Class Action Defense

September 26, 2026September 26, 2026 by Gerald L. Maatman, Jr.

Michigan Federal Court Drives Back Auto Manufacturing Employees’ Collective Action Efforts

By Gerald L. Maatman, Jr., Shannon Noelle, and Olga A. Romadin

Duane Morris Takeaways: In Glidwell v. Autoneum N. Am., Inc., Case No. 2:24-CV-12805, 2026 WL 2621157 (E.D. Mich. Sept. 4, 2026), in a decision issued on September 4, 2026, Judge Robert J. White of the U.S. District Court for the Eastern District of Michigan denied Plaintiffs’ motion for court-facilitated notice to be distributed in a collective action alleging unpaid pre-shift and post-shift work in violation of the FLSA. Judge White found that Plaintiffs’ evidentiary basis — namely, 6 declarations, including from one of the named plaintiffs and 5 from opt-ins — were insufficient to demonstrate “a strong likelihood” that thousands of employees across four states were similarly situated.

Case Background

Plaintiffs Roger Glidwell, Jr. and Amy Kelly brought an action against Autoneum North America, Inc. (“Autoneum”), an automobile parts manufacturer, asserting state law and FLSA claims alleging that the Company violated applicable wage and hour laws by failing to compensate employees across six plants in four different states for pre-shift and post-shift work. Plaintiffs claimed that employees were required to clock in using Autoneum’s timekeeping system and to then do pre-shift work, including donning personal protective equipment (“PPE”) and attend meetings, and to do post-shift work by waiting for the next round of workers to start their shifts before clocking out. Id. 1031-33, 1040.Plaintiffs alleged that “Autoneum would round, edit and otherwise manipulate the Plaintiffs’ start and stop times despite using a timekeeping system that records exactly when employees punch in and out each day.” Id. at 1033. The Court dismissed Plaintiffs’ state law claims and only the FLSA claim remained at the time the Court was considering Plaintiffs’ Motion for Court-Facilitated Notice to Potential Opt-In Plaintiffs. Id.

The District Court’s Ruling

Judge White denied Plaintiffs’ motion finding that the 6 declarations submitted fell short of meeting the “strong likelihood” evidentiary standard for demonstrating that potential opt-ins are similarly situated and, finding further, that to approve notice — to thousands of employees across six plants in four different states — without such an evidentiary showing would be unfair. Judge White offered three bases for his decision to deny Plaintiffs’ motion.

First, the Court found that Plaintiffs did not meet their required evidentiary showing for court-approval of the notice because the 6 declarations (one from named Plaintiff Kelly and the rest from 5 opt-ins) did not rebut assertions made in the Complaint and in the Company’s opposition demonstrating a lack of uniformity in policies amongst the plants regarding time recording and overtime pay and as to collective bargaining agreement (“CBA”) and non-CBA facilities subject to different grievance procedures. Though the Court agreed with Plaintiffs that declarations alone could potentially carry Plaintiffs’ burden, in the present case, it determined that the substance of the declarations could not overcome assertions in the Complaint and opposition briefing indicating that each plant used a different handbook or set calculation of work hours based on a CBA. The Court noted that the named Plaintiffs “offered little evidence to rebut that each facility had its own system for calculating time worked” and, as such, there was no “strong likelihood that the underpayment was attributable to a companywide policy.” Id. at 1038. Because of the evidence showing that each plant had different handbooks and work hour calculations and indicating that some were governed by CBAs while others were not, the Court also found that the Plaintiffs were subject to differing individualized defenses as well. Id. In sum, Plaintiffs’ declarations could not overcome other evidence in the record showing differences amongst employees at the plants proposed to make-up the collective action at issue.

Second, turning to the issue of fairness with respect to distribution of the notice, and citing Clark v. A&L Homecare and Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023), for the principle that sending notice can easily expand the “ranks” of a collective action “a hundredfold” and “forc[e] a defendant to settle,” the Court concluded that approving dissemination of the notice also would be unfair on such a sparse evidentiary showing. Id. at 1040. The Court observed that “[h]ere, there are thousands of employees across six plants in four different states that would receive notice” which could “amount[] to solicitation of those employees to bring suits of their own” if such employees are not eligible to join the lawsuit. Id. From that observation, the Court concluded that, given the size and scope of the potential collective and the “the impact notice might have on the ranks of th[e] collective action,” further evidence” was needed “to show that potential opt-ins are similarly situated.” Id.

Third, and finally, the Court found that not only was named Plaintiffs’ evidence insufficient and sparse, but also it had notable shortcomings. Id. at 1041. Two of the declarants had ended their employment over three years before the complaint was filed, putting their claims outside the statute of limitations period, and rendering their declarations irrelevant to the action at hand. Id. Further, one of the declarants was an opt-in plaintiff in a different FLSA action based on similar claims against the Company as to its Oregon, Ohio factory and, therefore, the declarant could not participate in the action rendering her declaration irrelevant as well. Id. at 1041-42.In light of these additional deficiencies, the Court noted that it “only has four declarations across the six identified plants to rely on” which “further weaken[ed]” Plaintiffs’ position. Id. at 1042.

Implications for Companies

In defending FLSA collective actions, Companies should prioritize identifying evidence of differences amongst its locations or departments demonstrating different wage and hour computations or grievance processes early and often throughout the lifespan of the litigation. Though the conditional certification and notice authorization stages of court review are thought to be more lenient and preliminary, the Glidwell decision shows that the evidentiary showing is not a cursory one, at least in the Sixth Circuit, and provides fertile ground for employers to make an evidentiary showing of their own to take putative plaintiffs to task.

September 25, 2026September 25, 2026 by Class Action Defense

The Class Action Weekly Wire – Episode 166: Job Applicants Seek Class Certification in Mobley v. Workday AI Bias Suit

Duane Morris Takeaway: This week’s episode features Duane Morris partner Jerry Maatman, special counsel Adam Brown, and associate Elizabeth Underwood with their analysis of a significant development in a landmark class action centered on algorithmic discrimination in the employment context.

Check out today’s episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, and YouTube.

Episode Transcript

Jerry Maatman: Hello, everyone, and thank you for being here again today for the next episode of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are my colleagues, Adam Brown and Elizabeth Underwood. Thanks so much for being on our podcast today.

Adam Brown: Great to be here, Jerry.

Elizabeth Underwood: Thanks for having me, Jerry.

Jerry: Today, we’re discussing one of the most closely watched, AI-related employment lawsuits in the United States, a case called Mobley v. Workday. The plaintiffs recently filed a sweeping motion for class certification, asking a federal court in the Northern District of California to allow their claims to proceed on a class-wide basis involving potentially thousands, if not millions, of job applicants who were screened by Workday’s AI-powered recruiting tools. The certification gives us an early preview of the plaintiffs’ case theory and how they’re trying to challenge AI-driven hiring systems on a class-wide basis. Adam, can you give us an overview of the plaintiffs’ motion?

Adam: Sure, thanks, Jerry. The core of this case is an allegation by the plaintiffs that Workday’s recruiting and applicant screening tools disproportionately disadvantage applicants based on protected characteristics, which include race, sex, age, and disability. What they contend is that Workday’s AI products, such as HiredScore Spotlight, Fetch, and Candidate Skills Match, rely on historical hiring data and apply common screening logic across employers, which they say results in systemic disparities. What is important to note here is that the plaintiffs are pursuing disparate impact theories under Title VII, the ADA, and California’s Fair Employment and Housing Act. And what that means is that they don’t necessarily need to prove intentional discrimination, and instead, they’re attempting to show that the tools allegedly produce statistically significant adverse outcomes for protected groups.

