Duane Morris Takeaway: This week's episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Rebecca Bjork with their discussion of key sanctions rulings in class action litigation over the past 12 months.
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Episode Transcript
Jerry Maatman: Thank you, loyal blog readers and listeners, for joining us for our next episode of the Duane Morris Class Action Weekly Wire. I'm Jerry Maatman, a partner here at Duane Morris, and joining me today is special counsel Rebecca Bjork of our Washington, D.C. office. Thanks so much, Rebecca, for being on our podcast.
Rebecca Bjork: Jerry, it's great to be here. Thanks for having me.
Jerry: Today we have a little bit of a different topic. We're going to focus on significant issues considering motions for sanctions in class action litigation. Rebecca, describe for our listeners some of the reasons why a court might contemplate entering sanctions in class action litigation.
Rebecca: Sanctions are just simply thought of as penalties – in civil cases, they are typically in the form of a monetary fine usually issued in response to violating procedures or abusing the judicial process somehow. But the most extreme sanction that can be imposed in civil cases is dismissal with prejudice of the filing party or dismissal of the answer of the responding party, which means that the sanctioned party would have no further recourse available, and the case would be over with judgment entered against them.
Jerry: Well, thanks for that overview. Let's jump right into it and talk about some of the most significant rulings over the past 12 months. What about the Ikea case – what happened there?
Rebecca: Sure. In Donofrio, Ikea was hit with sanctions in an age discrimination collective action. Plaintiffs had alleged that older workers were passed over for promotions in favor of younger employees based on so-called "future potential" and their willingness to relocate. The court had ordered Ikea to preserve and produce emails from certain managers, which is obviously common in such litigation, but instead, Ikea deleted four of those accounts in violation of the court's order. The court said that this spoliation wasn't intentional, but it still caused significant prejudice to the plaintiffs, and as a result Ikea had to pay attorneys' fees and expenses related to their sanctions motion.
Jerry: Always viewed that case as a great example of how simple negligence and not intentional or bad faith conduct can trigger sanctions in the class action space. Let's pivot to a sanctions ruling that made a lot of headlines in the consumer fraud class action space. The Dukas v. KLM Airlines case. What stood out for you there in that situation?
Rebecca: Well, that one centered on climate-related advertising. Plaintiffs, led by class action lawyer named Spencer Sheehan, claimed that KLM had misled customers about their environmental commitments. But the named plaintiff admitted that she never saw the ads in question – so she never had standing. Now the attorney Sheehan did not withdraw the suit or fix the issue even after KLM raised these points with the court, so the court hit him with a $1,000 fine and ordered him to pay KLM's legal fees. The court also referenced this attorney's history of filing questionable consumer class actions, so this is a clear signal – do your diligence before filing your lawsuit.
Jerry: Good admonition. But speaking of high costs, what about Durant v. Big Lots that involved over $140,000 in attorneys' fees? What happened there?
Rebecca: Well, that case was about allegedly deceptive labeling of coffee, and the court found that the lawsuit was frivolous, especially since it mirrored previously dismissed case out of New York. The judge used the lodestar method to calculate fees, and rejected the plaintiff's objections as vague. But importantly, while the defendant requested a multiplier for the work their attorneys did, the court said that standard fees were enough, but still this was a big hit for the plaintiff's counsel, both financially and reputationally.
Jerry: Let's continue and take a tour of the sanctions jurisprudence that developed over the last year. Tell us briefly about the cases of Hamm v. Acadia Healthcare and Plunkett v. FirstKey Key Homes.
Rebecca: Sure. In Hamm, the court partially granted sanctions against the plaintiff's counsel in a wage and hour case, and it was all about discovery misconduct, which is often the case in these cases – missed depositions, failure to cooperate. The judge trimmed the fee award, though, for inefficiencies like block billing, but he still ordered reimbursement for time spent preparing the sanctions motion.
But in Plunkett v. FirstKey, the other case you mentioned, the tables were turned there. The plaintiffs were awarded sanctions because the defendant, FirstKey Homes, tried to settle directly with potential opt-in plaintiffs outside of court supervision. The court called this coercive, issued a protective order, and awarded fees and costs to the plaintiffs. So, there's another cautionary tale – never sidestep judicial oversight in FLSA cases.
Jerry: Let's talk about courts declining to order sanctions or appellate review of sanctions order. Let's talk about the rare reversal in the In Re Sanford Law Firm case.
Rebecca: Yeah, in that case the Eighth Circuit concluded that the district court had not given the firm that was involved there, or its managing partner, sufficient notice before suspending them from handling FLSA cases for two years – that's another type of sanction that courts have the authority to impose. It was about allegedly excessive billing, but the appeals court said that due process matters, even in sanctions proceedings.
Jerry: And then what about the word count – in a very interesting decision, called Larsen v. PTT?
Rebecca: Yeah, that case was funny. The plaintiffs accused the defense team of submitting overly long briefs in violation of local rules by falsely certifying compliance with word limits, and it turns out that the Microsoft Word settings excluded footnotes from the count. Now the court here wasn't thrilled, but called it inadvertent, and actually denied sanctions in that case.
Jerry: Well, that's a good reminder to double check your software settings. We have time for two quick ones – how about the Mazurek v. Metalcraft case and the Ortiz v. Sazerac case?
Rebecca: There, plaintiffs lost their FLSA claims after not being able to show unrecorded work hours. But the court said that their legal theories were not frivolous, so, even though they ultimately lost no sanctions were awarded.
And in the Ortiz case. the plaintiffs voluntarily dismissed their suit alleging Fireball's malt labeling was misleading. The defendant sought fees under Rule 11, but because they withdrew the complaint within the safe harbor period. Under that rule, the court concluded that sanctions were not appropriate there either.
Jerry: As always, it's been an interesting year in terms of sanctions decisions throughout the United States. I know that you focused a lot in your writings and thought leadership in this area – what would you share with our readers and listeners as the general takeaways in this space?
Rebecca: Oh, it's definitely a fun area of the law to work in – very unique area of class action jurisprudence. I would say that the courts try to balance accountability of the parties to comply with the rules and fairness. and that's probably reflective of what the rules require. Courts are willing to impose serious consequences, but only after very careful consideration, and I see the trend being judges increasingly scrutinizing discovery matters and professional conduct matters in complex litigation, and that both sides, plaintiffs and defendants, are being held to the same standards.
Jerry: Well, thanks so much for your insights, Rebecca, and I know our readers are looking forward to the launch of the 2026 Duane Morris Class Action Review and the Appendix II on sanctions orders throughout the United States over the past 12 months, which you're the co-author of. Thanks so much for joining us today and sharing your thought leadership.
Rebecca: You're very welcome. Thanks so much for having me on.
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