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

The Economist is reporting that the French president Francois Hollande's government just presented a class action bill to the Council of Ministers on May 2. While the bill still must be debated and passed, it has already generated a fair amount of buzz in Europe about whether this means that the French Socialist government will be importing American-style class actions.

European businesses need not worry that much. The bill really is far more similar to England's "group action" law (although it appears to operate on an opt-out principle rather than an opt-in one). As Commercial Risk Europe reports, the bill only allows registered consumer associations to bring the group action, and only for "material losses." It's aimed primarily at consumers, and is likely to cover primarily products liability and competition cases. (It was apparently driven by several issues with medical products in the last few years.)

As a result, it's unlikely to result in the flood of litigation that companies face in America. Consumer associations tend to be non-profit, which means they will likely focus more on cases where real harm was done than on cases that can leverage the largest settlements (and therefore fees for their lawyers).
That said, it will be interesting to see how American plaintiffs' firms react. Firms like Hausfeld LLP have been trying to build a global presence for some time. If they wind up taking "advisory" roles on French group action cases, that may signal they sense the potential for profit. Someone might want to start monitoring the comings and goings in the 8th arrondissement.

(Thanks to Betting the Company co-author Andrew DeGuire for the tip about the article.)

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 As Colorado Law Professor Paul Campos has observed, it has rapidly become a cliche that law schools are in crisis. They charge too much, and they don't prove adequate training or job placement in return.  As a result, they are losing enrollees quickly, which means that a number of them may have to start cutting back or shutting down in the foreseeable future.

And, rather than confront the problems, most legal academics have shrugged and talked about how the problem is systemic, and therefore likely insoluble.

Of course, there are solutions out there. They just require political will (itself a very scarce resource). Take one that's relevant to this blog, sitting there, right under our noses, like a $100 bill no one will pick up off the street. [http://www.litigationandtrial.com/2012/12/articles/the-business-of-law/if-it-was-easy/.]

So here's a modest proposal for law schools not in the T14. [http://lawschool.about.com/od/lawschoolprofiles/tp/T14.htm] Start a legal aid clinic, or retool your current clinic. Hire three to four disaffected class-action lawyers. Now, focus the clinic's work entirely on class actions, a nice diversified portfolio of mortgage work, civil rights work, consumer work, and maybe even the occasional securities case. Don't be afraid to object to outrageous fees in other cases. [http://www.pointoflaw.com/archives/2012/12/stop-complaining-about-the-legal-job-market.php.]

Now, here's the extra bit no one seems to have considered. Give any student willing to commit three years to a full-credit Clinic course a full ride. How do you afford this? Make actual fee requests. Underbid the 33% contingency, but you don't have to do so by much. The fees go to funding these scholarships, and then to reducing tuition for the remainder of the students.

Many of the costs of prosecuting a class action involve manpower. You need people to review documents, to take depositions, to research legal theories, to hunt down clients, and to appear at arguments. All of these are important legal skills, some of which are not currently taught. A clinic like this would teach them.

(Even the other large cost--expert fees--can be reduced in a university setting. Many experts are academics. Give those "experts" willing to be on-call for the clinic a break on other administrative duties.)

Sure, it would take a few years for the clinic to become "profitable" (read, sustainable), but a law school concerned with its own sustainability should be able to make the investment. This is a top-of-the-head idea, so there are likely many, many flaws I haven't worked out. But if class actions are really about promoting the public good (as many academics claim), and if plaintiffs' lawyers are motivated by more than just money (as Morris Ratner has argued), and if law schools really exist to provide practical legal training to new lawyers, then this proposal should be an easy, easy sell.

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This term, the Supreme Court will review several class action cases. In one of those, Genesis HealthCare Corp. v. Symczyk (technically, an FLSA collective action, but a ruling either way will likely have wider significance) it will decide whether a defendant can moot a class action by offering full relief to a class representative. The case has received a lot of attention, in no small part because plaintiffs are worried about the practice of "picking off" named plaintiffs. On the other side, defendants would like to preserve one of the best tools they have for avoiding nuisance suits.

Last week, in Physicians Healthsource, Inc. v. Allscripts-Misy's Healthcare Solutions, Inc., 2012 U.S. Dist. LEXIS 169381 (N.D. Ill. Nov. 29, 2012), a magistrate judge for the Northern District of Illinois decided a motion to dismiss/deny certification in a TCPA "junk fax" case.  Physicians Healthsource addresses the same mootness issue at the heart of Symczyk, but the procedural posture shows just how far we have allowed the mootness debate to move from the real issues that motivate each side.

The opinion is complicated reading, because the posture is unusual. But here it is in a nutshell. The plaintiff filed a TCPA complaint and with it, a "bare-bones, boiler plate Motion for Class Certification." (We'll get to why in a moment.) But the plaintiff did not notice the motion for presentment (a local requirement). That same day, the defendant offered the plaintiff $1,500, a consent to an injunction, and costs--the maximum it could receive for the TCPA claims in its complaint. Then the defendant moved to dismiss the complaint as moot (and to deny the motion for certification), because in the Seventh Circuit, a defendant's offer of complete relief can moot a class action.

The plaintiff responded that it had filed a Motion for Certification, which the Seventh Circuit had said can prevent the mooting of a class action complaint. The defendant then pointed out that the plaintiff had not noticed the motion for presentment within 14 days of filing it as required by Local Rule 5.3(b), which meant that the motion for certification wasn't valid.

For those following along, at this point the fate of the class action hinges entirely on whether the plaintiff had filed a notice of presentment in accordance with the local rules.

The magistrate judge found that the plaintiff had not noticed the motion, and then pointed out that "deadlines count" and that

the Seventh Circuit has repeatedly warned that ignoring deadlines is the surest way to lose a case.

But it then decided that, since it had the discretion to not dismiss under Local Rule 78.2, it would decline to do so in this case. Why?

Excusing the plaintiff's noncompliance with the Local Rule's presentment schedule in this case is consistent with Damasco's requirement that to avoid the "buy-off" problem, a plaintiff must file with his complaint a motion for class certification and its directive that a court should "wait until 'an early practicable time' before ruling on a motion to certify a class."

There are a few easy lessons from this little motions drama:

1. Plaintiffs adapt to changing circumstances. Faced with clear guidance about the possibility of mootness, plaintiffs don't file better-researched complaints, they file pro forma class certification motions and ask the court to decide them later.
2. Courts adapt to changing circumstances. Faced with that same clear guidance, courts are willing to let plaintiffs file placeholder motions and grant requests to defer decision. And they're willing to waive local deadlines to keep class actions alive when they think it necessary.

But the very existence of this opinion speaks to some of the larger strategic dilemmas that face class action lawyers on both sides, and one of the largest unresolved debates in class action jurisprudence. The strategic dilemmas on each side stem from two questions:

(1) Why don't plaintiffs just have named plaintiffs waiting in the wings? After all, we know class actions are really brought by the lawyers, so why not just recruit 10 plaintiffs instead of one, and refile the case as soon as the first plaintiff gets picked off? If there really is a widespread problem, this would seem to be a simple answer rather than filing a motion and then asking the court not to decide it until you can support it with facts.

and

(2) Why don't defendants just settle the entire case? If there's a real problem, then they must know they will be facing more litigants. Why not settle early before incurring lots of litigation costs?

The answer to (1) is that, since the real benefit of class action litigation tends to flow to the class lawyers, finding adequate named plaintiffs is really hard.  That's one reason incentive awards are so popular.  And this is particularly true for statutory violations like the TCPA, where many class members may not know (or care) that the violation occurred.

So plaintiffs' counsel will fight hard to hold on to their plaintiffs, because if they lose one, they may not be able to find another. But, if there really are classwide problems--especially ones that require an injunction the defendant will readily agree to--why isn't the defendant just giving in?

The answer to (2) is that frequently, it is not clear that there really is a large problem. Many plaintiffs lawyers file class actions when there is little (or no) evidence that their client's individual complaint is really a classwide one, either because there aren't enough people who "suffered" or because the named plaintiff is unique in her complaint. (In Rule 23 terms, it lacks numerosity or typicality.)

So the mere act of filing a class action does not mean that there is really a classwide problem; instead one could be facing an overambitious plaintiff's lawyer or an unusually hacked-off customer. Under those circumstances, a defendant may be willing to make someone who actually cares enough to complain whole, but not want to pay millions of dollars in attorney fees for a plaintiffs' lawyer to act as a surrogate (and often redundant) customer service department.

The specific twists and turns that led to this outcome are unlikely to come up before the Court in Symczyk. (Indeed, neither the petitioner nor the respondent relied on Damasco, the Seventh Circuit case which created the need to concurrently file a complaint and a class certification motion.) But the underlying dilemma--what to do about cases where the plaintiffs' lawyer has an incentive to file a case even when he can't find a class member who cares about the supposed "harm"--will remain. Until courts can figure out better ways to fit the class action device to true collective harms (and the Supreme Court's 2011 term--in both its pro-plaintiff and pro-defendant rulings--was a great start toward that), they are likely to see many more cases Physicians Healthsource.
 

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Back over the summer, I was approached to blurb Paul Karlsgodt's now-published World Class Actions: A Practitioner’s Guide to Group and Representative Actions around the Globe, which I did happily. Here's the text of the blurb:

World Class Actions is a comprehensive and practical look at everything a class-action litigator needs to know about mass litigation in other countries. In an increasingly globalized world, this is a book no international lawyer should be without.

That was the two sentences that would fit on the back of a book cover, and I meant every word. This, however, is a (long-overdue) blog post on an important work for class-action practitioners, so let me expand on that a bit.

The book is broken into 2 parts, with 31 chapters. The first, 25-chapter part covers aggregated litigation in every jurisdiction in which it has arisen, from the United States to Singapore. Need a quick primer on classwide evidence in South Africa? No problem. Want to know the procedures for representative actions against the government in Malaysia? This book has you covered. Idly interested in how Australian damages caps play into the certification debate? I'm worried for you personally, but yeah, it's in there.

The second part (5 chapters) covers issues that arise in transnational class actions, from international arbitration to various jurisdictional and evidentiary doctrines that might come into play.

Karlsgodt did not write the book alone; he wrote the US chapter and edited the overall manuscript, drawing on contributions from a number of international lawyers. And that raises the degree of difficulty of the book significantly. Keeping up to date is hard enough when one is covering a single country and wrangling a single co-author. Riding herd on more than 20 contributors and presenting something clear and useful is a singular editing achievement, and while I envy the result, I do not envy the effort that must have gone into it.

