Class Action Defense

July 16, 2024 by Class Action Defense

California Federal Court Denies Motion To Dismiss Artificial Intelligence Employment Discrimination Lawsuit

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

Duane Morris Takeaways: In Mobley v. Workday, Inc., Case No. 23-CV-770 (N.D. Cal. July 12, 2024) (ECF No. 80), Judge Rita F. Lin of the U.S. District Court for the Northern District of California granted in part and denied in part Workday’s Motion to Dismiss Plaintiff’s Amended Complaint concerning allegations that Workday’s algorithm-based screening tools discriminated against applicants on the basis of race, age, and disability. This litigation has been closely watched for its novel case theory based on artificial intelligence use in making personnel decisions. For employers utilizing artificial intelligence in their hiring practices, tracking the developments in this cutting-edge case is paramount. This ruling illustrates that employment screening vendors who utilize AI software may potentially be liable for discrimination claims as agents of employers.

This development follows Workday’s first successful Motion to Dismiss, which we blogged about here, and the EEOC’s amicus brief filing, which we blogged on here.

Case Background

Plaintiff is an African American male over the age of 40, with a bachelor’s degree in finance from Morehouse College, an all-male Historically Black College and University, and an honors graduate degree. Id. at 2. Plaintiff also alleges he suffered from anxiety and depression. Since 2017, Plaintiff applied to over 100 jobs with companies that use Workday’s screening tools. In many applications, Plaintiff alleges he was required to take a “Workday-branded assessment and/or personality test.” Plaintiff asserts these assessments “likely . . . reveal mental health disorders or cognitive impairments,” so others who suffer from anxiety and depression are “likely to perform worse … and [are] screened out.” Id. at 2-3. Plaintiff was allegedly denied employment through Workday’s platform across all submitted applications.

Plaintiff alleges Workday’s algorithmic decision-making tools discriminate against job applicants who are African-American, over the age of 40, and/or are disabled. Id. at 3. In support of these allegations, Plaintiff claims that in one instance, he applied for a position at 12:55 a.m. and his application was rejected less than an hour later. Plaintiff brought claims under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1866 (“Section 1981”), the Age Discrimination in Employment Act of 1967 (“ADEA”), and the ADA Amendments Act of 2008 (“ADA”), for intentional discrimination on the basis of race and age, and disparate impact discrimination on the basis of race, age, and disability. Plaintiff also brings a claim for aiding and abetting race, disability, and age discrimination against Workday under California’s Fair Employment and Housing Act (“FEHA”). Workday moved to dismiss, where Plaintiff’s opposition was supported by an amicus brief filed by the EEOC.

The Court’s Decision

The Court granted in part and denied in part Workday’s motion to dismiss. At the outset of its opinion, the Court noted that Plaintiff alleged Workday was liable for employment discrimination, under Title VII, the ADEA, and the ADA, on three theories: as an (1) employment agency; (2) agent of employers; and (3) an indirect employer. Id. at 5.

The Court opined that relevant statute prohibits discrimination “not just by employers but also by agents of those employers,” so an employer cannot “escape liability for discrimination by delegating [] traditional functions, like hiring, to a third party.” Id. Therefore, an employer’s agent can be independently liable when the employer has delegated to the agent “functions [that] are traditionally exercised by the employer.” Id.

In regards to the “employment agency” theory, the Court reasoned employment agencies “procure employees for an employer” – meaning – “they find candidates for an employer’s position; they do not actually employ those employees.” Id. at 7. The Court further reasoned employment agencies are liable when they “fail or refuse to refer” individuals for consideration by employers on prohibited bases. Id. The Court held Plaintiff did not sufficiently allege Workday finds employees for employers such that Workday is an employment agency. Accordingly, the Court granted Workday’s motion to dismiss with respect to the anti-discrimination statutes based on an employment agency theory, without leave to amend.

In addition, the Court held that Workday may be liable on an agency theory, as Plaintiff plausibly alleged Workday’s customers delegated their traditional function of rejecting candidates or advancing them to the interview stage to Workday. Id. The Court determined if it reasoned otherwise, and accepted Workday’s arguments, then companies would “escape liability for hiring decisions by saying that function has been handed to over to someone else (or here, artificial intelligence).” Id. at 8. The Court determined Plaintiff’s allegations that Workday’s decision-making tools “make hiring decisions” as it’s software can “automatically disposition[] or move[] candidates forward in the recruiting process” were plausible. Id. at 9.

The Court opined that given Workday’s allegedly “crucial role in deciding which applicants can get their ‘foot in the door’ for an interview, Workday’s tools are engaged in conduct that is at the heart of equal access to employment opportunities.” Id. In regards to artificial intelligence, the Court noted “Workday’s role in the hiring process was no less significant because it allegedly happens through artificial intelligence,” and the Court declined to “draw[] an artificial distinction between software decision-makers and human decision-makers,” [sic] as any distinction would “gut anti-discrimination laws in the modern era.” Id. at 10.

Accordingly, the Court denied Workday’s motion to dismiss Plaintiff’s federal discrimination claims.

Disparate Impact Claims

The Court next denied Workday’s motion to dismiss Plaintiff’s disparate impact discrimination claims as Plaintiff adequately alleged all elements of a prima facie case for disparate impact.

First, Plaintiff’s amended complaint asserted that Workday’s use of algorithmic decision-making tools to screen applicants including training data from personality tests had a disparate impact on job-seekers in certain protected categories. Second, the Court similarly found disparate treatment present and recognized Plaintiff’s assertions were not typical. “Unlike a typical employment discrimination case where the dispute centers on the plaintiff’s application to a single job, [Plaintiff] has applied to and been rejected from over 100 jobs for which he was allegedly qualified.” Id. at 14. The Court reasoned the “common denominator” for these positions was Workday and the platform Workday provided to companies for application intake and screening. Id.

The Court held “[t]he zero percent success rate at passing Workday’s initial screening” combined with Plaintiff’s allegations of bias in Workday’s training data and tools plausibly supported an inference that Workday’s algorithmic tools disproportionately rejects applicants based on factors other than qualifications, such as a candidate’s race, age, or disability. Id. at 15. The Court therefore denied Workday’s motion to dismiss the disparate impact claims under Title VII, the ADEA, and the ADA. Id. at 16.

Intentional Discrimination Claims

The Court granted Workday’s motion to dismiss Plaintiff’s claims that Workday intentionally discriminated against him based on race and age. Id. The Court found that Plaintiff sufficiently alleged he was qualified through his various degrees and qualifications and areas of expertise, supported by his work experience. However, the Court found Plaintiff’s allegations that Workday intended its screening tools to be discriminatory as “Workday [was] aware of the discriminatory effects of its applicant screening tools” was not enough to satisfy his pleading burden. Id. at 18. Accordingly, the Court granted Workday’s motion to dismiss Plaintiff’s intentional discrimination claims under Title VII, the ADEA, and § 1981, without leave to amend, but left open the door for Plaintiff to amend if a discriminatory intention is revealed during future discovery. Id. Finally, the Court granted Workday’s motion to dismiss Plaintiff’s California’s Fair Employment and Housing Act with leave to amend.

Implications For Employers

The Court’s resolution of employer liability for software vendors that provide AI-screening tools for employers centered on whether those tools were involved in “traditional employment decisions.” Here, the Court held that Plaintiff sufficiently alleged that Workday was an agent for employers since it made employment decisions in the screening process through the use of artificial intelligence.

This decision likely will be used as a roadmap for the plaintiffs’ bar to bring discrimination claims against third-party vendors involved in the employment decision process, especially those using algorithmic software to make those decisions. Companies should also take heed, especially given the EEOC’s prior guidance that suggests employers should be auditing their vendors for the impact of their use of artificial intelligence.

July 12, 2024 by Gerald L. Maatman, Jr.

Minnesota Federal Court Imposes $100 Per Day Civil Contempt Sanctions For Company’s Continued Failure To Comply With An EEOC Subpoena

By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller

Duane Morris Takeaways: In EEOC v. Cambridge Transportation., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857 (D. Minn. July 8, 2024), Judge Nancy E. Brasel of the U.S. District Court for the District of Minnesota accepted U.S. Magistrate Judge Dulce J. Foster’s Report and Recommendation (see EEOC v. Cambridge Transportation, Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024)) to impose civil contempt sanctions against Cambridge Transportation Inc. for its failure to comply with an EEOC subpoena. The EEOC sought documents in its administrative charge investigation into Title VII discrimination allegations on behalf of a former Cambridge Transportation, Inc. worker.

The Court ordered payment to the EEOC of $100 per day for each day Cambridge Transportation, Inc. remains out of compliance beginning on June 7, 2024. Over one month later, Cambridge remains out of compliance based on the docket. This ruling is a warning admonisiton for employers facing EEOC subpoenas and the seriousness for any alleged non-compliance with the Commission’s investigation process.

Case Background

On October 19, 2023, the EEOC petitioned for an Application for and Order to Show Cause Why Administrative Subpoena Should Not Be Enforced (the “Application”) against Respondent Cambridge Transportation, Inc. (“Cambridge”). (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, ECF No. 1.) The EEOC’s subpoena duces tecum sought information from Cambridge regarding a charge of discrimination under Title VII of the Civil Rights Act of 1964. (See id.) In the underlying charge, Charging Party Becky Blechinger alleged that Cambridge “discriminated against her on the bases of her sex (female), race (white), national origin (United States) and disability by paying a higher rate of compensation to men of Somalian national origin,” who worked at Cambridge. (See id., ECF No. 2, at 2.)

On November 1, 2023, the Court issued an order to show cause for the EEOC’s Application. (See id., ECF No. 7.) On November 21, 2023, the EEOC provided a status report that reflected it had not effectuated service on Cambridge. (See id., ECF No. 9)

On December 19, 2023, the EEOC filed a Motion to Stay Proceedings. (See id., ECF No. 12.) Therein, the EEOC stated Cambridge responded and acknowledged receipt of the Court’s order to show cause and further indicated that Cambridge intended to produce the documents identified in the EEOC’s Application by December 26, 2023. (See id.) The following day the Court stayed the case. (See id., ECF No. 13.)

On January 25, 2024, the EEOC filed another status report with a request due to Cambridge’s failure to comply with the subpoena. Thereafter, the Court entered an order for hearing on the EEOC’s Application. (See id., ECF Nos. 14 & 15.) On February 22, 2024, Cambridge attended the hearing via telephone through its non-attorney registered agent. (See id., ECF No. 18.)

On February 27, 2024, the Court granted the EEOC’s Application and determined that Cambridge must comply with the subpoena or otherwise the Court may find Cambridge in civil contempt and impose a daily fine for each day Cambridge remains out of compliance. (See id., ECF No. 20.)

