The Class Action Weekly Wire – Episode 47: 2024 Preview: Discrimination Class Action Litigation

 

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and associates Zev Grumet-Morris and Derek Franklin with their discussion of 2023 developments and trends in discrimination class action litigation as detailed in the recently published Duane Morris Discrimination Action Review – 2024.

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Episode Transcript

Jerry Maatman: Welcome to our listeners – thank you for being here for our weekly podcast, the Class Action Weekly Wire. My name is Jerry Maatman, I’m a partner at Duane Morris, and joining me today are my colleagues, Derek Franklin and Zev Grumet-Morris. Thanks for being here guys.

Derek Franklin: Thank you, Jerry, happy to be part of the podcast.

Zev Grumet-Morris: Thanks, Jerry. Glad to be here.

Jerry: Today on the podcast we’re discussing the recent publication of our Practice Group, the 2024 edition of the Duane Morris Discrimination Class Action Review. Listeners can find the e-book publication on our blog, the Duane Morris Class Action Defense Blog. Derek, could you provide our listeners with a summary of what that publication is all about?

Derek: Absolutely, Jerry. Class action litigation in the discrimination space remains an area of key focus of skilled class action litigators in the plaintiffs’ bar. As a result, compliance with discrimination laws in the myriad of ways that companies interact with employees, customers, and third-parties is a corporate imperative. To that end, the class action team at Duane Morris is pleased to present the Discrimination Class Action Review – 2024. This publication analyzes the key discrimination-related rulings and developments in 2023, as well as the significant legal decisions and trends impacting discrimination class action for 2024. We hope that companies and employers will benefit from this resource in their compliance with these evolving laws and standards.

Jerry: Thanks, Derek. In 2023, courts around the country issued a mixed bag. I’ve always thought that discrimination class actions strike at the very brand and reputation of corporations. Zev, what are some of the takeaways from the publication with regard to major developments in 2023?

Zev: So for decades, federal courts routinely granted class certification in nationwide employment discrimination class actions. But this changed in large part over a decade ago, when the U.S. Supreme Court decided Wal-Mart Inc. v. Dukes, et al., where the court tightened the legal requirements for securing class certifications. But the pendulum appears to be swinging back, as courts are becoming increasingly inclined to find for plaintiffs in class certification rulings within the discrimination context. In 2023 alone, courts granted class certification 50% of the time, while of course denying certification in the other 50% of cases.

 

Jerry: The discrimination class action space is certainly evolving and reflecting societal trends. Derek, what do you foresee corporate counsel can expect for the coming year in 2024?

Derek: Ultimately, as the class action landscape continues to evolve, so, too, are the playbook theories of the plaintiff and defense bars. Counsel on both sides are becoming more sophisticated and creative in their approaches to prosecuting and defending class actions. Courts are facing increasing pressure to quickly and efficiently discern between properly pled actions and meritless litigation, not only to promote court expediency, but also to spare businesses the incredible expense that accompanies class action defense. So while workplace and quality continues to grab headlines and remain the forefront in the public eye, employers can expect discrimination class actions to reach even greater heights in 2024.

Jerry: Well, thanks for that information – key and important for corporate counsel trying to get ahead of these litigation risks. Of course, conversion of the filing of a discrimination class action into a certified class and then into a settlement, is the Holy Grail for the plaintiffs’ bar. Zev, how did the plaintiffs do in terms of that conversion rate in 2023 with respect to settlement amounts?

Zev: Plaintiffs did very well in securing high settlement dollars. In 2023, the top 10 discrimination settlements totaled $762.2 million, which was a significant increase over 2022, when the top 10 discrimination class action settlements totaled only $597 million.

 

Jerry: It will be interesting to see in 2024 if we cross the $1 billion line in this area – it seems like these settlements are on an upward trend in aiming for that $1 billion dollar mark. Certainly an important statistic that we track here at Duane Morris in terms of our analysis of class action rulings and class action settlements. Well, thank you, Derek, and thank you, Zev, for being here today, and thank you to our loyal listeners for tuning in. You can get your free copy of the Discrimination Class Action Review e-book on our website – free of charge.

Zev: Thanks for having me, Jerry, and thank you to all the listeners.

Derek: Yeah, thanks so much, everyone!

