Class Action Countermeasures : Class Action Lawyers & Attorneys : McGuireWoods Law Firm : Complex Litigation, Mass Torts

 Brian Fitzpatrick's argument that courts should approve more fees for class action plaintiffs' lawyers has generated its share of discussion. And a few months ago, the Seventh Circuit weighed in (sort of), during an argument about fees for objectors in In re Trans Union Corp. Privacy Litigation.

Judge Posner (who has decided a number of class action appeals this year) wrote the opinion, and observed:

It is a curiosity of class action litigation that often there is greater ferocity in combat among the class lawyers over the allocation of attorneys' fees than there is between the class lawyers and the defendants. The contest among the lawyers is a zerosum game. But the contest between them and the defendants is a positive-sum game because the class lawyers are naturally very interested in the fee component of any settlement, while the defendants care only about the size of the settlement, including fees. So the lawyers may be willing to settle for less for the class if the defendants will help them obtain a generous fee award, and the defendants will be happy to help them if the sum of the fee award and the relief granted to the class is smaller than it would be if the class lawyers pressed for more generous relief for the class. ...

Indeed, class lawyers may try to fend off interlopers who oppose a proposed settlement as insufficiently generous to the class; and given the role of such interlopers in preventing cozy deals that favor class lawyers and defendants at the expense of class members, their requests for fees must not be slighted.

(Emphasis added.)  In this case, the original class action involved the leaking of confidential personal data. The appellant was an objector (Dawn Wheelahan) who had been awarded $2.7 million in fees after challenging the original Trans Union settlement. (Pre-objection, the lawyers were going to settle for $40 million--$20 million in cash and $20 million in in-kind relief. Post-objection, the case settled for $110 million--$75 million in cash, $35 million in in-kind relief.) Wheelahan argued that $2.7 million was not enough; she should have received $14 million--20% of the additional $70 million she got for the class.  And, in a twist peculiar to class actions:

She is not opposed by the class action defendant, Trans Union, because this is a "common fund" suit; attorneys' fees come out of the amount of damages awarded the class, and so Trans Union has no stake in the dispute over fees. Wheelahan's only opponents are some of the other class lawyers, who fear that an increase in the amount of fees awarded to her would come at their expense. They don't object to an increase in the total fees awarded, or indeed to an increase in the share awarded to her that would not reduce their fees. With the class members unrepresented and the defendant indifferent to the overall award of attorneys' fees, we must decide the appeal with limited assistance from an adversary presentation. But this is a standard dilemma in class action adjudication, as we noted at the outset, and may be unavoidable without elongating the litigation disproportionately to the stakes in the fee dispute.

(Emphasis added.) Much of Judge Posner's discussion focuses on the special master's method of determining fees in the case (which, in typical Posnerian fashion, contains an excellent summary of research on the subject). I won't further summarize an already-dense explanation, but I will highlight two comments the opinion makes on the special masters. First, the opinion points out that courts need not place much weight on the previous arrangement between class-action lawyers and plaintiffs:

The special master arrived at these figures by first determining the total amount of attorneys' fees that would be reasonable to award and then allocating that amount among the lawyers. He placed little weight on the contingent fee agreements between the lawyers and the "clients" (the named plaintiffs in the class actions), recognizing that named plaintiffs are usually cat's paws of the class lawyers.

(Emphasis added.) The opinion also tries to untangle the knotty question of how much value an objector adds to an improved settlement. Is it just the difference between the two settlements? Judge Posner thinks that may overstate the case:

In making these adjustments the special master was wrestling with a problem of joint causation. The final settlement was the result of the combined efforts of MDL counsel and of the other two class lawyers. The fact that these efforts were successive rather than simultaneous has no significance. The MDL counsel created an asset—the expected gain from the lawsuits— the value of which they did not realize. The efforts of the other lawyers enabled the full value to be obtained.

(Emphasis added.) All told, the opinion concludes that objectors' counsel was underpaid by approximately $1.4 million. In fact, it concludes that all of the attorneys may may have been underpaid, but only those who appealed (here, objector's counsel) are entitled to any extra money. Judge Posner is no stranger to the effects monetary incentives can have on litigants; here's hoping he's prepared for the logical consequence of that part of his ruling.

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Today, the Supreme Court began to roll out its class-action opinions. And first up, it has decided AT&T Mobility LLC v. Concepcion. In a 5-4 opinion authored by Justice Scalia (Thomas concurring), the Court held that § 2 of the Federal Arbitration Act preempted California's Discover Bank rule, which "classif[ied] most collective-arbitration waivers in consumer contracts as unconscionable."