Jerry: Well, that’s obviously a very critical decision. President Trump had issued an executive order last year outlawing the use of the disparate impact theory, at least insofar as EEOC actions, and here’s an example where the private plaintiffs’ bar is using that theory to forge ahead on their motion. This isn’t a case, then, challenging individual recruiter-made decisions. Instead, it’s that the technology itself may be generating discriminatory outcomes on a huge scale. That’s what makes this litigation, obviously, so significant for employers and technology providers. Why is this class certification motion noteworthy in and of itself?

Elizabeth: So, the certification motion may ultimately be the most important phase of the case. The plaintiffs are arguing that this dispute presents common questions capable of being resolved in one stroke, which is the language courts often use when evaluating Rule 23 commonality requirements. Their main argument is that Workday implemented the same AI-driven screening architecture across its customer base, so whether those tools produce desperate outcomes should be answered once for everyone subjected to the technology. The proposed class includes applicants who were screened, ranked, scored, shortlisted, or rejected through various Workday AI tools. The plaintiffs also proposed separate subclasses based on race, gender, age, and disability.

Jerry: It’s a very interesting spin in terms of their case architecture and their theories. In other words, the plaintiffs are attempting to move the discussion away from individual hiring decisions and focus it on the design and the operation of the AI systems themselves in an attempt to convince the court that the algorithms work uniformly across the board against employees or applicants in favor of employers. Adam, one aspect of the litigation that’s getting a lot of attention is the statistical evidence cited in the motion. What are the plaintiffs relying on in this situation?

Adam: Yeah, the motion is jam-packed with statistical arguments. The plaintiffs rely very heavily on expert analyses that they contend show significant disparities in rejection and grading outcomes. According to the motion, Black applicants were rejected at rates showing disparities exceeding 18 standard deviations from expected outcomes. Female applicants showed disparities exceeding 15 standard deviations, and Black female applicants allegedly experienced even larger disparities. The plaintiffs also point to alleged patterns in the timing of the rejections. They argue that many applicants receive rejections very quickly after applying, often during evenings, overnight hours, or weekends, and the motion contends that these timing patterns suggest automated decision-making rather than individualized human review.

Jerry: Seems like those allegations in this case theory ties directly into the broader debate surrounding AI in the employment context. The concern is simply not whether a system can make decisions faster. Actually, the concern is whether this automated process is replicating historical patterns in a way that creates headwinds and measurable disparities against protected category groups. Elizabeth, let’s talk about the other side of the “v.” What is Workday’s expected primary responses to this motion likely to be?

Elizabeth: Well, Workday has already previewed much of that argument publicly. The company says the plaintiffs are improperly lumping together different products and different hiring situations. Workday’s position is that applicant outcomes depend on numerous individualized factors, including qualifications, job requirements, employers, industries, locations, and the decisions made by individual customers. Class certification becomes much harder if the court accepts that framework. If every hiring decision requires examining a unique combination of employer preferences and applicant qualifications, common issues may no longer predominate.

Jerry: As we see it happen so often in class-wide litigation, there are competing narratives then underscoring both the motion for class certification and the opposition. Plaintiffs will say, “There’s one AI engine, there’s one common process, and there’s one common question.” I expect Workday is going to argue that there are thousands of employers, millions of applications, and countless individual circumstances, the gist of which is something that doesn’t create a class-wide common question. Whichever narrative the court finds persuasive could determine whether the class proceeds on a class-wide basis or as a collection of smaller individual claims. So, stepping back from that, Adam, what should employers be paying attention to in the coming months with respect to this briefing and the ultimate decision by the court?

Adam: This case is really important to keep an eye on, because it ultimately could be a roadmap for future AI litigation. The theory the plaintiffs are putting forward here is designed to reach beyond a single software platform. They’re effectively arguing that an AI developer can be challenged based on the way its algorithm operates across many employers using a common system ad if courts accept that theory, plaintiff’s lawyers may focus increasingly on centralized AI products rather than individual employers. That could significantly expand the scope of potential AI-related employment litigation.

Elizabeth: And I think another takeaway is the growing emphasis on bias audits and validation studies. One theme throughout the motion is whether Workday adequately tested its systems for disparate impact and whether those efforts were sufficient. Much of the future litigation landscape may focus not just on AI outputs, but also on the governance processes surrounding those systems.

Jerry: These are great points, and the legal conversation seems to be increasingly shifting from “Do you use AI?” to “How do you monitor it, how do you validate it, how do you document those efforts to mitigate one’s risks?” Well, as we wrap up, this remains one of the preeminent and consequential AI employment-related cases in the country, and the court’s upcoming ruling on class certification could have implications well beyond just this litigation. As Adam had indicated, it may well define how future plaintiffs challenge AI -driven employment systems and how courts evaluate class certification in this space.

So, Adam and Elizabeth, thanks so much for joining us today and providing your thought leadership and your insights. And thank you to our listeners for tuning in for another episode of the Class Action Weekly Wire. We’ll certainly keep you apprised of all developments in this litigation.

Elizabeth: Thanks for having me, Jerry, and thank you listeners.

Adam: Thanks, appreciate everyone listening.

September 23, 2026September 23, 2026 by Gerald L. Maatman, Jr.

California Federal Court Denies Class Certification In Adtech Case Due To Lack Of Article III Standing

By Gerald L. Maatman, Jr., Justin R. Donoho, and Hayley Ryan

Duane Morris Takeaways: On September 21, 2026, in Smith, et al. v. Rack Room Shoes, Inc., No. 24-CV-6709 (N.D. Cal. Sept. 21, 2026), Judge Rita F. Lin of the U.S. District Court for the Northern District of California denied class certification in a case brought by consumers against an online shoe store company alleging that the company’s use of website advertising technology (“adtech”) violated the California Invasion of Privacy Act (“CIPA”) and Electronic Communications Privacy Act (“ECPA”). The ruling is significant as it shows that before any class can be certified in the hundreds of adtech class actions filed in federal courts across the nation alleging that adtech violates privacy laws, plaintiffs not only bear the burden to establish, by the preponderance of the evidence, that they have suffered an Article III injury, but also cannot meet this burden by showing merely that they visited the defendant’s website at a time when adtech was installed on the website.

Background

This case is one of a legion of class actions that plaintiffs have filed nationwide alleging that third-party technology captured plaintiffs’ information and used it to facilitate targeted advertising.

This software, often called advertising technologies or “adtech,” is a common feature of millions of consumer products and websites in operation today. In adtech class actions, the key issue is often a claim brought under a the CIPA, the ECPA, or a variety of other statutes providing for statutory damages regardless of whether any actual injury occurred, because plaintiffs often seek millions (and sometimes even billions) of dollars, even from midsize companies, on the theory that hundreds of thousands of consumers or website visitors, times $5,000 per claimant in statutory damages under the CIPA and $10,000 per claimant in statutory damages under the ECPA, for example, equals a huge amount of damages. Plaintiffs have filed the bulk of these types of lawsuits to date against healthcare providers, but they have filed suits against companies that span nearly every industry including retailers, consumer products, universities, and the adtech companies themselves. Several of these cases have resulted in multimillion-dollar settlements, several have been dismissed, and the vast majority remain undecided.

In Smith, the plaintiffs brought suit against Rack Room Shoes, Inc., an online shoe store company, alleging that in 2024, during their online web visits to purchase shoes from the company, the company had embedded on its website adtech supplied by Meta and other adtech companies that covertly intercepted the plaintiffs’ identities and interactions with the website, including the items the plaintiffs viewed, added to the their cart, and purchased, in alleged violation of the CIPA and the ECPA.