On May 14, 2024, the EEOC provided a status report to the Court and reiterated that Cambridge failed to comply with the subpoena and requested the Court impose a civil fine of $800 per day, for each day past May 14, 2024, that Cambridge remains non-compliant. (See id., ECF No. 23.)

On May 20, 2024, the Court ordered a hearing on the EEOC’s Application and required Cambridge to retain counsel to enter an appearance on its behalf to show cause why sanctions should not be imposed for failure to comply with the Court’s February 27 order. (See id., ECF No. 25.) On June 7, 2024, the hearing occurred and Cambridge did not appear. (See id., ECF No. 27.)

The Magistrate’s Report and Recommendation and the District Court Judge’s Finding

On June 10, 2024, Magistrate Judge Dulce J. Foster issued his Report and Recommendation. (See United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 121147 (D. Minn. June 10, 2024). The report detailed the continued failures of Cambridge to respond to the Agency’s subpoena and efforts to enforce its subpoena. (See id., at *1-6.)

The Court opined Cambridge had “ample time to retain counsel, for its alleged counsel to enter an appearance and to ensure its counsel either would be available to attend the show cause hearing or move to reschedule it” and “despite having months,” it had “faile[d] to do so and made no efforts to explain that failure or seek more time to comply.” (See id., at *5.) As a result, the Court found Cambridge waived all of its defenses to the EEOC’s motion and request for sanctions. (See id., at *5-6.)

The Court reiterated its authority that it “may hold a person who, having been served, fails without adequate excuse to obey the subpoena or an order related to it.” (See id, at *6) (quoting Fed. R. Civ. P. 45(g).) The Court found Cambridge’s continued non-compliance with the subpoena warranted contempt and imposition of monetary sanctions. (See id.) The Court’s recommendation was not made “lightly, but Cambridge’s intransigent refusal to cooperate” left the Court with few other options. (See id.)

On the requested $800 per day fine from the EEOC, the Court reasoned at this stage that it was not justified at this stage. (See id.) The Court instead recommended an initial daily fine of “$100 per day for each day Cambridge remains noncompliant with the subpoena beginning June 7, 2024, the date of the show cause hearing, and continuing until Cambridge satisfactorily complies.” (See id., at *7.) The Court further held “additional sanctions and penalties may be warranted in the future” if Cambridge’s failure to comply continues. (See id.)

The District Court Judge found no clear error in the Magistrate Judge Foster’s recommendation and report. (United States EEOC v. Cambridge Transp., Inc., No. 0:23-MC-00101, 2024 U.S. Dist. LEXIS 118857, at * 1 (D. Minn. July 8, 2024).) In so holding, the Court adopted the report in full, and found Cambridge in civil contempt and ordered payment of $100 per day for each day Cambridge remains out of compliance with the EEOC’s subpoena, beginning on June 7, 2024. (Id.) The Court left open whether any additional sanctions and penalties may apply.

Implications For Employers

This recommendation and report, and resulting Court order, illustrates the length to which the EEOC will go to enforce its investigation of allegations of discrimination under Title VII of the Civil Rights Act of 1964. Companies should recognize the EEOC’s enforcement efforts have teeth, and heed the Court’s response that imposed a daily fine based on total non-compliance.

Companies should take measures to ensure compliance with any EEOC request for information and respond accordingly, and promptly, to any investigation including subpoena requests. Otherwise, Companies may find themselves footing a $100 bill for every day of non-compliance and possibly expose themselves to further civil contempt sanctions.

July 12, 2024 by Class Action Defense

New Jersey Supreme Court Finds Standalone Class Action Waivers In Consumer Contracts Are Not Per Se Unlawful

By Gerald L. Maatman, Jr., Gregory S. Slotnick, and James Hearon

Duane Morris Takeaways: On July 10, 2024, in William Pace v. Hamilton Cove, A-4-23 (July 10, 2024 N.J.), the New Jersey Supreme Court held that consumer contract provisions waiving class actions are lawful under New Jersey law, even if they are not directly connected to an arbitration agreement. The Supreme Court also found that while class action waivers in consumer contracts are not per se contrary to public policy, they may be unenforceable if they are found to be unconscionable or otherwise violate state contract law. In a unanimous opinion, the Supreme Court analyzed claims by plaintiff-tenants seeking class certification in an action brought against their landlord, Hamilton Cove, for allegedly advertising that its apartments had “elevated, 24/7 security,” when in reality security cameras in the three-tower apartment complex did not function and there was no around-the-clock security. The Supreme Court reversed the New Jersey Appellate Division, finding that in the case before it, the plaintiff-tenants clearly and unambiguously waived their right to maintain a class action knowingly and voluntarily by signing a lease agreement including a standalone class action waiver, despite the fact that the class action waiver was not part of an arbitration agreement or arbitration provision.

The Supreme Court held that class action waivers standing alone and apart from a mandatory arbitration provision are not per se unenforceable. It then analyzed the lease language at issue and held that the lease was written in a simple, clear, understandable, and easily readable way as required by the New Jersey Consumer Fraud Act (CFA), putting plaintiff-tenants on notice that they could only proceed with a lawsuit against the landlord defendants on an individual basis. Under the lease and facts of the case, the Supreme Court held that the landlord defendants’ standalone class action waiver provision was lawful, relying on factors including the parties’ relative bargaining power, no indicia of economic compulsion, and the class action waiver not impermissibly prohibiting plaintiff-tenants from individually vindicating their statutory rights under the CFA. As such, the class action waiver was not unconscionable, and the lease was therefore enforceable.

The opinion will likely have a far-reaching impact for businesses using arbitration programs in New Jersey and beyond.

Case Background

The landlord defendants operate Hamilton Cove, a three-building apartment complex located in Weehawken, New Jersey housing hundreds of apartments along the Hudson River waterfront. Id. at 4-5. The plaintiff-tenants claimed that in April 2020, Hamilton Cove advertised on its website and on social media that its apartments had “elevated, 24/7 security,” and that during an apartment tour before moving in, Hamilton Cove’s leasing officer told them that security personnel would be stationed 24 hours a day, 7 days a week. Id. at 5. The plaintiff-tenants entered into lease agreements in 2020, which allowed prospective tenants three days to consult with an attorney, after which the releases would become final. Id. The leases included multiple addenda – one of which was a “Class Action Waiver” addendum – which were all incorporate into the lease. Id. at 5-6. The Class Action Waiver included language in bold and the plaintiff-tenants agreed to waive their ability to participate either as a class representative or members of any class action claims against the landlord-defendants. Id. at 6.

After moving into their apartments, the plaintiff-tenants found that the Hamilton Cove security cameras did not work, and there was no 24/7 security. They claimed that the advertised “24/7 security” drew them to lease their apartments and pay the leasehold price, especially due to their allegation that Weehawken has a property crime rate approximately one-third higher than New Jersey’s state average. Id. at 7.

On March 31, 2022, the plaintiff-tenants filed the Complaint, claiming common law fraud and violation of the CFA. Id. They specifically alleged that the landlord-defendants engaged in an “unconscionable commercial practice” of knowingly making false representations regarding 24/7 security on their premises, and they sought to certify a class comprised of similarly-situated tenants. Id. at 7-8.

After landlord-defendants moved to dismiss the Complaint for failure to state a claim or, alternatively, to strike plaintiffs’ class allegations – arguing that plaintiff-tenants waived their ability to proceed as a class when they signed the class action waivers – the trial court denied the motions. Id. at 8. After landlord-defendants appealed the decision, the Appellate Division affirmed the trial court’s denial, holding that “a class action waiver in a contract that does not contain a mandatory arbitration provision” is unenforceable as a matter of law and public policy. Id. at 8-9. The New Jersey Appellate Division found that unless rendered unenforceable by the presence of an arbitration agreement, class action waivers are clearly contrary to the public policy of New Jersey, regardless of whether they are unconscionable or part of an adhesion contract. Id. at 10.

The New Jersey Supreme Court’s Decision

The New Jersey Supreme Court began by analyzing class actions as a procedural device and the legal requirements necessary to certify a class action. Id. at 16-17. While acknowledging that class action requirements should be “liberally construed” (id. at 18), the Supreme Court disagreed with the Appellate Division’s establishment of a bright-line rule that a waiver of the right to maintain a class action in unenforceable absent a mandatory arbitration agreement. Id. at 19. The Supreme Court held that an arbitration provision is not necessary and is separate to a class waiver’s enforceability, and that New Jersey law supports the contractual waiver of many rights that advance important goals, such as the right to a jury trial, provided that the requisite procedural safeguards surrounding the waiver are met. Id. at 19-20. The Supreme Court reiterated New Jersey’s strong public policy favoring the freedom to contract, and noted that legislatures can override this freedom in specific settings – which has not occurred in the context of class action waivers. It stated that in New Jersey, there is neither a controlling statutory provision expressly permitting class actions, nor a clear statement of public policy disfavoring class action waivers – as such, class action waivers must be evaluated through the lens of unconscionability and traditional tenants of contract formation. Id. at 23-24. As a result, the Supreme Court held that class action waivers standing alone and apart from a mandatory arbitration provision are not per se unenforceable, but that particular waivers may be unenforceable if unconscionable or invalid under general contract principles. Id. at 24. It then considered the specific waiver in the case before it. Id.

The Supreme Court confirmed that in order to analyze whether the class action waiver in the Hamilton Cove lease signed by plaintiff-tenants was unconscionable, a fact-sensitive analysis was required. Id. at 25. Factors considered by the Supreme Court to determine whether the class waiver was an unenforceable contract of adhesion, known as the Rudbart factors, included: (1) the subject matter of the contract; (2) the parties’ relative bargaining power; (3) the degree of economic compulsion motivating the adhering party; and (4) the public interests affected by the contract. Id. at 25-26. The Supreme Court found that plaintiff-tenants knowingly and voluntarily waived their right to maintain a class action because the waiver language was written in a simple, clear, understandable and easily readable way as required by the CFA, and it clearly and unambiguously put plaintiff-tenants on notice that they could only proceed with a lawsuit against landlord-defendants on an individual basis. Id. at 30.

The Supreme Court found that even if the lease could be considered a contract of adhesion, the Rudbart factors favored enforceability, since the parties’ relative bargaining power did not favor either party and plaintiff-tenants had time to consult with an attorney and were free to seek alternative housing if they did not agree with the lease’s terms. Id. at 30-31. It held that plaintiff-tenants were not under economic compulsion, and likely had the ability to choose from a vast selection of apartments available for a monthly rent comparable to the $3,700 rent at issue here. Id. at 31-32. Finally, the Supreme Court found that plaintiff-tenants were still able to pursue their CFA claims on an individual basis against the landlord-defendants, and that the class waiver did not prohibit plaintiffs, or similarly-situated Hamilton Cove tenants, from individually vindicating their statutory rights under the CFA. Id. at 33. Thus, the Supreme Court held that the class waiver was not unconscionable and was enforceable, reversing the Appellate Division’s judgment. Id. at 34.