A number of sources are painting this as the end of the class-action as we know it. So, time to shut down the blog? Hardly. There are many, many class actions, even consumer class actions, that will survive this ruling. (Taco Bell, for example, does not rely on arbitration clauses when it sells its Enchirito. It's not clear whether one must sign a health waiver.)

So what exactly did the Court rule?

The overarching purpose of the FAA, evident in the text of §§ 2, 3, and 4, is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.

To support this ruling, Justice Scalia's opinion explores exactly what procedures are required to bind absent class members to a classwide verdict. In particular,

First, the switch from bilateral to class arbitration sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.

...

Second, class arbitration requires procedural formality. The AAA’s rules governing class arbitrations mimic the Federal Rules of Civil Procedure for class litigation. And while parties can alter those procedures by contract, an alternative is not obvious. If procedures are too informal, absent class members would not be bound by the arbitration. For a class-action money judgment to bind absentees in litigation, class representatives must at all times adequately represent absent class members, and absent members must be afforded notice, an opportunity to be heard, and a right to opt out of the class. At least this amount of process would presumably be required for absent parties to be bound by the results of arbitration.

(Internal citations omitted.) In other words, the Supreme Court ruled that a classwide arbitration is likely to be ineffectual. For it to have the benefits of a class action, it must sacrifice the informality that makes arbitration appealing. For it to have the benefits of arbitration, it must sacrifice the protections we afford absent class members.

What does this mean for class-action lawyers going forward? There are a couple of consequences. First--and hardly surprising--we're likely to see more defendants that use form contracts build in arbitration provisions.

Second, we're likely to see plaintiffs' lawyers try some innovative challenges to arbitration provisions. The Supreme Court held that a blanket rule against arbitration provisions is preempted by the FAA, but left open the possibility that a court might find a specific arbitration provision unconscionable if it does not comply with other steps designed to ensure that contracts of adhesion respect consumers' rights. (See footnote 6 for the specific language.)

Third, the Court's discussion of the difference between arbitration and class actions--in particular its emphasis on the need for adequate representation to bind absent class members--gives defense lawyers further ammunition in challenging inadequate plaintiffs. (It may also provide a hint on how the Court may rule on the Rule 23(b)(2) issue in the other closely-watched class action on its docket.)

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I've written before about the strange turns class-action strategy can take when public relations becomes a factor. But a PR campaign can also be a very effective defensive tool under certain circumstances. How effective? Just ask the folks at Taco Bell.

To recap the Taco Bell class action story: the plaintiffs, represented by class-action firms Blood Hurst & O'Reardon LLP and Beasley Allen Crow Methvin Portis & Miles PC, sued Taco Bell claiming that the fast food giant didn't use real beef in its meals. Most class-action defendants, when faced with a high-profile case like this, tend to keep mum. Their usual calculation (as many lawyers would tell you) is that it's better to take a few lumps in the press than to say something that might create a liability issue later down the line . Taco Bell, however, took the opposite tack. It embarked on an proactive PR campaign, taking out full-page ads that said "Thank You For Suing Us," and explaining exactly how much beef was in its meals.

The campaign certainly worked from a public-relations standpoint. The story quickly shifted from "Taco Bell Acccused of Inferior Product" to "Taco Bell Takes on Trial Lawyers." That did two things at once: it effectively neutered one source of leverage for plaintiffs, since it became clear that Taco Bell would not settle to avoid the possibility of adverse publicity. But, at the same time, the PR campaign told its customer base (which is made up largely of college students) that Taco Bell was going to stand by its product, and that it was willing to do so in an irreverent, pugnacious fashion. After all, if the Volcano Burrito doesn't give Taco Bell customers heartburn, why would counterpunching in a PR battle bother them?

What's more interesting is that the tactic also worked as a litigation defense. The plaintiffs voluntarily dismissed their suit. While they haven't explained why, it's safe to bet that their inability to pressure Taco Bell into settling (coupled with the possibility that they had not met their Rule 11 burden of conducting an adequate factual investigation) played a role.

There is a question as to whether the company's final push for an apology is an effective tactic. Taco Bell is unlikely to get either plaintiffs' firm to say they'e sorry. On the other hand, twisting the knife a little may be just what its target demographic finds appealing.

While Taco Bell's campaign validates using aggressive PR under certain circumstances, it's important to recognize that Taco Bell had some distinct natural advantages here: a clear case on the facts, a target audience that was likely to react well, and a court that had no reason to be annoyed with its advertising. But Taco Bell's success is a great reminder that sometimes, when the conditions are right, the best defense is a good offense.

