DMCAR Trend #3 – The Likelihood Of Class Certification In 2023 Remained Strong


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

Duane Morris Takeaway: In 2023, the number of class certification rulings issued by courts eclipsed the numbers issued in recent years, and the overall rate of class certification remained high, as plaintiffs continued to succeed in certifying class actions at high rates. In 2023, the plaintiffs’ class action bar succeeded in certifying class actions at a high rate. Across all major types of class actions, courts issued rulings on 451 motions to grant or to deny class certification in 2023. Of these, plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of 72%.

Watch Duane Morris partner Jerry Maatman discuss the high certification rates in 2023 and what it means for 2024 in the video below:

Trend #3 – The Likelihood Of Class Certification In 2023 Remained Strong

The numbers show that, when compared to 2022, plaintiffs filed more motions for class certification in 2023, resulting in more certified class actions in 2023. Across all major types of class actions, courts issued rulings on 451 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, with an overall success rate of 72%. In 2022, by comparison, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.

In 2023, the number of motions that courts considered varied significantly by subject matter area, and the number of rulings varied across substantive areas. The following summarizes the results in each of ten key areas of class action litigation:

Securities Fraud – 97% granted / 3% denied (35 of 36 granted / 1 of 36 denied)
Data Breach – 14% granted / 86% denied (1 of 7 granted / 6 of 7 denied)
Discrimination – 50% granted / 40% denied (4 of 8 granted / 4 of 8 denied)
ERISA – 82% granted / 18% denied (41 of 50 granted / 9 of 50 denied)
FCRA / FDCPA – 75% granted / 25% denied (3 of 4 granted / 1 of 4 denied)
RICO – 70% granted / 30% denied (7 of 10 granted / 3 of 10 denied)
TCPA – 70% granted / 30% denied (7 of 10 granted / 3 of 10 denied)
WARN – 54% granted / 46% denied (7 of 13 granted / 6 of 13 denied)
FLSA (Conditional Certification) – 75% granted / 25% denied (125 of 167 granted / 42 of 167 denied)
FLSA (Decertification) – 44% granted / 56% denied (8 of 18 granted / 10 of 18 denied)
Antitrust – 75% granted / 25% denied (15 of 20 granted / 5 of 20 denied)
Products Liability / Mass Torts – 69% granted / 31% denied (9 of 13 granted / 4 of 13 denied)
Civil Rights – 62% granted / 38% denied (30 of 48 granted / 18 of 48 denied)
Consumer Fraud – 66% granted / 34% denied (38 of 58 granted / 20 of 58 denied).

The plaintiffs’ class action bar obtained the highest rates of success in securities fraud, antitrust, FLSA, and ERISA actions. In cases alleging securities fraud, plaintiffs succeeded in obtaining orders certifying classes in 35 of the 36 rulings issued during 2023, a success rate of 97%. In antitrust litigation, plaintiffs succeeded in obtaining orders certifying classes in 15 of 20 rulings issued during 2023, a success rate of 75%. In cases alleging ERISA violations, plaintiffs succeeded in obtaining orders certifying classes in 41 of 50 rulings, for a success rate of 82%. And in cases alleging FLSA violations, plaintiffs managed to obtain first-stage certification rulings in 125 of 167 rulings issued during 2023, a success rate of nearly 75%.

As additional judicial nominations emanate from the White House to fill open slots in federal courts, we can expect the makeup of the judiciary to continue to evolve toward the left during the upcoming year, thereby reducing the likelihood we will see any significant shift in this trend.

Courts Issued More Rulings In FLSA Collective Actions Than In Any Other Areas Of Law

In 2023, courts again issued more certification rulings in FLSA collective actions than in other types of cases. Plaintiffs historically have been able to obtain conditional certification of FLSA collective actions at a high rate, which surely has contributed to the number of filings in this area.

In 2023, courts considered more motions for certification in FLSA matters than in any other substantive area. Overall, courts issued 183 rulings. Of these, 165 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.

These numbers are lower than the numbers observed in 2022, during which courts issued 236 rulings. Of these, 219 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 219 rulings that courts issued on motions for conditional certification, 180 rulings favored plaintiffs, for a success rate of 82%. Such rate was in line with and slightly higher than the historic rate of success that plaintiffs have achieved with respect to such motions.

The decline in success rates in 2023 likely reflects the impact of courts in certain federal circuits more closely scrutinizing motions for conditional certification. Until recently, courts almost universally applied a two-step process to certification of FLSA collective actions.

At the first stage, courts applied a lenient burden such that they required a plaintiff to make only a “modest factual showing” that he or she was similarly situated to others, and plaintiffs often met such burden by submitting declarations from a limited number of potential collective action members.

At the second stage, courts conducted a more thorough examination of the evidence to determine whether in fact the plaintiff was similarly situated to those he or she sought to represent such that the matter should proceed to trial on a representative basis.

Recently, however, federal appellate courts in two circuits – the Fifth Circuit and Sixth Circuit — took a closer look at the so-called two-step process. In 2021, the Fifth Circuit in Swales v. KLLM Transport Services, LLC, 985 F.3d 430, 436 (5th Cir. 2021), rejected the two-step approach to evaluating collective action certification, holding instead that district courts must “rigorously scrutinize the realm of ‘similarly situated’ workers … at the outset of the case.”

This past year, in 2023, the Sixth Circuit joined the Fifth Circuit in jettisoning the traditional two-step approach.

In Clark, et al. v. A&L Homecare & Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023), the Sixth Circuit rejected the traditional two-step approach, but expressly declined to adopt the standard approved by the Fifth Circuit. Instead, the Sixth Circuit introduced a new standard that focuses on whether the plaintiff has demonstrated a “strong likelihood” that other employees he or she seeks to represent are “similarly situated” to the plaintiff.

As these new, stricter standards in the Fifth and Sixth Circuits take hold, we are likely to see success rates normalize as plaintiffs shift their case filings away from these two circuits toward jurisdictions with more lenient, more plaintiff-friendly standards for conditional certification.

Indeed, the success rate for plaintiffs in the Fifth Circuit declined by a noticeable amount in 2023, likely as a trickle-down effect of Swales.

In 2022, courts in the Fifth Circuit issued 7 rulings on motions for conditional certification, and plaintiffs prevailed in 5, or 71%. In 2023, courts in the Fifth Circuit issued 6 rulings on motion for conditional certification, and plaintiffs prevailed in 3, or 50%.

At the decertification stage, courts generally have conducted a closer examination of the evidence and, as a result, defendants historically have enjoyed an equal if not higher rate of success on these second-stage motions as compared to plaintiffs.

