at least 50 full-time employees who comprise at least 33 percent of the employee population, or B) 500 or more full-time employees. The WARN Act regulations require aggregation of employment losses at a single site of employment during a rolling 90-day period, which in essence extends the statute’s 30-day period to 90 days. And the statue has teeth in the sense that covered employers that do not satisfy the statute’s requirements, or qualify for an exemption, can be liable to affected employees for back pay and benefits.

Jen: Thanks so much Tyler for that great overview. In terms of class action litigation relating to the WARN Act, how often do courts or are courts certifying these types of cases?

Tyler: In short – very, very often. In the year 2022, plaintiffs’ lawyers actually won every single motion for class certification that was filed in a WARN Act case pending in federal court. And the jurisdictions where those rulings were issued were clustered in the Third, Fourth, and Eleventh Circuits.

Jen: Wow, pretty good success rate! Can you tell our listener about some of the most significant rulings in the WARN class action space?

Tyler: Sure. So, one case from 2022 involving Rule 23 in the context of a WARN Act class action is Jones, et al. v. Scribe Opco, Inc. The plaintiff filed a class action alleging that the defendant, his former employer, violated the WARN Act when he and other employees were furloughed due to the COVID-19 pandemic. The plaintiff claimed that while the employer gave notice of the initial furlough, the defendant employer failed to provide a follow-up notice once it became reasonably foreseeable that the furlough/layoff would exceed six months. The court granted the plaintiff’s motion for class certification, finding that all the requirements for Rule 23 were satisfied. The court determined that the putative class of 344 people met the numerosity requirement. The court further ruled that although the determination of each class member’s damages would be individualized based on their rate of pay and the benefits to which they were entitled, all of the class members’ claims involved the same legal questions. Specifically, the court ruled that common questions underlying the elements of the WARN Act claim and the defendant’s affirmative defenses were common and predominated over any individual issues. Finally, the court concluded that the plaintiff met the superiority requirement of Rule 23 because of the small individual values of the respective claims for class members, and the fact that it would be difficult to have potentially dozens of individual WARN actions filed by affected employees.

Jen: Thanks, Tyler. So one question that intrigues me in terms of WARN Act litigation is this question of what is this “single site of employment” and how does that bear when employees are working from home. So as the pandemic has spurred this trend and great rise of remote work, how does that “single site of employment” test apply? Do you have any rulings that address that question?

Tyler: Yes, absolutely. A case that got a lot of attention in the legal media is Piron, et al. v. General Dynamics Information Technology Inc., which was issued in 2022. In this case the court analyzed what constitutes a “single site of employment” under the WARN Act for employees who remotely, and the court analyzed that statutory term in the context of a motion for class certification under Rule 23(b)(3). So in the Piron case, the proposed class consisted of remote employees who had worked under the employer’s Flexible Work Location policy. Under that policy, employees could work from a company-provided setting (e.g., an office) or from an alternative setting like their home. Employees frequently moved from location to location to conduct their work duties depending on their schedules and where they preferred to be that day. When the defendant laid off the employees, many of whom who fell into that group who were subjected to the policy, the employees filed a class action against the defendant under the WARN Act, asserting they were not given the 60 days’ notice required for “mass layoffs” occurring at a “single site of employment.” In opposing class certification, the defendant argued that the putative class could not show that questions of law and fact for the class “predominate” over the same questions for the individual plaintiffs. Specifically, the defendant argued that the plaintiffs did not work at a “single site of employment” and thus could not trigger the WARN Act’s notice requirements for mass layoffs. Instead, the court would have to look at each class member’s individual situation to determine his or her place of employment. For example, for each class member you’d have to look at how often they work in the office versus at home or some other location. The court rejected the defendant’s predominance argument, and ruled that the class could be certified under Rule 23(b)(3). So in its ruling, the court emphasized that the remote-work policy applied to all employees, and this policy would guide its determination of what constituted the site of employment for each employee. Meaning the critical inquiry – the application of the remote work policy and its application to the work arrangements of the employees – would be common to all potential class members, even if some class members utilized that policy a little bit differently. This case illustrates one potential pitfall that can arise with the shift from an office workforce to a remote or hybrid workforce – and that pitfall is the possibility of layoffs to a remote or hybrid work force triggering WARN Act liability. It also highlights how the use of a common remote work policy for remote workers can potentially render a class of workers sufficiently similar for purposes of Rule 23 class actions.

Jen: Very interesting ruling. How about any issues or rulings on exemptions provided to employers under the WARN Act?

Tyler: Sure – so this is the last case I’ll go over for today’s video blog, and it’s a significant one issues by the Fifth Circuit where the court provided guidance regarding the “Natural Disaster” Exception to the WARN Act. The case was Easom, et al. v. US Well Services, Inc., in which the Fifth Circuit held that COVID-19 does not qualify as a natural disaster under the WARN Act’s natural disaster exception. So as background, in that case the plaintiffs filed a WARN Act class action claiming that the defendant terminated their employment without the 60-day noticed required by the WARN Act. The defendant, US Well, argued that the termination was caused by COVID-19, and therefore notice of the layoff with 60-day notice was not required due to the WARN Act’s natural-disaster exception. Both the plaintiff and defendant in the trial court moved for summary judgment on that issue regarding the exception. The district court denied both motions. In doing so, the trial court concluded that COVID-19 was a natural disaster because people did not start or consciously spread it and it was a disaster based on how many people were killed or infected. The trial court nonetheless denied the defendant’s motion for summary judgment because the exception in the WARN Act uses a but-for causation standard and the court found that the record did not show that COVID-19 was the but four cause of the layoffs – meaning other factors could have been in play as for what led to the layoffs. On appeal, the Fifth Circuit basically disagreed with the trial court’s entire order. The Fifth Circuit held that COVID-19 does not qualify as a natural disaster and in doing so the appellate court narrowly construed the statutory language which limits examples of natural disasters to “flood, earthquake, or drought” and other hydrological, geological, and meteorological events. The Fifth Circuit also examined whether the phrase “due to” in the natural disaster exception requires but-for or proximate causation and unlike the trial court, the Fifth Circuit determined that the natural disaster exception incorporates proximate causation not but-for causation.

Jen: Great insights and analysis Tyler, thank you so much. I know that these are only some of the cases that had very interesting rulings in WARN Act class actions over the past year. The remainder of 2023 is sure to give us some more insights and more examples of the way that class actions are continuing to evolve in this space. That brings us to our conclusion, thanks to our listeners for joining us today – we’ll see you on the next edition of the Class Action Weekly Wire.

August 1, 2023 by Gerald L. Maatman, Jr.

