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The Class Action Weekly Wire – Episode 31: Artificial Intelligence: The Next Generation Of Class Action Litigation
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Brandon Spurlock with their discussion of the Senate Banking Committee’s hearing this week regarding consumer protection in the financial sector from the risks of artificial intelligence, as well as their analysis of the potential implications in the regulatory environment and class action space as AI continues to be utilized in workplace and commercial operations.
Episode Transcript
Jerry Maatman: Welcome, loyal blog readers and listeners to our Friday weekly podcast series. I’m joined by my colleague Brandon Spurlock today, and we’re going to be focusing on artificial intelligence and the fact that that issue has been foremost in the mind of legislators in Washington, D.C. Brandon, welcome to our weekly podcast.
Brandon Spurlock: Thanks, Jerry. Always happy to be here.
Jerry: Brandon, there was quite a lot of activity at the Senate Banking Committee this week with respect to artificial intelligence. It involved consumers and protection of consumers. To me AI is everywhere and in the news, in terms of how it impacts the workplace, how it impacts consumers – what’s your take away from what occurred in Washington, D.C. this week?
Brandon: Yeah, Jerry, this topic is exploding everywhere, and the changes in every sector are fast and furious is AI advances. The hearing was led by the committee’s chairman, Democratic Senator Sherrod Brown from Ohio. Brown opened the hearing by highlighting positive aspects of technology for society in the financial world. And you think about things like ATM machines providing quick access to money, smartphone apps that can access banking online and bill paying, but also explain that automation has led to many of the financial crises that we’ve seen in the past two decades. Brown stressed that any AI use in the financial sector should be utilized to make the economy better for consumers, and that there should be significant safeguards in place to ensure that it does so.
His Republican counterpart, Senator Mike Rounds of South Dakota, who was filling in for the committee’s ranking member, also stressed the risks of AI, but took a different stance on the issues of regulation. He stated that there should be regulations regarding “transparency and explainability in decision-making, especially where credit is involved” – but that Congress should take a “pro-innovative stance” so the U.S. can attract talent, and that halting the progress of AI in the financial sector could put the U.S. at a competitive disadvantage.
Jerry: It struck me that here is a great example of technology accelerating faster than the law, and the law is trying to catch up, and government regulators are thinking about the void that exists in the system about regulation. I know that the Senate Committee and Senator Brown focused on fraud and antitrust concerns, but the overlay also was in the fear that artificial intelligence incorporates a bias, that use of the artificial intelligence could have an adverse impact on protected minority groups. What’s your takeaway in terms of what we’re going to see in the future in this particular area?
Brandon: Well, that’s spot on Jerry. Brown highlighted several AI tools that companies in the financial sector already use have been shown to have ingrained discriminatory biases towards Black and Latino American borrowers. Specifically, banks use algorithms and machine learning AI models and consumer lending that can determine a borrowers creditworthiness. But it often automates, super charges the biases that end up excluding minorities.
Jerry: I know that the Consumer Financial Protection Bureau is dabbling in this area, also focusing on regulations. But it seems to me that this is an area that the plaintiffs’ class action bar is following. And my sense is that we’re going to see a tipping point soon where there is going to be private plaintiff lawsuits brought over these issues with allegations that either the use of the AI implicated antitrust or fraud concerns or discrimination, either in the employment arena in the workplace, or with the extension of credit or with loans. What’s your takeaway of class action risks in this area?
Brandon: Well, you know there was a committee witness attending the hearing, Daniel Gorfine. He’s the founder and CEO of advisory firm Gattaca Horizons, and he’s a former chief innovation officer with the CFTC. He noted the risk of AI, but stated the “speculative fear or fear of future harm … should not broadly block development of AI in financial services.”
Another witness, University of Michigan computer science and engineering professor Michael Wellman, urged that public and open knowledge on what practices can create risk will help better prepare financial systems for AI and inspire market rules and systems that remain resilient to AI’s inevitable impacts.
So with all this said, Jerry, there will probably be no shortage of class action lawsuits that are filed, and I think as we see how those class actions progress, we’ll also see how they impact the regulatory environment. I think both are going to have an impact on one another.
Jerry: Brandon, you’re a thought leader in this area, and we’ll be closely following artificial intelligence and its implications in litigation and government regulation, and in terms of what it means to companies in the private sector. Sincerely appreciate you lending your expertise today to our podcast and thanks so much for joining us.
Brandon: Thanks for having me, Jerry.
New York Federal Court Approves Unique Wage Case Settlement Structure Providing Plaintiff-Employee A Discounted Purchase Price For Employer’s Entire Business
By Gerald L. Maatman, Jr., Gregory S. Slotnick, and Maria Caceres-Boneau
Duane Morris Takeaways: Pursuant to Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), the practice of settling lawsuits filed in district courts in the Second Circuit alleging unpaid wages under the Fair Labor Standards Act (“FLSA”) requires approval from either the Court or the U.S. Department of Labor to take effect. On September 14, 2023, Magistrate Judge James M. Wicks of the U.S. District Court for the Eastern District of New York approved a rather unique settlement request by the parties in such an unpaid wage case. Although nearly all wage & hour lawsuit settlements in the Second Circuit ultimately conclude with the business-employer defendant agreeing to pay a monetary amount in exchange for dismissal of the case and a release of the employees’ wage claims against the employer, in Gallagher v. Mountain Mortgage Corp. et al., Case No. 22-CV-0715 (E.D.N.Y. Sept. 14, 2023), the Court evaluated and signed-off on the parties’ proposed settlement structure whereby the plaintiff-employee, who worked as a loan processor and mortgage loan originator for a mortgage lender, agreed to resolve the matter in exchange for her receipt of a heavily-discounted purchase price and her agreement to buy the business itself. The Court’s decision serves as an interesting thought exercise for resolving unpaid wage lawsuits through unorthodox strategies, though potentially applicable only in particular circumstances under which the Court may find such resolution fair and reasonable.