The company answered the complaint, and the parties engaged in discovery, including the depositions of the plaintiffs and plaintiffs’ subpoenas to the adtech companies.

Based on this discovery, the record reflected that in 2021 to 2023, the Meta pixel installed on the company’s website captured activities from devices and browsers that were signed into the plaintiffs’ accounts. However, the plaintiffs provided no evidence that these 2021-2023 incidents involved their own web activities as opposed to activities of their family members using the same devices and browsers, that Meta captured any activity from the plaintiffs’ devices and browsers during their own sole 2024 visits, or that the other adtech installed on the company’s website captured any activities at all.

The plaintiffs moved for class certification, arguing that they had standing to bring their claims and that they satisfied Rule 23.

The Court’s Decision

The Court disagreed that the plaintiffs established standing and denied class certification on that basis without addressing or needing to address any of the parties’ arguments under Rule 23.

In their motion for class certification, the plaintiffs proffered two theories of injury in support of their argument that they had standing to bring their claims: one based on the actual interception of their information, and one based on the attempt to intercept their information. (Slip Op. at 5.)

On the plaintiffs’ interception injury theory, the Court found no evidence that the Meta pixel embedded on the company’s website collected any data from the plaintiffs’ 2024 website visits, and no evidence that the activity that was recorded by Meta 2021-2023 was the plaintiffs’ own browsing activity. Further, the Court rejected the plaintiffs’ argument that the company’s general use of the Meta pixel during 2024 was circumstantial evidence of actual tracking. As the Court explained, citing the company’s expert testimony, the ability of adtech to collect and transmit data in a manner that can be linked to the website user “is impacted by many factors, including the browser being used, whether the browser and device are signed in to a social media account, and what cookie blocking features are enabled.” (Id. at 7.) In sum, the Court found that plaintiffs failed to present evidence from which a reasonable jury could find that any adtech installed on the company’s website collected any data attributable to the plaintiffs.

On the plaintiffs’ attempt injury theory, the Court found that the mere presence of active adtech on a company’s website does not bear the requisite close relationship to the type of harm traditionally at issue in intrusion upon seclusion and which type of harm the plaintiffs argued was the historical analog to the type of injury they suffered and thus sufficient to confer Article III standing. On this point, the Court’s opinion turned on its finding that the plaintiffs presented no evidence that the adtech on the company’s website attempted to collect any “embarrassing, invasive, or otherwise private information.” (Id. at 8.) Further the Court found that the plaintiffs had no reasonable expectation of privacy in their web-browsing data due to the company’s privacy policy because the plaintiffs did not read it and the policy also did not create an expectation of privacy from adtech transmissions, and that even if plaintiffs had had a reasonable expectation of privacy, the plaintiffs failed to show that the mere presence of adtech was highly offensive. (Id. at 9.) In short, the Court held that “[t]he mere presence of active tracking software … on a website involving objectively non-sensitive information” does not bear a close relationship to the type of harm traditionally at issue in intrusion upon seclusion and, therefore, was insufficient to confer Article III standing.

Implications For Companies

Smith provides powerful precedent for any company opposing adtech class action claims where plaintiffs lack evidence from which a reasonable jury could find that any adtech installed on the company’s website actually collected any data attributable to the plaintiffs, by showing that any number of issues could have prevented such collection, such as the browser being used, whether the browser and device are signed in to a social media account, and what cookie blocking features are enabled.

Of course, Smith is just one tool in a defendant’s kit for defeating class certification in adtech cases. Another is that even when named plaintiffs can establish that adtech collected data attributable to themselves (unlike in Smith), the same factors identified in Smith — browser type, social media account login status, cookie blocking features — are individualized issues that prevent named plaintiffs from establishing the defendant’s liability to alleged class members under Rule 23, as we blogged about here.

September 23, 2026September 23, 2026 by Gerald L. Maatman, Jr.

“Farm A Versus Farm B”: California Federal Court Rejects Class Certification Where Meal Period Claims Require Individualized Inquiries

By: Gerald L. Maatman, Jr, Daniel D. Spencer, Jamar D. Davis, and Kenny T. Tran

Duane Morris Takeaways: On September 18, 2026, in Sara Reyes v. Grow Smart Labor, Inc., No. 1:24-CV-00028, 2026 U.S. Dist. LEXIS 213967 (E.D. Cal. Sep. 18, 2026), Judge Jennifer L. Thurston of the U.S. District Court for the Eastern District of California denied class certification in a California wage-and-hour action after concluding that, although Plaintiff could identify a common question concerning whether the Donohue meal period presumption arose from Defendant’s timekeeping data, the rebuttal of that presumption would require extensive individualized farm-by-farm, crew-by-crew and day-by-day inquiries, demonstrating that individualized inquiries dominated over common questions.

Case Background

The case arose from Plaintiff Sara Reyes’ employment with Defendant Grow Smart Labor, a farm labor contractor that supplies agricultural workers to third-party farms. Id. at *1. Grow Smart’s workforce was anything but uniform: employees were assigned to different crops, locations, supervisors, and jobs; some were paid hourly while others were paid on a piece-rate basis; and the company used different timekeeping systems, including crew timecards and individual timecards. Id. at *8. Grow Smart presented evidence that its operations and timekeeping practices varied substantially by assignment, such that “farm-by-farm” or “crew-by-crew” investigation regarding meal breaks would ensue. Id. at *8-9.

The Court’s Reasoning

The meal period analysis was the centerpiece of the decision. The District Court recognized that under Donohue v. AMN Services, LLC, 11 Cal. 5th 58 (2021), time records showing missed, short, or delayed meal periods without corresponding compensation can create a rebuttable presumption that the employer violated California law. Id. at *4. But the Court emphasized that the Donohue presumption does not eliminate the separate requirements imposed by Federal Rule of Civil Procedure 23. Id. at *6.

Reyes’ expert provided class-wide evidence by analyzing Grow Smart’s timekeeping data, finding that almost none of Grow Smart’s records included entries that showed when employee meal breaks began or ended. Id. at *7. Grow Smart did not challenge the expert’s experience or qualifications, nor did it offer any contrary analysis of its own data or any rebuttal expert opinions. Id. at *7-8.The District Court concluded that Reyes had demonstrated a common question of law and fact concerning whether the class’s timekeeping data could trigger the Donohue presumption. Id. at *8.

However, Grow Smart successfully argued, to which the magistrate judge agreed to and found, that Reyes had not demonstrated that common questions are likely to predominate the rebuttal portion of the case: the degree of individualized inquiries needed to assess meal period compliance across all of Grow Smart’s California operations. Id. Grow Smart employees worked at different farms under different supervisors, some worked in crews while others had individualized timekeeping, and records varied from assignment to assignment. Id. Most importantly, Grow Smart presented evidence that whether meal periods were required to be recorded could depend on whether operations “ceased” during the relevant meal period. Id. at *8-9.The Court therefore anticipated that a class trial would devolve into “a long series of back-and-forth debates” concerning “what happened on Farm A versus Farm B or under the leadership of Supervisor 1 versus Supervisor 2.” Id. at *9.

The individualized nature of those inquiries also affected Reyes’ proposed class under Rule 23(b)(2). The Magistrate Judge found that a class action cannot be certified under 23(b)(2) when “each class member would be entitled to an individual award of monetary damages” and “a different injunction or declaratory judgment”, which Reyes did not object to. Id. at *9-10. Since Reyes no longer worked for Grow Smart or cited any plans to return, she had not demonstrated that she could pursue prospective relief on behalf of a class of current employees, which is a prerequisite to seek such relief on behalf of a class of current employees. Id. at *10.