Moreover, the systematic approach the book takes makes it valuable to several audiences. First, World Class Actions would be worth the cover price (less than one associate billable hour) to a single firm facing a single out-of-jurisdiction case; the research hours it would save under those circumstances alone would dictate ordering it. Second, for non-American class-action practitioners (and I know from my blog stats you guys are out there), this should be an invaluable resource when addressing comparatively new questions. While the US is often skeptical of following the leads of foreign jurisdictions when novel questions of law arise, the same is not true for other countries. Finally, it is essential reading for students of aggregated or international litigation. Is notice and opt-out really the best way to handle aggregation? Here is an opportunity to watch how litigation plays out without protections in place. Are American-style class actions the most prone to abuse? See how other jurisdictions worry about similar issues.

There have been numerous, more expensive, and ultimately lower-profile attempts to collect data on how different jurisdictions handle class action practice. But Karlsgodt and his contributors have presented a definitive work that others will have a hard time beating.

[Disclosures: As a result of blurbing the book, I received a free copy. Also Paul has graciously reviewed The Class Action Playbook twice--very kindly each time--and he and I share an editor at OUP. Despite these crossovers, this review was not solicited.] 

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 Defendants often argue that limiting the evidence they can produce in a class action violates their rights to due process. It's an argument we take very seriously, but since it's usually not the centerpiece of the argument, many defense arguments mention the concept briefly and then move on to the intricacies of Rule 23 or rebutting the plaintiff's particularly careless allegations.

DePaul Law professor Mark Moller has written an article for the Utah Law Review, "Class Action Defendants' New Lochnerism," that looks to investigate the due process argument defendants usually advance. [Disclosure, Professor Moller and I were in law school together.] Professor Moller comes at the question as a self-proclaimed "new originalist," presumably meaning that he roughly follows some of Justice Scalia's dictates about originalism. And his perspective is a tough one for defendants:

What are originalists to make of class action defendants' due process arguments? This Article is the first to examine the historical record with that question in mind. And, for class action defendants, the verdict is a bad one.

…

That's not to say there is no historical support for class action defendants' arguments. There is. But it is found in an awkward period: the Lochner era.

Professor Moller's article dives deep into the history behind the argument that due process requires everyone to have their day in court on every claim. His conclusion is that the argument really stems from the Lochner line of cases, which were widely discredited by the 1970s.

How bad is this news for defendants? Not necessarily all that bad, even assuming his analysis is completely correct. For one thing, few defendants rely solely on the due process argument. Instead, they point out that this version of due process seems to underpin much of the case law surrounding Rule 23. For another, there is no guarantee that one's judge is an originalist. And finally, as Professor Moller himself suggests, there are a number of other bases for the "day in court" argument that defendants advance (among them the basis of Rule 23, the Supreme Court's continued assurance that procedural rules cannot change substantive rights, and the Seventh Amendment).

But Professor Moller's article, by taking such a deep dive into the legal history of the "day in court" due process argument, does serve as an important reminder. Most class action lawyers do not consider ourselves constitutional scholars. But there is no question that class actions have a constitutional dimension to them. So it behooves us to make sure that we understand the constitutional dimensions of our arguments, particularly at a time when the Supreme Court is hearing so many class-action related cases.

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 Dreaded deadline doom on a few projects (and some actual paying work) means that, unfortunately, today's post will have to be light on original content.  

Fortunately, Judge Posner has an excellent review of Justice Scalia's new book up at The New Republic, so I can just direct you there.  It's classic Posner, and includes one of the most lucid critiques I've read on originalism:

The decisive objection to the quest for original meaning, even when the quest is conducted in good faith, is that judicial historiography rarely dispels ambiguity. Judges are not competent historians. Even real historiography is frequently indeterminate, as real historians acknowledge. To put to a judge a question that he cannot answer is to evoke “motivated thinking,” the form of cognitive delusion that consists of credulously accepting the evidence that supports a preconception and of peremptorily rejecting the evidence that contradicts it.

Not strictly class-action strategy, but still well worth your time.

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 Busy week means that this will be a brief post.  So I thought I might at least make it entertaining.  Several members of the Cornell Department of Computer Science [http://www.cs.cornell.edu/]  have published a paper in the Proceedings of the 50th Annual Meeting of the Association for Computational Linguistics titled You Had Me at Hello: How Phrasing Affects Memorability, which analyzes memorable movie quotes to see what makes them stick.  

The money quote:

In fact, comments provided by the human sub- jects as part of the task suggested two basic forms that such textual signals could take: subjects felt that (i) memorable quotes often involve a distinctive turn of phrase; and (ii) memorable quotes tend to invoke general themes that aren’t tied to the specific setting they came from, and hence can be more easily in- voked for future (out of context) uses.

It's well worth a read.

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Last week, NERA Economic Consulting released its latest mid-year report on trends in class-action securities filings. The trend most are mentioning is the decline in the pace of securities settlements, coupled with the fact that settlement amounts remain high. But there are a number of other interesting observations that are worth mentioning. Among them:

Of the cases that settled, 90% had a motion to dismiss filed and 42% had motion for class certification filed.

(Emphasis added.) This makes a degree of sense. A failed motion to dismiss would help the defendant to understand whether a legal theory has merit (or, at least, whether a court will allow a plaintiff to run with a theory others might not). Moeover, the motion to dismiss remains a critical filing in securities class action litigation.  While it would be interesting to know how many of those motions for class certification were granted, it is useful to know that slightly fewer than half of the settled cases at least got as far as seeing what plaintiffs' certification theory was. (Securities class actions, of course, often face fewer individualized issues than other class actions.)

The report also notes that merger objection class actions (which had long found homes in Delaware state court) are growing in federal court.

There continued to be a relatively large number of merger and acquisition objection cases (merger objection cases) in recent years. Merger objection cases first represented an important component of federal filings in 2010, when they amounted to 31% of filings..

And the report also observes that forum-shopping remains a common tactic in class-action filings:

"Filings remain concentrated in two circuits: the Second (encompassing New York, Connecticut, and Vermont), and the Ninth (including California, Washington, and certain other Western states and territories). However, in the first half of 2012 the balance between these two circuits was substantially different from that in previous years.

During the first half of this year, filings in the Second Circuit have been made at a higher pace than in any recent year except 2008. Filings in the Ninth Circuit, by contrast, have decreased substantially. At their current pace, there will be only 30 filings in the Ninth Circuit this year, which would be the lowest total since the passage of the PSLRA in 1995."

The decline in Ninth Circuit filings is probably due to a combination of the fallout from Wal-Mart Stores, Inc. v. Dukes, and the recent ruling in Mazza v. American Honda Co., which held that plaintiffs could not file nationwide class actions based solely on California law. While neither of these two holdings has a direct effect on securities class actions, it's been my unscientific impression that the various California district courts in particular have responded by clamping down on class actions in general; it would make sense that plaintiffs might decide to begin filing elsewhere under those circumstances. Nonetheless, it is clear that plaintiffs still far prefer to file in the Second and Ninth Circuits when possible. (Some of this might stem from the fact that the more favorable environment means that the plaintiffs' bar in these two areas is more developed.)

So what's the takeaway from these trends? Plaintiffs remain innovative, and class actions remain far from dead.

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 Last week, Senator Al Franken (D-Minn) proposed a bill that would partially reverse the Supreme Court's opinion in Wal-Mart Stores, Inc. v. Dukes.

According to Senator Franken's press release, the Equal Opportunity Employment Restoration Act (good title) would add a section 4201 to 28 U.S.C.:

Section 4201(a) creates a new judicial procedure – called “group actions” – that workers can use when bringing employment discrimination cases. The requirements for establishing a group action are the same as the pre-Dukes requirements for maintaining a class action under Rule 23 of the Federal Rules of Civil Procedure—namely, clarifying that the merits of the case need not be proven to certify the group action.

Section 4201(b) provides that group actions can be used regardless of whether the group is challenging an objective employment practice, a subjective employment practice, or a mixed employment practice (such as the use of a written test to qualify for an interview). It also provides that employers’ written anti-discrimination policies can be considered as a defense to certification only insofar as the employer demonstrates that the policy actually has been implemented in practice.

Section 4201(c) says that the group actions authorized by this section are subject to the same procedural requirements as class actions authorized by Rule 23. These include notice and opt-out requirements. This section also preserves the application of the Class Action Fairness Act and the availability of appeals.

Section 4201(d) says that courts can use statistical analyses and any other procedures they deem necessary to provide justice to prevailing plaintiffs.

The bill has a number of cosponsors, but is unlikely to pass a heavily Republican House of Representatives. Nonetheless, it's worth considering what the effects of the bill would be if it were passed as is.

And it's hard to tell what those effects are, because the bill as proposed seems pretty confused about Rule 23 practice. (This is not surprising. It was apparently drafted in conjunction with civil rights leaders rather than Rule 23 experts, so it makes sense that it might not be all things to all people.) The largest sources of confusion:

• It appears unclear what the law is surrounding "merits inquiries." Class actions, even Title VII class actions, have traditionally allowed inquiries into the merits to the extent they overlap with the rigorous analysis required by Rule 23.  And, in fact, most judicial circuits except the Ninth had already reached the conclusion that the Supreme Court did in Dukes.
• It claims that Rule 23 requirements will apply, but seeks to remove the latest clarifications to the commonality requirement. It's not clear how this will work out in practice. One of the largest potential problems is that class actions face is that, if there are not truly common issues, class trial gets extremely messy. This was the experience that informed the Dukes opinion on commonality; it seems kind of silly to pull back from it unless the legislators don't intend for there to actually be trials of Title VII actions.
• It would make labor and employment cases even more complicated. There are already "collective actions" under the Fair Labor Standards Act, and controversy over how they interact with Rule 23.

None of these issues, should they arise, are reasons for panic. They're more just, well, inelegant. Rule 23 works as well as it does because it applies equally across various different kinds of lawsuits, and because, over time, courts have figured out how it actually works in real cases. Taking a outlier case like Dukes and building a bill around it is a great way to create lots of unforeseen consequences in litigation.

So it appears that the primary benefit of this bill is rhetorical: it allows Democratic legislators to claim that they are standing up for civil rights, while not really standing a chance of amending Rule 23 in any significant way. Instead, they can claim that they tried to address the primary talking points of Dukes critics, and were stymied.

So Senator Franken's proposal is a competent political tactic, but would make for a lousy solution to civil rights problems.