Implications For New Jersey Businesses And Employers

The New Jersey Supreme Court’s opinion seemingly exceeds the landlord-tenant relationship, and may be characterized as a victory for New Jersey employers. As a result of the ruling, New Jersey businesses may seek to enforce a valid class action waiver separate and apart from an arbitration agreement or arbitration provision. While the class action waiver itself must be presented in a clear and direct manner, these waivers are not per se unenforceable on their face. As a best practice in light of the decision, New Jersey employers and businesses alike should ensure that any class action waivers provide for a reasonable period of time for review, and should strongly consider adding language providing time for a prospective signee to have the language reviewed by an attorney prior to signing. However, New Jersey businesses that do not wish to include mandatory arbitration provisions in contracts now have a clear path to still including class action waivers in such contracts, which are not per se unlawful, but which must still be presented in a manner that is not unconscionable based on individual circumstances.

July 11, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 64: Procedural Issues In 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 key decisions addressing a myriad of procedural issues in class action litigation.

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

Episode Transcript

Jerry Maatman: Thank you loyal blog readers for joining us on our next episode of our weekly podcast series, the Class Action Weekly Wire, I’m Jerry Maatman, a partner at Duane Morris, and joining me today is Brandon Spurlock. Thanks so much for being here on our podcast.

Brandon Spurlock: Great to be here, Jerry.

Jerry: Today we wanted to discuss trends and important developments with procedural issues in class action litigation. This is somewhat of a catch-all term in the Duane Morris Class Action Review in terms of our analysis of key rulings throughout the year. In 2023, federal and state courts address procedural issues and a wide range of class certification issues. Brandon, to your way of thinking, what are some highlights that corporate counsel should be aware of?

Brandon: Yes, jurisdiction is always an important consideration. Class action litigation jurisdictional defenses are often dispositive when a defendant challenges the ability of plaintiffs to maintain their class action in court. The Tenth Circuit issued a very interesting ruling on jurisdiction in Boulter, et al. v. Noble Energy Inc. There the plaintiffs, a group of oil and gas lessors filed a class action against the defendants for alleged underpaid royalties. The defendants then argued that the district court lacked jurisdiction because the plaintiffs failed to exhaust administrative remedies required by Colorado’s Oil and Gas Conservation Act, which grants jurisdiction to the COGCC to determine the amount of proceeds due to a payee. However, the Act excludes resolution of disputes over contract interpretation from the COGCC’s jurisdiction. The district court then agreed with the defendants, and granted their motion to dismiss. Plaintiffs did not appeal this decision, but filed a nearly identical second complaint in Boulter II three months later. While the second complaint was pending, the Colorado Court of Appeals issued a decision regarding the COGCC’s jurisdiction in another action. The district court dismissed Boulter II for the second time, and plaintiffs filed a third complaint, Boulter III in December 2021. The district court again dismissed the action on plaintiffs’ appeal. This Tenth Circuit affirmed the district court’s ruling. The Tenth Circuit considered whether the district court’s decision in Boulter I should preclude the jurisdictional arguments in Boulter II and Boulter III, and whether an exception to issue preclusion, based on an intervening change in the law applied. The Tenth Circuit concluded that the ruling in Boulter I did preclude the jurisdictional arguments, and the subsequent complaints. The Tenth Circuit also determined that the decision from the Colorado Court of Appeals did not change the law or provide a basis for plaintiffs to avoid exhausting their remedies with the COGCC. Therefore, the Tenth Circuit affirmed the district court’s dismissal for lack of jurisdiction.

Jerry: I’ve always found jurisdiction to be a very powerful argument for the defense in a Rule 23 situation. But equally pertinent is the concept of standing, and whether or not a named plaintiff has standing to prosecute a class action. In 2023, however, the plaintiffs’ bar secured a pretty plaintiff-friendly ruling on the issue of standing out of the Ninth Circuit in a case called Vargas, et al. v. Facebook, Inc. The district court had dismissed the named plaintiff’s claim in a class action for lack of standing where the named plaintiff, a New York resident and a Facebook user, claimed that as a member of a protected category group, she was unable to view housing ads that similarly situated White Facebook users were able to access based on the algorithms at issue in the Facebook platform. On appeal, the Ninth Circuit reversed the dismissal of the class action and remanded the district court’s ruling. The Ninth circuit held that sufficient allegations were asserted in the complaint with respect to the disparate treatment of the named plaintiff as compared to white users of Facebook, and as a result, there was a viable cause of action and an injury-in-fact sufficient to confer standing. Many legal commentators think that the Vargas decision is kind of on the outer edge of standing principles, but nonetheless shows in a very plaintiff-centric, or plaintiff-friendly way, how standing can exist in a class action complaint sufficient for the class action to go forward.

Brandon, are there other areas that you think are impacted that is favorable either to the defense bar or to the plaintiffs’ bar in the class action space?

Brandon: Yes. Jerry also wanted to address the issue of consolidation in class action litigation, since consolidation issues often surface when defendants are subject to multiple class actions, and whether or not to consolidate multiple cases in one forum is often a strategic imperative. For instance, in the case of In Re Tiktok In-App Browser Consumer Privacy Litigation, the plaintiffs filed multiple class actions alleging that TikTok illegally intercepted users, communications and activities on third-party websites through the web browser within the TikTok app. The plaintiff, and the class action pending in the U.S. District Court for the Central District of California moved under 28 U.S.C. § 1407 to centralize three of the actions in the Central District of California. Since filing the motion, the Judicial Panel on Multidistrict Litigation, the JPML, have been notified of 14 potentially related actions pending in three additional districts. All of the plaintiffs supported centralization, but the plaintiffs in five actions supported the movement’s position. So, while the plaintiffs in seven actions requested centralization in the Northern District of Illinois, and the plaintiff in one related action alternatively requested centralization in the District of New Jersey, and also in the Northern District of Georgia, and one plaintiff opposed centralization entirely. Because the in-app browser actions raised questions relating to the interpretation and the scope of settlement and the related MDL, the JPML ruled that those questions would be most appropriately resolved by the transferee court. Therefore, denied the motion to centralize those actions.

Jerry: I’ve always thought consolidation of multiple class actions in one quarter of consolidated class actions is a big money saver for the defense in terms of defending something once rather than multiple times, so that’s a key ruling. What about the area of sanctions in class action litigation – were there any particular rulings of note in 2023?

Brandon: Another good question, Jerry. Given the cost of defending a class action, corporate defendants sometimes move for sanctions if the claims are frivolous. For instance, the Sixth Circuit examine this issue in Garcia, et al. v. Title Check, LLC. There the plaintiff filed a class action against the defendant, alleging that its additional buyer’s fee violated Michigan’s General Property Tax Act. The district court dismissed the plaintiff’s claims, finding that the fee was not prohibited by statute. Subsequently, the defendant moved for sanction against plaintiffs’ attorneys on the grounds that the case was frivolous, and forced the defendant to incur unnecessary legal fees. The district court granted the motion, and ordered plaintiffs’ counsel to pay attorneys’ fees and costs over $73,000. On appeal, the Sixth Circuit affirmed the district court’s ruling. Plaintiffs’ counsel argued that the district court erred in opposing sanctions because the legal issues in the case were debatable and because the district court misunderstood Michigan law. The Sixth Circuit agreed with the district court’s conclusion, however, the plaintiffs’ counsel had unreasonably pursued frivolous claims based on an implausible interpretation of statute. The Sixth Circuit also found that the plaintiffs’ counsel should have known their claims lacked merit. The Sixth Circuit further rejected the argument of plaintiffs’ counsel that sanctions should have been limited to the specific filings related to the unnecessarily claims. Instead, it deemed the entire action frivolous and vexatious, and affirmed the district court’s ruling. So, very powerful use of sanctions that support a defendant’s position in that case.

Jerry: Those are great insights and analysis, Brandon. It certainly underscores the notion that non-merits issues in essence procedural issues can be important to the overall outcome of a class action and the method by which a corporation defends itself in class action litigation. Well, loyal blog readers thanks so much for joining us in this installment of the Class Action Weekly Wire. And thank you, Brandon, for providing your thought leadership in this space.

Brandon: Thanks for having me, Jerry

July 9, 2024 by Class Action Defense

The Seventh Circuit Derails Mass Arbitration Tactics

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

Duane Morris Takeaways: On July 1, 2024, in Wallrich, et al. v. Samsung Electronics America, Inc., No. 23-2842, 2024 WL 3249646 (7th Cir. July, 1, 2024), the U.S. Court of Appeals for the Seventh Circuit dealt a major blow to mass arbitrations. This decision strengthens protections for companies that utilize arbitration agreements as an effective way to limit their potential classwide exposure. The Seventh Circuit’s opinion is required reading for any corporation utilizing arbitration programs.

Case Background

Samsung Electronics, Co. Ltd. and Samsung Electronics America, Inc. (collectively “Samsung”) are two affiliates that manufacture and sell consumer electronics. “When consumers purchase or use Samsung devices, they automatically agree to Samsung’s terms and conditions.” Id. at *1. Like many other companies, Samsung’s terms and conditions contain an arbitration provision, which specifies that “all disputes” between Samsung and its customers shall be arbitrated before the American Arbitration Association (the “AAA”). Id.

Pursuant to those terms and conditions, “[a] group of 35,651 Illinois consumers . . . filed arbitration demands before the AAA alleging they purchased Samsung devices and that those devices unlawfully collected and stored sensitive biometric data in violation of the Illinois Biometric Information Privacy Act.” Id. at *2. This tactic — commonly known as a mass arbitration demand — is often used by plaintiffs’ lawyers as an attempt to secure a quick settlement out of a defendant. The tactic is sometimes successful because a defendant is often forced to pay expensive arbitration filing fees in order to initiate an arbitration. Often it is more cost effective for the defendant simply to settle the claims altogether rather than pay the filing fees and other expenses of litigation. For this reason, numerous federal courts have held that while this tactic may be permissible, “mass arbitration interferes with the fundamental attributes of arbitration promoted by the [Federal Arbitration Act].” See, e.g., Lamour v. Uber Technologies, Inc., No. 16-CV-21449, 2017 WL 878712, at *6 (S.D. Fla. Mar. 1, 2017) (quotations and citations omitted).

Against that backdrop, counsel for the claimants in Wallrich attempted to deploy mass arbitration tactics in this litigation. After the consumers filed their arbitration demands, “the AAA requested $4,125,000 from Samsung, representing Samsung’s share of the initial administrative filing fees.” Wallrich, 2024 WL 3249646, at *2. The only difference between this case and others was that Samsung refused to pay the fees. The AAA then offered the consumers the opportunity to pay the $4,125,000. They also declined. And, as a result, the AAA terminated the proceedings and paved the way for a federal class action lawsuit.