Takeaways and Implications for Employers

For employers defending wage-and-hour class actions, Reyes underscores an important distinction between identifying a statistical pattern and proving a class-wide violation. A plaintiff may be able to point to a common data anomaly, such as missing meal punches or apparent deductions, but the defense can still defeat certification by demonstrating that the meaning of those records depends on operational context. Here, the significance of a missing punch could not be evaluated in a vacuum because the company’s vast agricultural operations used different recordkeeping practices, including crew-level records that did not necessarily apply uniformly across business functions.

The decision also highlights the value of developing a factual record demonstrating operational variation before the certification stage. Employers should preserve and present evidence concerning different worksites, supervisors, scheduling practices, timekeeping systems, compensation methods, written policies, policy changes, and the actual practices followed in the field. Reyes shows how those facts can transform an apparently simple “missing meal punch” case into a series of individualized factual inquiries that plaintiffs cannot readily resolve through a single database or expert model. The result is a defense-friendly application of Rule 23’s predominance requirement: common data may establish a common issue, but it does not necessarily establish a common answer to the ultimate liability question.

September 21, 2026September 21, 2026 by Gerald L. Maatman, Jr.

You’re Invited: Year-End Review Of EEOC Litigation And Strategy 2026

By Gerald L. Maatman, Jr, Jennifer A. Riley, and Daniel D. Spencer

Mark your calendars for our bi-annual program analyzing the latest EEOC developments: Wednesday, October 14, 2026 from 11:00 a.m. to 11:30 a.m. Central. Reserve your virtual seat for the program here.

Join Duane Morris partners Gerald L. Maatman, Jr., Jennifer A. Riley and Daniel D. Spencer for a live panel discussion analyzing the latest impact of enforcement litigation at the U.S. Equal Employment Opportunity Commission, including its new National Enforcement Plan and strategic priorities established in fiscal year 2026 and the enforcement lawsuits filed over the past 12 months. Our virtual program will empower corporate counsel, human resource professionals and business leaders with key insights into the EEOC’s latest enforcement initiatives and provide strategies designed to minimize the risk of drawing the agency’s scrutiny.

Presenters

Gerald L. Maatman Jr.

Jennifer A. Riley

Daniel D. Spencer

September 21, 2026September 21, 2026 by Gerald L. Maatman, Jr.

Florida Federal Court Holds That The TCPA’s Do-Not-Call Provisions Do Not Apply To Cell Phone Users

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Ryan T. Garippo

Duane Morris Takeaways: On September 11, 2026, in Anthony, et al. v. Brian Marketing Group, No. 24-CV-80800, 2026 WL 2685650 (S.D. Fla. Sept. 11, 2026), Judge Aileen M. Cannon of the U.S. District Court for the Southern District of Florida denied a plaintiff’s motion for default judgment on a Telephone Consumer Protection Act (“TCPA”) class action claim and held that cell phone users are not “residential telephone subscribers” entitled to sue under the TCPA’s do-not-call provisions. The decision is premised on the conclusion that a prior Federal Communications Commission’s (“FCC”) order was outside the scope of the agency’s statutory authority under 47 U.S.C. § 227(c). If this decision is widely adopted, it has the potential to upend TCPA litigation nationwide.

Case Background

In June 2024, Plaintiff Michael Anthony (“Plaintiff” or “Anthony”) filed a putative class action against Brian Marketing Group (“BMG”) in the U.S. District Court for the Southern District of Florida for alleged violations of the TCPA and its implementing regulations. He claimed that he received five unsolicited text messages to his personal cellphone over a twelve-month span even though he registered his cell phone number on the national do-not-call registry. The text messages were identical and stated:

“Our records show that you or a loved one reached out for drug or alcohol treatment. We have immediate availability!”

Because Anthony had never used drugs or alcohol, or never heard of BMG, he claims these text messages were unsolicited and violated the TCPA. To that end, Anthony brought a single claim under § 227(c)(5) of the TCPA and its implementing regulations’ prohibition on unlawful communications to individuals who registered their phone numbers on the national do-not-call registry. 47 C.F.R. § 64.1200(c).

In September 2025, following proper service, the Clerk of Court entered default against BMG for failing to appear or respond. As a result, Anthony filed a motion for default judgment seeking declaratory relief and $2,500 in statutory damages.

The Court’s Decision

In a thorough 25-page opinion, Judge Cannon walked through the text, structure, and history of the TCPA to conclude that the FCC’s Report and Order, In Re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991 (the “2003 Order”) exceeded the agency’s statutory authority. The FCC could not lawfully include cell phone users within the definition of the term “residential telephone subscriber.” As a result, Anthony could not state a claim under § 227(c)(5) of the TCPA.

“The TCPA consists of two parts: § 227(b) imposes ‘restrictions on [the] use of automated telephone equipment,’ and § 227(c) protects ‘subscriber privacy rights’ and is colloquially known as the ‘do-not-call provision.’” Anthony, 2026 WL 2685650,at *2 (quotations omitted). The authority to promulgate the regulations to enforce the do-not-call provision come from an express delegation from the U.S. Congress and were designed “to protect residential telephone subscribers’ privacy rights [and] to avoid receiving telephone solicitations to which they object.” 47 U.S.C. § 227(c)(1).

Although Congress did not define the term “residential telephone subscriber,” the FCC’s implementing regulations – which created the national do-not-call registry adopted that language – when defining the individuals who have a private right of action under the statute. 47 C.F.R. § 64.1200(c)(2) (“No person or entity shall initiate any telephone solicitation to . . . [a] residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons”) (emphasis added); see also 47 C.F.R. § 64.1200(c)(1) (“No person or entity shall initiate any telephone solicitation to . . . [a]ny residential telephone subscriber before the hour of 8 a.m. or after 9 p.m.”) (emphasis added). From 1991 (when the TCPA was passed) to 2003 (when the 2003 Order was issued), there was no indication that the term residential telephone subscriber included calls to cell phones.

But, in 2023, the FCC issued the 2003 Order which purported to extend the national do-not-call registry’s protections to cell phone users because it was “more consistent with the overall intent of the TCPA to allow wireless subscribers to benefit from the full range of TCPA protections.” Anthony, 2026 WL 2685650,at *4 (quotations omitted). Judge Cannon, however, concluded that the FCC lacked the authority to decide this issue in the 2003 Order and therefore Anthony failed to state a claim as a matter of law. Judge Cannon’s analysis followed four primary steps.

First, Judge Cannon examined the plain meaning of “residential telephone subscriber” as used in § 227(c). Because the TCPA does not define the term, Judge Cannon looked to the dictionary definitions in existence at the time of enactment. “At the time the TCPA was enacted in 1991, dictionaries defined ‘residential’ as 1) ‘of or connected with residence,’ 2) ‘of, characterized by, or suitable for, residences or homes,’ and 3) ‘chiefly for residents rather than transients.’” Id. at *7 (quotations omitted). She, therefore, reasoned that the term “residential telephone subscriber” meant “at the very least . . . a person who pays intermittently to receive telephone services that are connected to his or her home.“ Id. Cell phones, however, were not connected to an individual’s residence in 1991 and therefore would not have been captured by the scope of that term at the time.

Second, Judge Cannon explained that the structure of the TCPA confirmed this interpretation as well. In § 227(b), Congress demonstrated its ability to extend protections to “cellular telephone service” subscribers. 47 U.S.C. § 227(b)(1)(A)(iii). It also included a separate section prohibiting the use of the above-mentioned regulated technologies to residential telephone subscribers. 47 U.S.C. § 227(b)(1)(B). Other sections of the TCPA confirmed that interpretation. See Anthony, 2026 WL 2685650, at *9-10. If the term “residential” was synonymous with “cellular,” then Judge Cannon reasoned that § 227(b)(1)(B) would violate the cannon against surplusage because Congress would have regulated the same conduct twice. “In sum, it is clear that Congress knew how to differentiate between cellular and residential when it wished to.” Id. at *10.