Case Background
According to the Complaint, plaintiff-employee Nicole Gallagher (“Gallagher”) has over 25 years of experience in the mortgage banking industry and is licensed to originate mortgage loans in New York, New Jersey, Connecticut, and Florida. Gallagher alleged that she worked for a mortgage lender, Mountain Mortgage Corp. (“MMC”), for a little over a year and claimed that despite working around 85 hours per week, MMC did not pay her at all during certain months, never paid her overtime despite consistently working over 40 hours per week, and failed to provide her with accurate paystubs and weekly earnings statements or with a notice and acknowledgment of her pay rate as required by law. Specifically, Gallagher asserted that MMC paid her a set weekly salary and no overtime during the entire year of 2021, and that MMC did not compensate her at all during November and December 2020 or at any time in 2022. MMC claimed that at all relevant times, it understood that Gallagher was not an hourly employee, but instead “was an owner and officer” of MMC who was to be paid by commission no differently than other previously employed salespersons of MMC.
Magistrate Judge Wicks’ opinion noted that, prior to the filing of the lawsuit, Gallagher and MMC had entered into a purchase agreement whereby Gallagher was to purchase MMC for $500,000. The parties informed the Judge that Gallagher was employed at MMC in advance of her anticipated purchase of MMC, but that when no successful application for a change in ownership of MMC was submitted to the New York State Department of Financial Services by the deadline contemplated in the purchase agreement, the parties’ relationship soured, resulting in Gallagher filing the lawsuit.
As part of the lawsuit, the parties previously submitted a request for the Judge’s approval of a settlement on May 6, 2022, whereby Gallagher would purchase MMC for $100,000 rather than the $500,000 contemplated in the original purchase agreement. Judge Wicks ultimately denied the parties’ first request for settlement approval due to what he deemed to be a lack of essential information required for the Court to evaluate whether the proposed agreement was fair and reasonable as required by Cheeks. Such information included the bona fide details of the parties’ FLSA dispute, calculations of Gallagher’s potential recovery, and an explanation of what portion of the reduced purchase price of MMC constituted consideration for Gallagher’s FLSA claims. The decision of September 14 addressed the parties’ submission of a renewed settlement approval request.
The Decision
As noted by Magistrate Judge Wicks, in support of the parties’ renewed settlement agreement approval request, the parties aimed to kill two bird with one stone – resuscitate the parties’ failed transaction and settle Gallagher’s wage & hour claims against MMC. Id. at 6. This time around, Gallagher submitted detailed information to the Court concerning her purported unpaid wage damages, which she alleged to be approximately $295,000. This figure included alleged “underpayments, liquidated damages, pre-judgment interest, and penalties” owed to her by MMC. Id. at 4. Gallagher also provided the Court with the specific details of her alleged employment, including time periods, weekly hours worked, regular rate of pay, and periods during which she claims that she did not receive proper compensation.
Magistrate Judge Wicks noted that under the original settlement approval request, he had been unable to determine which portion of the $400,000 reduction in MMC’s purchase price, if any, was consideration for the release of Gallagher’s FLSA claims, and which portion was attributable to other factors. As part of the renewed approval request, Gallagher informed the Court that no formal valuation was conducted to reach the original $500,000 purchase price, and that her reduced purchase price of $100,000 was similarly not calculated based on a formal valuation. Instead, both figures were the product of advice from her attorneys, her experience in the industry, and her “sense of the value” of the mortgage banking licenses (whereby MMC’s New York Mortgage Banker’s license was in the process of being surrendered). Id. at 5. Gallagher submitted that she was unable to “break down exactly” what portions of the reduced purchase price were attributable to what specific single factor; however, in her view, the value of her FLSA claims and the loss of MMC’s New York license were both factors that were “in the mix” along with her desire to own MMC outright, avoid costly arbitration, avoid the stress and expense of the lawsuit, and generally “just move on” with her life. Id. at 5-6.
In evaluating and approving the renewed settlement request, Magistrate Judge Wicks noted his satisfaction with the fairness of the proposed settlement, giving due weight to Gallagher’s more than 25 years of experience in the mortgage banking industry and the fact that Gallagher herself worked at MMC with the intention of inevitably owning it (as opposed to a disinterested third-party purchase of a business). As such, although there was no formal valuation of MMC’s value conducted, Judge Wicks acknowledged that Gallagher’s experience and familiarity with the business was relevant to her comfort level with the reduced purchase price. The Court also gave weight to Gallagher’s desire to move on with her life and put these issues behind her.
Magistrate Judge Wicks further cited the fact that Gallagher now owns 100% of MMC, and that a trial loss should he not approve the settlement could potentially turn her status as 100% owner into a 0% owner with no remaining claims against MMC. The Court noted that no settlement amount was earmarked for payment of attorneys’ fees, as all of Gallagher’s attorneys except for one were paid on an hourly basis (rather than a contingency), that the one exception only represented Gallagher briefly and was replaced within 3 months of filing the case, and the attorney had not expressed any intention of asserting a lien over the reduced purchase price of MMC.
Based on all of these factors, the Court finally confirmed that the renewed settlement agreement properly revised and limited two troublesome provisions concerning non-disparagement and confidentiality – both of which are regularly found by courts to be inconsistent with the public policy intent underlying the FLSA.
Implications for Employers
The decision is an interesting thought experiment for small employers who are subject to unpaid wage lawsuits brought on behalf of a small number of plaintiffs. In this instance, the parties agreed that rather than separate Gallagher’s desire to purchase MMC and her alleged unpaid overtime wages and related penalties, a more logical solution was to combine the two and provide for one global resolution. Creative, innovative thinking along these lines likely saved MMC from incurring additional litigation expenses and the unknown of a jury trial verdict. Moreover, the parties ultimately were able to provide the Court with evidence from which the settlement could be deemed fair and reasonable.
Although potentially limited to specific factual situations along the lines of an experienced employee initially employed by a small business with the goal of owning the business, this decision illustrates that in evaluating the reasonableness of proposed unpaid wage case settlements, judges may be open to approving agreements when the parties think outside the box (as long as the parties are able to defend and support their actions).
The Class Action Weekly Wire – Episode 30: The State Of BIPA Privacy Class Action Litigation
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associate Tyler Zmick with their discussion of a $7 million BIPA class action settlement announced this month and analysis of developing trends in biometric privacy litigation spurred by cutting-edge technology and the ever-evolving innovation of the plaintiffs’ class action bar.
Episode Transcript
Jerry Maatman: Hello, loyal blog readers and listeners. Welcome to our Friday weekly podcast, the Class Action Weekly Wire. I’m joined by my colleague Tyler Zmick today, one of our BIPA thought leaders, to discuss privacy class action litigation in general and Illinois BIPA lawsuits in particular. Welcome, Tyler.