Rather than pursue a class action, the consumers then “filed a Petition to Compel Arbitration” in the U.S. District Court for the Northern District of Illinois. Id. They sought, among other things, “an order compelling Samsung to pay its AAA filing fees and to arbitrate the claims.” Id. In support of that petition, the consumers submitted their: (1) “arbitration demands before the AAA”; (2) “copies of Samsung’s terms and conditions”; (3) a spreadsheet containing the consumers’ names and addresses; and (4) “the AAA’s determination that the consumers had met the AAA filing requirements.” Id. The consumers did not submit any proof, however, that they were actually customers of Samsung. Id. at *7. But regardless, the district court still entered an order compelling Samsung to pay the filing fees and to arbitrate the disputes. Samsung then appealed that decision.

The Seventh Circuit’s Opinion

On appeal, the Seventh Circuit dealt a major blow to mass arbitration tactics and reversed the order of the district court. The Seventh Circuit held, in a unanimous opinion, that “the consumers effectively needed to present evidence that they were in fact Samsung customers” in order to arbitrate the dispute. Id. at *6. It also held that the consumers had not met their burden of doing so.

The Seventh Circuit explained that “arbitration demands are nothing more than allegations, much like a complaint filed in a district court.” Id. As such, they are not proof that the consumers were actually Samsung customers. Similarly, copies of the terms and conditions “do nothing to show that any of the consumers purchased a Samsung device” nor did the AAA’s determination as to the filing requirements make such a showing either. Id. And last, the Seventh Circuit explained that the “spreadsheet of only names and addresses likewise fails to show that any of those named were Samsung customers.” Id. Accordingly, none of the “evidence” submitted by the consumers was sufficient to address their burden.

Further, the Seventh Circuit noted that the “consumers could have submitted almost anything to meet their burden of proving the existence of an arbitration agreement. For example, they could have submitted receipts, order numbers, or confirmation numbers from their purchases of Samsung devices. Or even more directly, they could have submitted declarations attesting to the allegations in their arbitration demands. They did not.” Id. at *7. The major difference, however, was that all 35,651 consumers would have needed to submit such proof. In the absence of such evidence in the record, the Seventh Circuit was left with no choice but to reverse the district court.

The Seventh Circuit concluded that a motion to compel arbitration is akin to a motion for summary judgment and, therefore, “does not allow second chances.” Id. “The consumers had the opportunity to present their evidence, and they failed to do so.” Id. Consequently, the mass arbitration tactics on display here seem to have been permanently halted.

Implications For Companies

The importance of Wallrich, et al. v. Samsung Electronics America, Inc. cannot be understated. Companies faced with mass arbitration threats can now force each and every purported claimant to submit proof that his claim is subject to an arbitration agreement. If a claimant does not come forward with such proof, the company may be able to refuse to pay any filing fees and avoid mass arbitration altogether. As a result, corporate counsel can rest easy knowing that it is more difficult for their arbitration agreements to be weaponized against them.

That said, the importance of arbitration agreements also must be emphasized. The Illinois Biometric Information Privacy Act (“BIPA”) is one of plaintiff’s counsel’s favorite litigation targets. When utilized on a class-wide basis, claims under the BIPA are defined by its “draconian exposure” and its “job-destroying liability.” Cothron v. White Castle System, Inc., 216 N.E. 3d 918, 940 (Ill. 2023) (Overstreet, J., dissenting). However, if each BIPA plaintiff is required to arbitrate his claims individually, a company’s exposure becomes significantly less and, in some circumstances, even de minimis. Accordingly, corporate counsel should also consider this factor as one of the benefits to implementing an arbitration program as an effective strategy to limit classwide relief.

July 8, 2024 by Class Action Defense

California Federal Court Refuses To Dismiss Wiretapping Class Action Involving Company’s Use Of Third-Party AI Software

By Gerald L. Maatman, Jr., Justin R. Donoho, and Nathan Norimoto

Duane Morris Takeaways: On July 5, 2024, in Jones, et al. v. Peloton Interactive, Inc., No. 23-CV-1082, 2024 WL 3315989 (S.D. Cal. July 5, 2024), Judge M. James Lorenz of the U.S. District Court for the Southern District of California denied a motion to dismiss a class action complaint alleging that a company’s use of a third party AI-powered chat feature embedded in the company’s website aided and abetted an interception in violation of the California Invasion of Privacy Act (CIPA). Judge Lorenz was unpersuaded by the company’s arguments that the third-party functioned as an extension of the company rather than as a third-party eavesdropper. Instead, the Court found that the complaint had sufficient facts to plausibly allege that the third party used the chats to improve its own AI algorithm and thus was more akin to a third-party eavesdropper for which the company could be held liable for aiding and abetting wiretapping under the CIPA.

Background

This case is one of the hundreds of class actions that plaintiffs have filed nationwide alleging that third-party AI-powered software embedded in defendants’ websites or other processes and technologies captured plaintiffs’ information and sent it to the third party. A common claim raised in these cases is a claim under federal or state wiretap acts and seeking hundreds of millions or billions of dollars in statutory damages. No wiretap claim can succeed, however, where the plaintiff has consented to the embedded technology’s receipt of their communications. See, e.g., Smith v. Facebook, Inc., 262 F. Supp. 3d 943, 955 (N.D. Cal. 2017) (dismissing CIPA claim involving embedded Meta Pixel technology because plaintiffs consented to alleged interceptions by Meta via their Facebook user agreements).

In Jones, Plaintiffs brought suit against an exercise equipment and media company. According to Plaintiffs, the defendant company used third-party software embedded in its website’s chat feature. Id. at *1. Plaintiffs further alleged that the software routed the communications directly to the third party without Plaintiffs’ consent, thereby allowing the third party to use the content of the communications to “to improve the technological function and capabilities of its proprietary, patented artificial intelligence software.” Id. at **1, 4.

Based on these allegations, Plaintiffs alleged a claim for aiding and abetting an unlawful interception and use of the intercepted information under California’s wiretapping statute, CIPA § 631. Id. at *2. Although Plaintiffs did not allege any actual damages, see ECF No. 1, the statutory damages they sought totaled at least $1 billion. See id. ¶ 33 (alleging hundreds of thousands of class members); Cal. Penal Code. § 637.2 (setting forth statutory damages of $5,000 per violation). The company moved to dismiss under Rule 12(b)(6), arguing that the “party exception” to CIPA applied because the third-party software “functions as an extension of [the company] rather than as a third-party eavesdropper.” 2024 WL 3315989, at *2.

The Court’s Opinion

The Court denied the company’s motion and allowed Plaintiffs’ CIPA claim to proceed to discovery.

The CIPA is a one-party consent statute, meaning that there is no liability under the statute for any party to the communication. Id. at *2. To answer the question for purposes of CIPA’s party exception of whether the embedded chat software provider was more akin to a party or a third-party eavesdropper, the Court found that courts look to the “technical context of the case.” Id. at *3. As the Court explained, a software provider can be held liable as a third party under CIPA if that entity listens in on a consensual conversation where the entity “uses the collected data for its own commercial purposes.” Id. By contrast, the Court further explained, if the software provider merely collects, refines, and relays the information obtained on the company website back to the company “in aid of [defendant’s] business” then it functions as a tool and not as a third party. Id.

Guided by this framework, the Court found sufficient allegations that the software provider used the chats collected on the company’s website for its own purposes of improving its AI-driven algorithm. Id. at *4. Therefore, according to the Court, the complaint sufficiently alleged that the software provider was “more than a mere ‘extension’” of the company, such that CIPA’s party exemption did not apply and Plaintiffs sufficiently stated a claim for the company’s aiding and abetting of the software provider’s wiretap violation. Id.

Implications For Companies

The Court’s opinion serves as a cautionary tale for companies using third-party AI-powered processes and technologies that collect customer communications and information. As the ruling shows, litigation risk associated with companies’ use of third-party AI-powered algorithms is not limited to complaints alleging damaging outcomes such as discriminatory impacts, such as plaintiffs alleged in Louis v. Saferent Sols., LLC, 685 F. Supp. 3d 19, 41 (D. Mass. 2023) (denying motion to dismiss claim under Fair Housing Act against landlord in conjunction with landlord’s use of algorithm used to calculate risk of leasing a property to a particular tenant). In addition, companies face the risk of high-stakes claims for statutory damages under wiretap statutes associated with companies’ use of third-party AI-powered algorithms embedded in their websites, even if the third party’s only use of the algorithm is to improve the algorithm and even if no actual damages are alleged.

As AI-related technologies continue their growth spurt, and litigation in this area spurts accordingly, organizations should consider in light of Jones whether to modify their website terms of use, data privacy policies, and all other notices to the organizations’ website visitors and customers to describe the organization’s use of AI in additional detail. Doing so could deter or help defend a future AI class action lawsuit similar to the many that are being filed today, alleging omission of such additional details, raising claims brought under various states’ wiretap acts and consumer fraud acts, and seeking multimillion-dollar and billion-dollar statutory damages.

July 8, 2024 by Gerald L. Maatman, Jr.

DMCAR Mid-Year Review – 2024/2025: FLSA Conditional Certifications Remain High, But So Far In 2024 Courts Are Granting Less Class Certification Motions Overall Compared To 2023

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

Duane Morris Takeaway: In the first half of 2024, across all major types of class actions, courts issued rulings on 203 motions to grant or deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 138 rulings, with an overall success rate of 68%. In contrast, in 2023, the plaintiffs’ class action bar succeeded in certifying class actions at a higher rate. Across all major types of class actions, courts issued rulings last year on 451 motions to grant or to deny class certification. Of these, plaintiffs succeeded in obtaining or maintaining certification in 324 rulings, an overall success rate of 72%. In 2022, by comparison, courts issued rulings on 335 motions to grant or to deny class certification, and plaintiffs succeeded in obtaining or maintaining certification in 247 rulings, an overall success rate of nearly 74%.

In 2024, the number of motions that courts considered varied significantly by subject matter area, and the number of rulings varied across substantive areas.

The following list summarizes the results in each of ten key areas of class action litigation:

WARN – 100% granted / 0% denied (1 of 1 granted / 0 of 1 denied)
FLSA / Wage & Hour (Conditional Certification) – 84% granted / 16% denied (68 of 81 granted / 13 of 81 denied)
Antitrust – 80% granted / 20% denied (8 of 10 granted / 2 of 10 denied)
FCRA / FDCPA – 75% granted / 25% denied (3 of 4 granted / 1 of 4 denied)
Securities Fraud – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
ERISA – 67% granted / 33% denied (10 of 15 granted / 5 of 15 denied)
Discrimination – 60% granted / 40% denied (6 of 10 granted / 4 of 10 denied)
Privacy – 60% granted / 40% denied (3 of 5 granted / 2 of 5 denied)
FLSA / Wage & Hour (Decertification) – 33% granted / 67% denied (3 of 9 granted / 6 of 9 denied)
Civil Rights – 48% granted / 52% denied (10 of 21 granted / 11 of 21 denied)
Consumer Fraud – 48% granted / 52% denied (12 of 25 granted / 13 of 25 denied)
Data Breach – 33% granted / 67% denied (1 of 3 granted / 2 of 3 denied)
Products Liability / Mass Torts – 0% granted / 100% denied (0 of 1 granted / 1 of 1 denied)
TCPA – 0% granted / 100% denied (0 of 3 granted / 3 of 3 denied).