 

Just In Time For The Holidays: New York Federal Court Gifts The Denial Of Plaintiffs’ Rule 23 Class Certification Motion In FDNY Bias Lawsuit

By Gerald L. Maatman, Jr., Katelynn Gray and Elizabeth M. Lacombe

Duane Morris Takeaways – In Local 3621 Of The EMS Officers Union, et al. v. City Of New York, Case No. 18 Civ. 4476, 2022 U.S. Dist. LEXIS 212218 (S.D.N.Y. Nov. 22, 2022), the City successfully defeated a Rule 23 motion for class certification brought by a group of EMS officers and Unions who alleged that the promotional process to leadership positions resulted in disparate and discriminatory promotional practices in violation of federal, state, and local law. The ruling is a primer for employers on how to dismantle employment discrimination class claims.

Background Of The Case

Plaintiffs Renae Mascol, Luis Rodriguez, Local 3621, EMS Officers Union, DC-37, AFSCME and AFL-CIO (collectively, “Plaintiffs”) brought a class action on behalf of its members and all other similarly-situated individuals against Defendants, the City of New York, the New York City Fire Department, and the Department of Citywide Administrative Services (collectively, the “City”), alleging Defendants’ subjective promotional policies and practices led to the denial of promotions to qualified applicants based on their race, sex, gender and/or disability and/or circumstances that led to the applicant taking a leave of absence.

Plaintiffs sought class certification pursuant to Rule 23(a) and (b)(2) of the Federal Rules of Civil Procedure on behalf of three classes, including: (1) EMS officers who are non-white, female, have received a reasonable accommodation, or have taken a leave of absence due to a disability or pursuant to FDNY time and leave policies; (2) non-white and/or female EMS officers; and (3) EMS officers who have received a reasonable accommodation or taken a leave of absence because of a disability and/or have taken a leave of absence pursuant to FDNY time and leave policies.

In support of their motion, Plaintiffs submitted an expert report from a forensic labor economist who concluded there was “statistically significant evidence of discriminatory promotional disparities” and that the statistical evidence showed that the common promotional policy “resulted in disparities that commonly disadvantaged the class.”  Id. at *7. Plaintiffs also submitted anecdotal evidence in the form of declarations from EMS officers testifying to their experiences with the City’s promotional processes.

Defendants opposed these theories and submitted rebuttal evidence with their own expert report. They argued that Plaintiffs’ expert’s analysis was flawed, largely because it was based in part on data that was irrelevant to the analysis and in other instances because it failed to consider other, relevant data.  Moreover, Defendants’ expert concluded that the relevant data led to a determination that, when evaluating promotions over the same time period, white men were actually less likely to be promoted than similarly-situated non-white officers; men were less likely to be promoted than women; and whites were less likely to be promoted than non-whites.

The Court’s Ruling Denying Class Certification

In denying Plaintiffs’ motion for class certification, Judge Lewis J. Liman of the U.S. District Court for the Southern District of New York conducted an extensive review of the promotional process at issue, as well as the expert reports and anecdotal evidence offered by the parties. Ultimately, the Court concluded that Plaintiffs had failed to sufficiently demonstrate the element of commonality under Rule 23(a)(2).

With respect to Plaintiffs’ disparate impact claims, the Court explained that Plaintiffs cannot simply point to the promotional process generally as the basis for the disparate impact, but must identify the “specific” employment practices allegedly responsible for the at-issue disparities.  In this case, there were several distinct steps in the promotional process, which combined subjective criteria with standardized eligibility criteria.  Significantly, an applicant could fail to be promoted at any one of these steps. As such, the Court opined that in order to state a disparate impact claim based on a failure to promote, Plaintiffs were required to identify which specific employment practice was responsible for the statistical disparities.

The Court reasoned that Plaintiffs’ expert’s analysis did not help them win the day, where it merely showed a racial and gender disparity with respect to the individuals holding leadership positions but failed to identify what aspect of the promotional process, if any, resulted in those disparities.  Moreover, the Court found that Plaintiffs’ anecdotal evidence did more harm than good, underscoring the individualized nature of each alleged incident of discrimination where each declaration identified a different form of discrimination and a different course of conduct.  The Court ultimately determined that Plaintiffs had failed to show that Defendants had used any of the cited employment practices to discriminate against the proposed class or that such practices had a discriminatory impact, holding that “the question of which of these specific employment practices has a discriminatory impact on the applicant is largely an individualized inquiry.” Id. at *25.

