Justia Class Action Opinion Summaries

Janet Duke, after retiring from Luxottica U.S. Holdings Corp., elected to receive pension benefits through a joint and survivor annuity (JSA), calculated using actuarial assumptions set by her employer’s defined benefit pension plan. Duke alleged that her plan used outdated assumptions—specifically, a 7% interest rate and life expectancy tables from 1971—to convert single life annuities (SLA) into JSA benefits, resulting in lower monthly payments for her and similarly situated retirees. She claimed this systematic practice violated ERISA’s requirements for actuarial equivalence and compliance, thereby potentially harming the plan’s participants and the plan itself.In the United States District Court for the Eastern District of New York, Duke filed a putative class action seeking relief under ERISA Sections 502(a)(2) and 502(a)(3), including plan reformation and monetary repayments to the plan. The district court initially found Duke lacked standing for Section 502(a)(2) claims but later reversed itself and held that she did have standing for both plan reformation and monetary payments. The court compelled individual arbitration of her Section 502(a)(3) claims under a dispute resolution agreement but held that the “effective vindication” doctrine prevented mandatory arbitration of her Section 502(a)(2) claims. Defendants’ motion for a mandatory stay of litigation pending arbitration was denied.The United States Court of Appeals for the Second Circuit reviewed the district court’s rulings. It held that Duke has Article III standing to pursue plan reformation under Section 502(a)(2) because her alleged injury—reduced benefits due to outdated assumptions—could be redressed by reformation of the plan. However, Duke lacks standing to seek monetary payments to the plan, as such relief would not redress any personal injury she suffered. The Second Circuit also held that the effective vindication doctrine precludes mandatory individual arbitration of her Section 502(a)(2) claim and affirmed the district court’s discretionary denial of a mandatory stay. The order was affirmed in part and reversed in part. View "Duke v. Luxottica U.S. Holdings Corp." on Justia Law

Two commercial truck drivers, residents of Connecticut, began working as delivery drivers for a baked goods company through a staffing agency, classified as W-2 employees. After several months, the company required them to create corporations and enter into “Distributor Agreements” in their capacities as presidents of those corporations to continue working. These agreements included mandatory arbitration clauses and disclaimed an employee-employer relationship. Despite the new contractual arrangement, the drivers’ daily responsibilities remained unchanged, consisting of picking up baked goods from the company’s warehouse and delivering them to retail outlets.Seeking relief under Connecticut wage and overtime laws, the drivers initiated a putative class action in Connecticut Superior Court. The baked goods company removed the case to the United States District Court for the District of Connecticut, invoking diversity jurisdiction. The company then moved to compel arbitration pursuant to the contractual arbitration clauses. The drivers opposed, arguing that the agreements were “contracts of employment” exempt from the Federal Arbitration Act (FAA) under § 1, that they were not bound in their individual capacities, and that the clauses were unenforceable. The District Court ruled in favor of the company, granting the motion to compel arbitration, and held that the agreements were not “contracts of employment” under § 1 of the FAA.On interlocutory appeal, the United States Court of Appeals for the Second Circuit reviewed the District Court’s order de novo. The Second Circuit held that the agreements, though signed by corporate entities created at the company’s request, were “contracts of employment” within the meaning of § 1 of the FAA, as they were contracts for the performance of work by workers. Consequently, the court vacated the District Court’s order compelling arbitration and remanded for further proceedings. View "Silva v. Schmidt Baking Distribution, LLC" on Justia Law

Several parents of disabled children brought a class action against the New York City Department of Education, the Board of Education of the City School District of New York, and the Chancellor, alleging that the defendants violated the Individuals with Disabilities Education Act (IDEA). The plaintiffs claimed the defendants maintained a policy of discontinuing special education services to disabled students before their twenty-second birthday, despite federal and state guidance and previous case law indicating that such services should continue until that age.The United States District Court for the Southern District of New York dismissed the suit, finding that it lacked subject-matter jurisdiction because the plaintiffs had not exhausted administrative remedies as generally required under the IDEA. The district court agreed with the defendants’ argument that exhaustion was necessary and rejected the plaintiffs’ contention that exhaustion would be futile due to the existence of a blanket, citywide policy.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s dismissal. The appellate court clarified that the IDEA’s exhaustion requirement is not jurisdictional but is instead a claim-processing rule, meaning that failure to exhaust is not a bar to the court’s power to hear the case. The Second Circuit held that exhaustion of administrative remedies is excused when plaintiffs challenge a policy or practice of general applicability that is contrary to law and when the purposes of exhaustion—such as developing a factual record or utilizing agency expertise—would not be served. Because the plaintiffs’ claims raised a purely legal question regarding the validity of a blanket policy, the court found that exhaustion would be futile. The Second Circuit vacated the district court’s dismissal and remanded the case for further proceedings. View "J.M. v. New York City Dept. of Ed." on Justia Law