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 I've written before about the current crisis in legal education. And I write from the perspective of an interested bystander. I like the idea of well-educated lawyers, but I also think that legal scholarship is often impractical and insufficiently strategic.

Moreover, it seems that the standard complaints about law school at this point are that (1) it is too expensive; (2) it does not teach one how to be a lawyer; and (3) it turns out too many lawyers for too few legal jobs. One could characterize all of these objections in economic terms like this: a profession like law requires barriers to entry, both for the good of the non-specialist consumer and the sustainability of the profession. (Here, barriers to entry are just another term for a way of making people self-select for a limited number of slots.) There is no question that there are high barriers to entry right now to being a lawyer; it costs a bundle to go to law school. But making cost the barrier to entry focuses on the wrong thing. Instead, we want ability and drive to be the barriers to entry.

So here's another crazy idea: make law school more like the US Armed Forces War Colleges. For those who don't know what they are, the War Colleges (the US Army War College, the US Naval War College, and the Air War College) are institutions that train leadership candidates in strategic and operational disciplines to make US war fighting more effective. They offer one-year courses of study that focus heavily on basic strategy and cutting edge tactics. And they sponsor research and scholarship as well, but with a distinct bias towards material that can actually be deployed in conflicts. Like law school, they focus on training critical thinkers and inculcating some sense of a profession. Unlike law school, they largely can't afford to crawl too far up their own intestines.

So how would this crazy blog-post proposal work in practice? Well, we'd have to switch up the ABA Standards for Approval of Law Schools.

1. Candidates for law school would spend two to three years as paralegals or other legal paraprofessionals. (Professional document reviewers, perhaps.) They would do this in the employ of law firms, public interest law groups, or the government, which would pay them salaries at market rates.
2. Admission to law school would be contingent on paralegal experience, and would require sponsorship by the employing institution. (Some institutions might even agree to provide some monetary sponsorship, much as some business firms will pay some business-school tuition.)
3. Law school would be clinical from the get-go. The primary course would be a clinic. Basic first-year courses would be taught as well, but with a hard focus on practical applications to current cases.
4. Law school would employ mostly JDs with practice experience as faculty. It might also employ some specialized non-legal faculty, in areas like economics, history, psychology, and literature (practical rhetoric is, after all, a vital legal skill). And, of course, JD/PhDs would be more than welcome. But those faculty would also be focused on research that helped develop legal strategies.
5. The course would be either one or two years, and cost less than current law school. Fewer loans would be available, since there would be a presumption that the candidates could afford to pay some out of pocket from their previous employment.

This approach would offer some of the same benefits we supposedly get from the current model:

• It would keep the focus on critical thinking, making arguments, and legal strategy (to the extent those currently exist).
• It would continue to inculcate professional values into young lawyers, including a concern for benefiting society.
• It would allow for interesting, practical scholarship of value to judges and the legal profession.
• It would be agnostic about the kind of law practiced after graduation. Graduates could still work solo, work in-house, work for the government, work for public interest groups, or even--Heaven forfend--work for law firms.

But it would also offer some distinct advantages over the current model:

• The focus would be on training actual practicing lawyers, instead of baby law professors or baby federal judges.
• * Young lawyers would go into law school with a much better idea of what practice looks like. Law school would no longer be the default for lost liberal arts graduates who test well.
• Becoming a lawyer would be more a question of opportunity cost than up-front funds, a more reliable method of sorting the truly committed from the trustifarians.
• Young lawyers would graduate with significantly less debt, which should in the long run reduce the costs of hiring a lawyer.
• There would be more competition for paralegal jobs and document review, which would lower the costs of discovery and routine legal tasks.
• There would be a renewed focus on law as a learned profession as opposed to a path to owning a private jet. (So it would be harder to get rich as a lawyer, but much easier to make a living.)

I am under no illusions that the ABA will adopt this suggestion any time in the near future. And I am sure there are a number of distinct disadvantages, too. (Feel free to share them in the comments.) But when a system is as broken as the current legal education system is, people should be considering all kinds of oddball ideas. And you can't deny, this is certainly one of those.

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 In the past year, there has been a spate of criticism of legal education. The upshot: it's too expensive, it doesn't actually train new lawyers, and it produces a lot of scholarship of no use to practitioners or judges. Pair this rising criticism with rising educational costs and rising legal unemployment, and it is hard to deny that law schools are facing a real crisis of legitimacy. As a very large consumer of legal scholarship, and a big fan of well-educated lawyers, this worries me.

From what I've seen, there are a few questions that espouse a few occasionally conflicting goals:

1. How do we reduce the cost of legal education so law remains a career available based on merit rather than money?
2. How do we make sure that the teaching of law remains relevant to the practice of law?
3. And, not to be underestimated: how do we make sure that law remains a learned profession that produces high quality thinkers?

So, in the spirit of trying to help out with "good strategy," [] here are five suggestions, some new, some floating around, for how we might reach these three goals with a coherent plan of action. (What's the "nugget"? Produce well-trained, well-educated lawyers.)

• Require briefs instead of exams. I'm sure it's easier to grade exams. But--except for the bar--lawyers don't take exams. We write briefs (or deal documents). We argue in court. We advise clients. We negotiate with people. Start teaching to what the lawyers actually do. (This wouldn't just help the students; it would also give a small leg up to all of those professors who envision themselves someday becoming federal judges.) Might this require reducing class size? It might. I'm not sure that's a bad thing.
• Ditch casebooks; teach out of current cases. The best education I ever received in my field (and I was lucky to learn from some great lawyers) was writing a book on class actions, and then starting this blog. Why? Because it forced me to read through many many cases, mostly current, but also working my way back through older ones with lots of influence. I have no doubt casebooks are helpful to professors. But they're also very expensive. Why not just teach the students out of both the classic and the current cases? Just like young lawyers learn? Get them straight to the primary sources. It will hone their research skills at the same time as it reduces their expenses. 
• Cut the ABA's physical library requirement. Look, I love books. I am a huge fan of books. But, particularly in the law, I have been cutting the number of books I actually own. And you know what? I don't miss them. I can do most of my research (both for cases and for my other writing) either online or at least onscreen. Electronic books and cases are easy to search and annotate, and are increasingly where most people turn. So why do we still need--particularly for newer schools--these large buildings that are expensive to maintain and full of physical books no one uses? I'm not saying we should get rid of the D'Angelo Law Library, necessarily. But for smaller schools further down the rankings, this would be a cost-effective way to provide the same services the bigger schools use.
• Fewer tenured faculty; more practitioner adjuncts. This one has been a popular suggestion. And we are lucky in the class-action field that we have a number of good professors who have been class-action practitioners.  But we could certainly use more people who have spent significant time in the trenches. At least some deans have complained that one of their schools' largest fixed expenses is tenured faculty. There's a simple fix for that. (And let's be clear; I know and like many fine tenured law professors.  And the ones I know are--to a person--good people doing good work. It does not please me to suggest cutting their jobs. But it also does not please me that many younger lawyers I know are struggling, or that many students I know are considering going into a profession that will bleed them dry with educational debt.) How would I envision doing this? Require a Ph.D. and J.D. for the tenured faculty, and reduce their ranks accordingly. (This allows you to maintain the "research institution" where possible.) For your adjunct faculty, take high-achieving J.D.s. Sure it's disruptive, but the high-achieving J.D.s who wind up displaced are well-placed to (1) get Ph.D.s of their own or (2) go back into law.
• Cut legal education to two years (or fewer); bring back the apprenticeship. It may be the effect of living in Britain, but the idea of less "education" and more lower-paid "on-the-job training" appeals to me at this point. It allows for a period of training that does not have to be subsidized by clients. And the addition of a few years of training (think like a medical residency) would raise the perceived barriers to entry to the profession. Of course, I say this as someone who got to jump into a biglaw job out of law school during a boom period, so salt this suggestion to your taste.

Short-term, it's easy for us all to point fingers. But longer term, finding scapegoats doesn't help nearly as much as finding solutions. (Plus, if one tries to look in an unbiased way, it's hard to find anyone really to blame. This is one of those times that the problem is truly systemic.) There's a lot about legal education to like; but there's no question that the current model is simply not sustainable.

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For the last three months, much of the law-firm world has been watching the slow-motion train wreck that was the dissolution of Dewey & LeBeouf. The legal blogosphere has written a lot about what the collapse means, and offered numerous theories about why Dewey failed so spectacularly in only a few months. Most focus on the income guarantees for a number of partners. Some go so far as to worry about criminal conduct. And it seems clear that there was at least some level of mismanagement. (As usual, Adam Smith, Esq. has an outstanding discussion of the many factors that led to Dewey's collapse. But I shouldn't have to tell you that, because that is one website you should be checking constantly anyway.)

But we can draw a more general lesson from the Dewey collapse. [DISCLOSURE - I do not manage my law firm, or speak on behalf of it. My opinions are my own.] When it came to grand strategy--in the law firm context, the larger goals of the law firm and the overarching methods it will use to get there--Dewey simply didn't have one. Grand strategy is a tricky thing at the best of times. It has become even more tricky in an environment where individual lawyers pay close attention to profits per partner (PPP) instead of the firm's primary mission. (Indeed, many lawyers might argue that the firm has no mission other than maximizing its profits per partner.)  But it's still an essential element for long-term, sustainable success.

Looking at all of the accounts, it appears that at best, Dewey had no strategy, and at worst, it had a classic "bad strategy." In this case, Dewey's management mistook its goals (growth and profit) for an actual plan.  As the New York Times's Dealbook reports, the reasoning behind the Dewey/LeBeouf merger:

was to become the next Skadden, Arps, Slate, Meagher & Flom or Latham & Watkins, two profitable large firms with strong international networks. Together, LeBoeuf and Dewey created a firm with offices in 26 countries and $1 billion in revenue that Mr. Davis thought had the global reach and diverse practice to withstand a recession.

So, in other words, Dewey's goals was to become one of the biggest law firms. Its strategy to get there was to merge with another law firm.  (And its strategy to keep the partners from the other firm was to guarantee their income.)  That seems delightfully straightforward, but only because it wasn't a real goal: it was the kind of goal one gives when one hasn't thought through what a real strategic goal looks like. It did not diagnose any current challenge, and it did not offer any solution that took account of the current terrain. (Here, a competitive legal market, rapid technological change, and a looming recession.)

Moreover, the firm never seemed to consider another essential element of a good strategy--what to do if things did not go exactly as it planned. As bankruptcy lawyer Marty Bienenstock repeated several times in his interview with the Wall Street Journal:

I think that if [Dewey chair] Steve [Davis] is guilty of anything, it's the crime of optimism.