The results in 2023 were no exception.

Of the 18 rulings that courts issued on motions for decertification of collective actions, 8 rulings favored defendants, for a success rate of 44%. Such rate aligns with the success rate defendants enjoyed in 2022, and aligns with the historic rate of success that defendants have achieved at the decertification stage.

An analysis of these rulings demonstrates that a disproportionate number emanated from traditionally pro-plaintiff jurisdictions, including the judicial districts within the Second Circuit (27 decisions) and Ninth Circuit (44 decisions), which include New York and California, respectively.

Similar to recent years, however, the number of rulings emanating from the Sixth Circuit (22 decisions) proved nearly as high if not higher than the number of rulings in the traditional pro-plaintiff forums, a trend that, as mentioned above, is likely to reverse as we start to see the impact of Clark and plaintiffs begin shifting their filings toward other jurisdictions.

The following map illustrates these variations:

The numbers no doubt flow from the different standards and approaches that courts in different federal circuits take in evaluating motions for conditional certification and decertification and, in turn, the likelihood of plaintiffs’ success on such motions. If more courts join the Fifth and Sixth Circuits in abandoning the traditional two-step certification process, and thereby increase the time and expense of gaining a conditional certification order, it may lead to a reshuffling of the deck in terms of where plaintiffs file their cases and the types of claims they pursue.

Michigan Federal Court Sets Scope Of Discovery Relevant For FLSA Certification Motions In The Sixth Circuit

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

Duane Morris Takeaways: In Stewart v. Epitec, Inc., No. 2:22-CV-12857 (E.D. Mich. Jan. 9, 2024), Judge Stephen J. Murphy of the U.S. District Court for the Eastern District of Michigan ordered the parties in an FLSA misclassification lawsuit to commence discovery under the Sixth Circuit’s standard for determining notice to potential plaintiffs announced in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023).  As one of the first FLSA discovery rulings under the new Clark standard, the decision is required reading for companies defending wage & hour claims in courts within the Sixth Circuit.

Case Background

On November 23, 2022, the plaintiff in Stewart filed a Complaint against his former employer, Epitec, Inc., alleging willful violations of the FLSA on behalf of over 100 similarly situated individuals who worked as recruiters for the company. The plaintiff sought unpaid overtime wages for a three-year lookback period based on his key contentions that the company misclassified his position as a recruiter as exempt and that he regularly worked 45 to 50 hours per workweek, but was not paid for work beyond 40 hours in a workweek.

On April 18, 2023, the plaintiff filed a motion seeking conditional certification, expedited opt-in discovery, and notice to potential opt-in plaintiffs.  Before the company had the opportunity to oppose the motion, the Court stayed the case on April 25, 2023 in anticipation of the Sixth Circuit’s ruling in Clark.

On May 19, 2023, the Sixth Circuit published its decision in Clark, announcing a new test for facilitating notice under 29 U.S.C. § 216(b) of the FLSA.  In a watershed ruling, Clark instructs district courts to authorize notice to potential plaintiffs only after the named plaintiff demonstrates a “strong likelihood” that other similarly situated employees exist.  Under the prior test used in the Sixth Circuit, a plaintiff could obtain court-sanctioned notice to others by making only a “modest” factual showing that other employees are “similarly situated.”  Because notice to others who may join the lawsuit has the practical effect of increasing sharply the settlement pressure on the defendant, the new test shifts the leverage significantly in defendants’ favor in FLSA litigation.

In light of the Clark standard, the Judge in Stewart ordered the parties to submit a joint discovery plan.  In supplemental briefing filed in August 2023, the parties articulated their opposing views of the type and scope of discovery that should proceed under the Clark standard.

The Court’s Decision

The Judge in Stewart ordered discovery both on the issue of similarly-situated status and on the defendant’s need for information to test the merits of the named plaintiff’s claims. In so ordering, the Court emphasized that “balance is key” when it comes to the parties’ respective, and contemporaneous, needs for discovery in a post-Clark landscape.

On the issue of whether a “strong likelihood” exists that other similarly-situated employees exist, the Court ordered the plaintiff and the existing opt-in plaintiffs to produce communications among themselves regarding any of the matters at issue in the litigation, excluding any communications shielded by the attorney-client privilege or attorney work product doctrines.  As the Sixth Circuit instructed in Clark, whether the potential other plaintiffs are subject to individualized defenses is one of the factors district courts ought to consider in evaluating whether to sanction notice of the FLSA lawsuit. The Court agreed that the defendant was entitled to discovery of such communications because may be probative of individualized defenses that disfavor notification under Clark.

The Court rejected the plaintiff’s request for discovery of the list of putative collective action members The Court reasoned that the names and contact information of all recruiters within a three-year lookback period is precisely the type of information disclosure of which Clark cautioned is tantamount to “solicitation of claims” before the Court authorizes notice.

The Court ordered discovery for a three-year lookback period, consistent with the three-year statute of limitations for “willful” violations of the FLSA, over the defendant’s objection that the standard statute of limitations period of two years for FLSA claims should dictate the time frame of discovery.  The Court explained that the parties’ dispute over the existence of willful violations “exemplifies the need for broader discovery.”

The Court permitted the company to proceed with depositions of the named plaintiff and all existing opt-in plaintiffs but rejected the company’s request to depose potential opt-in plaintiffs.  The Court reasoned that depositions of individuals who had not yet filed consents to join the lawsuit were not necessary to determine similarly-situated status under Clark.  The Court left for another day the defendant’s request for leave to exceed the ten depositions permitted under the Federal Rules of Civil Procedure.

The Court resolved the parties’ dispute over the equitable tolling period in favor of the plaintiff’s request for a broad interpretation of tolling to preserve the ability of would-be plaintiffs to recover on their FLSA claims.  Noting that two of the three Sixth Circuit panel judges in Clark endorsed broad equitable tolling in FLSA collective actions, Judge Murphy tolled the limitations period from April 25, 2023 through the resolution of the plaintiff’s forthcoming motion for notice under Clark.

The Court ordered the parties to conduct discovery on the permitted topics within 90 days of the issuance of its January 9, 2024 order.  The Court set a date 120 days from the issuance of its order for the plaintiff to file a motion for notice to potential plaintiffs.