West Virginia Federal Court Finds Lack Of Involvement By Defendant In Alleged Class Action Solicitation Does Not Preclude Personal Jurisdiction Or Article III Standing

Gerald L. Maatman, Jr., Jennifer A. Riley, and Nick Baltaxe

Duane Morris Takeaways: On July 18, 2023, in Mey v. Levin, Papantonio, Rafferty, Proctor, Buchanan, O’Brien, Barr & Mougey, P.A., et al., Case No. 5:23-CV-46 (N.D. W. Va. July 18, 2023), the Court denied a motion to dismiss Plaintiff’s claims for alleged violations of the Telephone Consumer Protection Act (the “TCPA”). In doing so, the Court held that, despite the fact that Levin Law did not direct and was not involved in the alleged calls, the Court had personal jurisdiction over Levin Law, and Plaintiff had Article III standing to pursue the TCPA claims. In doing so, the Court found allegations concerning the law firm’s alleged agency relationship with a co-defendant sufficient to confer broad authority to adjudicate Plaintiff’s claims against Levin Law under the TCPA. Additionally, the Court concluded that Plaintiff had alleged sufficient facts to support a do-not-call claim under the TCPA by alleging that her cell phone was a residential phone on the National Do-Not-Call Registry.

Case Background

Plaintiff Diana Mey, a resident of West Virginia, initiated this lawsuit against two law firms, Levin Law and Principal Law Group, LLC, alleging that those defendants violated the TCPA by soliciting clients for a mass tort litigation related to toxic water exposure at Camp Lejeune. Mey, Doc. 33 at 1-2. Defendant Levin Law filed a motion to dismiss on numerous grounds, including that the Court lacked personal jurisdiction, that Plaintiff lacked Article III standing, that Plaintiff failed to plead direct or vicarious liability, and that Plaintiff failed to plead a violation of the TCPA. Id. The Court denied the motion. Id. Specifically, Levin Law argued that it was not directly involved in any of the phone calls, which were made by co-defendant MCM Services Group, LLC (“MCM”), and therefore could not be sued for violation of the TCPA. Id. at 8.

Initially, Levin Law, a Florida professional corporation with a principal place of business in Pensacola, Florida, argued that it did not have sufficient minimum contacts with West Virginia because it did not purposely direct the alleged tortious activity toward the state. Id. While the Court acknowledged that Levin Law was not directly involved in the telephone calls placed to Plaintiff, it held that Plaintiff had provided sufficient facts to find that the calls were made by an agent under Levin Law’s control. Id. at 12. Specifically, the Court noted that Plaintiff allegedly received a representation agreement from Principal Law, under which Levin Law would provide legal services to Plaintiff, and Principal Law would serve as Levin Law’s associate counsel. Id. The Court found that these allegations were sufficient to plausibly connect Levin Law to the alleged calls. In a final point regarding personal jurisdiction, the Court did not address whether it had personal jurisdiction over out-of-state class members noting that, to proceed with the case, it needed to find personal jurisdiction only over the named Plaintiff and Defendants. Id. at 13.

The Court then addressed Levin Law’s argument that Plaintiff did not have Article III standing. Specifically, Levin Law argued that the calls, which were initiated by MCM, were not traceable to any conduct by Levin Law, which was a necessary prong in establishing Article III standing. Id. The Court, however, noted that because the representation agreement identified Principal Law as Levin’s Law associate counsel, and Plaintiff received the agreement from Principal Law, the Court reasonably could infer that the calls were made by someone under Levin Law’s control. Id. at 14. As such, the Court found that Plaintiff had pled sufficient facts to trace the challenged conduct to the defendant and, as such, had asserted Article III standing.

The Court addressed Levin Law’s final arguments that Plaintiff failed to plead a theory of liability against it and, further, failed to state a do-not-call claim under the TCPA. First, the Court held that Plaintiff asserted sufficient factual allegations to show vicarious liability and to survive a Motion to Dismiss. Id. at 15. Second, the Court found no case law supporting dismissal of a TCPA claim on the basis that the defendant allegedly placed a call to a cell phone instead of a residential phone. Id. at 17. Specifically, the Court noted that Plaintiff had alleged that her cell phone was used for residential purposes and was placed on the National Do-Not-Call Registry, making the claim actionable under the TCPA. Id.

Key Takeaways

In this ruling, the Court made interesting findings that will extend to plaintiffs outside the TCPA context to survive attacks at the pleading stage of litigation. Specifically, the Court found both personal jurisdiction and Article III standing despite the fact that Levin Law did not purposefully direct the activity at issue. By doing so, the Court agreed with arguments that the conduct of an alleged agent was enough to establish both personal jurisdiction and Article III standing. Going forward, plaintiffs will have yet another way to support personal jurisdiction and Article III standing at the outset of the case even against defendants who they do not contend were directly involved in the conduct about which they complain. Additionally, while there is a split in authority as to whether the TCPA extends to wireless telephone numbers, the Court in this litigation had no issue finding that a cell phone could be a residential phone for purposes of the TCPA, potentially extending its reach and keeping it relevant as a potential source of claims against corporate defendants.

July 28, 2023July 28, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 23: EEOC Summer Update

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Jeffrey Zohn with their discussion of recent developments at the EEOC including the Commission’s current enforcement priorities, the nomination of Kalpana Kotagal as the new commissioner, and what employers can expect under the current leadership structure.

Episode Transcript

Jerry Maatman: Blog readers, welcome to our Friday installment of the Class Action Weekly Wire. My name is Jerry Maatman of Duane Morris and I’m joined today by my colleague, Jeffrey Zohn, for this week’s episode. Welcome, Jeff!

Jeffrey Zohn: Thanks, Jerry. It’s great to be here, and I’m especially honored to be here because in today’s episode we get to mix it up where I got to interview you and ask you some questions about what’s going on with the Equal Employment Opportunity Commission, also known as the EEOC.

Jerry: Sounds good, fire away with those questions.

Jeff: All right so we’ll start out with an easier one for you – can you first explain about how the EEOC is structured in terms of its governance – who’s in charge, and how can one become part of the EEOC leadership?

Jerry: The EEOC is a creature of statute, it is in theory to be a bipartisan commission with leadership consisting of a chair, a vice chair, and three commissioners – and those five set policies for the EEOC, approve policy statements and enforcement guidance. A general counsel is also appointed by the President and reports to those commissioners, and typically the party in power that holds the White House will have a three to two advantage in terms of the composition of the five – the chair, the vice chair, and the three commissioners.

Jeff: Now of those five commissioners, are they all currently in place?