Third, Judge Cannon reasoned that the history of the statute confirmed this interpretation. “From the date of enactment of the TCPA through 2003,” no one thought that cell phone numbers were considered residential telephone lines. Anthony, 2026 WL 2685650, at *9-10. Indeed, the FCC even sought additional authority from Congress in order to promulgate such rules prior to 2003. “Nevertheless, in 2003, and without the previously contemplated additional authority from Congress, the FCC promulgated new implementing regulations . . . to bring wireless subscribers within the orbit of residential subscribers.” Id. at *11. In short, “[a]gencies may play the sorcerer’s apprentice but not the sorcerer himself” – and in the absence of an express delegation from Congress to allow the FCC to promulgate rules to protect cell phone users– the extension of § 227(c) to cell phones was improper. Id. at *11 (quoting Facebook, Inc. v. Duguid, 592 U.S. 395, 409 (2021)).

Finally, Judge Cannon opined on the ongoing circuit split related to whether text messages constitute calls and determined that “the private right of action in § 227(c)(5) . . . does not [authorize] suits by cell phone users based on unwanted text messages (rather than calls)” and noted that this authority was an additional basis to enter judgment for BMG. Anthony, 2026 WL 2685650, at *12.

Implications For Companies

If the reasoning of Anthony is widely adopted, this decision has the potential to eviscerate TCPA litigation for companies across the nation. Indeed, if the call in question is made to a cell phone, this decision essentially holds that there is no cause of action under § 227(c)(5) generally and specifically there is no protections afforded to such users under 47 C.F.R. § 64.1200(c)(1), 47 C.F.R. § 64.1200(c)(2), and 47 C.F.R. § 64.1200(d). It also represents yet another decision to hold that text messages are not calls within the meaning of § 227(c)(5).

That said, one of the more ironic elements of this decision is that it does not categorically foreclose 47 C.F.R. § 64.1601(e) claims – for failure to provide proper caller identification information – which a minority of courts have recently shoehorned into § 227(c)(5)’s private right of action. Despite the numerous other problems with such claims, § 64.1601(e) claims do not purport to hinge on an individual’s residential telephone subscriber status. This decision also does not eliminate TCPA liability under § 227(b)(3) for making calls using regulated technology but it would carve off a substantial chunk of TCPA liability if widely adopted.

While this decision is undoubtedly a positive development for corporate counsel, we are not yet at the stage where companies can take such liability off the table. This decision represents one decision, from one federal judge, and is certainly the minority view. Nonetheless, companies should continue to preserve this argument by raising it as the law continues to develop and monitor this blog to stay on top of this new potential trend in TCPA law.

September 18, 2026September 18, 2026 by Class Action Defense

The Class Action Weekly Wire – Episode 165: Ninth Circuit Denies Roblox’s Bid To Compel Arbitration In Online Safety Class Action

Duane Morris Takeaway: This week’s episode features Duane Morris partner Jerry Maatman, senior associate Kat Alphonso, and associate Caitlin Capriotti with their analysis of a ruling from the Ninth Circuit rejecting a game platform’s motion to compel arbitration, finding the defendant’s delay in seeking arbitration over nearly a year of litigation waived any right to arbitrate.

Episode Transcript

Jerry Maatman: Hello everyone, and thank you for being here again for the next episode of the Class Action Weekly Wire. I’m Jerry Maatman, a partner at Duane Morris, and joining me today are my colleagues Kat Alphonso and Caitlin Capriotti. Thanks so much for both of you being on the podcast.

Kat Alphonso: Glad to be here, Jerry.

Caitlin Capriotti: Thanks for having me, Jerry.

Jerry: Today, we’re discussing a recent Ninth Circuit decision that addresses an issue we hear about frequently in the context of class action litigation, that being arbitration, and more specifically, when a company can lose the right to compel arbitration by litigating in court too long. The case is Uhl, et al. v. Roblox Corporation from the U.S. Court of Appeals for the Ninth Circuit in San Francisco. The ruling arose out of litigation against the company involving allegations that children using the company’s gaming platform were targeted by adult predators. Kat, can you start us off with some background about the case?

Kat: Absolutely. So, the lawsuit was brought by a parent, Damien Uhl, who alleged that his daughter was exposed to inappropriate communications from an adult posing as a friend on the Roblox platform. The complaint was one of several actions alleging that Roblox failed to adequately protect minors despite representing that it had safeguards in place for younger users. Instead of immediately moving to compel arbitration, Roblox removed the case to federal court and filed a motion to dismiss the complaint on the merits. The company litigated for nearly a year before eventually seeking to compel arbitration based on arbitration provisions contained in its terms of service. The district court denied the motion to compel, concluding that Roblox had waived any right that it had to arbitrate, and Roblox appealed the ruling to the Ninth Circuit.

Jerry: Caitlin, how did the Ninth Circuit approach these issues on appeal, and why did it ultimately affirm the district court’s decision that denied the motion to compel arbitration?

Caitlin: The majority focused on the Ninth Circuit’s two-part waiver test. Under prior circuit precedent. A party waives its right to arbitrate when it knows of its right to compel arbitration, and then engages in conduct that is inconsistent with the exercise of that right. The Ninth Circuit found both elements satisfied. First, the panel concluded that Roblox knew it had a right to arbitrate from the outset. The company acknowledged that all versions of its terms of service during the relevant period contained arbitration provisions because the complaint alleged that the plaintiff’s daughter had used Roblox since 2017, and that purchases were regularly made on that platform, the court found Roblox possessed enough information to know that an arbitration provision potentially applied. Second, the court found that Roblox acted inconsistently with that right. Rather than moving to compel arbitration and seeking limited discovery if necessary, Roblox chose to litigate the case in court. It removed the action from state court, briefed jurisdictional issues, pursued a merits-based motion to dismiss, and waited approximately 11 months before filing its arbitration motion. The panel characterized those actions as inconsistent with a party seeking to arbitrate.

Jerry: One fact that seemed particularly important to the Ninth Circuit was an internal litigation email that surfaced during the proceedings. Kat, could you explain to our listeners why that email became a significant piece of evidence in the court’s analysis?

Kat: Yes, this email was actually really central to the outcome. Roblox argued that it could not originally move to compel arbitration because it lacked the username necessary to determine which version of the arbitration agreement governed the dispute. But the court pointed to an August 2024 email in which Roblox told plaintiffs’ counsel that it did indeed intend to seek arbitration, even though it still did not have a username, and would pursue targeted discovery later to determine which terms applied. The majority viewed that communication as highly damaging to Roblox’s position. According to the court, the email essentially demonstrated that Roblox knew it could seek arbitration without first obtaining the username, and as a result, the court concluded that Roblox could have filed its motion much earlier instead of spending almost a year litigating in court.

Jerry: That’s a very interesting, analysis. The majority also seem to be troubled by the sequence of events. How did that play in the Ninth Circuit’s ultimate decision?

Caitlin: The Ninth Circuit stated that Roblox pursued dismissal on the merits first, and then only turned to arbitration after the District Court rejected its attempt to dispose of the claims in court. The opinion contains some fairly strong language on that point. The court explained that a party cannot ask a district court to dismiss a complaint on the merits while simultaneously holding arbitration in reserve as a backup strategy in case the judicial approach does not work out. According to the majority, that type of litigation tactic is inconsistent with a genuine intent to arbitrate.