Implications For Employers

The Court’s ruling in Stewart is significant in that it is one of the first rulings to define the scope of pre-notification discovery under Clark.  The Court interpreted the Sixth Circuit’s ruling to give both sides in the litigation the right to discovery relevant to their respective positions on notice, and the right to do so simultaneously.  Likewise, the ruling is important in identifying topics, including contact information of putative class members, unnecessary to the notice determination under Clark and therefore, premature for discovery before notice is issued.  The opinion in Stewart has persuasive value to other district courts in Michigan, Ohio, Tennessee and Kentucky and may well influence the discovery landscape for litigants in the post-Clark world.

 

Nebraska Federal Court Imposes 3-Year Reporting Obligation On Employer After EEOC Verdict In Disability Action

By Gerald L. Maatman, Jr., Brittany M. Wunderlich, and Christian J. Palacios

Duane Morris Takeaways:  In EEOC v. Drivers Management, LLC et al., Case No. 8:18-CV-462 (D. Neb. Jan. 10, 2024), U.S. District Judge John M. Gerrard rejected the EEOC’s proposed injunctive relief — ordering the company to comply with the Americans with Disabilities Act (the “ADA”) — and instead ordered defendants to report to the EEOC all job applications it receives from deaf truck drivers and whether the applicants are hired, among other information, on a semi-annual basis over a three-year period.  This case illustrates how federal judges may use their discretion to fashion case-specific injunctive relief designed to prevent similar discrimination in the future.

Background

Victor Robinson, a deaf commercial truck driver, applied to work for Drivers Management, LLC and Werner Enterprises, Inc. (collectively, “Werner”) in January of 2016.  He was denied employment, despite having a commercial driver’s license and an exemption for his hearing disability from the Federal Motor Carrier Safety Administration (the “FMCSA”), the federal agency responsible for regulating and providing safety oversight to commercial motor vehicles.  The EEOC subsequently brought an enforcement lawsuit on the grounds that Werner discriminated against Robinson on the basis of his deafness.

The Jury Trial

Werner claimed that it rejected Robinson’s application for employment because it could not train inexperienced deaf drivers, like Robinson.  Despite the federal government’s approval and despite evidence that other trucking companies were able to train deaf drivers, Werner argued that Robinson, and other FMCSA hearing exemption holders, could not complete Werner’s training program, which required drivers with less than 6 months of experience to drive alongside a trainer on a real over-the-road trucking route, due to safety concerns.  Id. at 2.

In September 2023, the jury returned a verdict in favor of the EEOC after a trial. The jury rejected Werner’s position finding that Robison was qualified and could have performed the essential functions of the job, if provided with a reasonable accommodation.  Id. at 3.  The jury also determined that Werner acted with malice or reckless indifference towards Robinson’s right not to be discriminated against on the basis of his deafness, and awarded substantial damages intended to punish Werner for its misconduct.  Id.

The Court’s Order

In the Court’s Order, Judge Gerrard considered whether the EEOC’s requested injunctive relief was sufficient. In doing so, the Court concluded that the EEOC’s request for an order that the defendants to end their discriminatory practices, provide reasonable accommodations to workers, and train employees on the ADA, did little more than “order Werner to obey the law.”  Id. at 11.  Rather, the Court observed, “the scope of injunctive relief against continued discrimination should be designed to prevent similar misconduct, and must be related to the violation with which the defendants were originally charged.”  Id.  Accordingly, the Court imposed semi-annual recording and reporting requirements on Werner (and its subsidiaries), requiring that they keep records of every hearing-impaired applicant that applied for an over-the-road truck driving position, the date of the application, whether the applicant was hired, when the employment decision was communicated to the applicant, the basis for declining to hire the applicant, and whether the applicant remained employed with Werner for six months and, if not, the reason for the separation.  The reporting obligation was imposed for a term of three years, after which the Court would convene a hearing to determine whether Werner complied with the order, and whether the injunction should be modified, extended, or terminated.

Implications For Employers

As this decision illustrates, federal judges have a wide degree of discretion to modify the relief sought by the EEOC, specifically with respect to injunctive relief. If a judge does not believe that the requested injunctive relief effectively prevents future discriminatory conduct, that judge is free to require the defendant employer comply with additional requirements, up-to and including mandatory reporting obligations to the EEOC.

DMCAR Trend #2 – Privacy Class Actions Gained Momentum, Increasing In Number And Sophistication


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

Duane Morris Takeaway: Continuing with the top trends in class action litigation over the past year as we recognized in the Duane Morris Class Action Review – 2024, today we are discussing Trend #2. Trend # 2 focuses on class action litigation in the privacy space, which has generated a multitude of filings as it continues its reign as the hottest area of growth in terms of activity by the plaintiffs’ class action bar.

In today’s video blog, Duane Morris partner Jennifer Riley discusses the rise in privacy class actions under the Illinois Biometric Information Privacy Act (BIPA) in 2023, the impact of two seminal Illinois Supreme Court rulings on the application of the BIPA, and other privacy areas heating up in the class action arena.

Trend #2 – Privacy Class Actions Gained Momentum, Increasing In Number And Sophistication

1.    Illinois Biometric Information Privacy Act Claims

In 2023, the Illinois Biometric Privacy Act (BIPA) continued to fuel a swell of class action litigation. Its technical requirements, coupled with stiff statutory penalties and fee-shifting, provided a recipe for increased filings and hefty settlement demands from the plaintiffs’ class action bar.

Enacted in 2008, the BIPA regulates the collection, use, and handling of biometric identifiers and information by private entities. Subject to limited exceptions, the BIPA generally prohibits the collection or use of an individual’s biometric identifiers and biometric information without notice, written consent, and a publicly-available retention and destruction schedule.

In terms of lawsuit filings, for nearly a decade following enactment of the BIPA, activity under the statute was largely dormant.

Plaintiffs filed an average of approximately two total lawsuits filed per year from 2008 through 2016. Those numbers grew exponentially in 2017 and 2018 and then spiked as the plaintiffs’ class action bar filed a surge of class action lawsuits.

In 2022, companies saw more than five times as many class action lawsuit filings for alleged violations of the BIPA than they saw in 2018, and more than the number of class action lawsuit filings that they saw from 2008 through 2018 combined.

Filings continued to accelerate in 2023, prompted by two rulings from the Illinois Supreme Court that increased the opportunity for recovery of damages under the BIPA.

In 2023, the Illinois Supreme Court issued two seminal decisions that increased the opportunity for recovery of damages under the BIPA. On February 2, 2023, the Illinois Supreme Court issued its ruling in Tims v. Black Horse Carriers, 2023 IL 127801 (Feb. 2, 2023), and held that a five-year statute of limitations applies to claims under the BIPA. Perhaps even more significantly, on February 17, 2023, the Illinois Supreme Court issued its ruling in Cothron, et al. v. White Castle System, Inc., 2023 IL 1280004 (Feb. 17, 2023), and held that a claim accrues under the BIPA each time a company collects or discloses biometric information.

