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Class Action Countermeasures Discussions of the Strategic Considerations Involved In Class Action Defense

The Ten Most Significant Class Action Cases of 2013

Posted in Certification

2013 did not offer the blockbuster docket in front of the Supreme Court that 2011 did, but that didn’t stop the Court from issuing a number of opinions whose effects will be felt for some time to come. In addition, a number of other courts took bold steps to either support or constrain class action practice. The key trends coming out of 2013: watch out for predominance, and watch out for tricky settlement provisions. Also, pay attention to the complaint; key flaws can still lurk in there.

(1) Comcast Corp v. Behrend (Supreme Court).  This case was supposed to be a re-examination of the standard used for expert testimony in class certification. Instead, it became a restatement of the importance of the predominance requirement, and resurrected the idea that variations in damages can defeat class certification. It also sparked a debate among circuit courts about when common issues predominate that all but guarantees the Supreme Court will weigh in again in the next year or two.

(2) American Express Co. v. Italian Colors Restaurant (Supreme Court). Behrend may have caused more debate among courts, but this opinion invited more vitriol from plaintiffs’ counsel. After AT&T Mobility LLC v. Concepcion, plaintiffs experimented with defeating arbitration clauses by arguing that only a litigated class action could vindicate their rights; basically, they relied on the justification for class actions as cost-effective for small-dollar claims. A divided Supreme Court roundly rejected that argument, and, in the process, reminded courts that (a) there is no due process right to a class action, and (b) class actions are supposed to be difficult to bring.

(3) Genesis Healthcare Corp. v. Symczyk (Supreme Court). The offer of judgment under Rule 68 has been controversial in class action practice for some time. When the Supreme Court weighed in on its use in FLSA collective actions, it refrained from extending its reasoning to Rule 23. Nonetheless, lower courts have begun to apply the Court’s ruling in class actions, once again setting the issue up for further review.

(4) Standard Fire Ins. Co. v. Knowles (Supreme Court). The Supreme Court’s opinion in Knowles tied up an annoying potential loophole in CAFA jurisdiction. But the way in which the unanimous court did it–by reaffirming that a named plaintiff does not represent anyone but herself until a class is certified–helps cut off other annoying tactics that plaintiffs use based on the "entity theory" of class actions. At this point, the Supreme Court has made it clear that, until certification, a class action is just an individual lawsuit.

(5) Carrera v. Bayer Corp. (3d Cir.). Plaintiffs have often argued that a class action is ascertainable based only on class members’ recollections of their participation, an argument hard to defend against because no defendant wants to imply that its customers are fundamentally dishonest. The Third Circuit has made it easier for defendants to hold plaintiffs to they burden, by stressing that it is in fact plaintiffs’ burden to meet. If the defendants don’t have the records, a class action may not be ascertainable.

(6) Radcliffe v. Experian Info. Solutions Inc. (9th Cir.). One of the problems with class action practice in general is that class counsel, rather than the named plaintiffs, often control the litigation. That’s frustrating when the litigation is adversarial, but it’s downright dangerous during settlement, when the named plaintiff is often the only thing protecting the class from counsel’s self-interest. In Radcliffe, the Ninth Circuit reined in the use of "incentive awards" that aligned the named plaintiffs’ interests with their counsel instead of the absent class members. This is one of a number of cases that will likely be useful for objectors in fighting bad class settlements.

(7) Feder v. Frank (9th Cir.). CAFA was supposed to reduce the number of bad deals for absent class members from coupon settlements. In Feder, the court reversed approval of a settlement that was using the latest method of inflating settlements for inflated fees: combining nominal injunctive relief with low-value coupons.

(8) Critchfield Physical Therapy, P.C. v. Techhealth, Inc. (E.D. Mo.). Another court in the Eastern District of Missouri found a different way of ensuring that the named plaintiff exercises some influence over settlement: make sure that the named plaintiff actually shows up to the settlement negotiations.

(9) Duvio v. Viking Range Corp. (E.D. La.). One source of early conflict in class actions is when plaintiffs–either through inexperience or tactics–neglect to include vital information in their pleadings. That lack led to the Supreme Court’s "plausibility" opinions in Twombly and Iqbal, but it is also beginning to backfire on plaintiffs in class action pleadings. Duvio, which granted defendant’s motion to strike, establishes a lower limit to how vague plaintiffs can get in a class action pleading.

(10) Pileggi v. Wells Fargo Bank, NA (N.D. Cal.). Some plaintiffs will seek injunctive relief in addition to (or instead of) monetary damages because they perceive it to be easier to certify a class under Rule 23(b)(2) than 23(b)(3). Judge Alsup’s opinion denying certification in Pileggi is likely to be influential given its cogent discussion of the many drawbacks to thoughtlessly seeking declaratory or injunctive relief.

Careful readers may notice a few omissions in this list. Where, for example, is the Amgen opinion on securities class actions? Or some of the cy pres opinions that courts have begun to hand down? These tend to come down to judgment calls. From my experience with securities class actions, no defendants were really relying on the argument advanced in Amgen, and no one was particularly surprised or affected by the outcome. The Supreme Court has sent a signal about cy pres relief (and some courts have started doing interesting things), but there has been no overarching opinion that threatens to redefine the current practice. Maybe next year.