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 Most professional objectors are fee-seekers (or, as one court called them, "remoras"). But not all; some, like the Public Citizen Litigation Group and the Center for Class Action Fairness, are non-profits that seek to keep class settlements for the benefit of class members instead of class counsel.

Alan B. Morrison, one of the founders of the Public Citizen Litigation Group and a member of the American Law Institute, has long experience in objecting to class actions. As he has put it:

What we found was that all the lawyers in every case, as well as virtually every district court judge, were very unhappy to see us and not at all pleased with the substance of our objections. To say that we were considered the proverbial skunk at the garden party would be about as politely as it could be put, even though the Rules clearly gave class members the right to appear and object.

In a recent article in the George Washington Law Review, he explains--from a nonprofit objector's point of view--the effect of the "little changes" in the ALI Principles of Aggregated Litigation. Among them:

• Shifting focus from the predominant relief to the kind of relief in approving settlements. This gets to a problem that has been hotly discussed lately: can a court certify a class seeking monetary relief under Rule 23(b)(2)? The ALI prescribes looking at the kind of relief (money, injunction) rather than which relief "predominates." It seems primarily concerned with allowing class members to opt out when money is at stake; an option available under Rule 23(b)(3) but not Rule 23(b)(2).
• Requiring courts to look for structural conflicts in the class.  As Morrison summarizes: "The ALI now more broadly forbids the certification of a class when there are structural conflicts that may result in one group of claimants being short-changed to the benefit of another, and it included a special provision dealing with the problem of future claims."
• Blessing the lodestar cross-check. In other words, the ALI has approved courts calculating what counsel's hourly fees would have looked like, and using that figure as a benchmark for determining whether the contingency fee is outsized.
• Making the results of the claims procedure public. Doing so keeps objectors informed, and may provide incentives to keep attorneys fees in line with actual relief to the class.

So what can defense lawyers learn from Morrison's review of the ALI? Be transparent in the settlement process. It's a simple--though hardly an easy--lesson. The temptation for most defense lawyers is to make a strong showing of serving the client's interest by selling class counsel on a settlement with large fees, quick-pay or clear sailing provisions, and relief that appears valuable but doesn't cost much. But if the settlement appears to be the result of collusion, then it will invite objections, or rejection by the court. As I've pointed out before, settling on the cheap can often prove extremely expensive. The ALI's Principles of Aggregate Litigation only reinforce that lesson.

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Lately, there's been a lot of discussion in the class-action world about commonality. Which is why it's so refreshing to see the Fifth Circuit take on a case where the defendants argued predominance under Rule 23(b)(3).

The case--Madison v. Chalmette Refining--is a toxic tort case. As Judge Edith Jones, writing for the Fifth Circuit, describes the facts, the Chalmette Refinery, which processes petroleum, released an amount of petroleum coke dust that migrated over to the nearby Chalmette Battlefield while a number of students and parents were watching a reenactment of the Battle of New Orleans. The parkgoers filed a class action, seeking damages for a variety of personal injury claims.

The trial judge orally granted plaintiffs' motion for class certification, without having heard any evidence. The defendant appealed. During the briefing period, the district court issued its written order offering some supplemental analysis explaining why it believed plaintiffs had met their Rule 23 burden.

The Fifth Circuit disagreed; its primary reason for doing so was that the plaintiffs had offered no specific facts to back up their claim that common issues predominated in the litigation. And, in her opinion reversing the trial court, Judge Jones provided clear guidance--worth quoting at length--about how specific a plaintiff must be when demonstrating predominance:

"Determining whether the plaintiffs can clear the predominance hurdle set by Rule 23(b)(3) requires district courts to consider "how a trial on the merits would be conducted if a class were certified." Sandwich Chef of Texas, Inc. v. Reliance Nat'l Ins. Indem. Co. This, in turn, "entails identifying the substantive issues that will control the outcome, assessing which issues will predominate, and then determining whether the issues are common to the class," a process that ultimately "prevents the class from degenerating into a series of individual trials." O'Sullivan. Determining whether the superiority requirement is met requires a fact-specific analysis and will vary depending on the circumstances of any given case.

...

In stark contrast to the detailed trial plans in Watson and Turner, the district court simply concluded that "[t]he common liability issues can be tried in a single class action trial with any individual issues of damages reserved for individual treatment." The district court failed to consider whether this case could be "streamlined using other case management tools, including narrowing the claims and potential plaintiffs through summary judgment, [or] facilitating the disposition of the remaining plaintiffs' claims through issuance of a [pre-discovery] order."