Plaintiffs’ disparate treatment claim fared no better for similar reasons, as the Court again noted that the statistical evidence from Plaintiffs’ expert did not offer “significant proof of a pattern or practice of unlawful discrimination” and failed to account for non-discriminatory explanations for any disparities.  Plaintiffs’ primary evidence, that of anecdotal evidence from declarants, was similarly insufficient to salvage their claims because it raised “individual rather than common questions.” Id. at *26.

Implications For Employers

The ruling in Local 3621 Of The EMS Officers Union emphasizes the value of crafting and implementing detailed and thoughtful employment policies and procedures that utilize both objective and subjective measures in an effort to reduce or eliminate the influence of potential bias (implicit or otherwise) when evaluating employees for promotional opportunities.  Moreover, ensuring that those policies and procedures are reduced to writing, provided to those employees who might have occasion to evaluate others for promotional opportunities, and implemented appropriately will provide a strong defense to discrimination claims and may, as it did here, serve to dismantle a potential class claim based on generalized allegations of process-based discriminatory conduct.

What Employers Should Know About The EEOC’s Draft Strategic Plan For FY 2022-2026

By Gerald L. Maatman, Jr., Jennifer A. Riley, Rebecca S. Bjork, and Gregory Tsonis

Duane Morris Takeaways: On November 4, 2022, the U.S. Equal Employment Opportunity Commission released a preliminary draft of its 2022-2026 Strategic Plan.  According to its preliminary draft, the EEOC plans to focus its internal operations over the next four years to make changes that it hopes will improve its performance securing targeted injunctive relief and conducting systemic investigations, along with its use of technology to process charges and conciliate them.  The four-year plan – which is distinct from the EEOC’s strategic enforcement plan, still to be released in the coming months – was published in the Federal Register and is open for comment until December 4, 2022.  Even if employers do not submit comments, they would be well-advised to review the draft and final Plan once it is announced because it provides a window into the EEOC Commissioners’ thinking for how the agency will use its resources to redress and deter workplace discrimination.   

Introduction

Every four years, the EEOC prepares a Strategic Plan that drives how it will improve its internal operations to better enforce federal anti-discrimination laws.  The Plan for 2022-2026 that has now been published in the Federal Register is important because once it is finalized after the review and comment period expires, it will set forth specific goals along with performance metrics to measure how well those goals are being met.  The key elements of the draft Plan and why they are important are critical data points for employers.

Operational Improvements And Performance Metrics Sought By The EEOC

The 2022-2026 Strategic Plan draft signals that when investigating private sector employers, the EEOC will focus its internal operations on four key areas.  First, the EEOC will ensure that by FY 2025, “90% of EEOC conciliations and litigation resolutions contain targeted, equitable relief and that level is maintained through FY 2026.”  (Draft Strategic Plan at 15.)  The draft Plan explains the EEOC’s view that such a goal likely would improve compliance with the statutes enforced by the agency nationwide.

Second, between FY 2022 and 2026, the EEOC aims to continue to “favorably resolve at least 90% of enforcement lawsuits.”  (Id. at 16.)  On this point, the EEOC explains that because its systemic litigation program is resource intensive, this goal is important to enable the agency to use its resources in a wise and efficient manner.  Employers who have faced systemic lawsuits are well-aware of the amount of litigation resources they can consume, both for the companies involved and the EEOC.

Third, “In each year through FY 2026, the EEOC will provide training to all field staff on identifying and investigating systemic discrimination, and at least 90% of investigators and trial attorneys will participate in systemic training each year.”  (Id.)  The draft Plan explains that the purpose of this goal is “expanding the EEOC’s capacity to conduct systemic investigations, resulting in a coordinated, strategic, and effective approach to systemic enforcement.”  (Id.)  This likely signals that the draft Strategic Enforcement Plan will continue to emphasize and prioritize the EEOC’s use of pattern or practice lawsuits to enforce the statutes over which Congress gave it authority.