Jerry: Well, the EEOC has been dealing, like many government agencies, with recovering from the pandemic and from the election and so it has been operating for quite a while with only four commissioners – two Republicans and two Democrats. Although the EEOC and public pronouncements would not say things are deadlocked, people looking at the EEOC from the outside would suggest that there is an ideological deadlock with two Republican policy makers not agreeing with two Democratic policy makers, but in the last two weeks the Senate approved President Biden’s nomination of the fifth commissioner Kalpana Kotagal – she has yet to be sworn in, but will be sworn in any day now, and that will then allow the EEOC to have a full complement of policy makers and the five Commissioners, and will tip the balance in favor of kind of Democratic views of the policies and enforcement guidance memorandum of the EEOC.

Jeff: That sounds like a major development and something that could possibly bring some pretty significant changes to the EEOC.

Jerry: For employers it’s definitely, in the practical world in which we live, going to have a cause and effect that’s very different than what we’ve seen for the last two years, I think on several levels. The first level will be the issuance of policy guidance where the EEOC opines on how it interprets various statutes – and with a three to two majority with the Democrats, in my experience, what I’ve seen are very expansive interpretations of obligations that employers have under anti-discrimination laws and a broadening of the way the EEOC views rights of workers. Its views are not binding on federal courts, but its views are important, and its views activate the manner in which its investigators, district offices, and regional trial attorneys view the world and enforce the statute – and so there’s going to be a definite change, and the EEOC will act in a more activist manner to fulfill its policy mandates but it will do so with a tilt towards Democratic labor policies.

The second area where there will be a change most commentators believe, and I’m of the same opinion, that lawsuits – or investigations that have been in the queue for approval as lawsuits – will be approved and will begin to be filed. So the last couple of years EEOC-authorized lawsuits where the Commission sues in the public interest, on behalf of the United States against employers, on behalf of groups of employees – have been anywhere between about 85 and 105 lawsuits, and so its fiscal year starts on October 1 and goes to September 30. So we’re halfway through or a little past halfway through in the fiscal year, but I think what we’re going to see is an accelerated filing of lawsuits – especially what are known as systemic lawsuits that are bigger, brought on behalf of various groups of employees, hundreds sometimes thousands of employees, and so one way to look at the impact of the third Democratic commissioner is it will unleash the potential that the EEOC has in terms of litigation enforcement and I expect it to flex its muscle and bring more of those cases.

Jeff: So narrowing in a little bit more on Ms. Kotagal, the fifth appointment, the third Democrat – Jerry you’ve been one of the most distinguished lawyers in this field for a while, can you give us any background information on her?

Jerry: Well she is a very talented lawyer who also thinks expansively about this area and has handled big plaintiff-side employment discrimination class actions, she comes from the Cohen Milstein firm – probably one of the best if not the top plaintiff-side civil rights and employment discrimination law firm – she’s one of the key partners there. I’ve handled a myriad of cases against her, she’s an excellent lawyer, and has in the past few years been involved in movements: both the #MeToo movement and a movement that started in Hollywood, where Hollywood contracts for production of movies were created with a clause that would allow for hiring and use of a more diverse set of cast members and production personnel, and so she’s very interested in opening the doors of employment, she’s interested in bringing test cases to challenge policies, and she’s a champion of protected minority groups – so I expect her to utilize her expertise and bring it to the EEOC and to push the envelope, so to speak, in terms of what the EEOC does in enforcing employment discrimination laws

Jeff: It certainly sounds like her influence is going to be is going to be rapid and significant.

Jerry: I think so. I think the main thing on the EEOC’s agenda in terms of regulatory guidance will be the new Pregnant Workers Fairness Act where the EEOC will issue regulations and fill in the gaps, so to speak, of that law which is an amendment to the Pregnancy Discrimination Act that President Biden signed this year, and look for that to be kind of a signal of where the EEOC is going, and I expect it will be a very expansive document that will push the envelope even on that law to create more rights for workers who are pregnant and more obligations for employers – so that would be the first signal I would be looking for if I were an employer.

Jeff: Beyond that, are there any other EEOC developments that you think are worth talking about right now?

Jerry: I think the most relevant for most employers is the issue of systemic litigation that the EEOC has talked about it, but the number of systemic lawsuits that have been filed have been limited, and because the new commissioner’s background is on what I would call impact litigation, bringing cases to promote change, I think you’re going to be seeing test cases I think you’re going to be seeing cases brought on large against large employers, industry leaders to try and make a point and try and enforce the statute in a way that sends a signal to smaller players in the industry. So I think the EEOC is going to get back into the business of bringing large lawsuits against large employers that are very newsworthy.

Jeff: I think that should be the flashing red lights for the big companies to keep an eye on because that’s going to be impacting them directly. Definitely now is a great time for employers out there to make sure that they are compliant with all these requirements and the things that we think the EEOC is going to be going after.

Jerry: Absolutely, I think change is inevitable and the watchword is compliance compliance compliance is what employers need to be focused on at this point in terms of an activist EEOC.

Jeff: That is definitely a great advice, and I really appreciate all of the insights you had today, Jerry.

Jerry: Thanks all our loyal blog readers for joining us for this week’s Friday podcast. Signing off, this is Jeff and Jerry. Have a great day

Jeff: Bye everyone, thank you!

July 27, 2023 by Alex W. Karasik

EEOC Issues New ADA Guidance On Visual Disabilities And Discussing AI Impact

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

Duane Morris Takeaways: On July 26, 2023, the EEOC issued a new Guidance entitled “Visual Disabilities in the Workplace and the Americans with Disabilities Act” (the “Guidance”). This document is an excellent resource for employers, and provides insight into how to handle situations that may arise with job applicants and employees that have visual disabilities. Notably, for employers that use algorithms or artificial intelligence (“AI”) as a decision-making tool, the Guidance makes clear that employers have an obligation to make reasonable accommodations for applicants or employees with visual disabilities who request them in connection with these technologies.

The EEOC’s Guidance

The EEOC’s Guidance endeavors to address four subjects, including: (1) when an employer may ask an applicant or employee questions about a vision impairment and how an employer should treat voluntary disclosure; (2) what types of reasonable accommodations applicants or employees with visual disabilities may need; (3) how an employer should handle safety concerns about applicants and employees with visual disabilities; and (4) how an employer can ensure that no employee is harassed because of a visual disability.

The EEOC notes that if an applicant has an obvious impairment or voluntarily discloses the existence of a vision impairment, and based on this information, the employer reasonably believes that the applicant will require an accommodation to perform the job, the employer may ask whether the applicant will need an accommodation (and, if so, what type). Some potential accommodations may include: (i) assistive technology materials, such as screen readers and website accessibility modifications; (ii) personnel policy modifications, such as allowing the use of sunglasses, service animals, and customized work schedules; (iii) making adjustments to the work area, including brighter lighting; and (iv) allowing worksite visits by orientation, mobility, or assistive technology professionals.