...

The court failed to identify "the substantive issues that will control the outcome, assess[] which issues will predominate, and then determin[e] whether the issues are common to the class." Bell Atlantic. Absent this analysis, "it was impossible for the court to know whether the common issues would be a 'significant' portion of the individual trials," Castano, much less whether the common issues predominate. The opinion is also silent as to the relevant state law that applies to Plaintiffs' claims and what Plaintiffs must prove to make their case."

(Emphasis added, internal citations reduced to hyperlinks.) Judge Jones's opinion is a strong reminder of a fundamental principle of class-action law: to get a class certified, plaintiffs must be able to explain how the class trial will proceed. Basic as this requirement is, it is the primary weakness of many plaintiffs' class certification motions.

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NYU professors Geoffrey Miller and Gerald Rosenfeld have written an article on "intellectual hazard." Their basic point is that organizations are subject to various biases in the way they process information (what the legal scholars call "heuristic biases.") Miller and Rosenfeld are standing on the shoulders of a lot of previous scholars in this article (including Office of Information and Regulatory Affairs Administrator Cass Sunstein and Chicago professor Richard Thaler), but their article is worth pointing out for two reasons: first, it provides one of the most current attempts to classify various biases; and second, they do a good job of applying those biases to help explain the roots of the 2008 financial crisis. According to Miller and Rosenfeld, these biases can be divided into three main categories:

• Complexity bias, which stems from the human brain's need to absorb information in manageable chunks. Examples of complexity bias include oversimplification bias (the tendency to oversimplify complicated ideas or sets of facts, losing important information in the process) and authoritative bias (the tendency to accept information from experts or superiors without examining it critically).
• Incentive bias, which stems from humans' tendency to serve their own self-interest. Examples of incentive bias include herding behavior ("Everyone else at my company can't be wrong ..."), cognitive dissonance (the ability to compartmentalize conflicting information rather than resolve the conflict), and loss aversion (the tendency to spend disproportionate effort avoiding or "making up" losses).
• Asymmetry bias, which gives unequal weight to pre-formed conclusions. Examples of asymmetry bias include status quo bias (the tendency to prefer the current state of affairs), the ostrich effect (the tendency to ignore negative information), and regret aversion (the tendency to put off difficult decisions that may result in regret).

Miller and Rosenfeld's taxonomy isn't perfect. For example, their definitions of loss aversion and regret aversion seem to overlap, which may stem in part from the fact that their definition of loss aversion differs subtly from others' definitions.

Nonetheless, Miller and Rosenfeld do an excellent job of explaining why these biases will exist in large organizations, and illustrating how those biases can result in a disastrous outcome. And this is where their work becomes important to class-action defense lawyers. Because class actions tend to address large, complex legal and factual issues, heuristic biases are prevalent, both in the client defendant and the plaintiffs' bar.  Both the client defendant and the plaintiffs' lawyer tend to represent organizations that have committed to a course of action (bet-the-company litigation) with large risk and heavy uncertainty, meaning that these biases will come into play as they evaluate new information about the litigation. In particular, these biases can come into play as each side evaluates possible settlements. As a result, it is important for the defense attorney to identify which biases may be at play, and either counsel her client accordingly, or decide on a strategy that will overcome her adversary's bias.

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 ... Point of Law is holding a Featured Discussion on the issue, featuring Lester Brickman, R. Matthew Cairns, Jim Copland, Richard Epstein, Ted Frank, Myriam Gllles, Russell Jackson, and yours truly.  Pop over; it should be an interesting discussion.  

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 In the last few years, statutory non-disclosure have become more common among class-action filings. They allow the plaintiffs to assert fraud-like claims that can arouse public (or judicial) sympathy, without necessarily having to worry about proving individualized reliance the way they would if they had alleged a common-law fraud claim.

A recent case, Noel v. Hudd Distribution Services, Inc., 2011 U.S. Dist. LEXIS 21480 (D.S.C. March 2, 2011), provides one tactical roadmap for defending against these kinds of claims. In Noel, the plaintiffs brought claims against a truck leasing company, claiming that it charged them for insurance premiums and certain cell phone charges without disclosing them first as required by federal law. True to form, the plaintiffs asserted a number of pseudo-fraud claims, couched as "disclosure" violations. In this case, those claims incldued:

1) declaratory judgment action seeking declarations from the court that defendants have violated the Truth-in-Leasing Act in multiple respects; 2) damages for Truth-in-Leasing Act violations (insurance charge-backs); 3) damages for Truth-in-Leasing violations (cell phone charge-backs); 4) injunctive relief; 5) breach of contract (insurance-charge backs); 6) breach of contract (cell phone charge-backs); 7) breach of the covenant of good faith and fair dealing; and 8) misrepresentation.