Fourth, “the EEOC will make significant progress toward enhanced monitoring of conciliation agreements, leading to a more robust compliance program.”  (Id. at 17.)  The Commission’s focus here is to implement “streamlined and standardized procedures, improved tracking and internal reporting mechanisms, and related training for EEOC field staff” to ensure that conciliation agreements are reached and enforced.  (Id.).

Finally, the EEOC continues to be aware that its charge intake process needs work.  The draft Plan pledges to leverage technological advancements to “enhance its intake services to potential charging parties, respondents, and representatives.”  (Id. at 19.)

Implications For Employers

The EEOC’s FY 2022-2026 draft Strategic Plan is a document that provides insight into the direction the agency will take to improve how it functions.

With a nod the old E.F. Hutton TV commercial, “when the EEOC speaks, employers should listen…”

Massachusetts State Court Rules In Class Action That A Multiple-Choice Promotional Test Discriminated Against Minority Police Officers

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

Duane Morris Takeaways – In Tatum et al. v. Commonwealth of Massachusetts, et al., C.A. No. 0984-CV-00576 (Mass. Sup. Ct. 2022), a Massachusetts state court judge conducted a class trial found that a multiple-choice promotional exam – used for years by various police departments to determine promotions – discriminated against Black and Latino police officers in violation of Massachusetts law.  In analyzing the test format, which largely required “rote memorization,” the court opined that the exam failed to adequately test for the relevant job qualifications, as well as the police departments’ use of a ranking system from which candidates were selected for promotion.  Ultimately, the court held that the test and ranking system adversely impacted minorities and interfered with their ability to promote to sergeant.  The decision demonstrates why employers must be careful to implement policies and processes that do not have a discriminatory impact, even if on their face such policies and practices appear to be neutral.

Case Background

The Commonwealth of Massachusetts’ Human Resource Division (“HRD”), for 50 years, administered a written multiple-choice test to police officers to determine promotion to sergeant.  Id. at 4.  Officers were ranked almost exclusively according to their scores on the written examination, with individuals at the top of the list being first in line for promotion.  In 2007, certain police officers that were subject to the written examination sued the Commonwealth of Massachusetts, and the municipalities in which they worked as police officers. They alleged that the testing process unfairly discriminated against them due to their race and national origin in violation of state and federal law.  Id. at 2.   The U.S. Court of Appeal for the First Circuit, in an interlocutory appeal, held that state defendants did not qualify as “employers” under Title VII and were entitled to sovereign immunity, thereby resulting in the dismissal of state law claims against the state defendants, which the plaintiffs subsequently re-filed in state court.  Id.  Though the Massachusetts state court initially dismissed the entire action based on the First Circuit decision, the Massachusetts Supreme Judicial Court remanded several claims, rejected the defense of sovereign immunity, and held that the plaintiffs could be entitled to relief under Massachusetts law prohibiting discrimination.  Id. at 3.  The state trial court subsequently certified a class of current and former police officers that took the written examination administered by HRD in certain years between 2005 and 2012.  Id.

Ultimately, the plaintiffs lost their federal court case after a bench trial, with the federal court finding that the tests had a disparate impact on minorities but that plaintiffs failed to prove that Boston refused to adopt an alternative test with less disparate impact.  Id.  Though the defendants in the state court case tried to dismiss the entire state court action based on the federal court’s decision, the Massachusetts Appeals Court held that defendants did not show issue preclusion and it authorized the case for trial.  Id. at 3-4.  The state trial court conducted a two-week bench trial in June and July of 2022 limited to the issue of class-wide liability.  Id. at 1.

The State Court’s Findings Of Fact And Conclusions Of Law

The state court found a “massive amount of evidence proving the known and unjustified disparate impact” of HRD’s testing format.  Id. at 1. Turning first to the format of the test, the court noted that exam questions “largely test for rote memorization of facts and passages taken directly from textbooks that candidates are asked to study,” and studies commissioned by the HRD over the years to measure the test’s efficacy “did not identify test-taking skills and lack of test-related anxiety as job related.”    Id. at 8.  The multiple choice portion of the test accounted for 80% of a candidate’s score, with 20% coming from an “Education and Experience” form that each candidate would complete.  Id.  The court explained that the allocated percentages had no discernible basis, and further disparaged the Education and Experience portion since every officer received 14 of the 20 available points simply for being able to sit for the exam.  Id. at 8, 28.  Though HRD worked with consultants and subject matter experts to identify the knowledge, skills, and abilities (“KSAs”) important to the job of sergeant, the court noted that the multiple choice questions could only test for 22% to 40% of the relevant KSAs and “did not in fact test for some skills that could have been tested” due to the types of multiple choice questions asked.  Id. at 13-15.  Rather than focusing on abstract knowledge and memorization of academic textbooks, the court reasoned that questions testing situational judgment, for example, should have been used but were not.  Id. at 19.