For safety concerns, the Guidance clarifies that if the employer has concerns that the applicant’s vision impairment may create a safety risk in the workplace, the employer may conduct an individualized assessment to evaluate whether the individual’s impairment poses a “direct threat,” which is defined as, “a significant risk of substantial harm to the health or safety of the applicant or others that cannot be eliminated or reduced through reasonable accommodation.” For harassment concerns, the EEOC notes that employers should make clear that they will not tolerate harassment based on disability or on any other protected basis, including visual impairment. This can be done in a number of ways, such as through a written policy, employee handbooks, staff meetings, and periodic training.

Artificial Intelligence Implications

As we previously blogged about here, the EEOC has made it a priority to examine whether the use of artificial intelligence in making employment decisions can disparately impact various classes of individuals. In the Q&A section, the Guidance tackles this issue by posing the following hypothetical question: “Does an employer have an obligation to make reasonable accommodations to applicants or employees with visual disabilities who request them in connection with the employer’s use of software that uses algorithms or artificial intelligence (AI) as decision-making tools?”According to the EEOC, the answer is “yes.”

The Guidance opines that AI tools may intentionally or unintentionally “screen out” individuals with disabilities in the application process and when employees are on the job, even though such individuals are able to do jobs with or without reasonable accommodations. As an example, an applicant or employee may have a visual disability that reduces the accuracy of an AI assessment used to evaluate the applicant or employee. In those situations, the EEOC notes that the employer has an obligation to provide a reasonable accommodation, such as an alternative testing format, that would provide a more accurate assessment of the applicant’s or employee’s ability to perform the relevant job duties, absent undue hardship.

Takeaways For Employers

The EEOC’s Guidance serves a reminder that the Commission will vigorously seek to protect the workplace rights of individuals with disabilities, including those with visual impairments. When employers are confronted with situations where an applicant or employee requests reasonable accommodations, the Guidance provides a valuable roadmap for how to handle such requests, and offers a myriad of potential solutions.

From an artificial intelligence perspective, the Guidance’s reference to the use of AI tools suggests that employers must be flexible in terms providing alternative solutions to visually impaired employees and applicants. In these situations, employers should be prepared to utilize alternative means of evaluation.

July 21, 2023 by Class Action Defense

The Class Action Weekly Wire – Episode 22: TCPA Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jennifer Riley, Katelynn Gray, Sheila Raftery Wiggins, and associate Shaina Wolfe with their analysis of key trends and notable rulings in the class action landscape of the Telephone Consumer Privacy Act (“TCPA”). We hope you enjoy the episode.

Episode Transcript

Jennifer Riley: Thank you for being here again, for the next episode of our Friday weekly podcast, the Class Action Weekly Wire. I’m Jen Riley, partner at Duane Morris, and joining me today are partners Sheila Raftery Wiggins and Katelynn Gray and associate Shaina Wolfe. Thank you guys for being on the podcast today.

Today we wanted to discuss trends and important developments in Telephone Consumer Protection Act or “TCPA” class action litigation. The TCPA has long been a booming focus of consumer litigation, particularly in the class action space. The statute was enacted in 1991 – it’s a federal statute – it’s aimed at protecting consumers from companies that use ATDS, meaning automatic telephone dialing systems, to engage in mass telemarketing methods, including robocalls. The TCPA originally focused on unwanted telephone calls and faxes. For many years, plaintiffs successfully have alleged that a defendant used an automatic telephone dialing system (ATDS) to call or send messages to a cell phones without obtaining prior express consent.

Sheila, can you explain some of the recent Supreme Court litigation governing the TCPA’s interpretation – in particular, what constitutes an autodialer?

Sheila Raftery Wiggins: Sure, Jen. In 2021, the U.S. Supreme Court issued its ruling Facebook, et al. v. Duguid, which adopted a narrow interpretation of what devices count as an ATDS. Before Duguid, some federal circuits held that equipment could qualify as an autodialer just because it autodialed stored phone numbers that had not been randomly or sequentially generated in the first instance. But the Supreme Court rejected this interpretation and held that “a necessary feature of an autodialer under § 227(a)(1)(A) is the capacity to use a random or sequential number generator to either store or produce phone numbers to be called,” because the contrary interpretation “would capture virtually all modern cell phones, which have the capacity to store telephone numbers to be called and dial such numbers.”

Jen: Got it. Are there other types of communication governed by the TCPA?

Katelynn Gray: As you can imagine, Jen, the TCPA was enacted thirty years ago, so of course the methods and the technologies that businesses use to engage customers now has changed. I’m sure all of you have received text messages from businesses for a variety of different reasons, including to communicate with customers, solicit consumer feedback, announce product promotions, identify the status of a delivery, even utilize two-factor security authentication. So, as a result of that – as a result of the changes that have occurred in the last thirty years – courts have now begun interpreting the TCPA to include text messages. The TCPA also empowers the Federal Communications Commission, or something that we refer to as the FCC, to “prescribe regulations to implement” the statute, and to create exemptions to statutory liability “by rule or order.” 47 U.S.C. § 227(b)(2)(B). So under this authority, the FCC has actually created a “two-tier system of consent” for TCPA liability, with different kinds of calls essentially requiring different types of consent.

Jen: Shaina, can you talk about how successful the plaintiffs’ bar has been in obtaining class certification in TCPA class action cases?

Shaina Wolfe: The plaintiffs’ bar was fairly successful in 2022 where they sought class certification over TCPA issues, particularly relating to or involving robocalls. The plaintiffs’ bar won 67% of motions for class certification, and companies secured denials in 33% of the decisions.

Jen: So it sounds like the plaintiffs’ bar has been fairly successful overall. Sheila, can you comment on some of the notable successful certification rulings in this space?

Sheila: Sure – in Head, et al. v. Citibank, N.A., the plaintiff received 100 robocalls from the defendant, a bank, over the course of three months regarding an overdue credit account of a man she did not know. The plaintiff was never a customer of the defendant and did not authorize the man or anyone else to open an account with the defendant using her cellphone number. The plaintiff filed a class action, alleging that the defendant routinely violated the TCPA by placing calls using an artificial or prerecorded voice to telephone numbers assigned to a cellular telephone service, without prior express consent. The court granted the motion. The court explained that the defendant did not deny that it places billions of calls each year regarding delinquent accounts, or that millions of accounts in its system are marked “wrong number” and that at least one unsolicited call must be placed to the number before a telephone number is marked wrong. Moreover, the court noted that the defendant did not dispute that it called the plaintiff repeatedly before it marked the account associated with her number “cease-and-desist,” making a clear inference that there may be numbers not yet marked “wrong,” “no consent,” or “cease-and-desist” for which the defendant does not have authorization to robocall. The court also found that the proposed class satisfied the typicality and commonality requirements, that common questions of law and fact predominated, and that in the absence of a class action, thousands of meritorious claims would likely go unredressed because the cost of litigation would dwarf any possible reward under the TCPA.