Faced with these kinda-sorta fraud allegations, the defendants took the plaintiffs' depositions. And they promptly discovered that the two named plaintiffs each would have difficulty proving that they had been even kinda-sorta defrauded by the alleged non-disclosure.

Yates stated that he read portions of the lease agreements but that he did not read the insurance-related appendix. Noel did read his leases and knew that Defendants were authorized to make certain insurance-related deductions from his compensation and how the number was calculated.

In other words, one plaintiff hadn't even read the section where the disclosure should have gone. The other had, and understood what the defendants were doing perfectly well. Neither of these plaintiffs could claim they were misled. One knew better, and the other didn't know enough.

As a result, the defendants opposed certification, arguing that--because they could not demonstrate that they had read or were misled by the allegedly fraudulent statements--the named plaintiffs were not typical of the remainder of the class. The court agreed.

Plaintiffs' testimony offers no basis to infer whether members of the absent class read their leases, understood the terms, or ultimately cared about those terms. Because Plaintiffs themselves cannot establish that they were misled or harmed by MDSI's allegedly deficient disclosures, they cannot claim to be typical of other class members they seek to represent.

So what can defendants learn from this case? First, always do the due diligence on a claim: serve interrogatories aimed at the elements of the claim, and focus in the deposition on how the named plaintiff will prove her claim. And second, don't forget to defend against the real claim in the case. Regardless of how much a plaintiff tries to mask it, if she is alleging a fraud case, she will still have to prove, in some fashion, the elements of fraud.

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It's a situation familiar to many class-action defendants: a plaintiff files a complaint with, say, ten causes of action. But, by the time the case reaches the certification stage, she's voluntarily dismissed nine of them--including the ones that actually address the alleged harm--in favor of an attenuated theory that she thinks stands the best chance of getting certified. (For example, a case that's clearly about fraud somehow morphs into a breach-of-contract case; or a tort case about an alleged safety defect becomes a breach-of-express-warranty case specifically disclaiming any future physical injuries.) No individual plaintiff in her right mind would assert this claim in an individual lawsuit; among other things, doing so would preclude her from later asserting her stronger claim. But this is, of course, not an individual lawsuit, it is a proposed class action.

Usually, defendants sigh and begin researching the caselaw on adequacy, preparing to argue that any plaintiff who would abandon perfectly logical (but not certifiable) claims in favor of a riskier streamlined claim is not doing her absent class members any favors. In fact, she is selling the potentially valid claims of her fiduciaries (the absent class members) in exchange for a chance at certification.

Now, Professor Edward F. Sherman of the Tulane Law School has proposed an alternative argument in his article in the George Washington Law Review, "Abandoned Claims” in Class Actions: Implications for Preclusion and Adequacy of Counsel.

Like many academic articles, this one isn't afraid of taking the long way around to get to its point. So it provides brief discussions of the Supreme Court's ruling in Cooper v. Federal Reserve Bank of Richmond, the Fifth Circuit's recent ruling in McClain v. Lufkin Industries, Inc., and a line of Texas state-law cases on preclusion. But, toward the end of the article, Professor Sherman begins to make some interesting points about preclusion and abandoned claims. Most notably, he recommends:

a court should make a determination as to whether the omitted claims are likely to be of importance to the class and whether the risk of preclusion is high enough to refuse certification. The practice of some plaintiffs' attorneys of shotgunning all possible claims into a complaint should not establish that none of those claims can ever be omitted or else there would be inadequate representation. Multiple causes of action can be repetitious and overlapping, and class counsel should have some leeway in structuring a class action to be the most efficient and effective vehicle to serve the interests of the class. In the cases that find that abandoning claims is inadequate representation, there are hints that courts are particularly concerned with strategic abandonment no matter how important those claims might be to some class members. Paring down a class action so that it can be certified should not in itself be considered inadequate representation. It is often in the interests of the class members to do just that, particularly where there is little likelihood, in the absence of a class action, that class members can and will pursue the claims in individual suits. In (b)(3) class actions, a certifying court is required to find that "a class action is superior to other available methods for the fair and efficient adjudication of the controversy," which includes whether the class members are interested "in individually controlling the prosecution or defense of separate actions." A similar determination that there is little likelihood that class members will want to sue individually on omitted claims might be required should class certification be opposed on the basis of abandoning claims.