A group of shareholders in seven small-to-mid cap companies brought coordinated class actions against two major financial institutions, alleging that these institutions enabled Archegos Capital Management to amass large, nonpublic, and highly leveraged positions in the companies’ stocks through total return swaps and margin lending. When the value of these stocks declined and Archegos was unable to meet margin calls, the financial institutions quickly sold off their related positions before the public became aware of Archegos’ impending collapse. The shareholders claimed that this conduct constituted insider trading, arguing that the institutions used confidential information to avoid losses at the expense of ordinary investors.The United States District Court for the Southern District of New York first dismissed the shareholders’ complaints, finding insufficient factual allegations to support claims under both the classical and misappropriation theories of insider trading. The court allowed the shareholders to amend their complaint, but after a second amended complaint was filed, the court again dismissed the claims with prejudice. The district court concluded that the complaint did not plausibly allege that Archegos was a corporate insider or that the financial institutions owed a fiduciary duty to Archegos. It also found the allegations of tipping preferred clients to be unsupported by sufficient facts. The court dismissed the related claims under Sections 20A and 20(a) of the Securities Exchange Act for lack of an underlying securities violation.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s judgment. The Second Circuit held that the shareholders failed to plausibly allege that the financial institutions engaged in insider trading under either the classical or misappropriation theories. The court found no fiduciary or similar duty owed by Archegos to the issuers or by the financial institutions to Archegos, and determined that the complaint lacked sufficient factual allegations to support a tipping theory. The court also affirmed dismissal of the Section 20A and 20(a) claims. View "In Re: Archegos 20A Litigation" on Justia Law

Two former employees of a fire alarm and sprinkler company provided fire alarm testing and inspection services on public works projects in New York. They alleged that their employer failed to pay them the prevailing wages required by New York Labor Law § 220, which mandates that workers on public works projects receive at least the prevailing rate of wages. The contracts between the employer and various public entities included clauses that either disclaimed the applicability of prevailing wage laws, were silent on the issue, or referenced prevailing wage rates. Many contracts also contained a provision shortening the statute of limitations for any action against the company to one year.The United States District Court for the Northern District of New York granted partial summary judgment in favor of the employer on all prevailing wage-related claims. The court found that: (1) the contracts did not expressly promise to pay prevailing wages; (2) the one-year contractual limitations period barred the claims; and (3) fire alarm testing and inspection work was not covered by § 220’s prevailing wage requirement. The court also dismissed related quantum meruit and unjust enrichment claims and later approved a class action settlement on other claims, with the prevailing wage claims reserved for appeal.On appeal, the United States Court of Appeals for the Second Circuit held that, based on a 2009 New York State Department of Labor opinion letter and relevant precedent, fire alarm testing and inspection work is covered by § 220, entitling the plaintiffs to prevailing wages. However, the Second Circuit found New York law unsettled on whether a promise to pay prevailing wages is implicit in every public works contract (even if not expressly stated) and whether a contractual one-year limitations period is enforceable against workers’ third-party beneficiary claims. The court therefore certified these two questions to the New York Court of Appeals for resolution. View "Walton v. Comfort Systems" on Justia Law

A former dancer at two adult entertainment clubs in Manhattan filed a class charge with the Equal Employment Opportunity Commission (EEOC), alleging pervasive sexual harassment and a hostile work environment affecting herself and other female dancers. She claimed that the clubs’ policies and practices fostered this environment, including being forced to change in open areas monitored by video and being pressured to engage in sexual acts with customers. After receiving the charge, the EEOC requested information from the clubs, including employee “pedigree” data such as names, demographics, and employment details. The clubs objected, arguing the requests were irrelevant and burdensome, but the EEOC issued subpoenas for the information.The United States District Court for the Southern District of New York granted the EEOC’s petition to enforce the subpoenas, finding the requested information relevant to the investigation and not unduly burdensome for the clubs to produce. The clubs appealed and, while the appeal was pending, the EEOC issued a right-to-sue letter to the charging party, who then filed a class action lawsuit in the same district court. The clubs argued that the EEOC lost its authority to investigate and enforce subpoenas once the right-to-sue letter was issued and the lawsuit commenced.The United States Court of Appeals for the Second Circuit held that the EEOC retains its statutory authority to investigate charges and enforce subpoenas even after issuing a right-to-sue letter and after the charging party files a lawsuit. The court also found that the employee information sought was relevant to the underlying charge and that the clubs had not shown compliance would be unduly burdensome. The Second Circuit therefore affirmed the district court’s order enforcing the subpoenas. View "EEOC v. AAM Holding Corp." on Justia Law

Ferdinand E. Marcos, former President of the Philippines, deposited approximately $2 million in a New York Merrill Lynch account in 1972, which grew to over $40 million. These funds, known as the Arelma Assets, were proceeds of Marcos’s criminal activities. After Marcos’s ouster, multiple parties—including the Republic of the Philippines, a class of nearly 10,000 human rights victims, and the estate of Roger Roxas (from whom Marcos had stolen treasure)—asserted competing claims to these assets. The Republic obtained a forfeiture judgment from a Philippine court and requested the U.S. Attorney General to enforce it under 28 U.S.C. § 2467.The United States District Court for the Southern District of New York reviewed the enforcement application. The court rejected the class’s affirmative defenses, which included arguments based on statute of limitations, subject matter jurisdiction, lack of notice, and fraud. The court also found that Roxas lacked Article III standing because she failed to show a sufficient interest in the Arelma Assets, and denied her leave to amend her answer. The court entered judgment for the Government, allowing the assets to be returned to the Republic of the Philippines.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s judgment. The Second Circuit held that the class failed to create a genuine dispute of material fact as to any of its affirmative defenses and that Roxas lacked standing to participate as a respondent. The court also upheld the denial of intervention by Golden Budha Corporation, finding its interests adequately represented and lacking standing. The main holding is that the Government’s application to enforce the Philippine forfeiture judgment was timely and proper, and that neither the class nor Roxas could block enforcement or claim the assets. View "In re: Enforcement of Philippine Forfeiture Judgment" on Justia Law