Jen: Thanks so much Sheila. Katelynn, were there any memorable class certification rulings denying certification in 2022?

Katelynn: So there was one that I’ll talk about, but I just would generally say in 2022 it seems that defendants in TCPA class actions continued to succeed in defeating class certification by demonstrating that the proposed representative, or the individual who sought to represent the class, was inadequate or atypical, so essentially didn’t have anything in common with the other class members – especially where the circumstances surrounding their consent distinguish them from those other class members. So one of those examples was a case called Bustillos, et al. v. West Covina Corp. Fitness. This was a case where a former gym member went into the defendant’s gym and he provided his phone number to an employee who entered it into his profile – and I’m sure a lot of us do this all the time. Unfortunately for the company, the phone number provided was actually one digit off from the actual number of the former gym member – and belonged to the plaintiff in this case. At one point, the defendant authorized its marketing agency to send out a one-time pre-recorded telephone message to former gym members and guests who had expressed interest in joining the gym at a certain point – essentially inviting them to join or rejoin. Most of these individuals had provided their telephone numbers when they filled out a guest registration or a contract with the defendant when they joined the gym the first time. The plaintiff was one of 1,400 individuals that received a pre-recorded message on her cell phone from the defendant offering a gym membership promotion. So in this instance, the Court denied certification because they found the plaintiff in this case did not allege or produce evidence that any of the other messages were sent to wrong numbers and therefore found she was not typical to the members of the class she proposed to represent.

Shaina: Another common reason that courts deny class certification in TCPA cases is due to predominance of an individualized issue. For TCPA cases, one of the most powerful affirmative defenses is showing consent to the telemarketing messages. Courts have tended to rule in favor of defendants where they can show that a substantial portion of the proposed class consented to the communications; the purpose and nature of each communication varied from person to person; or identifying who provided consent and who did not would be impractical or impossible. There were also several case rulings that demonstrated this defense, including Cooper v. Neilmed Pharmaceuticals, Inc., where the defendant successfully offered five methods by which it received prior express invitation or permission from recipients before sending faxes, which creates almost a sort of presumption that the consent issue will be individualized.

Jen: Before we turn to settlements, if I recall the largest TCPA jury verdict ever was overturned on appeal last year, is that correct?

Sheila: That’s correct. The largest TCPA jury verdict involved in an award of $925 million, however, the defendant successfully overturned the verdict on appeal. In Wakefield, et al. v. ViSalus, Inc., the plaintiffs filed a class action alleging that the defendant made unlawful telephone calls using prerecorded voice messages in violation of the TCPA. Following a trial, the jury returned a verdict in favor of the plaintiffs and found that the defendant sent over 1.8 million prerecorded calls to class members without prior express consent. Accordingly, the jury awarded the minimum statutory damages of $500 per call for a verdict against the defendant of $925 million. The defendant filed a post-trial motion challenging the constitutionality of the statutory damages award under the due process clause of the Fifth Amendment as being unconstitutionally excessive. The district court denied the motion. On appeal, the Ninth Circuit vacated and remanded the district court’s denial of the defendant’s motion. On appeal, the defendant contended that even if the TCPA’s statutory penalty of $500 per violation was constitutional, an aggregate award of $925,220,000 was so “severe and oppressive” that it violated the defendant’s due process rights. So this case has ultimately obtained an extension of time from the Supreme Court to file a petition for certiorari.

Jen: Wow, we will absolutely keep listeners updated as to what happens next in that case. As far as TCPA settlements, I doubt there were any quire that large, but were there any significant settlements over the past year – Shaina, can you comment on that?

Shaina: I can. Although none were in the hundreds of millions, there were several multi-million class-wide TCPA settlements in 2022. Four of the top 10 were over $15 million and the value of the top 10 totaled over $134 million.

Jen: Thanks Shaina. Great insights and analysis, everyone. I know that these are only some of the cases that had interesting rulings over the past year in the TCPA class action space. The remainder of 2023 is sure to give us some more insights into the ways that class actions are evolving in the TCPA class litigation area. Thanks again everybody for joining us today, thanks to the panel – we look forward to connecting again next Friday on the next episode of the Class Action Weekly Wire.

July 20, 2023July 21, 2023 by Brandon Spurlock

Tennessee Federal Court Dismisses Class Action Under the Video Privacy Protection Act Because Plaintiff Failed to Allege He Accessed Video Content

By Brandon Spurlock and Jennifer A. Riley

Duane Morris Takeaways: On July 18, 2023, in Salazar v. Paramount Global d/b/a 247Sports, No. 3:22-CV-00756 (M.D. Tenn. July 18, 2023), Judge Eli Richardson of the U.S. District Court for the Middle District of Tennessee dismissed a class action lawsuit against Paramount Global because the Plaintiff failed to state a claim under the Video Privacy Protection Act (“VPPA”) where Plaintiff’s allegation that his subscription to an online newsletter made him a “subscriber” under the statute was insufficient because he did not allege that he accessed audio visual content through the newsletter. The VPPA is a law from 1980’s stemming from the failed Supreme Court nomination of Robert Bork, which involved his video rental history being published during the nomination process. In the ensuing decades, companies are seeing an increase in class action lawsuits under the VPPA and other consumer privacy statutes where plaintiffs seek to levy heavy penalties against businesses with an online presence. This ruling illustrates that some federal courts will closely examine such statutes to ensure that a plaintiff adequately states a claim based on the underlying statutory definitions before allowing a class action to proceed.

Case Background

Plaintiff filed a putative class action against Defendant Paramount Global d/b/a 247Sports alleging a violation of the VPPA. Id. at 1. According to Defendant, 247Sports.com is an industry leader in content for college sports, delivering team-specific news through online news feeds, social platforms, daily newsletters, podcasts, text alerts and mobile apps. Id. at 2. Plaintiff alleged that Paramount installed a Facebook tracking pixel, which allows Facebook to collect the data on digital subscribers to 247Sports.com who also have a Facebook account. Id. at 3-4. So if a digital subscriber of 247Sports.com is logged-in to his or her Facebook account while watching video content on 247Sports.com, then 247Sports.com sends to Facebook (via the Facebook pixel) the video content name, its URL, and, most notably, the digital subscriber’s Facebook ID. Id. at 4. Plaintiff claimed that Paramount violated the VPPA when it installed the Facebook pixel, which caused the disclosure to Facebook of Plaintiff’s personally identifying information. Id. at 5. Paramount moved to dismiss for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and for failure to state a claims for relief under Rule 12(b)(6).