Given the format of the multiple-choice exam and the types of questions asked, the court observed that a racial disparity existed based on test-taking ability, and not on job qualifications.  Noting that “[t]est taking skills are built through practice,” the court adopted the opinions of expert witnesses who testified that “minorities, in general, have had fewer opportunities to participate in our educational system” and differences in average test scores of minorities on tests of cognitive abilities “is due to socioeconomic differences, lack of access to opportunity, and structural racism that exists within the system.”  Id. at 26.  Ultimately, the court found that “[b]ecause HRD failed to test many important KSAs, measured test-taking skills and memorization, enabled test-related anxiety to affect results and failed to ask questions that focused upon measuring job-related knowledge, its format did not rank candidates for promotional purposes on a basis that was substantially job related.”  Id. at 14.

The court also noted that HRD had knowledge of the shortcomings and adverse impact of its tests before and during their use.  A 1987 job analysis conducted by a consulting firm recommended that a written test “did not assess many of the attributes needed for the job” and “should account for no more than 40% of the overall score.”  Id. at 16.  In addition, a study conducted for the Boston Police Department in 2000 advised HRD that an examination should include non-written components, such as an assessment center and performance review system.  Id. at 17.  The failure to include a performance based assessment technique, the court explained, “injects extraneous influences (such as test-taking ability and temporary memorization skills) into the selection process.”  Id.  Analysis of the rate of minorities’ promotion to sergeant showed that minorities were promoted at a drastically lower rate than non-minority officers.  Id. at 17-19.

The court further determined that Defendants failed to adopt alternatives that would have minimized or eliminated the adverse impact of the tests on minority test-takers.  The tests could have contained fewer questions, reducing the “large cognitive loads” and memorization required, in order to reduce the adverse impact.  Id. at 45.  Rather than using questions that require “rote memorization,” HRD could have used questions that tested situational judgment and were written in plain language instead of “convoluted phrases.”  Id.  Most notably, banding, in which scores within a range are treated as equal, would have reduced adverse impact because there was no evidence that a police officer that scored one point higher than another was more qualified or would make a better sergeant.  Id. at 45-46.  Further, HRD adopted 11-point bands in 2009 at the recommendation of a consultant.  Id.  Finally, the use of other testing methods, such as oral assessments and performance reviews, to assess nonwritten skills “such as leadership, conscientiousness, calmness under pressure, decision-making, interpersonal skills, and oral communication” would have reduced the adverse impact of the tests.  Id. at 47.

As a result of the myriad shortcomings of HRD’s written tests, the Court described at length the statistically significant adverse impact of the tests on minority test-takers across all years as compared to white test-takers in the form of lower passing rates, lower overall scores, lower rate of promotion of minority police officers, and increased delay in promotion of minority police officers.  Id. at 34-42.  Given the adverse impact on scoring and the use of a rank-order list to determine promotions, the court found an adverse impact on the ability and timeliness of minority police officers to achieve promotion to sergeant.  Id. at 57.  The multiple-choice format of the exam and the ranking of candidates were not job-related, the court also held, given the invalidity of the exam and ranking process.  Id. at 61-63.  Based upon its factual findings, the court held that “[o]verwhelmingly persuasive evidence proves that HRD interfered with the class members’ rights to consideration for promotion to police sergeant without regard to race or national origin.”  Id. at 75.

Implications for Employers

The Tatum decision illustrates why employers with criteria for promotion must be cognizant of how such testing systems may adversely impact classes of individuals in violation of state and federal law.  While the testing system used in this case appeared neutral, in practice the test and ranking system resulted in less promotions and increased delay in promotions for minorities.  This case demonstrates the potential for costly and years-long class action lawsuits stemming from employer policies and practices in determining promotions.  Given these risks, it behooves employers to ensure that neutral policies and practices do not adversely impact groups of individuals.