These rulings have far-reaching implications. Together, they have the potential to increase monetary damages in BIPA class actions in an exponential manner, especially in the employment context, where employees might scan in and out of work multiple times per day across more than 200 workdays days per year.

In the wake of these rulings, class action filings more than doubled. From January 1, 2023, to the ruling in Cothron, plaintiffs filed approximately 61 lawsuits in Illinois state and federal courts alleging violations of the BIPA.

By contrast, in the same period of time following the ruling, plaintiffs filed 150 lawsuits in Illinois state and federal courts, representing an increase of 71%.

Below is a chart outlining this litigation spike:

Throughout the remainder of 2023, lawsuit filings continued to grow in number and sophistication as they targeted more advanced and innovative technologies. Given the five-year statute of limitations, and the potential for enhanced monetary penalties, we anticipate that filings and settlement numbers in BIPA litigation will continue to expand.

2.    Other Sources Of Privacy Class Actions

Various provisions of state privacy, anti-surveillance, and wiretap statutes have had a similar impact, fueling creativity by the plaintiffs’ class action bar as it looks to apply many pre-existing laws to challenge the use of innovative and novel technologies that companies use to collect information about consumers and their online activities.

Over the past year, plaintiffs have filed a barrage of class action lawsuits under the federal Video Privacy Protection Act (VPPA). Congress originally passed the VPPA in 1988 to prevent the wrongful disclosure of video tape sale and rental records. Plaintiffs have filed lawsuits under the VPPA against companies that offer video content on their websites.

The VPPA prohibits a “video tape service provider” from knowingly disclosing personally identifiable information concerning any consumer of such provider.” 18 U.S.C. § 2710(b)(1). The statute defines a “video tape service provider” to include any person “engaged in business, or affecting interstate or foreign commerce, of rental, sale, or delivery of prerecorded video cassette tapes or similar audio-visual materials.” 18 U.S.C. § 2710(a)(4).

Some courts have construed “similar audio-visual materials” broadly, generally concluding that its definition encompasses streaming video delivered electronically. Plaintiffs allege that companies that maintain videos on their websites and deploy pixel tracking tools violate the VPPA because their websites track the videos that visitors watch and share the viewing data with third parties.

The VPPA provides for damages up to $2,500 per violation in addition to costs and attorneys’ fees for successful litigants, making it an attractive source of filings for the plaintiffs’ class action bar. Indeed, plaintiffs have initiated more than 137 class actions under the VPPA over the past year.

Similarly, state wiretapping and anti-surveillance laws are continuing to generate filings by enterprising plaintiffs’ lawyers. Plaintiffs have initiated class actions against companies that use third-party software to track user activity on their webpages, or to create and record transcripts of conversations conducted via chat features, based on the theory that such practices potentially violate electronic interception provisions of various state laws.

The plaintiffs’ bar grounded these claims in the electronic interception provisions of wiretap statutes like the California Invasion of Privacy Act, the Pennsylvania Wiretapping and Electronic Surveillance Act, and the Florida Security of Communications Act, among other laws, which generally prohibit the unauthorized interception of communications transmitted electronically.

The plaintiffs’ bar has targeted technologies that track a user’s interactions with the website (e.g., clicking, scrolling, swiping, hovering and typing) and create a recording of those interactions and inputs through session replay software.

It also has attacked coding tools that create and store transcripts of conversations with users in a website’s chat feature. Plaintiffs generally allege that recording users’ interactions with a website and sending that recording to a third party for analysis without their consent is an illegal invasion of their privacy. Over the past year, these lawsuits met mixed results.

During 2023, federal district courts in California ruled on the initial round of “chatbot” cases filed under the California Invasion of Privacy Act (CIPA) and several responded with skepticism. Courts granted motions to dismiss on various grounds finding, among other things, that the statutory provisions at issue do not apply to communications over the internet, see, e.g., Licea, et al. v. American Eagle Outfitters, Inc., 2023 WL 2469630, at *5-6 (C.D. Cal. Mar. 7, 2023); a party cannot “eavesdrop” on its own conversation, see id. at *7-8; Licea, et al. v. Cinmar, LLC, 2023 WL 2415592, at *7-8 (C.D. Cal. Mar. 7, 2023); or that allegations that a defendant used the code embedded in a chat program to “harvest valuable data” were too vague and conclusory to state a claim. See, e.g., Cody, et al. v. Boscov’s, Inc., 2023 WL 2338302, at *2 (C.D. Cal. Mar. 2, 2023).

Other courts denied motions to dismiss similar claims. See, e.g., Valenzuela, et al. v. Nationwide Mutual Insurance Co., 2023 WL 5266033, at *4-10 (C.D. Cal. Aug. 14, 2023); D’Angelo, et al. v. Penny OpCo, LLC, 2023 WL 7006793, at *2-4, *8-9 (S.D. Cal. Oct. 24, 2023).

These rulings contribute to a patchwork quilt of decisions in this space. Given the stakes, we do not anticipate that this initial round of decisions will spell the death knell for suits attacking session replay or chatbot suits, many of which remain in the pipeline before various courts. Instead, we anticipate that plaintiffs will respond with additional creativity as they attempt to plead around these potential issues and identify new technologies at which to target their claims.

DMCAR Trend # 1 – Class Action Settlement Numbers Continued To Spike At Unprecedented Levels


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

Duane Morris Takeaway: As authors and editors of our firm’s our Class Action Review, we identified ten (10) key trends in class action litigation over the past year. Trend # 1 focuses on the unprecedented number of massive class action settlements reached in the last 12 months. Aside from the Big Tobacco settlements nearly two decades ago, 2022 and 2023 have marked the most extensive set of billion-dollar class action settlements in the history of the American court system.

In today’s video blog, Duane Morris partner Jerry Maatman discusses how the aggregate monetary value of class action settlements continued to reach incredible highs in 2023, as plaintiffs’ lawyers and government enforcement agencies monetarized their claims into enormous settlement values. In 2023, the plaintiffs’ bar was successful in converting case filings into significant settlement numbers again. Tune in below to hear all about this or read the blog post blow for more information.

DMCAR Trend # 1 – Class Action Settlement Numbers Continued To Spike At Unprecedented Levels

In 2023, settlement numbers exceeded expectations for the second year in a row.