(Emphasis added, internal footnotes omitted.) This reasoning suggests that perhaps defendants should try opposing plaintiffs who abandon claims on superiority, as well as adequacy, grounds. After all, if class members can do better by asserting individual lawsuits, then that's what they should be doing, rather than waiting for a class representative without an actual theory to recover on their behalf.
 

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 Last week, while the legal world was abuzz over the Supreme Court argument on Wal-Mart v. Dukes, Judge Posner was quietly putting the finishing touches on Randall v. Rolls Royce, which provides his own take on some of the same issues.

As in Dukes, the plaintiffs sought to represent a class of women who alleged gender discrimination under Title VII. As in Dukes, they alleged that, because they were women, they had received less money for comparable work, and were passed over for promotions within the company. As in Dukes, they sought certification under Rule 23(b)(2), while seeking monetary relief in the form of "back pay." However, unlike the Dukes plaintiffs, the Randall plaintiffs only sought to represent 500 women, so this was hardly "too big to certify." 

The lower court denied certification, holding that the plaintiffs had not demonstrated commonality, typicality, or adequacy (there were conflicts within the class), and that certification of a class seeking monetary relief was not appropriate under Rule 23(b)(2). So the plaintiffs appealed under Rule 23(f).

Judge Posner began his opinion by noting one of the strategic quirks about this Rule 23(f) appeal. Rolls Royce had solid defenses to most of plaintiffs' claims; so it would behoove it not to oppose certification, because in the very likely event a certified class lost, it would never face another gender discrimination claim from the class members for any conduct through 2011. Judge Posner also spent a paragraph on the plaintiffs' conflict of interest (one also present in the Dukes class): since some class members were in management they'd be defendants in other class members' claims.

Having dealt with those issues, Judge Posner turned to Rule 23(b)(2). As he noted:

Class action lawyers like to sue under that provision because it is less demanding, in a variety of ways, than Rule 23(b)(3) suits, which usually are the only available alternative.

So, like in Dukes, the question became whether the plaintiffs could seek certification under Rule 23(b)(2) when they were also seeking back pay. According to Judge Posner, they could not.

To read “injunctive” in the rule to mean “equitable” is to become mired in sticky questions of differentiating between “legal” and “equitable” actions—and such questions abound. See, e.g., Medtronic, Inc. v. Intermedics, Inc. We can avoid the mire by recognizing that Rule 23(b)(2) class actions are limited to cases in which “final injunctive relief or corresponding declaratory relief” is appropriate, rather than extending to all cases in which any kind of equitable relief is sought.

...

As this case illustrates: calculating the amount of back pay to which the members of the class would be entitled if the plaintiffs prevailed would require 500 separate hearings. The monetary tail would be wagging the injunction dog.

...

The proper approach in this case would thus have been for the plaintiffs to seek class certification under Rule 23(b)(3)—which requires full notice so that class members can opt out if they want to bring an independent suit for damages or other monetary relief—but to ask for injunctive as well as monetary relief.

The plaintiffs also argued, in the alternative, that they should be allowed to substitute new class representatives (using intervention under Fed. R. Civ. P. 24) should the court find the originals inadequate. But Judge Posner held that, in this case, that would not be an option.

It would go too far to suggest that unless substitution for the original named plaintiffs is sought as soon as a substantial challenge to certification is made, the district judge is justified in denying it. Such a rule might involve constant interruptions of the proceeding—procedural hiccups—as nervous class action counsel tried to add new class representatives every time the defendants raised an objection to certification. But it was obvious from the outset that these named plaintiffs faced a serious chal- lenge to their status as class representatives. And with the entire class in one location (a single plant in Indiana), class counsel had ample opportunity to sift through potential named plaintiffs before deciding on Randall and Pepmeier. Intervention shouldn’t be allowed just to give class action lawyers multiple bites at the certification apple, when they have chosen, as should have been obvious from the start, patently inappropriate candidates to be the class representatives.

With the exception of the substitution question, this case provides a possible road map for the Supreme Court's decision in Wal-Mart v. Dukes. Wal-Mart raised the same adequacy issues in its brief, and the same Rule 23(b)(2) arguments. Size of the class aside, the facts of the case are remarkably similar to the Dukes class. Whether the Supreme Court will follow that road map, of course, remains to be seen.

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