(Emphasis added) Optimism is no crime (as Bienenstock's use of dysphemism emphasizes), but excessive optimism is a hallmark of bad strategy. It's particularly bad strategy if part of the plan is to withstand a recession. One has to assume that, during a recession, firm revenues might contract. So where was the money going to come from to pay income guarantees if that happened? To borrow one of Professor Richard Rumelt's criteria for a good strategy, guaranteeing million-dollar incomes during a recession to protect against the effects of a recession indicates a lack of coherent action.

Lawyers--especially defense lawyers--tend to be reactive instead of strategic. Sure, we all like using the word strategy (I'm clearly no exception) but employing an actual strategy with a diagnosed challenge, a guiding policy, and a set of coherent actions to reach the end----is much more difficult, either in a given piece of litigation, in one's career, or on behalf of one's firm. Take too many shortcuts, do too much that sounds like strategy without actually being strategy, and you run a very large risk of ending up like Dewey.

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 So, unless you live under a rock, you've probably heard that JP Morgan lost some money last week. And, as one might expect, with a $2 billion loss, lots of people have opinions. One of those is Yale Law Professor Jonathan Macey, who wrote an op-ed in the Wall Street Journal (behind a paywall) worrying that, since both the SEC and the Department of Justice has launched an investigation into the loss, the Obama administration was turning losing money into a federal crime. (WSJ Law Blog summary here.) Professor Macey is a very smart man. But he also has never spent time as a litigator. (Go ahead, check; I'll wait.) And I think, in this case, that shows.

See, here's the thing. While Professor Macey is very worried, I'm not sure that JP Morgan's executives are complaining about either the SEC's or DOJ's investigations. I'm sure they're not celebrating them, but there's have good reason to welcome the investigations at this point.

Let's leave aside for a moment the fact that JP Morgan CEO Jamie Dimon already said he was expecting regulators to sniff around (because that was, in fact, their job). That might just be diplomacy.

But it's also a great way to reduce JP Morgan's eventual legal exposure from any lawsuits. JP Morgan's stock went down once the loss was announced. (To be expected.) And that meant securities lawsuits would soon follow.  In fact, Thompson/Reuters legal reporter Alison Frankel immediately asked what the over-under would be for filing the first class action. 

It wasn't long. As of this post, Robbins Geller Rudman & Dowd LLP and Bernstein Liebhard have both announced class actions against JP Morgan. (This once again calls into question the deterrence justification for these lawsuits; to say that JP Morgan needs more deterrence than a $2 billion loss to tighten its practices stretches credulity. If deterrence is the name of the game, these firms should be looking for the next JP Morgan, not suing this one.)

One of the best ways to inoculate against those class actions is to let the regulators in to give the firm a clean bill of health. If a clean bill of health is not possible (and it may not be, see Dealbook's analysis here), better to negotiate a settlement with the government than with lawyers who will take a 33% cut for themselves. If JP Morgan works with the government, it has an excellent rhetorical argument against fast-tracking a class action (why duplicate government effort?) and a good doctrinal argument against certifying the class (the class action would not be superior to the government investigations). That's not making it a crime to lose money, that's using the legitimacy of the DOJ to buttress the legitimacy of JP Morgan when it needs to defend civil lawsuits. If the DOJ and JPM's C-suite both contain smart people (and they clearly do), then they'll take advantage of this situation--the DOJ (and perhaps the SEC) to show that they're on the case when something is rotten on Wall Street, and JP Morgan to show that government action is enough.

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 I've written before about priming, the tendency of us humans to adopt emotional states if we are exposed to words with emotional content. But there are other psychogical effects that can influence negotiating in unseen, and unwelcome, ways. One of the most common of these is the problem of anchoring.

What is anchoring? As Dan Orr and Chris Guthrie write in their 2006 article Anchoring, Information, Expertise, and Negotiation: New Insights from Meta-Analysis, it's the tendency of any negotiation of numbers (like the price of a home) to cluster around the first number thrown out. Experiments have shown that this actually happens. And it can happen in odd ways. For example, social scientists have been able to influence a person's estimate of the value of a home in Des Moines, Iowa by showing them the median home price in the far more expensive Honolulu; or, better yet, they have influenced people's estimates of the African membership in the UN by spinning a wheel of fortune and reporting the number the arrow pointed at.

In essence, anchoring is a subset of priming, just one that focuses on numbers. Much as we can be primed by words to act in certain ways, we can also be "primed" by numbers that we see.

Like all heuristics, anchoring is often adaptive. For example, when estimating how much we will have to pay to purchase a house, it is usually reasonable for us to rely on the initial list price because it often conveys meaningful information about the actual market value of the home. Problems can arise, however, in two circumstances. First, we can get into trouble when we over-rely on an anchor. In the home purchase example, for instance, we are at risk of over-paying for the house if we are unable to adjust sufficiently away from its list price. Second, we can get into trouble if we rely on an irrelevant or uninformative anchor. If, for example, a newspaper article recounting the median home price in Honolulu influences the amount we are willing to pay for a small house in Des Moines, we are also at risk of over-paying for that home. (Likewise, if our estimate of African membership in the United Nations is influenced by the spin of a wheel of fortune, anchoring is obviously influencing our judgment in untoward ways.)

To test whether anchoring really wound up influencing actual negotiations, Guthrie and Orr performed a statistical meta-analysis on previous studies. (A meta-analysis is a method of statistical analysis that aggregates studies in the same field; performed properly, it can offer results that are more statistically sound than any individual study.) Their conclusion:

Our meta-analysis demonstrates that anchoring has a powerful influence on negotiation outcomes.

From this, they drew a few tactical recommendations. First, they leapt to the same conclusion as most do when they first hear of anchoring: bid high (or low) to start out, in order to sway your counterparty into moving their price closer to yours. Of course, most negotiators already do this, and there is only so far one can move out of a general range before it becomes obvious what one is doing, which may actually cause certain agreements to fall through.

Guthrie and Orr do identify another tactic, however, which is to use anchoring on oneself to counteract any external anchors. In other words, to the extent that one can set high explicit goals before sitting down at the table, one can counteract the anchoring effect of any opening offers at the table. (One might consider this the "I'm not going to pay a lot for this muffler" strategy.)

Guthrie and Orr also talk about the importance of using a good "outside" strategy as a way of defending against anchoring effects. What is an "outside" strategy? Basically, it's any strategy that gets the negotiator out of her own head, since that is where the anchoring effect is happening.

This outside, 'policy' approach improves decision-making by changing the dimensions of the choice-set. A good example of an outside strategy is the prevention of 'independent' auditors from working with a bank or brokerage firm for more than, say, five consecutive years. Rather than simply advising auditors to be impartial, or expecting them to be professional and direct in delivering bad news to the company responsible for their employer's financial growth, the outside strategy removes the threat to integrity by eliminating its source.

(Emphasis added.)  Simple bans are an outside strategy, as are bright-line rules. (The controversial Federal Sentencing Guidelines were an effort by Congress to either keep judges from anchoring too low, or an attempt to impose an alternative anchor.) But so is consulting an impartial third party, such as a consultant or a local expert. And it's possible that having a client back at home with high expectations also constitutes a good defense against anchoring; it's certainly something that works for a number of defense counsel.

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There is a common perception in complex litigation (not to mention litigation generally) that time favors the defendant. Defendants often counsel clients not to react too quickly: situations that may provoke a fight-or-flight response in the moment often present more strategic opportunities as they unfold. And plaintiffs tend to agree; they often complain that defendants' primary strategy is just to delay litigation for as long as possible.

But is there any basis for this assumption? After all, there are definite cases--like the motion to strike class allegations, or when plaintiffs try to change their theory late in the litigation--where defendants prefer to move faster than plaintiffs to resolve outstanding issues. So why is it that we all assume that plaintiffs want to rush while defendants want to wait?

One of the largest reasons that we assume that plaintiffs want to proceed faster than defendants is because of what economists call the time discount factor. All other things being equal, people value a gain now more than an equal gain in the future. This works in reverse, too. Most people would prefer a loss in the future more than the same loss today. (So you can see why, from the beginning, plaintiffs push for quick trials--they want their payments now, while defendants don't mind putting off losses from litigation.)

In 2007, Rutgers political science professor Jack S. Levy and PhD candidate Phillip Streich looked over the economic literature on time discounting. And what they found was that the classic account of time discounting actually understates how people treat decisions over time. As they wrote in their article Time Horizons, Discounting, and Intertemporal Choice:

The accumulation of experimental research on intertemporal choice has made it increasingly clear that the exponential discounting model that Samuelson (1937) pioneered nearly seventy years ago, which has subsequently dominated economics and economic applications in political science, does not provide a descriptively accurate model of how most people actually behave in making choices over time. Instead of discounting by a constant rate from one period to the next, people tend to discount relatively more heavily the near-term future and to discount relatively less heavily the more distant future, compared to constant-rate exponential discounting. In addition, discounting is not independent of the value of future out- comes. People have greater discount rates for less valuable outcomes than they do more valuable outcomes, and they have greater discount rates for gains than for losses. This asymmetry of losses and gains, so familiar to students of prospect theory, carries over into other manifestations of reference dependence and framing: the anticipated loss of utility of having to wait longer than expected for a future reward is greater than the anticipated gain in utility from receiving a future reward sooner than expected.

(Emphases aded.) All of these phenomena together contribute to what economists call hyperbolic discounting.  These two phenomena (sometimes called the gain-loss asymmetry and the delay-speedup asymmetry) add to the explanation of why defendants appear to prefer delay: plaintiffs value the gains they might receive less the further away they appear, and the mere fact of delay feels like a loss to them. By contrast, the defendant still anticipates that any anticipated loss will close to the amount it hurts today, and it experiences comparatively less gain from the day.

So what does this mean in complex litigation? It means that plaintiffs are in fact likelier to push hard to resolve matters quickly, even when there are sound reasons for proceeding deliberately. And that means that any attempts to slow the litigation to a manageable pace will lead to vigorous protest and strong rhetoric about "delay tactics." This may not be mere rhetoric on the part of cynical counsel; it may represent genuine frustration.

It also means that defendants have some leverage in negotiating how the litigation will proceed. Remember, all else being equal, delays are more immediately painful to plaintiffs than they are immediately helpful to defendants. So, when defendants need important concessions in other areas of the litigation (perhaps in the scope of discovery), they may be able to trade less-valuable (to them) scheduling concessions.