The Court’s Decision That Plaintiff Had Standing Under The VPPA

First, Paramount argued that Plaintiff did not have standing because Plaintiff failed to adequately allege either a concrete injury in fact or the traceability of the injury to Paramount’s conduct, because the alleged disclosure of Plaintiff’s information to Facebook did not constitute a concrete injury. Id. at 9. Rejecting Paramount’s standing argument, the Court noted that the VPPA created a “right to privacy of one’s video-watching history, the deprivation of which – through wrongful disclosure, or statutory violation alone – constitutes an injury sufficient to confer Article III standing.” Id. at 11-12. In other words, the VPPA created a statutory right to have personally identifiable information remain private by prohibiting disclosure to third parties. Id. at 12. Thus, the Court ruled that Plaintiff’s allegation that his personally identifiable information was transmitted to Facebook in violation of the VPPA identified a concrete harm for standing purposes. Id. at 14.

Plaintiff Failed To State A Claim Under The VPPA

Paramount also asserted that Plaintiff had no claim under the VPPA because he was not a “consumer,” meaning “any renter, purchaser, or subscriber of goods or services from a video tape service provider.” Id. at 17. Because Plaintiff was not a “consumer” within the meaning of the VPPA, Paramount argued he was not a “subscriber of goods or services from a video tape service provider,” and Plaintiff did not state a claim under the VPPA because the statute only protects individuals who are “consumers” under the statute. Id. at 18.

The Court noted that although the VPPA does not define “subscriber,” the dictionary definition indicates that “subscriber” is a person who “imparts money and/or personal information in order to receive a future and recurrent benefit.” Id. at 19. Further interpreting the statute, the Court reasoned that a consumer is only a “subscriber” under the statute when he or she subscribes to audio visual materials. Id. at 21. Completing the analysis, the Court reasoned that under the VPPA, because Plaintiff’s subscription to the newsletter was not sufficient to establish that the he had subscribed to audio visual materials, Plaintiff’s position was unavailing in claiming that his subscription to the newsletter renders him a “subscriber.” Id. at 22.

The Court, therefore, dismissed Plaintiff’s VPPA class action lawsuit because Plaintiff failed to allege that he actually accessed audio visual content, which necessarily meant that Plaintiff was not a subscriber under the VPPA. Id. at 22.

Implications For Businesses

This past year has seen an uptick in VPPA class action filings against businesses that operate websites offering online videos and using third-party tracking tools. These lawsuits represent an ongoing pattern of increased consumer privacy class litigation throughout the country exposing companies to significant risk across a wide array of industries. Corporate counsel should note this ruling is a positive indication that some courts will closely examine the plain language and legislative intent of a privacy statute to ensure that a plaintiff actually states a viable claim before allowing class litigation to proceed.

July 20, 2023July 20, 2023 by Class Action Defense

California Supreme Court Rules That So Long As They Are Aggrieved, PAGA Plaintiffs Can First Pursue Individual Claims In Arbitration And Then Can Pursue Non-Individual Claims In Court

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

Duane Morris Takeaways: On July 17, 2023, the California Supreme Court issued its long-awaited decision in Adolph v. Uber Technologies, Inc., No. S274671 (July 17, 2023), addressing standing requirements under the Private Attorneys General Act of 2004 (“PAGA”). The Supreme Court held that, once a PAGA plaintiff’s individual claims are compelled to arbitration, the plaintiff retains standing to maintain non-individual, representative PAGA claims in court so long as they are an aggrieved employee. If the plaintiff loses in arbitration, they are not aggrieved and therefore lack standing. However, if the plaintiff prevails or settles their individual claims in arbitration, they can then return to court to prosecute their non-individual PAGA claims. For companies facing PAGA claims, the ruling in Adolph is required reading, as it will usher in a new period of workplace litigation in California.

Case Background

Erik Adolph, an Uber delivery driver, alleged that Uber misclassified him as an independent contractor. Although Adolph initially sought to maintain a class action, those efforts were thwarted by a class action waiver in his workplace arbitration agreement. Adolph then amended his complaint to allege PAGA claims. The trial court denied Uber’s motion to compel arbitration, and the Court of Appeal affirmed on the basis of California’s prior rule, under Iskanian v. CLS Transportation, 59 Cal. 4th 348 (2014), that PAGA claims cannot be split into individual and non-individual parts and that a PAGA claim was non-arbitrable.

Uber filed a Petition for Review and, while it was pending, the U.S. Supreme Court issued its decision in Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022), holding that PAGA claims are divisible and that the Federal Arbitration Act preempted California law insofar as it precluded arbitration of an individual PAGA claim. The U.S. Supreme Court further opined that, once a PAGA plaintiff’s individual claims are compelled to arbitration, they lose standing to pursue non-individual PAGA claims. Against this backdrop, the California Supreme Court granted review in Adolph.

The California Supreme Court’s Decision

In a unanimous decision, the California Supreme Court disagreed with Viking River’s interpretation of PAGA standing. The California Supreme Court held that, so long as an employee alleges they are aggrieved by a violation, they maintain standing under the PAGA. Thus, even after individual PAGA claims are compelled the arbitration, the plaintiff retains standing to pursue non-individual PAGA claims in court.

As to logistics, the Supreme Court clarified several things. First, even though individual PAGA claims may be pending in arbitration and non-individual PAGA claims pending in court, the claims all remain one action, and the court action may be stayed pending completion of arbitration. Second, if the plaintiff loses in arbitration, at that juncture, the plaintiff no longer has standing to maintain non-individual PAGA claims. Third, if the plaintiff prevails in arbitration or settles their individual claims, they continue to possess standing to return to court to pursue non-individual PAGA claims on behalf of others.

Implications for Employers

In the wake of Adolph, the stakes for employers in individual PAGA arbitrations are high. Employers facing PAGA claims should conduct an early assessment of the plaintiff’s individual claims and if unmeritorious aggressively defend the matter because a win in arbitration will extinguish the case in court as well. We also anticipate that PAGA plaintiffs may begin alleging their aggrieved employee status, yet disclaiming any individual relief, in order to bypass arbitration altogether. It remains to be seen if that pleading strategy will be condoned by California courts.

July 20, 2023 by Gerald L. Maatman, Jr.