Tyler Zmick: Great to be here, Jerry. Thanks for having me.
Jerry: I look on the docket every day, and there seems to be just a mushroom cloud explosion of BIPA class action filings. What’s going on there, and what’s driving the plaintiffs’ bar to file so many of the BIPA cases?
Tyler: Sure, I mean, that’s absolutely accurate. It seems for years now that plaintiffs’ lawyers on the class action side have been filing BIPA cases on seemingly a daily basis. The impetus, the sort of driving force, I believe, is really just the possibility of very high levels of damages. It could be a lot of money involved for both class members and plaintiffs’ counsel, especially in the wake of very plaintiff-friendly Illinois Supreme Court decisions. We have just plaintiffs’ lawyers really just looking to cash in and join the many high dollar settlements that have been come into play in recent years.
Jerry: One of the areas of focus of the Duane Morris Class Action Review has been our tracking of settlements. I’m a believer that success begets copycats, and big settlements result in more filings and more plaintiffs’ lawyers attracted to the area. Recently in the news there was a large BIPA class action settlement preliminarily approved in federal court here in Illinois, about a Little Caesars. Could you tell us a little bit about that, and share your thoughts about what was going on in that case?
Tyler: Sure, Jerry, so this is a settlement between Little Caesars, the Pizza company, and thousands of employees who targeted the company’s finger scanning time clock. It’s a fairly old case filed initially in 2019, so it’s been pending for over four years now. The employees in the case asserted that Little Caesars violated BIPA by requiring employees to scan their fingerprints to clock in and out of work without first providing the necessary disclosures, or obtaining their express written consent. Little Caesars denied all allegations of wrongdoing, and denied that it violated BIPA.
This type of case – probably by and large, if you were to count by the numbers the factual context of different BIPA cases – employee timekeeping cases involving fingerprint scanning is probably the most common fact pattern, although far from the only fact pattern you would find in BIPA cases that are being filed.
Jerry: Can you explain to our listeners where you would peg this $7 million settlement kind of on the range of what large-scale BIPA cases have been settling for – either on an aggregate basis or on a per claimant per class member basis?
Tyler: I would say that this settlement of just under $7 million for a class of approximately 8,500 class members is right in the middle of the range of recoveries that we have seen over the past couple of years. When all fees for administrative costs and plaintiffs’ attorney fees are taken out of the picture, each class member will receive roughly $545 each – and that is really consistent with a number we’ve seen in a lot of BIPA class action settlements. And, importantly, if that number of class members stated in the settlement agreement turns out to be higher, the gross settlement fund will increase by $832 for each class member, just to make sure that the per class member payments do not change.
Jerry: You had mentioned this as an older case. Could you provide your analysis to our listeners about kind of the average length of time it takes for BIPA cases to work through either the state court system as compared to the federal system? This one, of course, was in the federal court.
Tyler: Yeah, sure, Jerry. So I think it’s hard to come up with an average lifespan for a BIPA case, just because some can be dismissed very early on if the fact investigation done by plaintiffs’ counsel reveals that there actually is no biometric data at issue in the in the case, and their allegations and complaint were actually untrue, then they’ll voluntarily dismiss the case. Other cases can reach settlements on an individual basis early on, or even on a class basis, early on. Whereas other defendants, this case Little Caesars, for a good period of time opt instead to litigate the case, and really to prove, either at the summary judgment stage or trial stage, that they did not, in fact, violate BIPA for a number of different reasons.
Jerry: Well, in following that mantra of ‘success begets copycats,’ and more of these cases get filed, could you share with corporate counsel what you view as the future of BIPA litigation, the types of claims apt to be brought? I know that in talking you to before, claims are divided into two boxes, one being employee-related cases and others being non-employee related cases.
Tyler: Yeah, absolutely. And that’s a great question. I think, as I mentioned, the most common type of BIPA case, historically, has been the employee. Timekeeping context and facts involving employees clocking in and out – either with fingerprints or face scans. I think, moving forward, we are likely to see non-employee BIPA class actions, and we can also expect to see BIPA cases brought against people that are further downstream than you might think. For example, a company like Amazon Web Services that provides cloud storage services, and is pretty far removed from any “collection” of biometric data that may have occurred relative to an end user. So it may have been collected by one entity, whether it’s an employer or timekeeping vendor, and then sent to another company and ultimately sent to some kind of cloud of storage service provider that really has no idea what’s on its servers. And we are seeing companies like that being sued under BIPA or other companies in similar situations, that are one step or two steps removed from consumers or employees, being named as defendants in BIPA cases.
Jerry: That’s an interesting perspective. I’d call that “BIPA 2.0: The Next Generation.” And the plaintiffs’ bar, I’ve found in my experience, is nothing if not innovative, and is pressing the envelope of statutes like BIPA. Well, Tyler, thank you so much for sharing your analysis and your thought leadership in this area. Loyal listeners, that signs off on another Friday weekly podcast – thanks so much for joining us.
Tyler: Thanks for having me, Jerry, always great to be here.
FCRA Class Action Survives Equifax’s Motion To Dismiss
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Zachary J. McCormack
Duane Morris Takeaways: In In Re Equifax Fair Credit Reporting Act Litigation, No. 1:22-CV-03072 (N.D. Ga. Sept. 11, 2023), Judge Leigh Martin May of the U.S. District Court for the Northern District of Georgia granted in part as to the state law negligence claim and injunctive relief under the Fair Credit Reporting Act (“FCRA”), but denied in part the motion to strike class action allegations, allowing the plaintiffs’ claims to proceed past the motion to dismiss stage. Judge May struck plaintiffs’ negligence and injunctive relief claims, reasoning the plaintiffs could not identify a statutory or common law duty of care owed to the plaintiffs by the Credit Reporting Agency (“CRA”) Equifax, Inc. (Equifax). As to to the FCRA claim, Judge May noted that the cases cited by Equifax center on instances where a correctly reported credit score was misleading, which was distinguishable from its position that it was not “objectively unreasonable” for the company to interpret 15 U.S.C. § 1681e(b) as being inapplicable to credit scores. The ruling is a good roadmap for defendants involved in FCRA class action litigation.