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For years, class-action scholars have tried to import lessons from administrative law into Rule 23, on the theory that mass torts, like administrative actions, deal with large, generalized issues. Sometimes these imports provide new insights, but often they stress why it is that Rule 23 is not equipped to handle issues in the same way that administrative agencies are. Now, Professors Adam Zimmerman and Michael Sant' Ambrogio seek to "turn the tables" and ask what overworked  administrative agencies can learn from Rule 23. Their argument, in a nutshell:

[T]here is no reason why ALJs should have any less power to aggregate claims than a civil court. For some time, administrative law scholars have described the significant impact agency adjudications have on parties who never directly participate in a proceeding. Moreover, the modern administrative state, like the class action, originally developed in response to intractable disputes involving large groups of people. In part for that reason, the Supreme Court has long characterized class actions themselves as a “quasi-administrative” proceeding.
This article argues that agencies should adopt aggregation procedures, like a civil class action, to resolve common claims raised by large groups of people in administrative courts.

(Footnotes omitted, emphasis added.)

It's an interesting proposal, which the authors argue would result in more consistent outcomes for agency litigants, speed up rulings, and increase access to justice. It also addresses a persistent problem with private class actions:

reforming agency procedures through the federal court class action deprives agencies of the opportunity to take the first crack at reasoned decisionmaking with the same focused attention and information available to a federal court in a class action. It is inconsistent with the values underlying the doctrines of exhaustion and ripeness, which seek to give agencies the first opportunity to address issues within their purview. Indeed, one of the criticisms of judicial reform of administrative programs is that it is anti-democratic and the political branches, not the courts, should correct agency errors. Providing agencies with the opportunity to address systemic problems through aggregation mechanisms is respectful of the responsibilities allocated to the agency by Congress.

And for two of the types of cases the authors address ("public rights" cases where many individuals are suing the government, and "distribution" cases, where the government is looking to compensate victims after it has fined a defendant) any kind of agency class action would operate much like a classwide settlement. Since the global peace would be bought by an institution that already has sovereign immunity, and is consenting to aggregation, it looks like a very attractive solution to what they describe as a widespread administrative problem.

For "private right" cases however (which the authors describe as cases brought by plaintiffs against private defendants in front of agencies), agency class actions would run into the same problems as Rule 23 class actions--the defendant is entitled to put on its full range of defenses. And that means that the authors have overstated the reach of their proposal. These are often the situations--alleged safety problems, alleged consumer fraud--where administrative rulemaking is superior to individual litigation.

In the meantime, however, I'd recommend class-action defense lawyers read their proposal, if only because their analysis of the overall problem shows why some class actions belong in front of administrative agencies instead of in the federal courts. 

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Last week, Carlton Fields published the results of a survey it commissioned, in which an independent consulting firm interviewed 322 corporate counsel about what class action practice would look like to them in 2012. The survey has gotten a fair amount of press, and rightfully so. Any time someone takes the time to collect actual data about how lawyers do their jobs, it's worth paying attention.

The headline for the survey has been that corporate counsel are expected to do more with less. Specifically:

In 2012, corporate legal departments expect to handle slightly more of them—on average, 5.4 matters per company, up from 4.4 in 2011. At the same time, they plan to decrease their per suit costs, which average $776,500, by 17 percent this year.

(Emphases added.) The survey has a number of other important findings, from the three most prevalent practice areas for class actions (labor/employment, consumer fraud, and securities), to the importance of consolidating class actions with a single in-house lawyer (which yields average savings of more than $300,000 per case).

But I want to focus on the headline--more with less is the new normal for class-action counsel. That may sound like bad news in an embattled legal market. It's not. In fact, I'm glad to see it, because it means that there is real opportunity out there for up-and-coming class-action firms. There are more matters out there, they're being centralized within corporate law departments, and counsel who can show deep knowledge of Rule 23 and cost-saving strategies will be at a competitive advantage.

What does that mean specifically?

• Settlements will likely be be fewer and smaller. While Carlton Fields reports that inside counsel are split on whether to settle cases early, it's hard to dispute one central truth: if there's less money available to spend on class actions, then there is less money for settlement. And that makes good litigators, as opposed to quick settlers, that much more valuable.
• Aggressive defense--including early challenges to certification--becomes more important. If defendants can't afford settlement, then they're gong to fight harder. Motions to dismiss and to compel individual arbitration remain favored tactics, although those victories may not be as decisive as once thought. But there are other tactics as well. Regular readers are probably bored to death of my beating the drum for the motion to strike class allegations. But at a time when budget pressures are high, it's a great way to force a debate on certification on the defendant's--rather than the plaintiff's--timetable. (Smart defense counsel will also consider tactics that may not be related to motions practice.)
• Rule 23 nerds are more attractive. If corporations are consolidating class actions with a single in-house lawyer, we're going to be facing clients with a deeper knowledge of Rule 23 across various practice areas. It stands to reason that firms that can offer individuals with a deep, broad-based knowledge of Rule 23--lawyers fluent in the language and familiar with the terrain--are going to be able to offer tangible benefits to their clients. (Which means it's a good time to be a class-action blogger.) Not every member of a team has to be an expert in Rule 23, but smart in-house counsel will want to make sure at least one of their outside lawyers is.
• Case management is critical. Look, I'll be the first to admit it. Case management is not sexy. It will never get the clicks a good SCOTUS opinion will.  And lawyers who geek out over things like knowledge management or Getting Things Done tend to get funny looks from others in the office. But mastering case management yields real benefits in greater productivity [] and adaptability to unforeseen circumstances. That may be anathema to lawyers who bill by the hour, but it's a big deal to inside counsel who pay by it.

The takeaway here is a simple one. The market is getting tougher. In-house counsel need lawyers who can work faster and cheaper, and are willing to try unconventional things to win quick and reduce costs--whether those are alternative fee arrangements or unusual arguments. It's a bad time for business as usual in class-action defense. And that makes it a great time to be a class-action defense lawyer.

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 Strategy is the art of making use of time and space. I am less concerned about the later than the former. Space we can recover, lost time never.

-- Napoleon Bonaparte

Last week, I wrote about how, once I was faced with monitoring of 50-odd class actions at once, I wound up developing a memo for each case that I could use to keep track of what was going on. There's a second issue with running 50 cases at once, however. You have to find the time to do everything you need to do. And that's a lot of stuff. At the time, I mentioned this problem to a friend, who recommended a book that wound up changing my approach to managing all of these cases: Getting Things Done by David Allen.

Getting Things Done ("GTD" to its adherents, of whom there are many), is one method of tracking and actually doing all of the things on those endless to-do lists that make up complex litigation.  And Allen's system relies on a number of ideas that are pretty simple, but still very powerful case (and life) management techniques.  Among the most helpful:

Mind Like Water. This, according to Allen is the goal of getting things done. As he puts it:

In karate there is an image that's used to define the position of perfect readiness: "mind like water." Imagine throwing a pebble into a still pond. How does the water respond? The answer is, totally appropriately to the force and mass of the input. It doesn't overreact or underreact.

For many litigators, this state of mind is where the best arguments come from, as well as the best strategies. Sometimes we achieve this by locking our doors so no one can disturb us. What Allen shoots for is more about making sure that at any given moment, the mind is clear of all of the internal distractions.

Ubiquitous Capture. Those distractions have to go somewhere, though. Mind like water doesn't work very well if you keep missing your conference calls. So write down everything you have to do. No, seriously. Everything. As Allen puts it:

The big difference between what I do and what others do is that I capture and organize 100 percent of my 'stuff' in and with objective tools at hand, not in my mind. And that applies to everything--little or big, personal or professional, urgent or not. Everything.

(Second emphasis in original.) Allen recommends the first time someone does this, they block out several hours and bring a ream of typing paper. Because most busy people (including litigators) have to do a lot. And not just at the office. We also have to remember to buy groceries, pick up the kids from soccer practice, and get our oil checked. Not to mention plan the vacation we so desperately need. Writing it all down means having no voicemails, no outstanding emails, and no assortment of weird post-its.

The Two-Minute Rule. Within the first two minutes of writing down something, you should do it, defer it, or delegate it. If it will take less than two minutes, do it. If someone else can do it better (like your admin assistant or an associate), delegate it. If you need some time to do it, defer it to when you have time.

"Even if the item is not a "high priority" one, do it now if you're ever going to do it at all. The rationale for the two-minute rule is that that's more or less the point when it starts taking longer to store and track an item than to deal with it the first time it's in your hands--in other words, it's the efficiency cutoff. If the thing's not important enough to be done, throw it away. If it is, and if you're going to do it sometime, the efficiency factor should come into play."

(Emphasis in original.) I should admit, I'm terrible at this one. You can ask my wife. But every time I use it, things get done faster.

Next Actions. Too many of us write to-do lists that make no sense when we read them over later. And then we skip the tasks that require too much thought. Part of GTD is writing down the actions you need to take on a given project.

This may sound obvious. However, it might amaze you to discovery how many next actions for how many projects and commitments remain undetermined by most people. It's extremely difficult to manage actions you haven't identified or decided on. Most people have dozens of things that they need to do to make progress on many fronts, but they don't yet know what they are. And the common complaint that "I don't have time to" (fill in the blank) is understandable because many projects seem overwhelming--and are overwhelming because you can't do a project at all! You can only do an action related to it.

(Emphasis in original.) So, as I write a brief, instead of writing "Outline brief," I wind up having tasks like "Draft commonality section, focus on MD v. Perry," or "Draft book review post on why more lawyers don't use Martin Redish." That way, when I come back to the task later, I know what I'm supposed to be doing.  (Incidentally, identifying all of the "next actions" involved in a case? That's the basics behind legal project management.)

Contexts. Not all work gets done in the same place. Some gets done in front of the computer. Some gets done on the phone. Some work is just errands. So, for each place that one can get things done, have a list for that context: "@computer," "@phone," "@errands."

As I've said, you should always organize your action reminders by context--"Calls," "At Home," "At Computer," "Errands," "Agenda for Joe," "Agenda for Staff Meeting," and so on. Since context is the first criterion that comes into play in your choose of actions, context-sorted lists prevent unnecessary reassessments about what to do.

In other words, when you're somewhere you can be productive, you don't need to sift through twenty projects to bang something out, you just use the context list.