The cumulative value of the top ten settlements across all substantive areas of class action litigation hit near record highs, second only to the settlement numbers we observed in 2022.

When the numbers for 2022 and 2023 are combined, the totals signal that we have entered a new era of heightened risks and higher stakes in the valuation of class actions.

On an aggregate basis, across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.4 billion in settlements in 2023.

The largest 20 settlements during 2023 are included on the below chart:

Such numbers are second only to the value of class actions and government enforcement settlements in 2022, which topped $66 billion. Combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence.

In 2023, parties agreed to resolve 10 class actions for $1 billion or more. These settlements include the following:

In 2022, parties resolved 14 class actions for $1 billion or more in settlement dollars, making 24 billion-dollar settlements in two years. Reminiscent of the Big Tobacco settlements nearly two decades ago, 2022 and 2023 marked the most extensive set of billion-dollar class action settlements and transfer of wealth in the history of the American court system.

The plaintiffs’ class action bar scored rich settlements in 2023 in virtually every area of class action litigation. The following list shows the 10 most lucrative settlements across key areas of class action litigation:

$25.82 Billion – Products liability class actions and mass tort
$11.74 Billion – Antitrust class actions
$5.4 Billion – Securities fraud class actions
$3.29 Billion – Consumer fraud class actions
$1.32 Billion – Privacy class actions
$762.2 Million – Discrimination class actions
$742.5 Million – Wage & hour class and collective actions
$643.15 Million – Civil rights class actions
$580.5 Million – ERISA class actions
$515.75 Million – Data breach class actions
$263.58 Million – Government enforcement actions
$139.67 Million – Labor class actions
$103.45 Million – TCPA class actions
$100.15 Million – Fair Credit Reporting Act class actions

Many of the settlements in 2023 emanated outside of the products and pharmaceutical space, signaling a wider base and greater threat to businesses as settlements continue to redistribute wealth at a substantial rate. Furthermore, the settlements reached virtually all industries and areas of the country.

Particularly when viewed next to the settlement values observed in 2022, the settlement numbers in 2023 signal a new era of class action settlement values.

Corporations should expect such numbers to incentivize the plaintiffs’ class action bar to be equally if not more aggressive with their case filings and settlement positions in 2024.

It Is Here — The Duane Morris Class Action Review – 2024


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

Duane Morris Takeaways:  As we kick off 2024, we are pleased to announce the publication of the second annual edition of the Duane Morris Class Action Review. It is a one-of-its-kind publication analyzing class action trends, decisions, and settlements in all areas impacting corporations, including the substantive areas of antitrust, appeals, the Class Action Fairness Act, civil rights, consumer fraud, data breaches, discrimination, EEOC-Initiated and government enforcement litigation, the Employee Retirement Income Security Act of 1974, the Fair Credit Reporting Act, wage & hour class and collective actions, labor, privacy, procedural issues, product liability and mass torts, the Racketeer Influenced and Corrupt Organizations Act, securities fraud, state court class actions, the Telephone Consumer Protection Act, and the Worker Adjustment and Retraining Notification Act. The Review also highlights key rulings on attorneys’ fee awards in class actions, motions granting and denying sanctions in class actions, the top class action settlements across all areas of law, and primers on both the Illinois Biometric Information Privacy Act and the California Private Attorney General Act. Finally, the Review provides insight as to what companies and corporate counsel can expect to see in 2024.

This past year Employment Practices Liability Consultant Magazine (EPLiC) called the DMCAR “the Bible” on class action litigation and an essential desk reference for business executives, corporate counsel, and human resources professionals.” It said that “The Review must-have resource for in-depth analysis of class actions in general and workplace litigation in particular.” EPLiC continued that “The Duane Morris Class Action Review analyzes class action trends, decisions, and settlements in all areas impacting Corporate America,” and “provides insight as to what companies and corporate counsel can expect . . . in terms of filings by the plaintiffs’ class action bar.”

Click here to access our customized website featuring all the Review highlights, including the ten major trends across all types of class actions over the past year.

Order your free copy of the eBook here, and download the Review overview on the key Rule 23 decisions and top class action settlements here.

The 2024 Review analyzes rulings from all state and federal courts in 23 areas of law. It is designed as a reader-friendly research tool that is easily accessible in hard copy and e-Book formats. Class action rulings from throughout the year are analyzed and organized into 23 chapters and 6 appendices for ease of analysis and reference.

Executive Summary Of Key Class Action Trends Over The Past Year

Class action litigation presents one of the most significant risks to corporate defendants today. Procedural mechanisms like the one set forth in Rule 23 of the Federal Rules of Civil Procedure have the potential to expand a claim asserted on behalf of a single person into a claim asserted on behalf of a behemoth that includes every employee, customer, or user of a particular company, product, or service, over an extended period.

A class action allows one or more individuals to pursue claims on behalf of a defined and sometimes sprawling group of similarly situated individuals. When the plaintiffs’ bar aggregates the claims of many individuals in a single lawsuit, a class action can present substantial implications for a corporate defendant. As a result, class action litigation poses some of the most significant legal risks that companies face. By joining the claims of many individuals in a single lawsuit, class actions have the potential to increase potential damages exponentially. A negative ruling in a class action has the potential to reshape a defendant’s business model, to impact future cases, as well as to set guidelines for the entire industry. This can make the outcome of a class action lawsuit significant and potentially devastating for a company. Due to their potential implications, class actions are often costly to defend. Defending against a class action can be a time-consuming and resource-intensive process that diverts management attention from core business activities. Plaintiffs can attempt to leverage this reality to make class actions as expensive and disruptive as possible, in an effort to bring about litigation fatigue and to extract a sizable settlement.

Class actions are often complex legal proceedings with uncertain outcomes. The complexity can arise from managing multiple claims, myriad legal issues, and assorted class members, making it challenging for corporate defendants to predict and control the result. Due to these factors, corporate defendants should approach class actions from a broad vantage point with a thoughtful and multi-faceted defense strategy.

We developed this one-of-a-kind resource to provide a practical desk reference for corporate counsel faced with defending class action litigation. We have organized this year’s book into 23 chapters, with five appendices, each of which provides a rundown of the trends in a particular area of class action litigation, along with the key decisions from courts across the country that companies can use to shape their defense strategies.