Illinois Supreme Court Refuses To Reconsider “Per-Scan” BIPA Accrual Ruling In Cothron v. White Castle

By Gerald L. Maatman, Jr. and Tyler Zmick

Duane Morris Takeaways: As we previously blogged, on February 17, 2023 the Illinois Supreme Court held in Cothron v. White Castle, 2023 IL 128004 (2023), that a separate claim for damages accrues under the Biometric Information Privacy Act (“BIPA”) each time a private entity scans or transmits an individual’s biometric data in violation of Sections 15(b) or 15(d) of the statute. On July 18, 2023, the Illinois Supreme Court denied White Castle’s petition for hearing, resulting in the February 17 ruling becoming the final “law of the land” in Illinois. The Court’s decision to deny White Castle’s rehearing petition was not unanimous, however, as reflected by the blistering dissent penned by Justice Overstreet and joined by Chief Justice Theis and Justice Holder White. For companies involved in BIPA class action litigation, the dissent is required reading, as it foreshadows an array of defense-oriented arguments over damages issues in privacy litigation.

Illinois Supreme Court’s Majority Decision In Cothron

In a 4-3 split ruling, the Illinois Supreme Court held on February 17, 2023 that a separate claim accrues under the BIPA each time a private entity scans or transmits an individual’s biometric data in violation of Sections 15(b) or 15(d), respectively.

Relying on the statute’s plain language and the fact that the actions of “collecting” and “disclosing” biometric data can occur more than once, the Supreme Court agreed with Plaintiff’s interpretation – namely, that Section 15(b) “applies to every instance when a private entity collects biometric information without prior consent” and that Section 15(d) “applies to every transmission to a third party.” Cothron, 2023 IL 128004, ¶¶ 19, 23, 28. The Supreme Court acknowledged that this interpretation – coupled with the statute allowing prevailing plaintiffs to recover up to $1,000 or $5,000 for each “violation” – could lead to astronomical damages awards that may be “harsh, unjust, absurd or unwise,’” id. ¶ 40 (citation omitted), but noted that it must apply the statute as written and that policy-based concerns should be addressed by the Illinois legislature.

Dissent To Majority’s Decision To Deny White Castle’s Rehearing Petition

On July 18, 2023 the Illinois Supreme Court denied White Castle’s petition for rehearing in Cothron v. White Castle, effectively leaving White Castle with no further avenues for challenging the ruling.

Three Justices (the same three who dissented to the February 17 majority decision) disagreed with the decision to deny White Castle’s petition for rehearing. In opining that the Supreme Court should have granted rehearing, the Dissent focused on three issues, including: (1) the majority’s “per scan” theory of liability subverting the intent of the Illinois legislature; (2) the majority’s “per scan” theory of liability threatening the survival of Illinois businesses and raising “significant constitutional due process concerns,” id. ¶ 70; and (3) the majority’s decision in failing to provide trial courts with criteria to use in exercising their discretion whether to award statutory damages for BIPA violations.

First, the Dissent stated that the Illinois legislature meant for the BIPA to be a straightforward remedial statute that allows individuals to choose to provide (or not to provide) their biometric data after being informed that the data is being collected, stored, and potentially disclosed. The Dissent rejected the majority’s “flawed construction” of the statute, which mistakenly presumes that the legislature meant for the BIPA to “establish a statutory landmine” and “destroy commerce in its wake when negligently triggered.” Id. ¶ 73; see also id. (“The majority’s construction of the [BIPA] does not give effect to the legislature’s true intent but instead eviscerates the legislature’s remedial purpose of the [BIPA] and impermissibly recasts [it] as one that is penal in nature rather than remedial.”).

Second, the Dissent opined that by construing the statute to allow for awards of statutory damages that bear no relation to any actual monetary injury suffered, the majority’s decision raises due process concerns that “raise doubt as to [the BIPA’s] validity.” Id. ¶ 74; see also id. ¶ 75 (“The legislature’s authority to set a statutory penalty is limited by the requirements of due process. When a statute authorizes an award that is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable, it does not further a legitimate government purpose, runs afoul of the due process clause, and is unconstitutional.”).

Finally, the Dissent took issue with the majority’s refusal to clarify its February 17 holding with respect to the discretionary (rather than mandatory) nature of liquidated damages under the statute. Specifically, the Dissent noted that the majority opinion did not provide trial courts with standards or criteria to apply in determining whether to award statutory damages in a particular BIPA case and, if so, in what amount. The Dissent asserted that the Supreme Court should have agreed to clarify “that statutory damages awards must be no larger than necessary to serve the [BIPA’s] remedial purposes” and to “explain how lower courts should make that determination.” Id. ¶ 85. Per the Dissent, “[w]ithout any guidance regarding the standard for setting damages, defendants, in class actions especially, remain unable to assess their realistic potential exposure.” Id.

Implications For Corporations

Assuming White Castle cannot convince the U.S. Supreme Court to grant review of the Cothron decision based on constitutional issues, Cothron is now the final law of the land in Illinois. White Castle and other BIPA defendants may, however, attempt to raise constitutional challenges to the statute in other BIPA cases moving forward based on the same concerns expressed by the three dissenting Justices in Cothron.

The denial of White Castle’s rehearing petition indicates that the well is beginning to dry for businesses in terms of potential BIPA defenses. While employers and other BIPA defendants can still explore novel defenses, such as the exception for information captured from a patient in a health care setting or challenges to personal jurisdiction, many companies caught in the crosshairs of BIPA class actions will face pressure to settle due to the risk of facing monumental potential damages. Moreover, attempts to reform the BIPA statute failed in 2023, and the Illinois legislature likely will not consider any further reform proposals until 2024. Given the bleak outlook of the law as it stands, it is imperative that businesses immediately ensure they are compliant with the BIPA.

July 19, 2023 by Gerald L. Maatman, Jr.

D.C. Circuit Issues A “How-To” Ruling Regarding Issue Certification For Rule 23 Class Actions

By Gerald L. Maatman, Jr. and Rebecca S. Bjork

Duane Morris Takeaways: On July 18, 2023, the U.S. Court of Appeals for the District of Columbia Circuit ruled that district courts must analyze the predominance and superiority requirements for certification of a class action when considering an “issue class” under Rule 23(c). In Harris v. Medical Transportation Management, Inc., No. 22-7033 (D.C. Cir. July 18, 2023), the three-judge panel ruled that the district court erred when it certified an “issue” class under Rule 23(c)(4) without first undertaking an analysis of whether the class certification prerequisites of Rule 23(a) and 23(b) had also been satisfied. The case was remanded for further proceedings. The D.C. Circuit’s decision ought to be required reading for employers with large workforces and those dealing with wage & hour class actions. It bears watching whether the district court’s analysis of the rigorous requirements of Rule 23(b) on remand also results in a pro-certification decision, given the instructions provided on remand.

Case Background

In Harris, the named plaintiffs were non-emergency medical drivers for the defendant, a company that provides transportation to individuals on public assistance who require transit getting to medical appointments. They alleged that they and a class of other drivers who they seek to represent in a class action lawsuit were denied minimum and overtime pay in violation of District of Columbia and federal wage and hour laws. Slip op. at 5-6.