Continuous Review. Here's the other tricky part, at least for me: that big overhaul list? Do that every week. As Allen argues:

The Weekly Review will also sharpen your intuitive focus on your important projects as you deal with the flood of new input and potential distractions coming at you the rest of the week. You're going to have to learn to say no--faster, and to more things--in order to stay afloat and comfortable. Having some dedicated time in which to at least get up to the project level of thinking goes a long way toward making that easier.

Allen recommends Friday afternoons; I personally prefer Sunday mornings (my wife's a later sleeper).

Let's be clear. I have never--no matter how hard I've tried--worked this system perfectly. But then, so many of those who use it never have. And that's OK. The real issue here is whether one can find principles in this book that can help them with case management.

And I will say this: even implemented sporadically and imperfectly (which is the way I do it), my experience is that GTD works pretty darned well. Since that moment of panic years ago, I've kept up my legal work, published a book, contracted to write a few others, started a blog, begun speaking more on class-action issues, and moved overseas. I've mentioned before, I am not a naturally organized person. Those kinds of extra projects would have killed me without some system to keep everything straight. Every good strategy requires good logistics. And that's what makes GTD such a great tool for managing complex litigation.

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Years ago, back when I was a mid-level associate at another law firm, I woke up one day to discover that I had just inherited not one, not ten, but somewhere around 50 active class actions. (Without going into detail, it was a portfolio of TCPA class actions for an insurance firm.) This was, of course, a great opportunity to get up to speed on various jurisdictions and how they treated class action law. (And it provided a strong foundation for the Class Action Playbook.) But it also intensified a worry I think many lawyers share:

How the heck was I going to keep track of all of these cases?

After all, each of these cases was for a different insured client; each involved different facts, different documents, different plaintiffs' counsel; many were in different jurisdictions governed by different laws; and each was moving forward rapidly, with a different set of deadlines. I went into law because I perceived my strengths to be in writing, speaking, and arguing. Making the trains run on time was decidedly not my forte.

But I needed to do something. So, motivated by necessity and no small bit of panic, I developed a method of running fifty cases at once, while still staying on top of the other various cases I had with other partners. Without realizing it, I wound up duplicating some of the principles David Allen uses in Getting Things Done. (More on this next week.) Most importantly, I decided I needed to write down everything that was happening in each case I had.

My first version of this case management technique was just a Word document, into which I dumped everything connected with a given case. The memo was reverse chronological--recent stuff went at the top. If I needed to find something, I just searched within the document, and prayed I'd written it down. It worked surprisingly well.

It worked well enough that I got a reputation on certain cases as being the person who actually knew what was going on. Which, of course, meant I fielded more phone calls. So my next version tried to accommodate the most common questions I would get. It was also very primitive: just a list of deadlines at the top of the memo (because everyone wants to know if we've missed a deadline), with other important facts coming underneath. More important facts gravitated towards the top of the document.  This version worked even better.

Then one day a partner with whom I worked closely on a number of matters (but not the insurance ones) called me into his office. "I notice that every time I call to talk to you about a case, I hear you tapping on your keyboard," he said. "If you've got a cheat sheet, I'd love to see it." I showed him what I had, and the two of us (joined by his administrative assistant) spent a week consciously designing a template that could work for any number of cases, and provide all of the information any member of our class-action litigation teams might require.

Here is the version I use now. I'm attaching it because, among other things, it's actually in use at several law firms now, so it's not like I'm revealing a closely-guarded trade secret. Ideally, most lawyers who run complex cases have something like this they use anyway. (That said, I know quite a few who still don't.)

Of course, there is no one right way to manage a class action. But this method provides a number of advantages:

• It provides one-stop shopping for case information.  Sure, deadlines will also be in the calendar, and contacts will also be in your contacts.  But sometimes you need to search for something in a given case, rather than page through weeks of Microsoft Outlook.
• It's a nice compromise between the high-tech solution many associates (and clients) may crave (you can host it online with instantaneous updating), and the memo-in-a-binder method many older partners actually require.
• If you have a document management system, the memo can function as a wiki for the case, since anyone can edit it. In fact, at my first firm, we referred to the memos as "wikis."  (But do not, I repeat, do not save a new version each time.)
• If you have a document management system, you can "link" popular documents with more information by including their document numbers.
• It's trivial to update on a regular basis. (Deadline shifts? Type in the new one, or mark it on a paper copy and hand it to your admin.)
• Whenever a client asks you how a case is going, you can send them your latest version.

In the last decade, lawyers have become more focused on productivity. We've learned about knowledge management and project management, and we've handed over a fair amount of our own earnings to management consultants who can tell us ways to be more productive and more efficient in managing our complex cases. And yet, much of the stuff we pay to learn are just new ways of shuffling around the same old organizational concepts. It's always been true that a good litigator needs to be organized enough to keep track of her cases. This is a pretty simple tool to do just that, and yet it's surprising just how many lawyers don't use something like it.

If you're working a number of complex cases for a large client, can you afford not to have some method like this? And if you're a client with a number of complex cases, can you afford a lawyer who doesn't?

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Most articles about negotiation or settlement treat conflict not just as something to be avoided, but as a complete breakdown in the negotiation process. Either conflict represents a massive miscalculation (as law-and-economics scholars have said about litigation, and international security scholars say about war), or it represents a best alternative to negotiation for one party.

But there is another option, one that Professor Robert Powell recognized back in 2004. As he discussed in his article "Bargaining and Learning While Fighting," conflict (for his area of study war, for ours litigation) can operate as an information-gathering device.

How does this differ from the standard economic model of bargaining? In the standard model, you have a buyer and a seller, and some private information (the true value of the object to the buyer). The buyer has an incentive to hide the true value, and the only real indication of the true value of the object is the buyer's willingness to keep negotiating or walk away.

In conflict, however, there's another source of private information (the distribution of power), and another way of learning about it (the fighting). Fighting will reveal some information that's not as prone to strategic manipulation. For example, actual litigation will reveal one's resolve to litigate, as well as provide some idea of the resources one has at his disposal.

The model Powell proposes is the following. There is a satisfied party (let's call them the defendant for our purposes) and a dissatisfied party (the plaintiff). The dissatisfied party registers a complaint or a threat, and the satisfied party makes an offer. The more the defendant concedes, the more likely there will be a settlement without a fight, but the worse the terms for the defendant. If the plaintiff rejects the offer, then there is conflict. But the bargaining doesn't have to end there. Instead, at the end of each round of conflict (here, those might be when motions are decided or discovery is released), each side knows a little more about the other side's capabilities, and about the likely outcome of the conflict.

Thus, the bargaining continues until the states reach agreement or until one of the states runs out of resources.

Powell goes on to explain that while, in the standard model of negotiation, there's really only one source of uncertainty (the price of the object), in negotiation that leads to conflict, there are two. One is the price (which he refers to as costs or resolve). But there's also uncertainty over the distribution of power, which will dictate who wins the conflict. (For lawyers, this can be any number of things: the state of the law, the relative talent for each firm, the resources available to each firm, even the rhetorical advantage for each position.) And, as Powell points out, this difference in types of uncertainty

suggests that crises arising out of uncertainty over costs or resolve are likely to be settled more quickly and short of large scale fighting than are crises arising out of uncertainty over the distribution of power.

Powell's conclusion requires one tweak when discussing litigation. Class-action lawyers, unlike generals, face an ethical duty to represent their clients. As a result, once a class-action lawyer files a lawsuit, he often faces additional pressure to keep the conflict going unless he can settle on terms favorable to the class. (There's likely political pressure to do this in war, but not the same worry about one's professional license.)

So, how can defendants use Powell's work to their advantage? Powell's article confirms one important feature of litigation that I have been discussion for some time: every action taken in litigation leaks information. And bargaining, even hostile bargaining between two parties locked in conflict, is primarily an exchange of information. So for litigators who continue to keep negotiation open as a strategy, it is important to watch how their opponents are actually fighting the case: doing so can provide vital information about what kinds of offers they might entertain, and which ones they are certain to reject.

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 At the DePaul symposium a few weeks back, Professor Suja Thomas argued that the Supreme Court should not take on "oddball" cases, because the outlying facts make for decisions that are too sweeping. (She's made this argument before about Iqbal and Twombly, so you don't have to wait for the DePaul Law Review's Symposium Issue to get the basics.)

As I've mentioned before, Professor Thomas is no fan of oddball cases. She argues that:

the Supreme Court and some scholars, including Professor Richard Epstein, have justified the new standard on the basis of the costs in Twombly, an “oddball” case—with massive costs and significant asymmetry of costs—and have not shown that the new standard should apply transsubstantively to cases that do not have such costs, including typical employment discrimination cases. This Essay also shows that Iqbal, while different than Twombly in types of costs, is similarly “oddball” in nature. Moreover, this Essay argues that, despite the lack of significant justification for why the new standard should apply transsubstantively, and also contrary to a prediction of Professor Epstein, the new standard will likely have a revolutionary impact on cases, without the same types of costs as Iqbal and Twombly, including employment discrimination cases.

In other words, what Professor Thomas doesn't like about oddball cases is that the extreme facts drive results that she believes undermine good legal rules.

While she didn't write in direct response to Professor Thomas, Professor Suzanna Sherry has produced an essay (to appear in the Supreme Court Review) that takes this argument head on: Hogs Get Slaughtered at the Supreme Court. Professor Sherry's argument starts from an interesting premise: the reason that the Supreme Court made the sweeping rulings it did in Concepcion and Dukes is not because the majority was necessarily pro-business or anti-plaintiff, but because the lower court (in this case, the Ninth Circuit) had overreached in each case.

And these two cases are not isolated tragedies; they provide a window into a larger problem. Rule 23 turns class counsel into powerful private attorneys general and tempts them to raise the stakes. It allows plaintiffs’ lawyers to chart a course not only for their own clients, but for future litigants. If that course is ill-advised – as it is when the lawyers have incentives, as they often do, to frame issues broadly for the “big win” – the consequences can be disastrous for those future litigants.

If anything, the largest flaw with Professor Sherry's argument is that it's incomplete: hogs don't just get slaughtered on the plaintiff's side. As the Halliburton and Smith v. Bayer decisions show, defendants who push radical arguments (and the appellate courts that endorse them) can also get reversed quite easily.  (Although in those cases, there is more likely to be a client that constrains the attorneys from going too far afield.)

I'd say that in this debate, Professor Sherry has the better end. Oddball cases provide oddball results because they take the rules as they stand, and bring them to absurd results, and courts do not like absurd results. From a policy standpoint, that means that while Professor Sherry's position--courts that want to preserve current good rules shouldn't overreach--has practical policy implications, Professor Thomas's position--the Supreme Court should allow oddball results to stand to preserve otherwise good rules--really doesn't.