The plaintiffs’ class action bar obtained the highest rates of success in WARN, wage & hour, antitrust, and FCRA class actions. There has only been one WARN certification ruling in 2024, which was granted by the court for a 100% success rate. In wage & hour litigation, plaintiffs succeeded in obtaining orders certifying classes and/or collective actions in 68 of 81 rulings issued during 2024, a success rate of 84%. In cases alleging antitrust violations, plaintiffs succeeded in obtaining orders certifying classes in 8 of 10 rulings, for a success rate of 80%. And in cases alleging FCRA violations, plaintiffs managed to obtain class certification rulings in 3 of 4 rulings issued during 2024, a success rate of 75%.

Courts Issued More Rulings In FLSA Collective Actions and Wage & Hour Class Actions Than In Any Other Areas Of Law

For the first half of calendar year 2024, courts again issued more certification rulings in FLSA collective actions and wage & hour class actions than in other types of cases. Plaintiffs historically have been able to obtain conditional certification of FLSA collective actions at a high rate, which surely has contributed to the number of filings in this area.

From January 1 to July 1, 2024, courts considered more motions for certification in FLSA matters than in any other substantive area. Overall, courts issued 90 rulings. Of these, 81 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 9 addressed second-stage motions for decertification of collective actions. Of the 81 rulings that courts issued on motions for conditional certification, 68 rulings favored plaintiffs, for a success rate of nearly 84%.

These numbers are higher than the numbers observed in 2023, during which courts issued 183 rulings. Of these, 165 addressed first-stage motions for conditional certification of collective actions under 29 U.S.C. § 216(b), and 18 addressed second-stage motions for decertification of collective actions. Of the 167 rulings that courts issued on motions for conditional certification, 125 rulings favored plaintiffs, for a success rate of nearly 75%.

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

The results so far in 2024 have not supported that typical success. Of the 9 rulings that courts issued on motions for decertification of collective actions, only 3 rulings favored defendants, for a lower success rate of 33%.

An analysis of the rulings demonstrates that a disproportionate number emanated from traditionally pro-plaintiff jurisdictions, including the judicial districts within the Second Circuit (16 decisions) and Ninth Circuit (10 decisions), which include New York and California, respectively.

Takeaways From The Numbers Midway Through 2024

Notable this year at the halfway point, there have been a very small number of rulings emanating from the Fifth and Sixth Circuits (4 and 7 decisions, respectfully), which could account for the high overall conditional certification rate in the wage & hour space, given that these two circuits have imposed new, stricter standards for conditional certification. Plaintiffs likely are shifting their case filings away from these two circuits toward jurisdictions with more lenient, more plaintiff-friendly standards for conditional certification.

The numbers no doubt flow from the different standards and approaches that courts in different federal circuits take in evaluating motions for conditional certification and decertification and, in turn, the likelihood of plaintiffs’ success on such motions. If more courts join the Fifth and Sixth Circuits in abandoning the traditional two-step certification process under 29 U.S.C. § 216(b), and thereby increase the time and expense of gaining a conditional certification order, it may lead to a reshuffling of the deck in terms of where plaintiffs file their cases and the types of claims they pursue.

We will continue to track class certification trends in 2024 and will report on final numbers in the Duane Morris Class Action Review – 2025, which will be published in the first week of January. Stay tuned!

July 3, 2024 by Class Action Defense

The Class Action Weekly Wire – Episode 63: Key Developments In FCRA Class Action Litigation

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates Emilee Crowther and Derek Franklin with their discussion of key rulings and trends in class action litigation under the Fair Credit Reporting Act (“FCRA”).

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

Episode Transcript

Jerry Maatman: Thank you and welcome loyal blog readers and listeners to our next episode of the Weekly podcast series that we call the class Action weekly wire. My name is Jerry Maatman, and I’m a partner at Duane Morris and joining me today are my colleagues, Derek Franklin and Emilee Crowther, and we’re here to talk about Fair Credit Reporting Act class action litigation. Emilee and Derek, can you tell me a little bit about what is going on in this space in terms of the history of the FCRA?

Emilee Crowther: Absolutely, Jerry, and thanks for having me today. The stated purpose of the Fair Credit Reporting Act, or the FCRA, is to ensure that consumer reporting agencies, exercise their important responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy. It requires consumer reporting agencies and entities, obtaining consumer reports to follow reasonable procedures, to assure maximum possible accuracy of consumer reports. Courts have often noted that FCRA violations lend themselves to resolution through class action, litigation, and FCRA. Class actions have increased partially as a result of the Fair and Accurate Credit Transaction Act, or the FACTA, amendments which require that a consumer who is afforded less favorable treatment and reliance on her credit report be provided an adverse action notice.

Derek Franklin: And in FCRA cases in 2023, the class action plaintiffs’ bar continued to look for any failure of an employer to provide disclosures or obtain proper authorization from an applicant. Although these authorization and disclosure requirements may appear to be relatively straightforward, case law has created additional requirements that may not be as obvious from a plain reading of the FCRA. While employers must be vigilant in their efforts to avoid running afoul of the FCRA authorization and disclosure requirements, the third-party agencies they obtain consumer reports from must also take active steps to ensure that they provide accurate reports. The plaintiffs’ bar is quick to investigate violations of these provisions and bring Rule 23 class actions against CRAs.

Jerry: I know that compliance with the FCRA is not for the faint of heart, and it’s certainly spiked quite a bit of class action litigation in terms of our annual report. Are there some significant guideposts in the case law in terms of FCRA class actions?

Emilee: So, the United States Supreme Court’s decision in TransUnion LLC v. Ramirez substantially limited FCRA class actions by making it clear that only consumers who have “been concretely harmed by a defendant’s statutory violation may sue that private defendant over that [FCRA] violation in federal court.” In TransUnion, the defendant credit reporting agency generated thousands of consumer credit reports which mistakenly match the consumers’ names with the names of people on the list of individuals who threaten America’s national security. However, the Supreme Court only allowed this case to proceed for plaintiffs whose false reports had been provided to third-party creditors. According to the Supreme Court, if the third-party creditors did not receive the potentially defamatory reports, then the individuals did not suffer from a concrete injury under the FCRA.

Jerry: Well, the TransUnion case certainly has created quite a tidal wave of defenses and case law that have interpreted just what an “injury-in-fact” may be. How has that resulted in terms of FCRA class certification rulings and motions to dismiss over the past year?

Derek: In 2023, all the three major CRAs in the United States – Equifax, Experian, and TransUnion – had to litigate at least one FCRA class action concerning allegedly inaccurate or incomplete credit reports. In one such case brought against Equifax in the Us. District Court for the Northern District of Georgia, the court granted in part a motion to dismiss as to a state law negligence claim and injunctive relief under the FCRA. But the court denied in part the motion to strike the class action allegations allowing the plaintiffs’ claim to proceed. The court noted that the plaintiffs could not identify a statutory or common law duty of care owed to the plaintiffs by Equifax. And as to the FCRA claim, the court stated that the case is 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 federal law as being inapplicable to credit scores. The ruling is a good roadmap for defendants involved in FCRA class action litigation.

Emilee: Another case, titled Nelson, et al. v. Experian Information Solutions, Inc., the court examined what documents and information would reasonably be “in a consumer’s file” underneath the FCRA. The plaintiff reviewed her credit report and discovered that it contained inaccurate personal identification information, including two addresses that weren’t hers, her maiden name was misspelled, and the last digit of her social security number was incorrect. She contacted Experian to request the information be changed and Experian updated all but one of the incorrect addresses because it was associated with an open credit account. The plaintiff ended up filing a class action against Experian, alleging that Experian violated the FCRA by providing inaccurate personal identification information on her credit report and failing to correct the inaccurate information. Experian filed a motion for summary judgment, asserting that although the FCRA’s disclosure provision requires credit reporting agencies to disclose “all information in a consumer’s file” the word “any” in “any item of information contained in a consumer’s file” is limited to information that might be, or has been, furnished consumer report. Experian contended that since personal identification information, like a consumer’s name, address, and social security number, do not bear on an individual’s credit worthiness, such information did not itself constitute a credit report. The court rejected this argument, and found that the FCRA’s plain language “forbid the use of credit worthiness as a limitation on information contained in both the consumer’s credit report and [in the] consumer’s credit file.” However, the court ended up holding that the existence of a duty to reinvestigate was “not enough to prove a violation of the FCRA” – that the plaintiff also had to establish that Experian, either negligently or willfully, failed to satisfy its duty to reinvestigate by showing that Experian’s interpretation of the FCRA was objectively unreasonable. The court ruled that no jury could find that Experian negligently or willfully violated the FCRA, and that Experian’s interpretation of the FCRA was objectively reasonable. Thus, the court granted Experian’s motion for summary judgment.

Jerry: Those are key cases and a great overview of what corporate counsel are facing here. Certainly the business model of plaintiffs’ counsel is to file the class action, certify the class action, and then monetize it through settlements. How did the plaintiffs’ bar do in terms of monetizing significant FCRA settlements on a class-wide basis over the past year?

Derek: Jerry, in terms of securing high settlements – the plaintiffs’ bar did not do nearly as well in 2023 as in 2022. In 2023, the top 10 FCRA, FDPCA, and FACTA settlements totaled $100.15 million. This was a significant decrease from the prior year, where the top 10 class action settlements totaled $210.11 million.

Jerry: Still a lot of money, and certainly corporate counsel need to be on guard in terms of compliance efforts in this area. What are your thoughts on the takeaways given the case law, given the settlements, in terms of what corporate counsel should have in their toolkit for FCRA compliance?

Emilee: Well, Jerry, it’s very important for consumer reporting agencies to implement policies and procedures that furnish accurate reports. Systemic issues in a reporting system provide the plaintiffs’ class action bar with ample evidence to argue that class certification is justified, regardless of whether there was actual harm to many consumers.

Derek: And to add on to that – good document retention can save the day in FCRA litigation. While various cases involve the generation of consumer reports for tenant applicants, they are just as applicable to consumer reports generated for employee applicants and the plaintiffs’ class action bar will continue to press legal envelope.