Case Background
Equifax is a multinational data analytics and CRA headquartered in Atlanta, Georgia, that collects and aggregates credit information for millions of individual consumers and businesses. On May 27, 2022, reporting first emerged that Equifax allegedly had provided inaccurate credit scores on millions of U.S. consumers seeking loans during a three-week period in 2022. According to public reporting in May of 2022, the glitch occurred when Equifax experienced a coding issue once it introduced a technology change to its legacy online model platform, leading to the miscalculation of roughly 12 percent of credit scores. This led to score inaccuracies of 20 points or more. Equifax sent the erroneous scores of individuals applying for lines of credit, which affected auto loans, mortgages, and credit card applications. Plaintiffs in this action, filed on August 3, 2022, are consumers who applied for loans during this three-week period in spring 2022, and were either denied credit, forced to pay inflated interest rates, and/or have a co-signer, due to Equifax’s reporting or artificially lowered scores.
On February 14, 2023, Equifax filed a motion to dismiss, seeking dismissal of plaintiffs’ claims of willful violation of the FCRA and common law negligence, class allegations of negligent violation of the FCRA and common law negligence, and injunctive relief. On September 11, 2023, the Court entered an Order partially dismissing plaintiffs’ claims of negligence and injunctive relief, but not their claim of willful violation of the FCRA.
The Court’s Order
A. Willful Violation of the FCRA
The FCRA was created “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. V. Burr, 551 U.S. 47, 52 (2007). The FCRA requires that when a CRA “prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C § 1681e(b). This includes an obligation to investigate and account for the accuracy of such information if the customer disputes it.
In turn, 15 U.S.C. § 1681n(a) provides recovery for willful violations of the FCRA, which may entitle the consumer to actual or statutory damages and even punitive damages. Here, Equifax argued that plaintiffs’ claim for a willful violation of the FCRA was invalid because the statute is inapplicable to credit scores, and the technology glitch was a mistake rather than willful conduct. The Court noted that the cases cited by Equifax centered on instances where a correctly reported credit score was misleading, which was distinguishable from its position that it was not “objectively unreasonable” for the company to interpret 15 U.S.C. § 1681e(b) as being inapplicable to credit scores. The Court likewise rejected Equifax’s argument that because it was proactively replacing its legacy technology system, it did not act recklessly. Instead, the Court allowed plaintiffs’ claim for willful violation to remain because Equifax’s replacement of the legacy technology system provided indicia that Equifax was aware its system was antiquated.
Although Equifax insisted that each claim requires individualized analysis, the Court reasoned it would be premature to dismiss the class claims. Considering this is a data-driven case, it reasoned that discovery could establish an electronic paper trail supporting plaintiffs’ allegations and establishing cause and effect. The Court relied on these points as support that it might be possible for plaintiffs to certify a class, and as such, Equifax could not dodge a class action at this point.
B. Georgia Statutory and Common Law Negligence Claim
The Court remained unpersuaded by plaintiffs’ negligence allegations, and granted Equifax’s motion to dismiss this claim. The Court opined that Plaintiffs could not meet the burden to plead a duty owed by Equifax. Rather than arguing that Equifax owed plaintiffs a statutory duty of care under Georgia statutory law, the plaintiffs asserted that the CRA owed them the alleged duty of care under Georgia common law. Plaintiffs relied on common law because the Georgia Supreme Court has held that mere foreseeability of a potential harm is not enough to establish a duty of care. CSX Transp., Inc. v. Williams, 608 S.E.2d 208, 209-10 (Ga. 2005).
Instead, plaintiffs relied on a recent Eleventh Circuit opinion in hopes to establish that Equifax’s “creation of a risk of foreseeable harm” is enough to create a legal duty of care. Ramirez v. Paradies Shops, LLC, 69 F.4th 1213 (11th Cir. 2023). But the Court differentiated the cited precedent, noting the employer-employee relationship was “significant” in establishing a duty of care. See Ramirez, 69 F.4th at 1219-20.
C. Injunctive Relief
The Court likewise dismissed plaintiffs’ demand for injunctive relief, requiring the company to “(i) implement new protocols, procedures, and practices that will ensure no further harm to consumers, (ii) disgorge [their] gross revenues and profits derived from [their] furnishment of inaccurate consumer reports, (iii) and inform each affected customer that their information was misreported, what information about them was misreported, and to what entities it was misreported.” See Amended Complaint at 39.
While plaintiffs argued the Court could award injunctive relief because the FCRA does not expressly prohibit it, the Court remained skeptical at the series of cases cited by plaintiffs that contained little to no analysis. The Court was, instead, persuaded by the “affirmative grant of power to the FTC and other agencies to pursue injunctive relief and similar affirmative grant to private litigants to pursue injunctive relief from certain government conduct, contrasted with the affirmative grant to private litigants in other situations to pursue other relief, persuasively demonstrates that Congress did not grant private litigants general power to obtain injunctive relief under the FCRA.” Id. at 22.
Implications for CRAs
Overall, the Court’s order provides guidance that (i) consumer reporting agencies, like Equifax, Transunion, and Experian, cannot challenge the application of the FCRA on the basis that they are not a CRA; and (ii) that CRAs can willfully violate the FCRA by failing to identify, adopt, and maintain reasonable procedures to greatly reduce the chances of a technology glitch that incorrectly report credit scores. The decison further provides insight that CRAs cannot claim it is “objectively unreasonable” to interpret 15 U.S.C. § 1681e(b) as being inapplicable to credit scores. Unreasonable data-management procedures that undermine the numerical representations of credit scores clearly falls under the FCRA. As such, it is imperative that CRAs monitor, investigate, and account for data-management issues that could leave an electronic paper trial to surface in discovery, and ultimately lead to class action liability under the FCRA.
Drug Screening Company Obtains Hairy Win In Disparate Impact Race Bias Class Action
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther
Duane Morris Takeaways: In Wilson v. Timec, No. 2:23-CV-00172, 2023 WL 5753617 (E.D. Cal. Sept. 6, 2023), Judge William B. Shubb of the U.S. District Court for the Eastern District of California granted Defendants’ Motion for Partial Judgment on the Pleadings in a race discrimination class action. The Court held that Plaintiffs Marvonte Wilson and Domonique Daniels (“Plaintiffs”) failed plausibly to allege in their complaint that Defendants’ hair drug testing employment practice had a disparate impact or disparate treatment on individuals with melanin-rich hair under Title VII of the Civil Rights Act of 1964 (“Title VII”) or under the California Fair Employment and Housing Act (“FEHA”). This case serves as an important reminder to companies that utilize employment-related drug testing to stay vigilant as to the potential impact of their chosen drug testing protocols on certain populations and communities.