More importantly, Professor Sherry's approach provides some valuable advice for defense (and plaintiff's) counsel, particularly when arguing on appeal: don't get greedy. Appellate litigation, like class action litigation, is a long game . An decisive win at the motion to dismiss is a great outcome, but a defendant who structures their strategy to aim solely for that is likely to face avoidable strategic problems if going all in doesn't work out. On the other hand, planning carefully, and encouraging the court to make a series of well-grounded rulings that lead to a decision defensible on appeal? That's your jackpot.

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Yesterday, a number of outlets reported on the fact that the federal judiciary is--like many other government agencies--bracing for budget cuts. In the short term, the Judicial Conference is talking about curtailing services for probation and pretrial services. But in the long term, these cuts may also affect the ways in which class action lawyers litigate.

After all, if we're all legal strategists, the courts are the terrain in which we operate. So we have to pay attention to how it's shaped in any given year. And cutting funding to the judiciary can have two larger effects on how we litigate class actions. First, it means courts will have fewer resources with which to address any cases before them. But second, because judges are themselves strategic actors who worry about their backlogs, funding cuts may very well affect how judges handle complex cases like class actions. So what effects might we see? Off the top of my head:

• Fewer complaint filings. In the long terms, budget cuts might lead to fewer complaint filings. How? If the budget cuts are longer-term, we might expect to see judges employ more scrutiny at early stages in the litigation, say granting more motions to dismiss or entertaining more motions to strike class allegations. After all, cutting cases from the docket early beats monitoring them for several years. Assuming the cuts last long enough, we might see plaintiffs begin to pull back from less-meritorious filings because they know they'll be dismissed.
• Less supervision of discovery. If I were a betting man, I'd guess that a cash-strapped judiciary may actually lead to more intensive discovery. Why? Because (especially in the age renewed "rigorous analysis" under Dukes), we can expect that judges will put plaintiffs to their proof when certifying class actions. And that means plaintiffs will press harder on pre-certification discovery. And that greater effort is likely to combine with courts that are less inclined to hear discovery disputes. I'd say that bodes for a small edge for plaintiffs in the asymmetric world of class-action discovery.
• A defense edge in merits arguments. In general, time favors the defense in class actions. (Often because it proves apocalyptic rhetoric from plaintiffs to be wrong.) To the extent less funds mean larger backlogs, which in turn mean longer waits, defendants may enjoy a small edge in merits arguments when they finally arrive.
• Less reliable superiority arguments. Federal budget cuts present a double-edged sword for class-action defendants. On the one hand, the more strapped federal judges feel, the more attractive manageability arguments look to them. On the other, judges may be more likely to believe plaintiffs' counter to some superiority arguments that cash-strapped agencies don't have the resources to provide viable alternatives. Adjust your rhetoric accordingly.

These are, of course, all fairly off-the-cuff reactions to a single news item. But I find it's often worthwhile to think through what the possible effects may be of larger events like these.

So what's the bottom line to all this gazing at the bottom line? Just that it's worthwhile to pay attention to shifts in the strategic environment that may not seem to have immediate impact. Smart lawyers take account of lots of different factors, not all of which are the latest Supreme Court cert grant.

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 In honor of an approaching book deadline, I'm introducing a new feature. Most Wednesdays, there will be a brief piece here on negotiation strategy, pulled from a case study or scholarly literature on negotiations. (Negotiation is an important part of a class action lawyer's life, particularly because so many cases end in settlement.) This will likely continue until the book itself is out sometime in early 2013.

So, today's question: Why do so many lawyers make arguments during settlement negotiations, if the real goal is to reach some kind of an agreement? They can't possibly think they're going to persuade the other side, can they?

This is the question Robert Condlin asks in an old Maryland Law Review article: "Cases on Both Sides": Patterns of Argument in Legal Dispute Negotiation, 44 Md. L. Rev. 65 (1985). Condlin's thesis is that when it comes to negotiation, lawyers are terrible arguers:

Negotiation argument is seen as more simplistic, chaotic, predictable, and illogical than is generally believed to be the case, partaking more of stylized dance or game-playing than of political discourse or analytical investigation. These qualities suggest that it is discounted in negotiation because it ought to be.

As Condlin observes after reviewing several transcripts of a negotiation exercise, the law students engaging in the exercise offer "little more than unsupported, self-serving conclusions." Condlin doesn't have a great explanation for this phenomenon. He blames legal education in part, since in 1985, law school focused almost entirely on doctrinal analysis. However, 28 years later, most law schools offer at least some practical courses, including courses in negotiation. (The most famous at this point is Harvard's Program on Negotiation.) And yet, most lawyers engage in the same patterns of argument as they did then.

So we could blame law schools for teaching poorly, or we could look to see whether there's some use to the shallower legal arguments used in negotiation.

And there is. Condlin himself, while he doesn't focus on it, provides two telling pieces of evidence. The first comes from one of the exercise transcripts, where a law student roleplaying a Legal Aid lawyer says:

Let me just ask you one question. How much is it worth to you to litigate this question, to determine once and for all, to get a judicial determination as to whether this regulation creates a legally protected expectation not to be transferred absent, according to Meachum, serious misconduct or other occurrences? I mean, I think you will recognize that this regulation was only promulgated to get around the whole reclassification hearing requirement, the ICC [Institutional Classification Committee] reclassification hearing requirement. This is a blatant attempt to try to circumvent that. There hasn't been any judicial determination. The Legal Aid Society would just love nothing better than a case like this, which involves the transfer from a minimum security to a maximum security, and most importantly in our case, the fact that our prisoner, our client, was not given any medical treatment for his heroin addiction in a maximum security prison. I think that the Society would like nothing better than to have a case as egregious as that to test this regulation.

(Emphases added.) The other comes from the transcript of a negotiation training video, where the lawyer says:

I'm always agreeable to resolving cases at an early stage. There really is only one issue though and that is how much your client wants to pay my client before we get this matter into court. This is the type of case, Mr. Harris, that I like to try and I want to try. I think you know why. When you have someone ripping off the public as your client has been doing and I'll have no difficulty establishing fraud in this case. I've got a client who is an indigent gal, whose husband is an invalid. First of all, I can't understand why you even sued her. You're not going to collect any money anyway and you know that. And the counterclaim is as valid a counterclaim as I've ever filed, and you know I've been successful in the past and I'll be successful in the future. And as emotional as this case is, where you knock a gal out of her job because of selling her a car which is defective. I'm absolutely convinced we're going to prevail and we're going to get a substantial judgment of compensatory damages.

(Emphasis added.) These both provide, in the course of their bluster, a primary reason lawyers may argue (and do so shallowly) during negotiations. They're previewing the arguments they'll make during any substantive motions or trial. Since most class-action negotiations take place against the not-so-implicit threat of bet-the-company litigation, providing a preview of one's best arguments may in fact make for compelling leverage in negotiation.

So why not make the arguments better? Why are they so often off-the-cuff instead of carefully researched for maximum effect? Most lawyers are loath to give away their best arguments, even if that fear is largely groundless.

What can defense lawyers take from this? First, it pays to have some sense of your argument before going into negotiation. But more importantly, negotiations can be an important tool for seeing just what plaintiffs think they have as a case.

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A few weeks ago, I had the distinct pleasure of participating in the DePaul Law Review's 22d Annual Symposium: Class Action Rollback? Wal-Mart v. Dukes and the Future of Class Action Litigation. The Law Review staff assembled an impressive array of speakers, all thoughtful, all interesting, only one of whom spoke too fast.  As is my wont, I took a lot of notes, and here's a quick summary of them.

Oddball Cases. The opening presentation, by Professor Suja Thomas, focused on the Supreme Court's alleged predilection for deciding "oddball" cases, which Professor Thomas thinks make for less-than-ideal outcomes. What is an oddball case? It's one with (1) odd facts that creates (2) a significant change in the law, where the change is (3) motivated by the odd facts rather than the legal principles, and has (4) a significant effect on less-oddball cases in the same area of law. According to Professor Thomas, Dukes is an oddball case (mainly because of the expansiveness of the class), while something like Citizens United is not. Professor Thomas believes that, in oddball cases, the Court should leave any real rule making to Congress, and decide the case on as narrow grounds as possible.

Defending Dukes. Mark Perry (one of the defense counsel in Dukes) provided a one-hour deep dive into the strategy behind the Dukes defense, and the law governing class action defense in general. I don't say this often, but this was the presentation I wish I could have given. Mark's presentation was both comprehensive and comprehensible. He covered everything from the basics of Rule 23 to how to use the often-overlooked Taylor v. Sturgell in a class certification opposition. The biggest takeaway though, was that--by reiterating the need for a rigorous certification inquiry--Dukes has shifted the cost of class-action litigation forward, a development that will have clear implications for strategy on both sides.

The "New Rules" of Civil Procedure panel. We'll leave out one of the panelists here, and focus on what the others had to say. Professor WIlliam Hubbard wondered if, as a matter of economics, the class action can get too large to certify. Professor Wendy Netter Epstein argued that the Dukes ruling may unravel a number of verdicts and settlements reached under Rule 23(b)(2) in the last few years. And Professor Marcia McCormick looked at the kind of social science evidence that might be allowable post-Dukes. The biggest takeaway from the panel for defense counsel was Professor Epstein's warning about the finality of pre-Dukes judgments: this kind of unraveling has happened before, and it can happen again.

The Power and Promise of Procedure. This was the keynote speech, given by Professor Suzette Malveaux. Professor Malveaux focused on the class action's ability to afford access to justice. Admitting that she was "surprised" by the Court's unanimous ruling on the Rule 23(b)(2) issue, she worried that requiring plaintiffs to bring damages actions under Rule 23(b)(3) would reduce the ability of discrimination plaintiffs to bring lawsuits. She also predicted that plaintiffs' counsel would focus on smaller class actions with a tighter nexus to discriminatory conduct, more state court filings, and (like Mark Perry) more pre-certification discovery. Professor Malveaux offers a strong case for a plaintiff-oriented rhetorical theme: class action exist to balance the scales for small plaintiffs. While she and I continue to (congenially) disagree on the scope of Rule 23, her keynote provided an excellent reminder that defendants must take this rhetoric seriously.