Jerry: Well, thank you, Emilee, and thank you, Derek, for your thought leadership in this area. And loyal blog readers and listeners, thank you for joining us for this week’s installment of the Class Action Weekly Wire.

Emilee: Thank you, Jerry, for having us, and thank you loyal listeners.

Derek: Thank you, everyone.

July 1, 2024 by Class Action Defense

New York Federal Court Recommends Class Certification In Tax Preparer Wage & Hour Lawsuit

By Gerald L. Maatman, Jr., Gregory S. Slotnick, and Zachary J. McCormack

Duane Morris Takeaways: On June 21, 2024, in Cinar v. R&G Brenner Income Tax, LLC, No. 20-CV-1362, 2024 U.S. Dist. LEXIS 110045 (E.D.N.Y. June 21, 2024), Magistrate Judge James R. Cho of the U.S. District Court for the Eastern District of New York recommended granting class certification in a suit accusing R&G Brenner Income Tax Centers, also known as R&G Brenner Income Tax Consultants (“R&G Brenner”) of failing to pay overtime wages in violation of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law (“NYLL”). Judge Cho was unpersuaded by R&G Brenner’s arguments that plaintiffs’ motion to certify the class and distribute notice to putative class and collective action members was untimely and that plaintiffs could not establish numerosity, commonality, predominance and superiority under Rule 23. The ruling recommended that R&G Brenner’s employees, working as income tax preparers since March 13, 2014, met the requirements for class certification.

In determining the timeliness of the class certification motion, Judge Cho opined that R&G Brenner should not have been surprised by the motion considering that earlier pleadings in the record alluded to its likelihood. Further, the rules governing class actions indicate there is no deadline to file a motion to certify a class. While explaining that plaintiffs could establish numerosity, commonality, predominance and superiority, Judge Cho relied on the terms of more than eighty tax preparers’ employment agreements, which were derived from a form template that R&G Brenner adjusted slightly to allow for individualized compensation and work schedules. Therefore, the Court recommended the tax preparers met the requirements to secure class certification in the lawsuit accusing R&G Brenner of failing to pay overtime.

Case Background

R&G Brenner operates a tax preparation business that maintains approximately thirty offices in the New York metropolitan area. Id. at *2. During tax season, R&G Brenner employs approximately 75 income tax preparers at these different offices, which it classifies as overtime exempt. Id. at *3. On March 13, 2020, tax preparers for R&G Brenner filed a class and collective action claiming the employer violated federal and state wage and hour law by denying them overtime and by taking unlawful deductions from their wages. Id. at *4.

R&G Brenner paid the income tax preparers on a commission-only basis, in which the employees received a weekly advance on their commissions that was later deducted from their final gross commissions at the end of the tax season. Id. at *3. At the end of the tax season, R&G Brenner then created a final reconciliation for each income tax preparer, including: (i) the gross commission earned for the tax season; (ii) all advances that were paid during the season; (iii) all deductions withheld from the employee’s wages; and (iv) the net commission earned by and payable to the income tax preparer for the tax season. Id. at *4. Plaintiffs alleged that this compensation structure denied overtime compensation to the tax preparers even though they routinely worked more than forty hours per week. Id. at *6.

In addition to the contention that R&G Brenner failed to compensate tax preparers for overtime worked, plaintiffs further claimed that R&G Brenner’s policies made unlawful deductions from tax preparers’ wages, including credit card service charges, chargeback receipts, missing deposit money, employee referrals, “early bird specials,” reward money and promo money. Id. Finally, plaintiffs claimed that R&G Brenner did not provide the tax preparers with accurate written wage statements each week and did not pay them at least monthly, as required by New York State law. Id.

The Court’s Decision

Plaintiffs brought their FLSA and NYLL claims under a single action using the procedural mechanisms available under 29 U.S.C. § 216(b) and Rule 23, and moved the Court to certify a class of all income tax preparers who worked for R&G Brenner in New York since March 13, 2014. Id. at *8. R&G Brenner opposed plaintiffs’ motion, arguing the motion was untimely and that plaintiffs had not established numerosity, commonality, predominance, and/or superiority to certify the proposed class action. Id. at *1.

Even though Rule 23 does not provide a deadline for filing a motion for class certification, R&G attempted to persuade the Court to deny the motion as untimely, and therefore prejudicial. Id. at *10. Unpersuaded by this argument, Judge Cho explained that the claims of surprise were contradicted by the plaintiffs’ complaint and amended complaint that put R&G Brenner on notice of the class-wide claim. Id. In addition, R&G Brenner’s timeliness argument was upended by its stipulation with plaintiffs containing an express reservation of plaintiffs’ rights to move for class certification. Id. at *12.

R&G Brenner also failed to persuade Judge Cho that plaintiffs could not fulfill the numerosity requirement to certify the class. Id. at *8. Numerosity is presumed when the putative class has 40 or more members, and plaintiffs identified at least 87 putative class members. Id. However, R&G Brenner argued that the Court should not consider 84 of the 87 collective action notice recipients for numerosity purposes because they declined to opt-in to the collective action. Id. R&G Brenner, however, could not offer any authority in support of this position, and the Court relied on Second Circuit precedent indicating that the number of opt-ins under the FLSA has no bearing on the numerosity requirement under Rule 23. Id.

Finally, plaintiffs successfully demonstrated commonality and typicality through R&G Brenner’s policy of failing to pay overtime compensation, failing to provide plaintiffs with accurate wage statements pursuant to NYLL, delaying payment to plaintiffs, and withholding unlawful deductions. Id. at *15. Plaintiffs, as well as all income tax preparers, were required to sign employment agreements prior to the tax season which included their compensation and work schedule. Id. Those agreements were based on form templates that R&G Brenner adjusted to allow for individualized compensation and work schedules, but were otherwise standardized. Id. Thus, the Court determined that the language of the agreements was similar with the exception of commission rates, salary draws, and work schedules. Id. Relying on the foregoing reasoning, Judge Cho recommended granting the motion to certify the class, allowing the parties until July 8, 2024 to object to his recommendation and report. Id. at *40.

Implications For Employers

Judge Cho’s recommendation and report serves as a cautionary tale for employers drafting standard employment agreements. Even with differing compensation and work schedules, employment contracts derived from standardized language may provide the necessary elements for a Court to find the commonality and typicality requirements of a proposed class under Rule 23 are satisfied for purposes of class certification. Moreover, the decision serves as a timely reminder that courts may find the opt-in rate of an FLSA collective action unrelated to the issue of Rule 23 class certification within the same litigation.

July 1, 2024July 1, 2024 by Gerald L. Maatman, Jr.

Duane Morris Class Action Review – 2024/2025: Mid-Year Class Action Settlement Report & Analysis

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

Duane Morris Takeaways: Corporate defendants saw unprecedented settlement numbers across all areas of class action litigation in 2022 and 2023, and halfway through 2024, settlement numbers remain robust. The cumulative value of the top ten settlements across all substantive areas of class action litigation hit near record highs in 2023, second only to the settlement numbers observed in 2022. When the numbers for 2022 and 2023 are combined, the totals signal that corporate defendants have entered a new era of heightened risks and higher stakes in the valuation of class actions. On an aggregate basis, across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.4 billion in settlements in 2023, almost as high as the record-setting $66 billion in 2022. When combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence.

As a prelude to the Duane Morris Class Action Review – 2025, this post reports on our analysis of class action settlements through the first half of 2024. The data shows that for the period of January 1 to June 30, 2024, the current year is on pace with the numbers of the previous two years. As of the end of the first half of 2024, the aggregate settlement total across all areas of class action litigation and government enforcement lawsuits is $22.9 billion (in accounting for the top 5 settlements in the various substantive areas of law). It is anticipated that these numbers will increase across the board by the end of the year and when measured by the top 10 settlements in each category.

More Billion Dollar Class Action Settlements

At the mid-way point of 2024, there are four settlements over the billion-dollar mark. In 2023, parties resolved 14 class actions for $1 billion or more in settlements, making 24 billion-dollar settlements in the last two years. Reminiscent of the Big Tobacco settlements nearly two decades ago, 2022 and 2023 marked the most extensive set of billion-dollar class action settlements and transfer of wealth in the history of the American court system.

Class action settlements totaled $66 billion in 2023, $51.4 billion in 2023, and $22.9 billion in 2024 so far.

The Scorecard On Leading Class Actions Settlements Halfway Through 2024

The plaintiffs’ class action bar has scored rich settlements thus far in 2024 in virtually every area of class action litigation.

[Click image to enlarge] The top 5 class action settlement totals in each practice area.

The following list shows the totals of the top 5 settlements at the mid-year point in 2024 in key areas of class action litigation:

$14.45 Billion – Products liability/mass tort class actions
$4.17 Billion – Antitrust class actions
$2.05 Billion – Securities fraud class actions
$628 Million – Consumer fraud class actions
$388.95 Million – Data breach class actions
$331.5 Million – Privacy class actions
$288 Million – ERISA class actions
$157.15 Million – Wage & hour class and collective actions
$147 Million – Discrimination class actions
$101.3 Million – Labor class actions
$67.7 Million – Government enforcement actions
$58.8 Million – Civil rights class actions
$49.69 Million – TCPA class actions
$24.96 Million – Fair Credit Reporting Act class actions

The high dollar settlements of the past two years suggested that the plaintiffs’ bar would continue to be equally, if not more aggressive, with their case filings and settlement positions. From the 2024 data, it certainly looks to be the case as we end the first half of the year.

The data points in each category are set out in the following charts.

Top Class & Collective Action Litigation Settlements In 2024

Top Antitrust Class Action Settlements In 2024

The top 10 antitrust class action settlements totaled $11.74 billion in 2023, and $3.72 billion in 2022.

1. $2.77 billion – In Re College Athlete NIL Litigation, Case No. 20-CV-3919 (N.D. Cal. May 23, 2024) (settlement agreement reached to resolve claims with former college athletes who filed an antitrust class action seeking compensation allegedly denied to them for decades before the Supreme Court overturned the NCAA’s compensation ban)..
2. $418 million – Burnett, et al. v. the National Association of Realtors, Case No. 19-CV-332, Gibson, et al. v. National Association of Realtors, Case No. 23-CV-788, and Umpa, et al. v. The National Association of Realtors, Case No. 23-CV-945 (W.D. Mo. Mar. 15, 2024) and Moehrl, et al. v. The National Association of Realtors, Case No. 19-CV-1610 (N.D. Ill. Apr. 23, 2024) (preliminary settlement approval granted in a class action to resolve claims that broker commission rules caused home sellers across the country to pay inflated fees).
3. $385 million – In Re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, Case No. 13-MD-2445 (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action to resolve claims brought by states, insurers and buyers of a new dissolvable strip version of Suboxone to the market, encouraging the move from tablets to strips by misrepresenting to the U.S. Food and Drug Administration that the tablets posed a risk to children of accidental consumption).
4. $335 million – Le, et al. v. Zuffa LLC, Case No. 15-CV-1045 (D. Nev. Mar. Mar. 20, 2024) (preliminary settlement approval sought in a class action to resolve claims that fighters’ wages were suppressed by up to $1.6 billion).
5. $265 million – In Re Generic Pharmaceuticals Pricing Antitrust Litigation, Case No. 16-MD-2724 (E.D. Penn. June 26, 2024) (preliminary settlement approval granted for a class action to resolve claims by direct purchasers, end-payors and states alleging that multiple makers of generic drugs conspired to keep the prices on their products high, in violation of state laws and the federal Sherman Act).