Jerry: Well, the Ninth Circuit’s decision was not unanimous. What did the dissent have to say on these issues?

Kat: So, Judge Bumatay dissented and took a very different view of the record. He argued that the Ninth Circuit had never previously held that a party must file a motion to compel arbitration and seek discovery simultaneously in order to preserve arbitration rights. In his view, Roblox lacked sufficient information and identified the specific arbitration agreement at issue, and should have not been penalized for waiting until it could determine that information. Judge Bumatay also criticized the majority for relying on Roblox’s motion to dismiss and removal efforts, noting that the Ninth Circuit precedent had never held that filing a non-jurisdictional motion to dismiss automatically results in waiver, and he argued that removing a case through federal court may actually be consistent with invoking protections under the Federal Arbitration Act. Ultimately, he viewed Roblox conduct as a forfeiture resulting from delay, rather than an intentional waiver of a known right.

Jerry: Well, let’s retreat to a 100,000-foot view and discuss and examine the practical implications of this ruling. Caitlin, what are the lessons learned for companies, that have, arbitration programs with class action waivers in terms of when and how to invoke those provisions to defend themselves in litigation?

Caitlin: So, there are several important takeaways. First, companies that intend to rely on arbitration agreements need to evaluate that strategy immediately upon receiving a complaint. This decision demonstrates that courts are increasingly willing to scrutinize litigation conduct and timing when determining whether arbitration rights have been waived. Defendants should be cautious about pursuing merits-based motions before addressing arbitration. Here, the Ninth Circuit repeatedly stated that Roblox sought dismissal with prejudice before moving to compel arbitration. That sequencing played a substantial role in the court’s waiver analysis. Finally, if a court believes additional information is needed to establish the applicability of an arbitration agreement, it should consider promptly moving to compel arbitration and requesting limited discovery rather than waiting months to raise the issue.

Kat: I would also add, Jerry, that the ruling illustrates a broader trend we’re seeing following the Supreme Court’s decision in Morgan v. Sundance. Courts are becoming more willing to find waiver without requiring plaintiffs to prove prejudice. That means defendants face greater risk when they actively litigate before invoking arbitration. For companies with online terms of service, consumer arbitration agreements, or even employee arbitration programs, early case assessment is more important than ever. Delays that might have once been excused can now create a significant risk that arbitration rights will be lost altogether.

Jerry: Well, well said. Those are excellent takeaways. Certainly, to me, the decision underscores and is a valuable reminder that arbitration is simply not a defense to keep in one’s back pocket or in reserve. Companies and litigants who want the benefits of arbitration must act consistently, promptly, and pretty quick from that choice at the beginning of litigation. Once a defendant chooses to litigate substantive issues, beware, because they are going to be subject to an argument from plaintiffs’ counsel in these class actions that the defendant has waived the right to compel arbitration.

Well, Kat and Caitlin, thank you so much for being our guest today and providing your insights on this most significant Ninth Circuit ruling, and thank you to our listeners for tuning in for another episode of the Class Action Weekly Wired. We look forward to bringing you more updates on important developments in the class action world. Until next time, thanks so much for tuning in and listening.

Caitlin: Thanks for having me, Jerry, and thanks, listeners.

Kat: Thank you, everyone, for listening.

September 17, 2026September 17, 2026 by Class Action Defense

North Carolina Superior Court Denies Class Certification In Hospital Monopoly Case

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

Duane Morris Takeaways: On September 8, 2026, Judge Mark A. Davis of the North Carolina Superior Court denied Plaintiffs’ motion for class certification and excluded key portions of Plaintiffs’ expert report in Davis v. HCA Healthcare, Inc., Case No. 21-CVS-003276-100 (N.C. Super. Ct. Sept. 8, 2026). The Court found that Plaintiffs, a putative class of indirect purchasers alleging that a hospital network’s anticompetitive conduct caused them to pay inflated health insurance premiums, failed to satisfy the predominance requirement under Rule 23 of the North Carolina Rules of Civil Procedure because they could not demonstrate class-wide antitrust impact through common proof. The decision is required reading for defense counsel in antitrust class actions, particularly those involving indirect purchaser claims and pass-through theories of harm.

Case Background

Plaintiffs are individual North Carolina residents and a small business who purchased commercial health insurance in the Western North Carolina region through various channels, including ACA Exchange plans, employer-sponsored fully-insured plans, and employer-sponsored self-funded plans. They brought suit against the HCA entities that acquired Mission Health, a hospital system in Western North Carolina, from ANC Healthcare, Inc. and Mission Hospital, Inc. (the “ANC Defendants”) in January 2019, as well as the ANC Defendants themselves (the former nonprofit owners of Mission Health). The Plaintiffs asserted claims for monopolization, attempted monopolization, and restraint of trade under N.C.G.S. § 75-1 and the North Carolina Constitution.

Mission Health had previously operated under a Certificate of Public Advantage (“COPA”) that shielded it from antitrust liability in exchange for regulatory oversight. The COPA was repealed in 2016. Plaintiffs allege that Defendants coerced Blue Cross Blue Shield (“BCBS”) and United Healthcare (“United”) into including anticompetitive provisions in managed care contracts, resulting in supra-competitive prices for healthcare services that were ultimately passed through to the putative class in the form of higher health insurance premiums. A separate direct purchaser class action against the same Defendants, City of Brevard v. HCA Healthcare, Inc., No. 1:22-CV-00114 (W.D.N.C.), was previously filed in federal court and settled. The present action was designated a mandatory complex business case and assigned to the North Carolina Business Court.

The Court’s Decision

The Court focused its denial on the predominance requirement, specifically whether Plaintiffs demonstrated class-wide antitrust impact through common proof. As a threshold matter, the Court rejected Plaintiffs’ argument that because they sought only equitable relief — injunctive relief and equitable disgorgement rather than monetary damages — a relaxed predominance standard should apply. The Court emphasized a critical structural distinction between North Carolina Rule 23 and Federal Rule 23: unlike the Federal Rules, which exempt injunctive-relief classes from the predominance requirement under Rule 23(b)(2), North Carolina’s Rule 23 requires predominance for all class actions regardless of the type of relief sought. See Dewalt v. Hooks, 382 N.C. 340, 350–51 (2022). This distinction eliminated Plaintiffs’ primary pathway to a lower certification bar.

Turning to the merits, the Court found that Plaintiffs’ indirect purchaser theory — that supra-competitive healthcare prices were passed through by BCBS and United to class members via higher premiums — was not supported by sufficient common evidence. The Court excluded paragraphs 232–237 of Plaintiffs’ expert, Dr. Robert J. Town’s, report under Rule 702 and the Daubert framework. Dr. Town’s opinions on pass-through consisted of only six paragraphs out of 237 total, relied solely on general economic literature and selected deposition testimony, and did not employ any econometric or statistical model. Critically, Dr. Town admitted in deposition that he was never asked to quantify damages, determine the number of class members who suffered harm, calculate a pass-through rate, or analyze any lag between alleged overcharges and premium increases.

The Court relied heavily on Sidibe v. Sutter Health (Sutter I), 333 F.R.D. 463 (N.D. Cal. 2019), where a similar indirect purchaser class was denied certification because the expert’s pass-through analysis was based on assumptions rather than rigorous econometric modeling, and noted that even the expert in Sutter I had at least attempted to construct a statistical model, which Dr. Town had not done. The Court catalogued a series of unaddressed questions that Dr. Town’s analysis failed to consider, including how many distinct insurance plans were affected, the role of regulatory oversight by the NC Department of Insurance, competition within the insurance market, other factors contributing to premium increases, whether refunds or rebates offset any pass-through, the differences between ACA, fully-insured, and self-funded plans, and whether employers absorbed costs rather than passing them to employees. The Court also rejected Plaintiffs’ alternative theory that class members were harmed by a decrease in the quality of services at Mission Health, finding this theory inherently individualized and subjective.