We identified 10 key trends that characterize the past year. These trends involve: (i) the continued prevalence of massive class action settlements; (ii) expansive growth in privacy class action litigation; (iii) plaintiff-friendly class certification conversion rates; (iv) an expansive growth of data breach litigation; (v) decisions by the U.S. Supreme Court fueling class action litigation; (vi) transformative rulings on the PAGA front, bolstering its popularity among the plaintiffs’ class action bar; (vii) a resurgence of broader and more aggressive government enforcement activity; (viii) the emergence of generative artificial intelligence (AI) and its potential to reshape class action litigation; (ix) a new focus on ESG-related class action risks; and (x) the continued impact of the arbitration defense in the class action space.

Trend #1 – Class Action Settlement Numbers Continue To Spike At Unprecedented Levels

In 2023, settlement numbers exceeded expectations for the second year in a row. The cumulative value of the top ten settlements across all substantive areas of class action litigation hit near record highs, second only to the settlement numbers we observed in 2022. When the numbers for 2022 and 2023 are combined, the totals signal that we have entered a new era of heightened risks and higher stakes in the valuation of class actions.

On an aggregate basis, across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.3 billion in settlements in 2023. The largest 20 settlements during 2023 included those on the above chart.

Such numbers are second only to the value of class actions and government enforcement settlements in 2022, which topped $67 billion. Combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence.

Trend #2 – Privacy Class Actions Gained Momentum, Increasing In Number And Sophistication

In 2023, the Illinois Biometric Privacy Act (BIPA) continued to fuel a swell of class action litigation. Its technical requirements, coupled with stiff statutory penalties and fee-shifting, provided a recipe for increased filings and hefty settlement demands from the plaintiffs’ class action bar. In terms of lawsuit filings, for nearly a decade following enactment of the BIPA, activity under the statute was largely dormant. Plaintiffs filed an average of approximately two total lawsuits filed per year from 2008 through 2016. Those numbers grew exponentially in 2017 and 2018 and then spiked as the plaintiffs’ class action bar filed a surge of class action lawsuits.

In 2022, companies saw more than five times as many class action lawsuit filings for alleged violations of the BIPA than they saw in 2018, and more than the number of class action lawsuit filings that they saw from 2008 through 2018 combined. Filings continued to accelerate in 2023, prompted by two rulings from the Illinois Supreme Court that increased the opportunity for recovery of damages under the BIPA. In the wake of these rulings, class action filings more than doubled. From January 1, 2023, to the ruling in Cothron, plaintiffs filed approximately 61 lawsuits in Illinois state and federal courts alleging violations of the BIPA. By contrast, in the same period of time following the ruling, plaintiffs filed 150 lawsuits in Illinois state and federal courts, representing an increase of 71%.

Trend #3 – The Likelihood Of Class Certification In 2023 Remained Strong

In 2023, the plaintiffs’ class action bar succeeded in certifying class actions at a high rate. Across all major types of class actions, courts issued rulings on 451 motions to grant or to deny class certification in 2023. Of these, plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of 72%. The numbers show that, when compared to 2022, plaintiffs filed more motions for class certification in 2023, resulting in more certified class actions in 2023. Across all major types of class actions, courts issued rulings on 451 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, with an overall success rate of 72%. In 2022, by comparison, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.

 

Trend #4 – Data Breach Class Actions Continued Their Growth And Inconsistent Outcomes

The volume of data breach class actions exploded in 2023 and their unique challenges, including issues of standing and uninjured class members, continued to vex the courts, leading to inconsistent outcomes. Companies unfortunate enough to fall victim to data breaches in 2023 faced class actions at an increasing rate, including copy-cat and follow-on class actions across multiple jurisdictions, saddling companies with the significant costs of responding to the data breach as well as the costs of dealing with high-stakes class action lawsuits on multiple fronts.  Plaintiffs bringing data breach class actions, however, continued to face hurdles associated with their ability to demonstrate an injury from the alleged data breach and, if they survived dismissal, with convincing courts to grant class certification. Indeed, only 14% of the class certification decisions issued in data breach cases in 2023 came out in favor of plaintiffs.

Trend #5 – U.S. Supreme Court Rulings Continue To Impact The Class Action Landscape

As the ultimate referee of law, the U.S. Supreme Court traditionally has defined the playing field for class action litigation and, through its rulings, has impacted the class action landscape. The past year did not buck that trend. On June 29, 2023, the U.S. Supreme Court ruled in Students for Fair Admissions, Inc., et al. v. President & Fellows of Harvard College, 600 U.S. 181 (2023), that two colleges and universities that considered race as a factor in the admissions process violated the Equal Protection Clause of the U.S. Constitution and Title VI of the Civil Rights Act of 1964. The ruling is fueling controversy along with a wave of claims that is likely to expand.

The Supreme Court’s decision has also caused private sector employers to question whether the ruling impacts their diversity, equity, and inclusion (DEI) initiatives. While politicians moved quickly to stake out positions on the issue, the plaintiffs’ class action bar and advocacy groups moved to take advantage of the uncertainty to line up a deluge of claims.

Trend #6 – PAGA Filings Reached An All-Time High

In 2023, employers saw claims filed under the California Private Attorneys General Act (PAGA) reach an all-time high. According to data maintained by the California Department of Industrial Relations, the number of PAGA notices filed with the LWDA has increased exponentially over the past two decades, from 11 in 2006 to 7,780 in 2023. The PAGA created a scheme to “deputize” private citizens to sue their employers for penalties associated with violations of the California Labor Code on behalf of other “aggrieved employees,” as well as the State. A plaintiff may pursue claims on a representative basis under the PAGA, i.e., on behalf of other allegedly aggrieved employees, but need not satisfy the class action requirements of Rule 23. In other words, the PAGA provides the plaintiffs’ class action bar a mechanism to harness the risk and leverage of a representative proceeding without the threat of removal to federal court under the CAFA and without the burden of meeting the requirements for class certification.

Trend #7 – Government Enforcement Lawsuit Filings Reflected A Resurgence

In 2023, the EEOC’s litigation enforcement activity showed that its previous slowdown in filing activity is well in the rearview mirror, as the total number of lawsuits filed by the EEOC increased from 97 in 2022 to 144 in FY 2023. In accordance with tradition, the EEOC filed more lawsuits in September 2023, the last month of its fiscal year, than in any other month from October 2022 forward. This past year, the EEOC filed 67 lawsuits in September, up from 39 filed in September 2022.