Top Civil Rights Class Action Settlements In 2024

The top 10 civil rights class action settlements totaled $643.15 million in 2023, and $1.31 billion in 2022.

1. $17.5 million – Clark, et al. v. City Of New York, Case No. 18 Civ. 2334 (S.D.N.Y. Apr. 5, 2024) (settlement approval sought in a class action to resolve claims alleging that the city policy department’s policy requiring all arrested individuals to have their photograph taken without a head covering violated the Religious Land Use and Institutionalized Persons Act).
2. $13.7 million – Sow, et al. v. New York, Case No. 21 Civ. 533, (S.D.N.Y. Mar. 5, 2024) (final settlement approval granted for a class action resolving claims by individuals who were arrested or arrested and subjected to force by the New York City Police Department during protests in 2020 following the murder of George Floyd).
3. $12.8 million – In Re Chiquita Brands International Inc., Alien Tort Statute And Shareholders Derivative Litigation, Case No. 08-MD-1916 (S.D. Fla. June 24, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the company funded Colombian paramilitary groups leading to the deaths of over 2,500 victims.
4. $10 million – Adberg, et al. v City Of Seattle, Case No. 20-2-14351-1 (Wash. Super. Ct. Jan. 30, 2024) (settlement reached to end a lawsuit brought by more than 50 protesters who say they were brutalized by its police force during Black Lives Matter demonstrations in the summer of 2020).
5. $4.8 million – Students For Fair Admissions, Inc., et al. v. University Of North Carolina, Case No. 14-CV-954 (M.D.N.C. Jan. 29, 2024) (the University of North Carolina agreed to cover the fees and expenses of a group founded by affirmative action advocates that won a U.S. Supreme Court challenge to the school’s consideration of race in student admissions).

Top Consumer Fraud Class Action Settlements In 2024

The top 10 consumer fraud class action settlements totaled $3.29 billion in 2023, and $8.596 billion in 2022.

1. $150 million – In Re Chevrolet Bolt EV Battery Litigation, Case No. 20-CV-13256 (E.D. Mich. May 16, 2024) (preliminary settlement approval sought in a class action to resolve claims against General Motors LLC and LG units over alleged battery which allegedly make cars prone to overheating and fires).
2. $145 million – In Re Kia Hyundai Vehicle Theft Marketing, Sales Practices, And Products Liability Litigation, Case No. 22-ML-3052 (N.D. Cal. July 15, 2024) (final settlement approval sought in a class action resolving claims that that consumers were left vulnerable to theft and damage due to vehicles being improperly manufactured with design flaws).
3. $125 million – National Veterans Legal Services Program, et al. v. United States, Case No. 16-CV-745 (D.D.C. Mar. 20, 204) (preliminary settlement approval granted in a class action resolving claims challenging the legality of “excessive” PACER fees).
4. $108 million – Elder, et al. v. Reliance Worldwide Corp., Case No. 20-CV-1596 (N.D. Ga. Apr. 23, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the defendants made and sold water heater connector hoses with defective rubber linings).
5. $100 million – Esposito, et al. v. Cellco Partnership d/b/a Verizon Wireless, Case No. MID-L-6360-23 (N.J. Super. Apr. 26, 2024) (final settlement approval granted in a class action to resolve claims that the company misled its customers by not disclosing certain fees in its postpaid wireless service plans).

Top Data Breach Class Action Settlements In 2024

The top 10 data breach class action settlements totaled $515.75 million in 2023, and $719.21 million in 2022.

1. $350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal Apr. 9, 2024) (preliminary settlement approval granted in a class action alleging that a software glitch led to a data breach in which Google+ users’ personal data was exposed for three years).
2. $15 million – Salinas, et al. v. Block Inc., Case No. 22-CV-4823 (N.D. Cal. June 3, 2024) (preliminary settlement approval granted in a class action to resolve claims that a December 2021 data breach at the companies exposed personally identifiable information, account numbers and trading activity of 8.2 million people).
3. $8.7 million – Sherwood, et al. v. Horizon Actuarial Services LLC, Case No. 22-CV-1495 (N.D. Ga. Apr. 2, 2024) (final settlement approval granted for a class action to resolve claims that employer benefit plan members’ sensitive data was exposed in a massive breach at a consulting company).
4. $8 million – In Re Orrick, Herrington & Sutcliffe LLP Data Breach Litigation, Case No. 23-CV-4089 (N.D. Cal. May 31, 2024) (preliminary settlement approval granted in a class action to resolve claims brought by clients of a law firm alleging their personal information was compromised in a March 2023 data breach of some of the firm’s client data).
5. $7.25 million – In Re Lincare Holdings Inc. Data Breach Litigation, Case No. 22-CV-1472 (M.D. Fla. June 24, 2024) (final settlement approval granted for a class action to resolve claims that the company failed to protect consumers from a 2021 data breach).

Top Discrimination Class Action Settlements In 2024

The top 10 discrimination class action settlements totaled $762.2 million in 2023, and $597 million in 2022.

1. $54 million – California Civil Rights Department v. Activision Blizzard Inc., Case No. 21STCV26571 (Cal. Super. Jan. 17, 2024) (consent decree entered for an action to resolve claims that the company engaged in gender discrimination, pay inequities, and fostered a culture of sexual harassment in the workplace).
2. $30 million – Employees’ Retirement System Of Rhode Island v. Paul Marciano, et al., Case No. 2022-0839 (Del. Chan. Jan. 4, 2024) (final settlement approval granted for a class action to resolve claims of decades of alleged sexual misconduct by one of the company’s co-founders).
3. $25 million – Jewett, et al. v. Oracle America Inc., Case No. 17-CIV-02669 (Cal. Super. Ct. Feb. 11, 2024) (preliminary settlement agreement sought in a class action to resolve claims that female employees were paid less than male employees).
4. $20 million – Council, et al. v. Merrill Lynch Pierce Fenner, Case No. 24-CV-534 (M.D. Fla. May 24, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging discrimination and retaliation against a proposed class of nearly 1,400 Black financial advisers who alleged they received less pay and promotions compared to their white counterparts).
5. $18 million – Forsyth, et al. v. HP Inc., Case No. 16-CV-4775 (N.D. Cal. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims alleging that the company unlawfully pushed out hundreds of older workers as part of a workforce reduction plan in violation of the ADEA).

Top EEOC / Government Enforcement Class Action Settlements In 2024

The top 10 EEOC / government enforcement class action settlements totaled $263.58 million in 2023, and $404.5 million in 2022.

1. $16.5 million – In The Matter Of Avast Ltd., Case No. 202-3033 (FTC Jan. 19, 2024) (consent decree entered following a Federal Trade Commission lawsuit alleging that the company sold personal information to more than 100 third parties despite promising to protect consumers from online tracking).
2. $16 million – U.S. Department Of Labor v. Disaster Management Group LLC (DOL Jan. 24, 2024) (consent order entered following investigations into 62 government subcontractors hired to construct temporary housing and provide services to Afghan refugees at Joint Base McGuire-Dix-Lakehurst in New Jersey).
3. $15 million – California Civil Rights Department v. Snap Inc. (Cal. Super. Ct. June 18, 2024) (consent order entered following an investigation into the company’s hiring and pay practices were discriminatory, finding the company failed to ensure women were treated equally, resulting in a glass ceiling for pay and promotions, sexual harassment and retaliation when female workers spoke up).
4. $11.5 million – Washington Department Of Labor & Industries v. Boeing (May 24, 2024) (the parties entered into a compliance agreement following an investigation by the agency after it received four complaints in November 2022 from workers who were performing aircraft maintenance overseas, and found that Boeing had not paid or accounted for all overtime and for paid sick leave for the additional time going to worksites while out of town).
5. $8.7 million – EEOC v. DHL Express (USA) Inc., Case No. 10-CV-6139 (N.D. Ill. Apr. 24, 2024) (consent decree entered resolving a lawsuit filed alleging that the company gave Black workers more difficult and dangerous work assignments than white employees).

Top ERISA Class Action Settlements In 2024

The top 10 ERISA class action settlements totaled $580.5 million in 2023, and $399.6 million in 2022.

1. $169 million – Electrical Welfare Trust Fund, et al. v. United States, Case No. 19-CV-353, (Fed. Claims Ct. May 16, 2024) (final settlement approval granted in a class action alleging that the government illegally exacted certain contributions from SISAs under it for benefit year 2014).
2. $61 million – In Re GE ERISA Litigation, Case No. 17-CV-12123 (D. Mass. Mar. 7, 2024) (final settlement approval granted in consolidated class actions alleging that the company violated the ERISA by directing employee retirement savings into underperforming GE Asset Management funds to generate fees for the subsidiary before it was sold).
3. $20 million – Durnack, et al. v. Retirement Plan Committee Of Talen Energy Corp., Case No. 20-CV-5975 (E.D. Penn. June 4, 2024) (final settlement approval granted for a class action resolving claims from employees alleging that that they were owed early retirement pension benefits and pension supplements due to a change in control).
4. $19 million – Krohnengold, et al. v. New York Life Insurance Co., Case NO. 21-CV-1778 (S.D.N.Y. Mar. 5, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the company unlawfully kept underperforming proprietary investment options in two employee retirement plans).
5. $19 million – Colon, et al. v. Johnson, Case No. 22-CV-888 (M.D. Fla. June 10, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the company and executives enacted a scheme that diverted workers’ retirement benefits to shell companies and private equity firm Palm Beach Capital).

Top FCRA, FDPCA, And FACTA Class Action Settlements In 2024

The top 10 FCRA, FDPCA, and FACTA class action settlements totaled $100.15 million in 2023, and $210.11 million in 2022.