Implications For Employers

Davis v. HCA Healthcare is a significant defense victory in indirect purchaser antitrust class actions and underscores the rigorous burden plaintiffs face in demonstrating pass-through impact on a class-wide basis. The decision reinforces that generic economic literature and corporate representative testimony about general pricing trends are insufficient to satisfy predominance — plaintiffs must present actual econometric or statistical modeling showing that alleged overcharges were passed through to all or virtually all class members.

The ruling also highlights a potentially significant structural advantage for class action defendants in North Carolina state court: because North Carolina’s Rule 23 does not contain a counterpart to Federal Rule 23(b)(2), plaintiffs cannot avoid the predominance requirement simply by recasting damages claims as requests for injunctive or equitable relief. Defense counsel should further note the Court’s thorough catalogue of individualized issues that an indirect purchaser expert must address — including plan-specific pricing dynamics, regulatory influences, competitive market conditions, and employer-level absorption of costs — which provides a useful roadmap for challenging pass-through expert opinions in future cases. The decision is consistent with a growing body of case law requiring rigorous empirical analysis in indirect purchaser class actions and sends a clear signal that courts will closely scrutinize the methodology behind pass-through theories at the certification stage.

September 17, 2026September 17, 2026 by Gerald L. Maatman, Jr.

Show Your Work: California Federal Court Denies Preliminary Approval Of Data Breach Class Action Settlement

By Gerald L. Maatman, Jr., Anna Sheridan, and Olga Romadin

Duane Morris Takeaways: On September 16, 2026, in Jimenez, Jr., et al. v. OE Federal Credit Union, Case No. 24-CV-02746 (N.D. Cal. Sept. 16, 2026), U.S. District Judge Jon S. Tigar of the U.S. District Court for the Northern District of California denied plaintiffs’ motion for preliminary approval of a class action settlement in a data breach case involving over 220,000 individuals. The decision is a significant reminder that courts will scrutinize class action settlements for obvious deficiencies, and that plaintiffs seeking preliminary approval must “show their work” by providing detailed information about the relative value of their claims and the strengths and weaknesses of their case.

Case Background

Plaintiffs Daniel Jimenez Jr., Mark Hendren, and Erica Jaramillo are current or former customers of OE Federal Credit Union (“OEFCU”), which is described as “the country’s largest labor-based credit union.” Order at 1. OEFCU possessed its customers’ personally identifiable information (“PII”) and protected health information (“PHI”), including full names, Social Security numbers, dates of birth, bank and financial account information, driver’s license numbers, medical procedure information, and health insurance information. Id. Sometime between August 19, 2023 and October 29, 2023, OEFCU suffered a ransomware attack and data breach resulting in unauthorized access to the PII/PHI of the named plaintiffs and the putative class.

Plaintiffs filed suit alleging claims for negligence, breach of implied contract, invasion of privacy, unjust enrichment, violation of the California Unfair Competition Law, violation of the California Consumer Privacy Act, violation of the California Customer Records Act, and declaratory relief. They brought claims on behalf of themselves and a class of all persons identified as being impacted by the data breach. After OEFCU moved to dismiss, the Court granted the motion in part and denied it in part, dismissing several claims with leave to amend and the declaratory relief claim with prejudice.

The parties subsequently engaged in mediation and reached a proposed class settlement. Under the proposed settlement, OEFCU agreed to establish a non-reversionary settlement fund of $2,300,000. Id. at 3. Each class member could submit a claim of up to $5,000 for reimbursement of out-of-pocket losses traceable to the data incident. Settlement class members were also entitled to submit a claim for a pro rata cash payment from the net settlement fund, estimated at approximately $50 per claimant. California class members could claim an additional $75, subject to reduction based on the total number of claimants. The settlement agreement proposed to deduct $766,666.66 in attorney’s fees (one-third of the common fund), $5,000 each to the three class representatives as service awards, and undetermined amounts for litigation costs and settlement administration costs. Id.

The Court’s Decision

Judge Tigar denied the motion for preliminary approval, identifying seven deficiencies that collectively prevented a finding that the settlement fell “within the range of possible approval” under Rule 23(e)(2). See In Re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007).

Adequacy of Relief — Rule 23(e)(2)

The first four deficiencies all bore on whether the proposed settlement provided adequate relief to the class. The Court began by questioning the use of a claims-made distribution process, noting that because OEFCU could readily identify class members from its own records, requiring them to submit claims was unnecessary and would predictably depress the actual payout — “[t]he effect of not simply distributing relief to the known class members is that the defendant will likely pay out much less than it would if there were no claiming process.” Order at 6. The Court noted that claims-made settlements are appropriate when it is the best or only option available, as is often the case with consumer class actions. Id. The Court faulted Plaintiffs for providing no information about the maximum potential recovery at trial, offering instead only boilerplate that the settlement “provides significant relief” and “is well within the range of other data breach settlements.” Relatedly, Plaintiffs supplied only generic statements about the “high level of risk, expense, and complexity” of continued litigation rather than a careful analysis of the claims and defenses — falling short of the Court’s requirement that movants “show their work by explaining the relative value of their claims in significant detail.” Order at 7–8 (quoting Haralson, 383 F. Supp. 3d at 970). Finally, the Court observed that the estimated $50 per-member pro rata payment was unsupported by evidence. Order at 8. After subtracting attorney’s fees alone, the actual per-member recovery was closer to $6, and would decline further once administration costs, incentive awards, and out-of-pocket reimbursement claims were accounted for — the Court noted that if just over 300 claimants sought the full $5,000 reimbursement, the pro rata share could dwindle to nothing for remaining class members. Order at 8.

Equitable Treatment — Rule 23(e)(2)(D)

The fifth deficiency concerned the settlement’s differential treatment of class members. The settlement provided California class members a higher recovery than non-California members, yet Plaintiffs identified no California subclass with distinct claims that might justify the disparity. Order at 8–9. The Court emphasized that unexplained disparate treatment “increases the likelihood that the settlement agreement does not meet the Rule 23(e) standard.” Id. at 9 (quoting Ferrington v. McAfee, Inc., No. 10-CV-01455, 2012 WL 1156399, at *8 (N.D. Cal. Apr. 6, 2012)).

Accuracy and Procedural Compliance

The final two deficiencies concerned the quality of the submission itself. The Court identified a material discrepancy between the motion’s description of the timing of payments to class members and the actual terms of the settlement agreement. Order at 9–10. The Court also found that the motion failed to comply with the Northern District of California’s Procedural Guidelines for Class Action Settlements — including the requirements to explain anticipated versus maximum class recovery, to identify the settlement administration process and its costs, and to provide information about comparable settlements. Id. at 10; see also Bakhtiar v. Info. Res., Inc., No. 17-CV-04559, 2020 WL 11421997, at *8 (N.D. Cal. Jan. 30, 2020) (“A movant’s failure to address the issues discussed in the Guidelines is a proper ground for denying a motion for preliminary or final approval of a class action settlement.”).

The Court denied the motion without prejudice to Plaintiffs’ filing a revised motion, which it ordered due by November 4, 2026. The Court also reminded the parties that the Ninth Circuit benchmark for attorney’s fees in a successful class action is 25% of the common fund, and that Plaintiffs should justify any deviation from that benchmark. Id.