Case Background
Plaintiffs, who both have melanin-rich hair, filed a complaint alleging that Defendants failed to provide them work assignments or opportunities on the basis of allegedly false positive hair drug tests. Id. at 1. Plaintiffs asserted that hair drug testing is less effective on melanin-rich hair, and persons of color who have melanin-rich hair are consequently at a higher risk of false positive test results than individuals with lighter-colored hair. Id. at 2. Plaintiffs filed a class action and sued on behalf of themselves and other similarly-situated workers alleging that the drug testing had a disparate impact on individuals with melanin-rich hair under Title VII and under the FEHA and that Defendants subjected them to disparate treatment. Id. at 1. In response, Defendant DISA (later joined by all other Defendants) filed a Motion for Judgment on the Pleadings (“Defendants’ Motion”). Id.
The Court’s Decision
The Court initially noted that Title VII prohibits employers from “discriminat[ing] against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race . . . or national origin.” Id. at 2 (quoting 42 U.S.C. § 2000e-2(a)(1)). Similarly, the FEHA prohibits employers from discriminating against an individual “‘in compensation or in terms, conditions, or privileges of employment’ on, inter alia, race, color, or national origin.” Id. (quoting Cal. Gov’t Code § 12940(a)). Due to the similar language between Title VII and FEHA, the Court opined that that “Title VII framework is applied to claims brought under the FEHA.” Id. (quoting Pinder v. Emp. Dev. Dep’t., 227 F. Supp. 3d 1123, 1136 (E.D. Cal. 2017)).
The Court reasoned that a disparate impact claim is proper when plaintiffs “plausibly allege that an employment disparity exists with respect to the protected group.” Id. (citing Liu v. Uber Techs. Inc., 551 F. Supp. 3d 988, 990 (N.D. Cal. 2021)). The Court dismissed Plaintiffs’ Title VII and FEHA disparate impact claims because it found that their complaint lacked substantive allegations sufficient to “establish a connection between race and the challenged” hair drug testing. Id. at 3. Namely, the Court held that, even though Plaintiffs raised allegations in their response to Defendants’ Motion “concerning the difference in the melanin content of dark hair in people of different races, the disparity in drug test outcomes between black and white employees, the difference in how drugs interact with the hair of black and white individuals, and the increased risk of false positive test results due to hair products used by black individuals,” “[n]one of th[o]se allegations appear[ed] in the [Plaintiffs’] complaint.” Id. at 2.
The Court also opined that a claim of disparate treatment is proper “where an employer has treated a particular person less favorably than others because of a protected trait.” Id. at 3. That said, the Court dismissed Plaintiffs’ Title VII and FEHA disparate treatment claims because Plaintiffs failed plausibly to allege that, in adopting their facially neutral drug-testing policies, Defendants “had discriminatory intent.” Id.
For these reasons, the Court concluded that Defendants’ Motion should be granted. Id. at 3. It provided Plaintiffs 20 days, or until September 26, 2023, to file an amended complaint. Id.
Implications for Employers
The Court’s ruling is an important win for companies facing disparate impact class actions in that it illustrates the high bar plaintiffs must meet to clear the pleading phase. In particular, the Court’s decision shows that plaintiffs must allege facts showing an actual connection between the challenged practice and the protected category at issue. That said, companies that utilize employment-related drug testing should be proactive and stay apprised of research surrounding their chosen drug tests and their potentially disparate impact on various communities. Additionally, companies should evaluate their drug testing policies and practices to ensure they remain free of discriminatory intent and potential bias as to any particular community.
Ohio Federal District Court Authorizes Notice Of FLSA Claims In Step One Of The Two-Step “Strong Likelihood” Test And Certifies Rule 23 Class
By Gerald L. Maatman, Jr., Jennifer A. Riley, and Kathryn Brown
Duane Morris Takeaways: In Hogan v. Cleveland Ave Restaurant, Inc. d/b/a Sirens, et al., 15-CV-2883 (S.D. Ohio Sept. 6, 2023), Chief Judge Algenon L. Marbley of the U.S. District Court for the Southern District of Ohio authorized notice to potential opt-in plaintiffs and conditionally certified a collective action of thousands of adult club dancers in a case asserting violations of the Fair Labor Standards Act (“FLSA”) and Ohio law, including claims of unpaid minimum wages, unlawfully withheld tips, and unlawful deductions and/or kickbacks. For good measure, the Court also granted class certification on the plaintiffs’ state law claims. The opinion is a must-read for employers in the Sixth Circuit facing — or hoping to avoid facing — class and collective wage & hour claims.
Case Background
On October 6, 2015, the named plaintiff Hogan filed the lawsuit as a class and collective action asserting violations of the FLSA and Ohio law. After amending the complaint in May 2017 to add additional defendants, on May 14, 2020, Hogan filed a Second Amended Class and Collective Action Complaint, the operative complaint, with a second named plaintiff, Valentine.
In the operative complaint, the named plaintiffs asserted claims against seven adult entertainment clubs and their owners and managers as well as two club associations and an individual defendant with which the clubs were associated. The plaintiffs later settled their claims against one of the seven clubs.
The allegations in the operative complaint center on the clubs’ use of a landlord-tenant system by which the defendant clubs charged dancers “rent” to perform at the clubs for tips from customers in lieu of paying them wages for hours worked.
On September 26, 2022, the plaintiffs moved for certification of their claims as a class and collective action. The parties concluded briefing on the motion five months before May 2023, when the Sixth Circuit issued its pivotal decision in Clark v. A&L Homecare and Training Center, LLC, 68 F.4th 1003 (6th Cir. 2023). In Clark, the Sixth Circuit ushered in a new, more employer-favorable standard for deciding motions for conditional certification pursuant to 29 U.S.C. § 216(b) of the FLSA.