Trend #8 – Generative AI Began Transforming Class Action Litigation

Generative AI hit mainstream in 2023 and quickly become one of the most talked-about and debated subjects among corporate legal counsel across the country, as numerous companies jumped to incorporate AI while attempting to manage its risks. In 2023, we saw the tip of the iceberg relative to the ways that generative AI is poised to transform class action litigation. As the COVID 19 pandemic brought video-conferencing tools into the mainstream, such tools enabled more litigants to conduct and to attend more hearings, more depositions, and more mediations in less time. While the debate continues as to their effectiveness, generative AI is poised to enable lawyers to far surpass those gains in efficiency, potentially enabling the plaintiffs’ class action bar to do “more with less” like never before, leading to more lawsuits that can be handled by fewer lawyers in less time and a potential surge of class actions on the horizon.

Less than a year into the generative AI movement, we have seen the technology influence various aspects of the legal process, including by assisting legal professionals in analyzing vast amounts of data; automating the review of documents, contracts, and communications; increasing the speed and potentially enhancing the accuracy of e-discovery; and automating and enhancing the dissemination of information in the class action settlement administration process.

Trend #9 – ESG Class Action Litigation Hit Its Stride

During the past year, the label “ESG” became “mainstream,” and discussion of its impact became a recurring topic of conversation in boardrooms across the country. ESG refers to broadly to “environmental, social, and governance,” which many companies have embraced as part of their business plans and corporate missions. ESG was not immune to lawsuits, and we saw a steady influx of class action litigation in two particular ESI spheres – (i) product advertising and (ii) employment and DEI-related lawsuits.

Most often, plaintiffs’ class action attorneys file greenwashing lawsuits as class actions. These lawsuits largely focus on claims that defendants marketed products as “environmentally responsible,” “sustainably sourced,” or “humanely raised,” arguing that such misleading claims induce purchasers to pay a premium for “greener” products.

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

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

Statistically, corporate defendants fared well in asserting the defense. Across various areas of class action litigation, the defense won approximately 66% of motions to compel arbitration (approximately 126 motions across 190 cases) over the past year. Such numbers are similar to the numbers we saw in 2022, where defendants succeeded on 67% of motions to compel arbitration (roughly 64 motions granted in 96 cases).

Class action litigation is a staple of the American judicial system. The volume of class action filings has increased each year for the past decade, and 2024 is likely to follow that trend. In this environment, corporate programs designed to ensure compliance with existing laws and strategies to mitigate class action litigation risks are corporate imperatives.

The plaintiffs’ bar is nothing if not innovative and resourceful. Given the massive class action settlement figures in 2022 and 2023 (a combined total of $113 billion), coupled with the ever-developing law, corporations can expect more lawsuits, expansive class theories, and an equally if not more aggressive plaintiffs’ bar in 2024. These conditions necessitate planning, preparation, and decision-making to position corporations to withstand and defend class action exposures.

We hope the Duane Morris Class Action Review provides practical insights into complex potential strategies relevant to all aspects of class action litigation and other claims that can cost billions of dollars and require changed business practices in order to resolve.

Duane Morris Class Action Review – 2024 Overview Video

Duane Morris Takeaways:  Coming today is the Duane Morris Class Action Review – 2024! Hot off the presses, our Duane Morris Class Action Review outlines how 2023 was a year of history making developments in the class action world. The Review is the preeminent resource for discussing the trends of 2023 and what to expect in 2024. Below is a video exploring the origin of the Review, presented by Jerry Maatman and Jennifer Riley, partners at Duane Morris, Co-Chairs of the Firm’s class action defense group, and the Review editors.

Check it out below:

Fifth Circuit Refuses To Revive EEOC COVID-Era Mask Bias Suit

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios

Duane Morris Takeaways:  In EEOC v. U.S. Drug Mart, Inc., No. 23-50075, 2024 WL 64766, at *1 (5th Cir. Jan 5, 2024), the Fifth Circuit refused to resurrect an EEOC lawsuit alleging that a Texas pharmacy created a hostile work environment under the Americans with Disabilities Act (the “ADA”) by reprimanding an asthmatic employee for wearing a mask during the beginning of the COVID-19 pandemic.  This case illustrates the Fifth Circuit’s high evidentiary standards associated with establishing the existence of a hostile work environment, especially with regards to demonstrating that the conduct was “sufficiently severe or pervasive to alter the conditions of the victim’s employment.”  Id.

Background

The charging party, David Calzada, was a pharmacy technician at U.S. Drug Mart (d/b/a Fabens Pharmacy).  Id.  Mr. Calzada suffered from asthma, and elected to wear a face mask to work on March 26, 2020. Id.  However, after arrival, the store manager informed Mr. Calzada that mask-wearing violated the pharmacy’s policy, and instead of removing his mask, Mr. Calzada left for the day.  Id.  A few days later, when Mr. Calzada returned to work, his supervisors informed him that the pharmacy’s polices were updated and he was now permitted to wear a mask and gloves at work.  Id.  However, during the meeting, Mr. Calzada was repeatedly belittled by the head pharmacist and at one point called a “disrespectful stupid little kid.”  Id.  Mr. Calzada quit the same day. Id.

Mr. Calzada subsequently filed a charge of discrimination with the EEOC.  Id.  The EEOC brought suit against U.S. Drug Mart on his behalf, alleging the Texas pharmacy created a hostile work environment and constructively discharged Calzada based on the conduct of the store manager and head pharmacist.  Id.  The district court granted summary judgment in favor of U.S. Drug Mart in October of 2022. It determined that “an isolated instance of verbal harassment is generally not sufficient to support a hostile work environment claim.” EEOC v. United States Drug Mart, Inc., No. EP-21-CV-00232, 2022 WL 18539781, at *8 (W.D.Tex. 2022). The EEOC appealed on January 31, 2023.

The Fifth Circuit’s Ruling

The Fifth Circuit, in affirming the district court’s summary judgment decision, held that the EEOC was unable to establish a prima facie case for a hostile work environment claim because it was unable to prove that the head pharmacist’s harsh words were “sufficiently severe or pervasive to alter the conditions of the victim’s employment.”  EEOC, 2024 WL 64766, at *2.  The Fifth Circuit observed that although the head pharmacist’s behavior was “certainly brusque,” it fell well short of the Fifth Circuit’s fairly high standard for “severe” conduct.  Id.  The Fifth Circuit noted that the EEOC’s constructive discharge claim failed for the same reason, because proving constructive discharge required an even “greater degree of harassment than that required by a hostile work environment claim.”  Id.  Accordingly, the Fifth Circuit affirmed the district court’s grant of summary judgment in favor of the employer.