Implications For Companies

The Jimenez decision is a reminder that courts will closely scrutinize class action settlements at the preliminary approval stage, particularly in data breach litigation impacting consumers. The decision underscores several key points for corporate counsel. Most importantly, parties should closely follow the Court’s Procedural Guidelines for Class Action Settlements as failure to heed those Guidelines can serve as an independent basis for denying preliminary approval.

On a more granular level, the Jimenez decision offers other relevant practice pointers for class action settlements. First, claims-made settlement structures may be disfavored where the class members are readily identifiable from the defendant’s records. Second, plaintiffs seeking preliminary approval must do more than offer boilerplate language about the risks of litigation — they must provide concrete information about the maximum potential recovery and a detailed analysis of the strengths and weaknesses of their claims. Third, settlements that provide differential treatment to subsets of class members without explanation may face heightened scrutiny under Rule 23(e)(2)(D). Companies facing data breach class actions should work closely with counsel to ensure that any settlement submissions provide the level of detail and analysis that courts increasingly require before granting preliminary approval.

September 16, 2026September 17, 2026 by Gerald L. Maatman, Jr.

It’s An Arbitration Agreement After All: Disney Compels Arbitration And Obtains Dismissal Of Class Claims In Antitrust Suit

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

Duane Morris Takeaways: On September 8, 2026, in Unger, et al v. The Walt Disney Company, No. 5:25-CV-01163 (N.D. Cal. Sept. 8, 2026), Judge Edward J. Davila granted Defendant’s motion to compel arbitration, ordered on a consolidated docket with Biddle, et al. v. The Walt Disney Company, No. 5:22-CV-07317 (N.D. Cal.). This decision serves as a clear example of arbitration agreements as a powerful tool for a company to dismiss class claims, and a critical reminder that a company that may not have signed an arbitration agreement can invoke an arbitration agreement in specific circumstances.

Case Background

Plaintiffs Cole Unger and Steven Prescott brought suit against the Walt Disney Company (“Disney”), alleging violations of the Sherman Act and corresponding state laws. Unger filed the Complaint on January 14, 2025 and filed a First Amended Complaint, adding Prescott as a plaintiff, on April 28, 2025. According to the First Amended Complaint, Disney allegedly undertook a “multifaceted campaign to suppress competition in the market for live television streamed over the internet to paying subscribers.” Specifically, Plaintiffs alleged that Disney used its ownership of ESPN to force streaming services to carry non-ESPN content in order to access ESPN, force streaming services to carry ESPN in its “base” package for customers, inflated the price of streaming ESPN through most favored nation clauses with streaming services, and provided anticompetitive rebates to Disney-owned streaming service Hulu. Plaintiffs brought claims on behalf of a putative class of fuboTV subscribers. The Unger lawsuit made similar allegations as another case, Biddle, et al. v. The Walt Disney Company, 5:22-CV-07317 (N.D. Cal.), brought on behalf of a putative class of YouTube TV subscribers and DirecTV Stream subscribers. The cases were consolidated on June 10, 2025.

Shortly before Unger filed his initial complaint, on January 6, 2025, Disney publicly announced its plan to purchase a 70% stake in fuboTV. The parties closed the deal on October 29, 2025, creating a newly combined fuboTV and Hulu + Live TV business.

On December 19, 2025, Disney filed a motion to dismiss Plaintiffs’ class claims, compel arbitration, and stay Plaintiffs’ individual claims pending arbitration. Disney filed its motion subject to fuboTV’s terms of service because Plaintiffs had assented to fuboTV’s terms of service when they subscribed to fuboTV. fuboTV’s terms of service included a provision compelling arbitration of all disputes and waiving class action claims subject to the terms of service. Disney argued that fuboTV’s terms of service, which authorized fuboTV’s “future affiliates” to invoke fuboTV’s rights under the terms of service, permitted Disney to compel arbitration of Plaintiffs’ claims and dismissal of Plaintiffs’ class claims.

The District Court’s Ruling

In a 26-page opinion, Judge Davila granted Disney’s motion to compel arbitration, dismissed Plaintiffs’ class claims, and stayed Plaintiffs’ individual claims pending arbitration. The opinion stressed that Plaintiffs did not dispute that they had assented to fuboTV’s terms of service when they signed up as subscribers. The Court held that the terms of service were “reasonably conspicuous” and that Plaintiffs had “unambiguously manifest[ed] assent” to terms of service. Op. at 9-10.

The Court held that Disney, as a non-signatory to the terms of service, could invoke fuboTV’s terms of service under the “future affiliates” provision. The Court stressed that under “the ordinary definitions of the words within the Future Affiliates Provision” were “clear and unambiguous, such that the Court will rely on its terms so long as this reliance would not lead to an absurd result.” Op. at 14. The Court then rejected Plaintiffs’ enforceability argument that Disney had not undertaken reciprocal contractual obligations, stressing that Disney was not required to “show that it undertook reciprocal obligations.” Op. at 15. Finally, the Court found that enforcement of the arbitration clause by a non-signatory would not lead to absurd results, distinguishing cases cited by Plaintiffs where disputes wholly unrelated to a company’s terms of service were found not to encompass the terms of service. Instead, the Court was unsympathetic to Plaintiffs’ argument that they did not expect to be entering into a contract with Disney when signing up for fuboTV, explaining that “courts have repeatedly found that future affiliates provisions, or clauses granting rights to successors, are valid, despite the existence of some inherent uncertainty.” Op. at 17-18.

The Court then undertook an unconscionability analysis, rejecting Plaintiffs arguments that fuboTV’s terms of service were procedurally and substantively unconscionable. The Court rejected Plaintiffs’ argument that the terms of service were substantively unconscionable as having “near infinite scope,” stressing that the canon of ejusdem generis requires courts to read broad contractual language in the scope of the specific language of the contract. Therefore, the terms of service had practical limitations based on the context of the agreement as a whole. Regarding procedural unconscionability, the Court found that the terms of service were not unconscionable because the terms were inconspicuous, included the ability for users to opt out, and were “not concealed in dense legalese inaccessible to lay consumers.” Op. at 24.

Implications for Companies

When addressing class action claims, companies should scour for any potential arbitration agreements a plaintiff may have signed, even where the plaintiff signed an arbitration agreement not directly with the Company. Courts regularly hold that non-signatories to arbitration agreements can invoke arbitration with a signatory based on multiple legal theories, including the explicit language of the arbitration agreement vesting rights in non-signatories, assignment clauses, estoppel, and a non-signatory’s third-party beneficiary status. Company mergers, like the Disney-fuboTV merger, can change a lawsuit’s calculus and require a plaintiff to individually arbitrate claims rather than petition for class certification in court.

The financial implications of invoking an arbitration agreement are substantial, as shown here. A plaintiff’s individual and class action claims can be dismissed in federal court even after the plaintiff survives a motion to dismiss. In this case, Disney had originally agreed to settle the case with all three subscriber classes for $55 million. Disney and the YouTube TV and DirecTV subscriber classes have since filed for settlement approval for $50 million. Given the reduced settlement now that the fuboTV subscriber class is not included, Disney may have saved $5 million in a settlement award it otherwise would have owed to fuboTV subscribers.

Finally, corporate counsel should regularly update its terms of service to comply with requirements for invoking arbitration in its jurisdiction. Though courts regularly enforce arbitration agreements, an otherwise valid arbitration agreement can be undone if a court finds that the agreement is unconscionable. Helpful provisions for conscionability include permitting the ability to opt out of mandatory arbitration, drafting class waivers and mandatory arbitration provisions in clear and non-legalese language, and allowing signatories time to review provisions. Companies should also require signatories to terms of service to review and affirmatively agree to updates to terms of service and include any waiver of rights in large, clear language.