The District Court’s Decision
First, the court articulated the standard by which it would decide the plaintiffs’ motion for court-supervised notice of their FLSA claims. The court described the Sixth Circuit’s opinion in Clark as “maintain[ing] the two-step process for FLSA collective actions but alter[ing] the calculus.” Slip Op. at 7. Whereas pre-Clark case law authorized notice at step one of the two-step process after only a modest showing of similarly-situated status, the standard post-Clark demands that plaintiffs show a “strong likelihood” exists that there are others similarly situated to the named plaintiffs with respect to the defendants’ alleged violations of the FLSA prior to authorizing notice. Defendants after Clark retain the ability, after fact discovery concludes, to demonstrate that the named plaintiffs in fact are not similarly- situated to any individual who files a consent to join the lawsuit as a so-called opt-in plaintiff. Also unchanged by Clark is the standard for determining similarly-situated status for FLSA purposes.
The court in Hogan concluded that the plaintiffs adequately demonstrated a “strong likelihood” that they are in fact similar to the proposed group of dancers who too were classified as “tenants” of the six defendant clubs who paid rent to lease space at the clubs to earn tips from customers without receiving any wages from the defendant clubs.
In support of their motion, the plaintiffs submitted sworn declarations, deposition testimony, and documentary evidence of the defendants’ policies and practices with respect to dancers. The court found that the plaintiffs showed that the clubs maintained a system in which the defendants acted together to require dancers to pay rent for leasing space, often documented in lease agreements, instead of being paid as employees for performing work.
Among the defendants’ arguments opposing the plaintiff’s motion, the court considered, but ultimately rejected, the defendants’ argument that arbitration provisions in the lease agreements should preclude court-authorized notice of the FLSA claims. The court cited Clark for the proposition that it may consider as a relevant factor the defense of mandatory arbitration agreements in deciding whether to authorize notice of FLSA claims. Homing in on the facts, the court reasoned that members of the potential collective action did not all sign the lease agreements and that those who signed the lease agreements had the option to agree to forgo arbitration of their claims. According to the court, the defendants would have a stronger basis to defeat court-authorized notice if they could show that all dancers had to sign the lease agreement and the lease agreement made arbitration mandatory.
In addition, the court evaluated whether the plaintiffs satisfied the Rule 23 standards for seeking to certify a class of dancers on their state law claims. The court concluded that the plaintiffs met the requirements for class certification under Rule 23(b)(3), because questions of law or fact common to class members predominated over any questions affecting only individual members (the predominance inquiry), and that a class action was superior to other available methods for fairly and efficiently adjudicating the case (the superiority inquiry).
As to predominance, the court reasoned that the issue of the defendants’ alleged unlawful system of treating dancers as tenants rather than paying them wages predominated over individualized issues such as whether a particular dancer signed a lease agreement. As to superiority, the court concluded that the relatively small size of each dancer’s wage claim demonstrated that individuals would have little incentive to pursue their claims alone. Finding no factors pointing against class treatment of the claims, the court concluded that treating the claims as a class action was the superior method for adjudicating liability efficiently.
Implications For Employers
Hogan is the latest in a series of opinions applying the Sixth Circuit’s novel “strong likelihood” standard to plaintiffs’ efforts to expand the scope of their FLSA claims to potential opt-in plaintiffs. The developing case law in this area reflects a highly fact-specific approach to deciding whether plaintiffs have made the necessary showing to unlock court-authorized notice of their claims to potential opt-in plaintiffs. The opinion in Hogan is significant in that it grapples with the “strong likelihood” standard alongside the well-established test for certifying a class pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure.
The Class Action Weekly Wire – Episode 29: EEOC Strategic Plan Update
Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik with their analysis and discussion of the Equal Employment Opportunity Commission’s (“EEOC”) Strategic Plan for Fiscal Years 2022-2026.
Episode Transcript
Jerry Maatman: Welcome, loyal blog readers to our weekly installment of the Friday podcast, the Class Action Weekly Wire. I’m joined today by my partners, Alex Karasik and Jennifer Riley. Welcome.
Jennifer Riley: Great to be here. Thanks for having me.
Alex Karasik: Thanks, Jerry – Thrilled to be on the podcast.
Jerry: Today’s topic is the EEOC Strategic Plan for 2022 through 2026. It was just published this past month. Alex – what’s this about and what does it mean for employers?
Alex: Great question, Jerry. The Strategic Plan furthers the EEOC’s mission of preventing and remedying unlawful employment discrimination in advancing the Commission’s goal of providing equal opportunities and employment for all people. The Strategic Plan focuses on 1) enforcement, 2) education and outreach, and 3) organizational excellence. The Strategic Plan also provides performance measures for each strategic goal. So for corporate counsel who are involved in employment-related compliance as well as EEOC litigation, the new Strategic Plan is really required reading. You can find a copy of the Strategic Plan linked to the Duane Morris Class Action Blog, where we discuss the impact of the Plan and break down what it means for employers.
Jerry: Jen, enforcement is a big ticket item – it reminds me of the old EF Hutton commercial, ‘when EF Hutton speaks, people listen.’ And as Alex said, certainly when the EEOC talks about how it’s going to spend taxpayer dollars in enforcement of anti-discrimination laws, employers should listen and take notice. What are the takeaways in your mind when it comes to enforcement-related issues?
Jen: Well in the Strategic Plan, Jerry, the EEOC describes its primary mission as to prevent unlawful employment discrimination through its administrative mechanisms and through the litigation in terms of its enforcement mechanisms as well as through as adjudicatory and oversight processes. So the EEOC states that its main strategic focus for employing these mechanisms is through this fair and efficient enforcement based on the circumstances of each charge or each complaint, while maintaining a balance of meaningful relief for victims of discrimination.
Jerry: Well, I know that you can divide up the EEOC’s docket into systemic cases and non-systemic cases – systemic cases being much like class actions, even though the EEOC doesn’t have to comply with Rule 23 to litigate those. The EEOC also talks about outreach and education. Alex, is that something that employers should heed and take notice of?
Alex: Absolutely, Jerry – and one of the goals of the EEOC is trying to really prevent discrimination in these types of issues before they even ever surface to litigation. And the EEOC Strategic Plan does exactly that. It includes programs and events that come at cost-effective tools for enforcement. So these programs are primarily designed to help individuals from protected categories who may have historically been subjected to employment discrimination. Part of the EEOC’s education and outreach involves expanding technology through social media. That’s where a lot of workers are these days and a lot of people in society – and ensuring that the EEOC website and digital tools are more user-friendly and accessible and leveraging technology to capture a wider audience. These efforts to improve education and outreach are aimed at promoting public awareness of employment, discrimination laws while maintaining information and guidance for employers, federal agencies, unions, and staffing agencies. So really, the EEOC is dedicated to educating a large contingency of groups and organizations on what it can do to prevent discrimination.