1. $9.75 million – Sullen, et al. v. Vivint, Inc.,Case No. 01-CV-2023-903893 (Ala. Cir. Ct. Apr. 23, 2024) (final settlement approval granted in a class action alleging that the company accessed credit information in violation of the Fair Credit Reporting Act and created Vivint accounts without authorization).
2. $6.76 million – Martinez, et al. v. Avantus LLC, Case No. 20-CV-1772 (D. Conn. Feb. 27, 2024) (final settlement approval granted in a class action alleging that the company violated federal law by including inaccurate information on mortgage borrowers’ credit reports).
3. $5.7 million – Steinberg, et al. v. Corelogic,Case No. 22-CV-498 (S.D. Cal. Apr. 9, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company violated the federal Fair Credit Reporting Act by listing consumers as deceased on credit reports when they were actually alive).
4. $1.87 million – Parker, et al. v. The Salvation Army, Case No. 20-CV-4787 (Cal. Super. Ct. Mar. 20, 2024) (preliminary settlement approval granted in a class action to resolve claims to resolve claims the company failed to comply with the Fair Credit Reporting Act (FCRA) when procuring job applicant background checks for employment applicants.
5. $877,000 – McKey, et al. v. TenantReports.com LLC, Case No. 22-CV-1908-GJP (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company prepared consumer background reports that included outdated criminal non-conviction information).

Top FLSA / Wage & Hour Class And Collective Settlements In 2024

The top 10 FLSA / wage & hour class and collective action settlements totaled $742.5 million in 2023, and $574.55 million in 2022.

1. $72.5 million – Utne, et al. v. Home Depot USA Inc., Case No. 16-CV-1854 (N.D. Cal. Mar. 8, 2024) (final settlement approval granted for a class action to resolve claims that the company failed to pay hourly wages, pay final wages on time, and provide accurate written wages).
2. $38 million – In The Matter Of The Investigation Of Letitia James, Attorney General Of The State Of New York Of Lyft Inc., AOD No. 23-041 (AG Labor Bureau Nov. 30, 2024) (the New York Attorney General took legal action against Lyft, claiming the ride-booking company withheld wages from drivers by deducting taxes and fees from their pay instead of having passengers pay those expenses and prevented drivers from receiving the benefits they were entitled to under New York law).
3. $16.65 million – Goldthorpe, et al. v. Cathay Pacific Airways Ltd., Case No. 17-CV-3233 (N.D. Cal. June 20, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the airline violated state labor laws governing meal and rest periods, overtime and reserve duty pay).
4. $16 million – Oman, et al. v. Delta Air Lines Inc., Case No. 15-CV-131 (N.D. Cal. May 15, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company failed to provide accurate wage statements in violation of California Labor Law).
5. $14 million – Bolding, et al. v. Banner Bank, Case No. 17-CV-601 (W.D. Wash. Jan. 8, 2024)(final settlement approval sought in a class and collective action to resolve claims that the company misclassified mortgage loan officers as exempt employees and thereby failed to pay overtime compensation in violation of federal and state wage & hour laws).

Top Labor Class Action Settlements In 2024

The top 10 labor class action settlements totaled $129.67 million in 2023.

1. $55 million – Saunders, et al. v. State of Michigan Unemployment Insurance Agency, Case No. 22-000007-MM (Mich. Cl. Ct. Apr. 16, 2024) (preliminary settlement approval granted in a class action to resolve claims that unemployment benefits were improperly clawed back without notice during the COVID-19 pandemic)
2. $20 million – In Re International Longshore and Warehouse Union, Case No. 23-BK-30662 (N.D. Cal. Bankr. Feb. 22, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the union of engaging in an unlawful boycott of the company during a labor dispute).
3. $20 million – Bauserman, et al. v. State Of Michigan Unemployment Insurance Agency, Case No. 15-000202 (Mich. Ct. Claims Jan. 29, 2024) (final settlement agreement granted in a class action to resolve claims over the Michigan Unemployment Insurance Agency’s use of a computer program to detect fraudulent claims, which resulted in thousands of false fraud determinations).
4. $3.8 million – Moliga, et al. v. Qdoba Restaurant Corp., Case No. 23-2-11540-6 (Wash. Super. Ct. Apr. 10, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company violated Washington state’s pay transparency law when it failed to disclose pay information in job postings).
5. $2.5 million – Arrison, et al. v. Walmart Inc., Case No. 21-CV-481 (D. Ariz. Feb. 16, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company should have paid nearly 80,000 workers for the time they spent undergoing COVID-19 screenings before clocking in for their shifts).

Top Privacy Class Action Settlements In 2024

The top 10 privacy class action settlements totaled $1.32 billion in 2023, and $896.7 million in 2022.

1. $90 million – In Re Facebook Internet Tracking Litigation, Case Nos. 22-16903 and 22-16904 (9th Cir. Feb. 21, 2024) (final settlement approval affirmed in a class action to resolve claims alleging that Facebook used cookies to track the internet activity of logged-out social network users who visited third-party websites containing Facebook “Like” button plugins).
2. $75 million – Rogers, et al. v. BNSF Railway Co., Case No. 19-CV-3083 (N.D. Ill. June 18, 2024) (final settlement approval granted in a class action to resolve claims alleging that the company unlawfully scanned drivers’ fingerprints for identity verification purposes without written, informed permission or notice when they visited BNSF rail yards).
3. $62 million – In Re Google Location History Litigation, Case No. 18-CV-5062 (N.D. Cal. May 3, 2024) (final settlement approval granted in a class action to resolve claims that Google illegally collected and stored smartphone users’ private location information).
4. $52.5 million – Schreiber, et al. v. Mayo Foundation For Medical Education And Research, Case No. 22-CV-188 (W.D. Mich. May 25, 2024) (final settlement approval granted in a class action to resolve claims that the company shared subscriber information with third parties without getting consumer consent).
5. $52 million – In Re Clearview AI Inc. Consumer Privacy Litigation, Case No. 21-CV-135 (N.D. Ill. June 21, 2024) (preliminary settlement approval granted in a novel settlement in a multidistrict litigation targeting Clearview AI’s allegedly unlawful practice of “scraping” internet photos to collect biometric facial data wherein the class will receive a 23% stake in the company).

Top Products Liability And Mass Tort Class Action Settlements In 2024

The top 10 products liability / mass tort class action settlements totaled $25.83 billion in 2023, and $50.32 billion in 2022.

1. $10.3 billion – In Re Aqueous Film-Forming Foams Product Liability Litigation, MDL 2873 (D.S.C. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims with 3M by utilities that maintain it’s liable for the damage they have and will incur due to its signature PFAS that were used for decades in specialized fire suppressants, called aqueous film-forming foams (AFFF), that were sprayed directly into the environment and reached drinking water).
2. $1.18 billion – Camden, et al. v. E.I. DuPont de Nemours & Co., Case No. 23-3230 (D.S.C. Feb. 8, 2024) (final settlement approval granted in a class action to resolve claims in a multidistrict litigation for the firefighting agent aqueous film forming foam (AFFF), which contains per- and polyfluoroalkyl substances (PFAS).
3. $1.1 billion – Philips Recalled CPAP, Bi-Level PAP, And Mechanical Ventilator Products Liability Litigation, Case No. 21-MC-1230 (W.D. Penn. Apr. 29, 2024) (settlement reached in a multi-district litigation claiming that degraded foam in breathing machines caused plaintiffs personal injuries or will require long-term medical monitoring).
4. $916 million – State Of Hawaii, et al. v. Bristol-Myers Squibb Co., Case No. 1CC141000708 (Hawaii Cir. Ct. May 21, 2024) (court found in favor of the plaintiffs and ordered payment by the companies to resolve claim alleging they marketed and sold Plavix in an unfair and deceptive manner, and that the companies failed to disclose that the drug could be harmful to those of East Asian and Pacific Islander ancestry).
5. $750 million – In Re Aqueous Film-Forming Foams Products Liability Litigation, Case No. 18-MN-2873 (D.S.C. June 11, 2024) (preliminary settlement approval granted to resolve claims that Johnson Controls International PLC subsidiary Tyco Fire Products LP’s public water systems’ federal claims that some “forever chemicals” they detected in their supplies came from firefighting foam it made).

Top Securities Fraud Class Action Settlements In 2024

The top 10 securities fraud class action settlements totaled $5.4 billion in 2023, and $3.25 billion in 2022.

1. $580 million – Iowa Public Employees’ Retirement System, et al. v. Bank of America Corp. Litigation, Case No. 17-CV-6221 (S.D.N.Y. Sept. 4, 2024) (final settlement approval granted in a class action to resolve claims alleging that the defendants conspired to block and boycott new offerings that would have increased competition and improved the efficiency and transparency of the market, in violation of Section 1 of the Sherman Act).
2. $490 million – In Re Apple Inc. Securities Litigation, Case No. 19-CV-2033 (N.D. Cal. June 3, 2024) (preliminary settlement approval granted in a class action to resolve claims that Apple’s CEO Tim Cook defrauded shareholders by concealing falling demand for iPhones in China).
3. $434 million – In Re Under Armour Securities Litigation, Case No. RDB-17-388 (D. Md. June 21, 2024) (settlement reached in a class action brought by investors alleging that the company inflated stock prices by hiding declining demand for its products).
4. $350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal. Apr. 9, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company deceived them about a March 2018 software glitch that allegedly gave third-party app developers the ability to access the private profile data of 500,000 users of the Google Plus social media site).
5. $192.5 million – Chabot, et al. v. Walgreens Boots Alliance Inc., Case No. 18-CV-2118 (M.D. Penn. Feb. 7, 2024) (final settlement approval granted in a class action to resolve claims that the company’s executives lied about the likelihood of an ultimately unsuccessful merger between the two drugstore chains).

Top TCPA Class Action Settlements In 2024

The top 10 TCPA class action settlements totaled $103.45 million in 2023, and $134.13 million in 2022.

1. $21.88 million – Smith, et al. v. Assurance IQ LLC, Case No. 2023-CH-09225 (Ill. Cir. Ct. Sept. 3, 2024) (final settlement approval granted in a class action to resolve claims alleging that the company violated the Telephone Consumer Protection Act with unsolicited robocalls).
2. $9.7 million – Berman, et al. v. Freedom Financial Network LLC, Case No. 18-CV-1060 (N.D. Cal. Feb. 16, 2024) (final settlement approval granted in a class action to resolve claims alleging that the debt consolidation company and its subsidiaries made telemarketing calls which violated the Telephone Consumer Protection Act).
3. $9 million – Moore, et al. v. Robinhood Financial LLC, Case No. 21-CV-1571 (W.D. Wash. July 16, 2024) (final settlement approval granted in a class action to resolve claims that the company’s referral text messages violated Washington telemarketing laws).
4. $7 million – Williams, et al. v. Choice Health Insurance LLC, Case No. 23-CV-292 (M.D. Ala. July 9, 2024) (final settlement approval granted in a class action to resolve claims that the company violated the TCPA with unsolicited marketing calls).
5. $2 million – Burnett, et al v. CallCore Media Inc., Case No. 21-CV-3176 (S.D. Tex. June 25, 2024) (final settlement approval granted in a class action to resolve claims the company placed prerecorded phone calls to consumers in violation of state laws and the federal TCPA).