Brian Flores, a current NFL coach, brought a putative class action against the National Football League and several of its member clubs, including the Denver Broncos, New York Giants, and Houston Texans, alleging racial discrimination under federal, state, and local law. Flores’s claims stemmed from his interviews and employment experiences with these teams, during which he alleged discriminatory hiring practices. His employment contracts with various NFL teams incorporated the NFL Constitution, which contains a broad arbitration provision granting the NFL Commissioner authority to arbitrate disputes between coaches and member clubs.The United States District Court for the Southern District of New York reviewed the defendants’ motion to compel arbitration based on Flores’s employment agreements. The District Court granted the motion for claims against the Miami Dolphins, Arizona Cardinals, and Tennessee Titans, but denied it for Flores’s claims against the Broncos, Giants, Texans, and related claims against the NFL. The court found the NFL Constitution’s arbitration provision illusory and unenforceable under Massachusetts law, as it allowed unilateral modification by the NFL and lacked a signed agreement in one instance. The District Court also denied the defendants’ motion for reconsideration.On appeal, the United States Court of Appeals for the Second Circuit affirmed the District Court’s orders. The Second Circuit held that the NFL Constitution’s arbitration provision, which vested unilateral substantive and procedural authority in the NFL Commissioner, did not qualify for protection under the Federal Arbitration Act and was unenforceable because it failed to guarantee Flores the ability to vindicate his statutory claims in an impartial arbitral forum. The court also affirmed the denial of the motion for reconsideration, concluding there was no abuse of discretion. View "Flores v. N.Y. Football Giants" on Justia Law

A group of federally funded health centers and clinics serving low-income populations alleged that several major drug manufacturers conspired to restrict drug discounts offered through the federal Section 340B Drug Discount Program. The plaintiffs claimed that, beginning in 2020, the manufacturers coordinated efforts to limit the availability of discounted diabetes medications at contract pharmacies, resulting in significant financial losses for safety-net providers. The manufacturers, who are direct competitors in the diabetes drug market, allegedly implemented similar policies within a short timeframe, each restricting or eliminating the discounts in ways that had a comparable anticompetitive effect.After the plaintiffs filed a class action complaint, the United States District Court for the Western District of New York dismissed their first amended complaint and denied leave to file a second amended complaint. The district court concluded that the plaintiffs failed to allege sufficient parallel conduct or factual circumstances suggesting a conspiracy, and thus found the proposed amendments futile.The United States Court of Appeals for the Second Circuit reviewed the case and applied a de novo standard to both the dismissal and the denial of leave to amend. The Second Circuit held that the plaintiffs’ proposed second amended complaint alleged enough facts to plausibly infer a horizontal price-fixing conspiracy under Section 1 of the Sherman Act. The court found that the complaint sufficiently pled both parallel conduct and “plus factors” such as a common motive to conspire, actions against individual economic self-interest, and a high level of interfirm communications. The court also determined that Supreme Court precedents cited by the defendants did not bar the plaintiffs’ claims. Accordingly, the Second Circuit vacated the district court’s judgment and remanded the case with instructions to allow the plaintiffs to file their second amended complaint. View "Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC" on Justia Law

Plaintiffs filed a class action lawsuit against Kimberly-Clark Corporation, alleging that the company falsely advertised its bathroom wipes as flushable, leading consumers to pay a premium and causing plumbing damage. The parties reached a settlement where Kimberly-Clark agreed to pay up to $20 million in compensation to the class and up to $4 million in attorney’s fees. However, class members claimed less than $1 million. The district court approved the settlement under Rule 23(e) of the Federal Rules of Civil Procedure.The United States District Court for the Eastern District of New York approved the settlement, finding it fair, reasonable, and adequate. Objector Theodore H. Frank appealed, arguing that the settlement disproportionately benefited class counsel, who received most of the monetary recovery. Frank contended that the district court failed to properly assess the allocation of recovery between the class and class counsel.The United States Court of Appeals for the Second Circuit reviewed the case and agreed with Frank that the district court applied the wrong legal standard in its Rule 23(e) analysis. The appellate court clarified that Rule 23(e) requires courts to compare the proportion of total recovery allocated to the class with the proportion allocated to class counsel. The court vacated the district court’s order and judgment approving the settlement and remanded the case for further proceedings consistent with this opinion. The appellate court did not reach a conclusion on whether the settlement was fair but emphasized the need for a proper proportionality analysis. View "Kurtz v. Kimberly-Clark Corp." on Justia Law