Jerry: I also thought the aspect of the Plan that talked about organizational excellence was interesting. I, for one, have participated in internal EEOC training sessions where government attorneys came to be trained on cutting edge theories and techniques and employment discrimination laws. I once was an outside lecturer welcomed in by the EEOC to give that training. Jen, what do you read in terms of the EEOC’s investment taxpayer dollars into organizational excellence and what it means at the receiving end for employers in terms of lawsuits and techniques used by the government and litigating those lawsuits?
Jen: Well Jerry, the Strategic Plan makes clear that organizational excellence is the cornerstone of achieving the eeoc strategic goals. So the Plan states that the EEOC aims to improve on its culture of accountability, inclusivity, and accessibility. In addition to that, the Plan states that the EEOC will continue to advance civil rights in the workplace by ensuring resources are allocated properly to strengthen its intake, outreach, education, enforcement, and service goals. In terms of that organizational excellence strategic goal, it has two prongs including improving the training of the EEOC employees and enhancing the EEOC’s infrastructure. For employees, the Plan states that the EEOC will continue to foster enhanced diversity, equity, inclusion, accessibility in the workplace, maintain employee retention, implement leadership and succession plans. And relative to that to the agency’s infrastructure, the Plan embraces this increased use of technology through analytics as well as through the management of fiscal resources to promote the agency’s mission.
Jerry: Those are a very ambitious set of accomplishments that the government is staking out for itself. Alex, at the end of the day, what do you think are the most important takeaways for corporate counsel in terms of this newly published document from the EEOC?
Alex: Corporate counsel should pay attention to what they can do to best prevent discrimination and use this Strategic Plan to identify areas where the EEOC will essentially be focusing on in the coming years. The Strategic Plan is like a roadmap for businesses that they should absolutely pay attention to. Some of the focus areas that we learned about were systemic discrimination, conciliation, litigation, increasing the Commission’s capacity for litigating systemic violations of the discrimination laws., and how the EEOC is really ramping up its efforts to investigate charges. The EEOC’s focus on technology is a really key area for employers, and they’re taking advantage of the tools, such as the Internet, artificial intelligence, websites, social medias, and these types of things to look at where might employees be, and where my potential victims discrimination be, and how we can reach them to both educate them on the discrimination laws and what the key priorities are for the businesses and the Commission alike in terms of handling these issues. So these continue to be pillars for the agency – the areas that we just discussed today – and employers should absolutely buckle up for what will be a very busy four years of EEOC-initiated investigations and litigation.
Jerry: Thank you, Alex, and thank you, Jen, for your analysis and synopsis of this most important document. And thank you, loyal blog readers for tuning into our weekly podcast. Have a great day.
Alex: Thank you, Jerry.
Jen: Thanks, everybody.
Court Dismisses VPPA Class Claim Alleging That General Mills Shared Consumer Data With Facebook And Google
By Gerald L. Maatman, Jr. and Tyler Zmick
Duane Morris Takeaways: In Carroll v. General Mills, Inc., No. 23-CV-1746 (C.D. Cal. Sept. 1, 2023), Judge Dale Fischer of the U.S. District Court for the Central District of California issued a decision dismissing (for a second time) a class claim brought against General Mills under the Video Privacy Protection Act (“VPPA”). In its decision, the Court ruled that General Mills – a company that manufactures and sells cereals and other food products – did not qualify as a “video tape service provider” under the VPPA, and that even if it did, Plaintiffs’ claim would still fail because they did not show they were “consumers” covered by the statute’s privacy protections. Carroll v. General Mills is the latest decision involving the VPPA – a long dormant statute that class action plaintiffs have recently turned to in attempting to seek redress for alleged privacy violations.
Case Background
Plaintiffs Keith Carroll and Rebeka Rodriguez alleged that they watched videos on General Mills’ website and that General Mills subsequently disclosed their “video viewing behavior” to Facebook and Google. Specifically, Carroll claimed that General Mills sent Facebook the video he watched online and his identifying information in connection with General Mills’ use of a Facebook advertising feature. Similarly, Rodriguez claimed that General Mills disclosed her “video viewing behavior” and other website analytics data to Google through General Mills’ use of the Google Marketing Platform.
Based on these allegations, Plaintiffs filed a class action that alleged General Mills violated the Video Privacy Protection Act (“VPPA”) by knowingly disclosing their personally identifiable information (“PII”) to Facebook and Google. See 18 U.S.C. § 2710(b)(1).
The District Court’s Decision
The Court granted General Mills’ motion to dismiss Plaintiffs’ VPPA claim. It held that Plaintiffs failed to satisfy the first two prongs of the four-step pleading test applicable to VPPA claims.
In analyzing the allegations, the Court explained that to state a VPPA claim, a plaintiff must allege that: (1) a defendant is a “video tape service provider”; (2) the defendant disclosed PII concerning a consumer to another person; (3) the disclosure was made knowingly; and (4) the disclosure was not authorized by the “safe harbor” provision set forth in 18 U.S.C. § 2710(b)(2).
Like the claim asserted in the previous version of their complaint, the Court determined that Plaintiffs’ VPPA claim failed at step (1) because Plaintiffs did not adequately allege that General Mills is a “video tape service provider,” and that even if the Court were to proceed to step (2), Plaintiffs would also fail at that step based on their inability to show that they qualify as “consumers” under the statute.
“Video Tape Service Provider”
Regarding step (1), the VPPA defines a “video tape service provider” as “any person, engaged in the business, in 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). Importantly, the Court noted that the statute does not apply to every company that “delivers audio visual materials ancillary to its business” but only to companies “specifically in the business of providing audio visual materials.” See Order at 6.
Based on the allegations at hand, the Court held that Plaintiffs failed to allege that General Mills – who manufactures and sells cereals, yogurts, dog food, and other products – is “engaged in the business of delivering, selling, or renting audiovisual material.” Id. The Court rejected Plaintiffs’ attempt to satisfy step (1) by adding allegations in their amended complaint regarding General Mills posting on its website links to professionally made videos. In the Court’s words, these “allegations do no more than show that videos are part of General Mills’ marketing and brand awareness,” which does not suggest “that the videos are profitable in and of themselves” or that the videos “are the business that General Mills is engaged in.” Id. at 6-7.