Implications For Employers

The COVID-19 pandemic was accompanied by a variety of novel legal theories and questions of first impression. One thing that remains the same, however, is the high evidentiary standard that plaintiffs need to satisfy to prove their hostile work environment claims, specifically with respect to the element of “severe and pervasive” conduct.

Texas Federal Court Greenlights EEOC Lawsuit Against Three Companies As Parts Of An Integrated Enterprise

By Gerald L. Maatman, Jr., Emilee N. Crowther, and Christian J. Palacios

Duane Morris Takeaways: In EEOC v. 1901 South Lamar, LLC, No. 1:23-CV-539, 2024 WL 41202, at *1 (W.D. Tex. Jan. 3, 2024), U.S. District Judge Robert Pitman adopted U.S. Magistrate Judge Susan Hightower’s recommendation to deny Defendants’ three Motions to Dismiss an EEOC pregnancy discrimination lawsuit. As Magistrate Judge Hightower’s recommendation illustrates, even smaller entities that would ordinarily not satisfy Title VII’s numerosity requirement cannot escape the EEOC’s grasp if they collectively operate as a single, integrated enterprise. 

Case Background

Defendants 1901 South Lamar, LLC d/b/a Corner Bar (“Corner Bar”), Revelry Kitchen & Bar, LLC (“RK&B”), and Revelry on the Boulevard, LLC (“ROTB”) (collectively, “Defendants”) hired Kellie Connolly (“Connolly”) in September 2020 to work at the Corner Bar in Austin, Texas.  Id. at *1. On January 31, 2021, Connolly informed the Defendants she was pregnant.  Id.  Two months later, after Connolly became visibly pregnant, the Defendants allegedly reduced her work hours.  Id.  On June 25, 2021, Connolly’s manager terminated her employment, stating that “she was becoming ‘too much of a liability’” and that they would part ways “until after the baby.”  Id.

The EEOC filed suit against the Defendants alleging they discriminated against Connolly on the basis of her pregnancy in violation of Title VII.  Id. In seeking to dismiss the lawsuit, the Defendants argued: (i) Corner Bar was not an “employer” under Title VII because it employed fewer than 15 employees during the relevant time period, and (ii) the Defendants were not an integrated single employer enterprise under Title VII.  Id. at *2.

The Court’s Decision

Magistrate Judge Hightower was unpersuaded by the Defendant’s arguments. As a preliminary matter, Magistrate Judge Hightower held that Title VII’s numerosity requirement was not jurisdictional, and could therefore not serve to support Defendant’s Motion to Dismiss for lack of subject- matter jurisdiction.

The Magistrate Judge then applied a four-factor test to determine whether these separate entities were a “single, integrated enterprise” under Title VII and concluded that the factors weighed in favor of the EEOC.  In particular, the Court found the following facts supported the EEOC’s “integrated business enterprise” allegations: (i) Defendants all shared bartending staff and inventory, (ii) utilized a single Director of Operations to handle all human-resources related services, (iii) jointly marketed their businesses, and (iv) utilized a disciplinary form that bore the logo of each of the Defendants.  Id. at *3.  Accordingly, the Magistrate Judge found that these facts could support a finding of centralized control of labor relations and recommended the District Court deny Defendants’ Motion to Dismiss. Id. at *4.

The Defendants challenged the order by way of Rule 72 objections. On January 3, 2024, District Court Judge Robert Pitman rejected the Rule 72 objections, and accepted and adopted the Magistrate Judge’s report and recommendation.

Implications For Companies

As the ruling in EEOC v. 1901 South Lamar, LLC, illustrates, even employers with fewer than 15 employees that would ordinarily be exempt from Title VII’s requirements may be sued by the EEOC, provided they have sufficiently integrated affiliates that would collectively put them over Title VII’s numerosity threshold.

New York Federal Court Denies Class Certification To Chemical Purchasers In Price-Fixing Antitrust Case

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

Duane Morris Takeaways:  On December 28, 2023, Judge Elizabeth A. Wolford of the U.S. District Court for the Western District of New York denied a motion by Plaintiffs – purchasers of caustic soda – for class certification under Rule 23(b)(3) in Miami Products & Chemical Co., et al., v. Olin Corp., et al., No. 1:19-CV-385 (W.D.N.Y. Dec. 28, 2023). Judge Wolford refused to certify the putative class of caustic soda purchasers because individual issues predominated over questions common to the class and because the proposed class was not objectively ascertainable. As one of the final class certification rulings of the year, the decision is instructive reading for corporate defendants facing class-wide claims of alleged price-fixing.

Case Background

Plaintiffs alleged that they purchased caustic soda, a chemical co-produced with chlorine that is used in a variety of industries, from Defendants between October 1, 2015 and December 31, 2018. Defendants are the five largest producers of caustic soda sold in the United States. Plaintiffs asserted that Defendants unlawfully conspired to raise prices of caustic soda. Specifically, Plaintiffs claimed that Defendants violated antitrust laws by engaging in parallel conduct of announcing and implementing over a dozen price increases during the class period that resulted in prices of caustic soda rising by nearly 10% more than prices would have otherwise existed absent the alleged cartel.

The Court’s Order Denying Class Certification

Plaintiffs moved for class certification under Rule 23(b)(3). Defendants mostly focused their opposition on grounds that the Plaintiffs did not adequately represent the proposed class, that the claims were not typical of the proposed class, and that individual issues would predominate. Plaintiffs’ proposed class excluded purchases of caustic soda during the class period pursuant to contracts because the alleged anticompetitive price increases would not have impacted the contract prices.

The Court issued a 51-page ruling in denying Plaintiffs’ motion. To determine whether there has been class-wide injury, the Court noted that there must to be a reliable methodology for whether particular caustic soda purchases should be included or excluded from the class. The Court concluded that the methodology of Plaintiffs’ expert could not accurately determine whether a particular purchase fell within the class or not. The Court also opined that Plaintiffs could not establish an alternative common proof of class-wide impact because of the complexities of determining the prices paid for caustic soda during the class period; therefore, individual questions would predominate over common questions.

The Court also concluded that three of the proposed class members did not use the same price negotiation strategy as Plaintiffs; therefore, the Court held that Plaintiffs failed to demonstrate typicality. Finally, the Court determined that Plaintiffs failed to meet the ascertainability requirement because Plaintiffs failed to adequately define the contract purchases that were to be excluded from the proposed class.

Implications Of The Ruling

The Court’s ruling is important for antitrust class action defendants accused of price-fixing. The decision highlights the difficulties of earning class certification in antitrust cases where putative class members may not have always paid supracompetitive prices, in particular in markets characterized by complex pricing methodologies.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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