Don’t Mess With Texas: Federal Judge Rules That The EEOC’s Guidance On LGBTQ Employees And Bostock Is Invalid

By: Gerald L. Maatman, Jr., Jennifer A. Riley, and Rebecca S. Bjork 

Duane Morris Takeaways: On October 1, 2022, in Texas v. EEOC, No. 21-CV-194 (N.D. Tex. Oct. 1, 2022), Judge Matthew Kacsmaryk of the U.S. District Court for the Northern District of Texas ruled that the EEOC’s guidance on Bostock v. Clayton County, Georgia, 140 S.Ct. 1731 (2021), was invalid and unlawful. The EEOC’s guidance sought to delineate workplace protections for LGBTQ employees relative to general workplace policies, including obligations related to dress codes, use of bathrooms, and preferred pronouns. The Court agreed with the legal challenge mounted by the State of Texas over the Commission’s guidance. While the final chapter on these issues is far from written, employers should consider the ruling in Texas v. EEOC as part of a broader analysis of EEOC workplace regulations and the ever expanding array of issues involving appropriate workplace personnel policies.

The EEOC’s Guidance

On June 15, 2021, the Commission issued guidance on its interpretation of Bostock on the one-year anniversary of the U.S. Supreme Court’s ruling. Bostock, in a 6 to 3 decision, held that Title VII of the Civil Rights Act of 1964 prohibits discrimination against employees based on their sexual orientation or gender identity.

The EEOC’s guidance on Bostock – which can be accessed here – asserted that employers were obligated to accommodate LGBTQ employees regarding dress codes, use of identifying pronouns, and bathrooms and locker rooms. Critics of the Commission claimed that the guidance went far beyond the holding in Bostock and constituted impermissible rulemaking.

The Legal Challenge Of Texas

In what only can be deemed an extraordinary legal challenge, the Texas Attorney General sued the EEOC and sought declaratory and injunctive relief to invalidate the EEOC’s guidance and enjoin its enforcement and implementation. The lawsuit also challenged an analogous set of regulations issued by the U.S. Department of Health and Human Services (“HHS”). After rulings on procedural issues, Texas brought a motion for summary judgment on the grounds that: (i) the guidance of both agencies was inconsistent with the law; (ii) was arbitrary and capricious; and (iii) constituted improper rulemaking without following applicable notice-and-comment rulemaking procedures under the Administrative Procedure Act (“APA”).

The Court’s Decision

Judge Kacsmarky agreed with Texas, rejected the positions of the EEOC and the HHS, and granted summary judgment against the agencies.

The key aspect of the decision focused on the reach of Bostock. Judge Kacsmarky opined that the U.S. Supreme Court confined its ruling to a holding that Title VII banned workplace bias due to an employee’s “homosexual or transgender status.” Id. at 6. In analyzing Bostock, Judge Kacsmarky determined that the EEOC and the HHS misread the Supreme Court’s opinion.  Id. at 7-14. He held that Bostock did not extend to “correlated conduct,” such as dress, bathrooms, use of pronouns, or healthcare practices. Id. at 4.

Based on this reasoning, Judge Kacsmarky ruled that the EEOC and HHS violated Title VII and the APA by issuing what he deemed the equivalent of substantive, legislative rules through improper procedures. As a remedy, he declared the guidance unlawful, set it aside, and awarded attorneys’ fees and costs to Texas.

Implications For Employers

The ruling in Texas v. EEOC reflects a judicial finding that the Commission acted inappropriately in attempting to push the legal envelope in terms of how Bostock should be read to obligate employers to accommodate LGBTQ employees in the workplace. That said, the ruling is unlikely to shut down the Commission’s efforts to push for expansive interpretations of the boundaries of Title VII. Employers can expect the Commission to pursue other test cases and litigate over the interpretation of Bostock for the foreseeable future. Furthermore, the Commission is apt to appeal the ruling in Texas v. EEOC to the U.S. Court of Appeal for the Fifth Circuit. Stay tuned!

 

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

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