Greetings From Texas: Annual ABA Conference On Class Action Litigation

Duane Morris Takeaways: Recently we had the privilege of attending this year's annual ABA conference on class action litigation. Cutting-edge issues under Rule 23 were the focus of discussion among session leaders and attendees. The consistent theme is that case law precedents are in a state of constant flux – and the "new normal" is "change..."

Key cutting-edge issues are summarized below in terms of top-class action issues for 2025.

Data Breach Class Actions

The focal point in class actions over data breaches is discovery of consultant work in the aftermath of a breach and whether the work product is privileged or not. Plaintiffs' advocates asserted that discovery of facts is always allowed and that companies have complete control over the technology environment when remediation efforts are undertaken in the wake of a data breach. Defense proponents contended that such consulting expert work is a prime example of protected work product. Case law, however, is somewhat all over the lot and data breach litigation is increasing in scope and complexity.

This issue underscores what class action practitioners agreed upon – data breach class actions are exceedingly complex, raises vexing choice-of-law issues under state law, and are challenging in terms of managing the litigation process.

Trials In Class Actions

Once a rarity, trials in class actions are beginning to become more mainstream. A panel session on trying a class actions discussed how challenging such a trial is given the stakes and financial exposures in "big" lawsuits.

As an adjunct professor of law at Northwestern, I teach trial advocacy. The skillsets taught in my law school class resonated in this session – have an "elevator" presentation for the jury that boils down the complexities of the case into an easily understood explanation of the plaintiffs' theories and the defendant's defenses. Both plaintiffs and defense lawyers agreed that the ability to craft an effective "elevator" speech pays dividends in the successful prosecution and/or defense of a class action in a trial setting.

As a federal judge on the panel advised, "less is more" in terms of trying a complex dispute in a manner that engages the attention of a jury (and a judge).

Unresolved Rule 23 Issues

While many areas of class-wide ligation are in flux, the number one issue prompted agreement from all practitioners – the unresolved issue from Lab. Corp. v. Davis on the impact of uninjured class members on class certification and damages models prepared by experts in class cases. The "uninjured class member" issue continues to drive diverse outcomes and uncertainty relative to the concepts of Article III standing and predominance under Rule 23(b)(3).

Attendees agreed that the issue is ripe for U.S. Supreme Court review after the dismissal of the certiorari grant for jurisdictional issue in Lab. Corp.

Collective Action Certification Standards

The standard for conditional certification of a collective action under the Fair Labor Standards Act is in flux. In essence, there are four distinct standards depending on what circuit law applies. The majority standard is based on Lusardi v. Xerox Corp., 99 F.R.D. 89 (D.N.J. 1983).

For decades, many federal courts have relied on the two-step Lusardi approach for collective action certification. Under the Lusardi standard for conditional certification, plaintiffs only had to make a "modest factual showing" that they were victims of a common illegal policy or plan. Most courts applying this standard refused to weigh evidence or consider opposing evidence presented by the defendant. Such lenient notice standards allow plaintiffs to expand the size of a wage & hour lawsuit, significantly increasing pressure to settle, regardless of the action's actual merits.

In the past four years, the Fifth and Sixth Circuit Courts of Appeal have found that Lusardi's two step approach is inconsistent with the text of the FLSA. Swales v. KLLM Transp. Servs., LLC, 985 F.3d 430 (5th Cir. 2021); Clark v. A&L Homecare & Training Ctr., LLC, 68 F.4th 1003 (6th Cir. 2023). In Swales, 985 F.3d at 443, the Fifth Circuit rejected Lusardi's two-step approach outright, and required its district courts to "rigorously enforce" the FLSA's similarity requirement at the outset of the litigation in a one-step approach. Similarly, in Clark, 68 F.4th at 1011, the Sixth Circuit adopted a comparable, but slightly more lenient standard, requiring the employee to show a "strong likelihood" that others are similarly situated to him or her before the district court can send notice.

In contrast, the Second, Ninth, Tenth, and Eleventh Circuits continue to either follow or allow the district court to adopt the two-step framework outlined in Lusardi. Harrington v. Cracker Barrel Old Country Store, Inc., 142 F.4th 678 (9th Cir. 2025); Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095 (10th Cir. 2001); Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010); Hipp v. Liberty Nat'l Life Ins. Co., 252 F.3d 1208 (11th Cir. 2001).

The Seventh Circuit, in a recent opinion written by Judge Thomas Kirsch, rejected the Lusardi framework but declined to go as far as Clark or Swales. The Seventh Circuit observed that the notice process should be facilitated by three guiding principles: (1) the timing and accuracy of notice; (2) judicial neutrality; and (3) the prevention of abuses of joinder. Richards v. Eli Lilly, 2025 U.S. App. LEXIS 19667, at *14 7(th Cir. Aug. 5, 2025). It reasoned that the Lusardi standard threatened the latter two principles by "incentivizing defendants to settle early rather than attempt to 'decertify' at step two . . . transforming what should be a neutral case management tool into a vehicle for strongarming settlements and soliciting claims." Id. at * 17. Thus, the Seventh Circuit rejected Lusardi, but what to do in the alternative was a more difficult question.

The Seventh Circuit decided that rather than endorse the rigid standards of Clark or Swales, its approach would be guided by "flexibility" and an analysis that is not an "all-or-nothing determination." Id. at *19. Indeed, a plaintiff must now "make a threshold showing that there is a material factual dispute as to whether the proposed collective is similarly situated." Id. at *21. Or, in other words, a plaintiff must "produce some evidence suggesting that they and the members of the proposed collective are victims of a common unlawful employment practice or policy." Id, at *21-22. To counter a plaintiff's evidence, an employer "must be permitted to submit rebuttal evidence and, in assessing whether a material dispute exists, courts must consider the extent to which plaintiffs engage with opposing evidence." Id. at *22. It is not clear, however, the burden a plaintiff must satisfy to refute the defendant's evidence to move forward.

This brewing circuit split suggest that U.S. Supreme Court review is necessary to resolve this important issue.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.