“Consumer”
The Court next held that even if Plaintiffs had satisfied the first step, they nonetheless would have failed at step (2) based on their failure to allege facts establishing that they are “consumers” under the VPPA.
The VPPA defines “consumer” as “any renter, purchaser, or subscriber of goods or services from a video tape service provider.” 18 U.S.C. § 2710(a)(1). Read in the statute’s full context, courts have held that “a reasonable reader would understand the definition of ‘consumer’ to apply to a renter, purchaser or subscriber of audio-visual goods or services, and not goods or services writ large.” See Order at 7 (citation omitted). That is, the definition of “consumer” “mirrors the language used to define a ‘video tape service provider’ as one who is in the business of ‘rental, sale, or delivery’ of audiovisual material.” Id.; see also id. at 7-8 (“‘[C]onsumer’ is obviously meant to be cabined in the same way [as ‘video tape service provider’] – as a renter, purchaser, or subscriber of prerecorded video cassette tapes or similar audio visual materials.”).
The Court determined that Plaintiffs’ prior purchase of General Mills’ food – an “unrelated product” – does not make them “consumers of audiovisual material.” Id. at 8. The Court further noted that Plaintiffs’ failure at step (2) highlights “the fundamental issue” with their VPPA claim – namely, Plaintiffs struggle to plead that they are consumers of General Mills’ audiovisual material because General Mills is not in the business of offering audiovisual material to consumers. See id. at 8-9 (“If General Mills were in such a business, Plaintiffs would not be referring to purchases of General Mills’ food products to establish themselves as consumers.”).
Implications For Corporate Counsel
The decision in Carroll v. General Mills reflects the recent trend among class action plaintiffs’ lawyers of using traditional state and federal laws – including the long dormant VPPA – to seek relief for alleged privacy violations. In applying modern technologies to older laws like the VPPA (passed in 1988), courts have grappled with, among other issues, determining who qualifies as a “video tape service provider” or a “consumer” under the statute.
The Carroll decision may suggest that the definitions of “video tape service provider” and “consumer” are relatively straightforward, but other cases can present close calls (e.g., whether a social media platform that delivers various services to users, including video content, is a “video tape service provider”). Indeed, courts have recently faced challenges in interpreting the VPPA’s definitions in cases involving, inter alia, whether individuals who download a free app through which they view videos qualify as “subscribers” (and therefore “consumers”) under the statute.
Given this uncertainty, companies that provide audio visual materials in connection with their business operations should take advantage of the “safe harbor” amendment, adopted in 2013, under which “video tape service providers” may lawfully disclose PII with the informed written consent of consumers. To do so, companies should update their online consent provisions as needed to specifically address the VPPA.
Maryland Federal District Court Dismisses Class Action Alleging Website Privacy Violations For Lack Of Article III Standing
By Gerald L. Maatman, Jr., Jennifer A. Riley and Rebecca S. Bjork
Duane Morris Takeaways: On September 1, 2023, Judge Deborah Chasanow of the U.S. District Court for the District of Maryland granted a motion to dismiss a class action alleging that the website of defendant Jetblue Airways violated users’ privacy rights under the Maryland Website and Electronic Surveillance Act (“MWES”A). Finding that the named Plaintiff lacked Article III standing to bring the lawsuit, the Court relied upon the lack of any allegations in the Complaint that any of Plaintiff’s personal information was captured by the alleged use of a session replay code. As a result, his Complaint lacked any allegation of a concrete harm that is necessary to bestow standing by virtue of suffering an injury-in-fact. Employers are well-served to examine their websites for the level of risk they might pose of exposure to litigation of this kind, which is currently being filed in more and more courts around the country.
Case Background
Jetblue Airways Corp. (“Jetblue”) was sued by Matthew Straubmuller in the U.S. District Court for the District of Maryland, alleging that he and a putative class of website users who had visited Jetblue’s website were entitled to damages from Jetblue for violation of the MWESA. Slip Op. at 2. The purpose of that statute is two-fold: both to be a useful tool in crime prevention; and to ensure that “interception of private communications is limited.” Id. at 8.
Plaintiff alleged Jetblue’s website uses a “session replay code” and that this allows for Jetblue to track users electronic communications with the website in real time, and also can enable reenactments of a user’s visit to the website, and that these constitute actionable privacy violations under the provisions of the MWESA.
JetBlue filed a motion to dismiss. It asserted that that Plaintiff lacked Article III standing to bring his claims. It contended that Plaintiff alleged a mere procedural violation of the MWESA and did not allege a concrete harm necessary to establish an injury-in-fact to confer standing.
The District Court’s Decision
Judge Chasnow granted Jetblue’s motion to dismiss. Relying on the Supreme Court’s decision in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021), she rejected Plaintiff’s argument that a statutory violation alone is a concrete injury. The Judge opined that “Courts must independently decide whether a plaintiff has suffered a concrete harm because a plaintiff cannot automatically satisfy the injury-in-fact requirement whenever there is a statutory violation.” Slip Op. at 5-6 (quoting TransUnion (“under Article III, an injury in law is not an injury in fact.”). And more to the point, she cited case law interpreting the MWESA itself to this effect, which Plaintiff had not cited. Id.
As a way of underlining its ruling, the Court noted that Jetblue had submitted a June 12, 2023 decision coming to the exact same conclusion involving a nearly identical complaint filed against Jetblue in the Southern District of California in Lightoller v. Jetblue Airways Corp. Id. at 4.n.1. Other cases involving similar rulings are presently percolating throughout the federal district courts. Id. at 7 (collecting cases).
Implications For Employers
Judge Chasnow’s decision in Straubmuller v. Jetblue Airways Corp. provides corporate counsel with a good opportunity to set up a time to talk with their company’s information technology officers to discuss litigation risks related to websites and how they interact with employees, prospective employees and customers. As more plaintiffs-side attorneys file lawsuits alleging privacy violations like the ones alleged against Jetblue in both state and federal courts around the country, many have a good chance of surviving motions to dismiss. Preventing class action lawsuits are far superior to defending them.