Whether defendant MTM could as a matter of law be held liable as the drivers’ employer is a threshold question in the litigation. Id. at 6. The district court certified issues classes as to (i) whether MTM is the drivers’ joint employer (along with its sub-contractors); and (ii) whether MTM is a general contractor under D.C. law and thus strictly liable. Id. at 8. The district court did so despite finding previously that the predominance requirement of Rule 23(b)(3) was not met under the facts of the case specifically as they relate to the payment system for the drivers. Id. at 7-8.

MTM appealed the issue certification ruling.

The D.C. Circuit’s Decision

In a straightforward ruling, but one that delves into the complexities of Rule 23 with law-professor like precision, the D.C. Circuit panel consisting of Judges Millett, Childs and Rogers determined that the district court could not certify the issue classes under Rule 23(c)(4) without deciding whether those classes also meet the requirements of Rule 23(a) – commonality and typicality – and 23(b) – predominance and superiority. In essence, the D.C. Circuit read the plain language of Rule 23 and observed that sub-sections (a), (b) and (c) all bear on the certification inquiry conducted by the district court and therefore must be considered on an equal basis. Id. at 14-15.

In the penultimate statement of the holding, Judge Childs opined that “Rule 23’s text and structure offer no quarter to the view that Rule 23(c)(4) creates an independent type of class action that is freed from all of Rule 23’s other class action prerequisites. So the district court should have ensured that the issue class that it certified met all, and not just some, of Rule 23(a) and (b)’s preconditions to class status.” Id. at 15-16.

The D.C. Circuit instructed the district court that it must analyze on remand each of the potential class actions available under Rule 23(b)(3)’s predominance analysis. Id. at 19-20. It discussed various ways in which Rule 23(c)(4) can be applied in the context of the joint employer analysis that is at issue in Harris, such as bifurcating the liability issue from remedial claims, or where affirmative defenses may muddy the waters of class-wide evidence in a certified issues class. Id. at 21-22.

In a similar vein, Judge Childs instructed that summary judgment motions on discrete issues represent another way in which district courts could management issue certified class actions where the predominance of individualized issues threaten to overrun the common proof. Id. at 24-25.

Implications For Employers

The D.C. Circuit opinion in Harris v. MTM provides corporate counsel and executives a clear and easily understandable explanation of how Rule 23(b) and (c) intersect with one another when an issue class or classes are certified in class action litigation. District courts cannot certify issue classes under Rule 23(c)(4) without undertaking the rigorous analysis required to conclude that a class action is superior and manageable, that common issues will predominate over individualized issues, and that there are common and typical issues to be resolved in the first place. And by suggesting specific mechanisms that a district court has at its disposal for case management purposes such as targeted summary judgment motions, the decision provides reasonable strategies to consider when facing class action litigation.

July 14, 2023 by Class Action Defense

Not Again – No More Notices: North Carolina Federal Court Denies Conditional Certification In Duplicative FLSA Collective Action

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

Duane Morris Takeaways: In Emmanuel Jean-Francois et al. v. Smithfield Foods, Inc., et al., No. 7:22-CV-63, 2023 U.S. Dist. LEXIS 118136 (E.D.N.C. July 10, 2023), a federal district court in North Carolina denied plaintiffs’ motion for conditional certification of an FLSA collective action, holding that the collective action they sought to certify was duplicative to the conditionally certified collective actions in two other pending cases.

This decision is well worth a read for companies who are confronted with numerous collective action lawsuits containing similar alleged violations of wage and hour laws.

Case Background

Three employees (“Plaintiffs”) sued their employer, Smithfield Fresh Meats Corp. (“Smithfield”), and three of its sister companies (collectively “Defendants”) for violations of the Fair Labor Standards Act (“FLSA”), and specifically, for failing to include a “responsibility bonus” in their pay when calculating overtime. Id. at 1. During COVID-19, Plaintiffs received a “responsibility bonus,” which entitled them, as hourly employees, to a bonus of “$5 per hour for all regular hours worked up to and including forty in a workweek,” between April 1, 2020 and October 31, 2020. Id. at 3. Plaintiffs alleged that Defendants underpaid them for overtime pay during the period between April 1, 2020 and October 31, 2020. Id.

Plaintiffs moved to certify a collective action of a similarly situated group of 8,000 employees who were not properly compensated by Defendants for overtime work performed. Id. at 1. Defendants opposed the motion for conditional certification and argued, among other things, that the proposed collective action could not be certified because it was duplicative to two other cases entitled Canas and Winking. Id. at 2. The parties in Canas and Winking had recently reached agreements to settle the FLSA claims concerning the same responsibility bonus for employees and notices to opt-in plaintiffs who opted into the settlement had already been distributed. Id. at 2-3.

The Court’s Decision

The Court agreed with Defendants and denied Plaintiffs’ motion for conditional certification. Id. at 11. Significantly, the Court found that the Canas action encompassed claims identical to the claims Plaintiffs alleged in Jean-Francois. Id. at 11.

The Court explained that, “[i]n Canas, the collective [action members] settled claims against Smithfield (including employees in North Carolina) based on the same facts and during the same time period.” Id. In Canas v. Smithfield Packaged Meats Corp., No. 1:20-CV-4937 (N.D. Ill.), some employees brought a collective action lawsuit for violations of the FLSA against Smithfield, one of its sister companies, and another company. Id. at 2. On September 13, 2021, the judge in Canas approved a settlement between “the FLSA settlement class plaintiffs who opted into the settlement” and the two Smithfield companies concerning the responsibility bonus. Id. at 2–3. The settlement included employees who worked in North Carolina. Id. at 3.

The Court further explained that Plaintiffs were already part of the collective action that received notice as part of the Canas collective action, and that the scope of the Canas collective action included every potential opt-in plaintiff in the current proposed collective action at issue in Plaintiffs’ motion. Id. at 9-10. Instead of certifying another collective action, the Court opined that Plaintiffs’ remedy was “to proceed with their action as an individual action or request to be paid now what they would have received had they submitted a claim for from the Canas reserve fund.” Id. at 10-11. For these reasons, the Court denied Plaintiffs’ motion for conditional certification.

Implications For Employers

In FLSA collective actions, it is not uncommon for a series of cascading lawsuits to be filed against the same company, especially in scenarios when employees in scattered locations may independently retain their own counsel. However, it can be distracting for a business to have its workforce receive multiple notifications providing opportunities to join lawsuits against their employer, especially when the lawsuits may appear to be similar. This is an excellent ruling for employers to use when they are confronted with multiple, duplicative FLSA collection action lawsuits. Accordingly, businesses involved in wage and hour litigation would be wise to keep this ruling tucked away.