Employer/Employee Panel. This panel largely focused on Dukes's effect on labor law. As a result, it tended to take a narrow view of Rule 23. (In fact, two of the panelists really didn't discuss Rule 23 at all.) Nonetheless, it provided a number of interesting ideas. Professor Leslie Wexler argued that, in the wake of the Dukes litigation, Wal-Mart has engaged in a "genderwashing" campaign--providing possibly insincere reforms aimed at scrubbing its public image on these issues (not, she pointed out, that this was necessarily a bad thing). Professor Steven Greenberger probed the possible effects of relying too much on a decentralized, subjective human resources policy. And Bigelow Fellow Naomi Schoenbaum probed further into the potentially discriminatory effects of Wal-Mart's relocation policy, a small but often-overlooked part of the larger Dukes case. The biggest takeaway for defense counsel grows out of Professor Wexler's "genderwashing" discussion, since "genderwashing" sounds an awful lot like the kind of prophylactic "firewall" defenses recommended in Verdict for the Defense.

Dukes in Litigation Panel. And, finally, there was the practitioner's panel. There was one defense counsel, who relied on the cheap gimmick of a top ten list.  But Anthony Fata offered an excellent, wide-ranging presentation that argued that Dukes was not nearly as anti-plaintiff as one might think, particularly if one embraced the "rigorous analysis" standard. And George S. Robot told the behind-the-scenes story of the fresh-off-the-press McReynolds v. Merrill Lynch. The biggest defense takeaway from this panel--which came from both plaintiff panelists--was the reminder not to be complacent: smart plaintiff's counsel are already making the Dukes opinion work for them.

One final note as I look over my notes: with the exception of the practitioners' panel, where everyone said "Dukes," you could usually predict the scholar's attitude towards the Supreme Court's opinion by whether they called it "Dukes" or "Wal-Mart." I have no explanation for this phenomenon, but it struck me as an interesting bit of applied rhetoric.

[Many thanks to Chris Burrichter and the rest of the Law Review staff, who put together an amazing set of panels, and made sure everything ran smoothly.]

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I've had an exhausting (but very fulfilling) US travel week.  As a result, I have not yet gotten together my notes on DePaul's Symposium on Class Action Rollback.  My apologies; I will try to have a post on that later this week or early next.  

Meanwhile, as a peace offering, please accept this slide deck from my first presentation at the Symposium. I think it gives a flavor for my remarks.  

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Last month, I received a flurry of email from various people who wanted to point me towards Mark Herrrman's column on Above the Law, "Torpedoing Class Actions." In that column, Herrmann reviewed Martin Redish's 2009 book Wholesale Justice, which argues that class actions are an unconstitutional delegation of state power to private lawyers. He also called class-action defense lawyers "derelict" and asked "Where is the practicing bar?" when it comes to advocating Redish's arguments.

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For those unfamiliar with Ronald Coase, he is the 101-year-old Nobel Laureate who laid a number of the foundations for law and economics when he published his Nature of the Firm (which explained why people would use corporate forms instead of just contracts) and Problem of Social Cost (which explained why law should seek to minimize transaction costs).

In 1988, Professor Coase turned his formidable intellect to another question that had vexed legal scholars for some time: why is blackmail illegal? As Professor Coase pointed out, the central paradox of blackmail is that it makes it illegal to threaten to do something (reveal facts that would embarrass or harm someone) that is perfectly legal to actually go out and do. In other words, if I know something embarrassing about, say Russell Jackson, it is perfectly OK for me to reveal those facts on this blog. But it is not OK for me to ask Russell to buy me an expensive dinner in exchange for not revealing those facts. Why is that?

Professor Coase's solution--no surprise--draws on his previous work about minimizing transaction costs. He starts from the principle that:

It is obviously undesirable that resources should be devoted to bargaining which produces a situation no better than it was previously.

Based on that principle, Professor Coase argued that blackmail transactions do not provide any benefit to the victim (since he is in the same state as before), but do impose a cost.

It is not difficult to understand why people feel this way. A blackmailer threatens to do something which will harm his victim unless he is paid a sum of money or receives some other benefit,and by emphasizing the unpleasant consequences for the victim of not meeting his demands (or even inventing them, as in the "Mr. A. Case"), he endeavours to extract as much as he can from him. It may be objected that this is exactly what happens in business negotiations. And this is correct. But the situations are not identical. The demands made by a businessman are constrained by the competition of other businessmen, by the fact that the party threatened is likely to have a good idea of whether the threat has to be taken seriously and by the adverse effects on future business of being difficult in negotiating. ...

Business negotiations (which may also cause anxiety) either lead to a breakdown of the negotiations or they lead to a contract. There is,at any rate, an end. But in the ordinary blackmail case there is no end. The victim, once he succumbs to the blackmailer, remains in his grip for an indefinite period.

(Emphasis added.) In other words, the real problem here is not the threat, it is the fact that there is no way for the blackmail victim to put an end to the threat. Paying once does not guarantee that

The logic of Coase's blackmail argument extends to class action defense. Let's leave aside for the moment the common argument that some class actions are no more than legalized extortion. Here are two other ways in which the argument might apply, both of which will be familiar to readers of this blog.

The Aqua Dots case: A manufacturer comes across a consumer issue. It attempts to solve that issue through voluntary action (sometimes while cooperating with government agencies). Despite its voluntary action, an entrepreneurial plaintiffs' lawyer demands to be cut in for some nominal "improvement" to the relief, plus an attorneys' fee. So the manufacturer faces the choice of paying the counsel a fee to go away, or adding the cost of litigation to the cost of remedying the problem in the first place. (Judge Easterbrook solved this by deciding that a plaintiff who would simply piggyback on a voluntary recall is not an adequate representative of the class.)

The Thorogood case: Plaintiff files a class-action lawsuit on questionable grounds. Defendant defeats it. Plaintiff files again in a new jurisdiction. Plaintiff writes a letter pointing out to the defendant that there are many jurisdictions left to file in, and defending lawsuits is costly. So the defendant faces the choice of paying plaintiff or facing multiple lawsuits until one wins. (The Supreme Court has decided this issue by encouraging courts to follow the practice of judicial comity, respecting other denials of class certification for the same subject matter. It's an open question still how successful this solution will be.)

This is why "blackmail" is a problem. It's a bargain for a promise not to do something. And that's what makes it analytically useful for class actions, because class actions can be viewed as an attempt to extract concessions in exchange for a promise not to sue, or at least a promise not to sue again.

From the defendant's standpoint, that's part of what makes them a bad deal. Signaling a willingness to bargain in that fashion just opens one up to more and more attempts to make similar deals.

Using the rhetoric of blackmail, while attractive, is unlikely to persuade some judges that there is a real problem.  But using the logic behind prohibiting blackmail makes a great deal of sense: most courts can sympathize with the fact that some litigation does not actually promote any public benefit. And, if that is the case, there are real questions as to whether the lawsuit is really worth the court's resources.

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Last week, my post on the Ten Most Interesting Articles in 2011 got linked by Professor Alexandra Lahav at the fine Mass Tort Litigation Blog. She recommended my list of ten interesting but unwritten articles to students looking for notes topics, although she cautioned that 

I don't agree with Mr. Trask's assessment of my own work, legal academia or what people ought to write about …

Which is a completely fair opinion, even though I'm not entirely sure what those assessments are myself. Leaving aside what I think of Professor Lahav's work (I've featured it three times on this blog, and included it in one "Ten Most Interesting" list--I think her work is thought-provoking and worthy of serious discussion), I recently bemoaned the fact that 2011 was not a great year for interesting class-action scholarship. (Specifically, I complained that too many articles either previewed the same Supreme Court cases, or predicted the death of the class action.) And, in doing so, I stepped into a old debate that has grown heated in the past few months: what is the point of law school (and law professors) anyway?

The sources of that heat make this a particularly important question right now. The cost of legal education keeps rising, and so does legal-sector unemployment. While it grows more expensive, it also appears that legal education is becoming less relevant to actual law practice. Most of us have to justify our existence sometime, and law professors are taking their turn in the hot seat. They're not all doing it gracefully. While some have been thoughtful, others have been defensive, or self-congratulatory.

So what are legal scholars good for? They have two primary roles: they teach students and they research. I'll leave the teaching alone because it's been (let's just say "too long") since I was in law school, and I don't currently interview new hires.

But legal scholarship? Here I have an opinion, one that's been informed by reading pretty much everything published on class actions in the last four years through LEXIS or SSRN. I frequently rely on legal scholarship about class actions, on this blog, in my other writing, and in my own legal work. I think scholarship is more useful than most lawyers realize, even if you do have to sift a lot of silt to get to the gold. Since this is a defense-oriented blog, I focus on scholarship that is useful for class-action defense lawyers, but those are hardly the only worthwhile articles.

But I also think that legal academia is suffering from an ethos problem, one that stems from too much legal scholarship making too little effort to be relevant or interesting to those actually in the law. And, since law review articles may cost as much as $100,000 of student tuition each, that's a shameful waste of resources.

I'm a firm believer in academic independence. It enables scholars to follow where the facts and law lead for a given problem. That's something professional advocates can't do in the same way. And I accept that academic independence means that legal academia will never be merely a free R&D department for private lawyers.

But there is no reason, given the money law students (and, by extension, taxpayers, law firms, and clients) spend to fund those articles should result in so many proposals that ignore current law, faux dissents to existing opinions, jeremiads, or rehashes of the same Supreme Court cases. It should be eminently possible for academics to write articles that are original, useful, and still interesting to read.

So, based on those assumptions (and because I have a book deadline at the end of the week), here are ten simple things legal academics could do to make their work more relevant, and more interesting:

1. More looking for the overlooked. Professor Miriam Gilles wrote an excellent article on class-action arbitration--in 2005. It was good because lawyers weren't paying much attention to arbitration at the time. In the past year, as the legal status of class-action arbitration got resolved, we saw a flurry of articles rehashing Professor Gilles, but nothing focusing on emerging trends in numerosity, motions to strike class allegations, or new uses for superiority. Why not? Why weren't there any professors watching these trends?
2. More focus on district court cases. Where do you find the overlooked? On the front lines. And those are the trial courts. Based on two years' work with LEXIS, I can confidently say that the federal court system produces between 50 and 100 opinions in class actions each week. That's a lot of raw data, and a lot of overlooked trends. Who's looking there? Hardly anyone. Instead, everyone focuses on the same few appellate cases.
3. More focus on how the common law actually works. Many law review articles focus on Congressional action, what the Supreme Court should do, or arguments that are just plain contrary to existing law. But it takes little effort to come up with our own wish lists and invoke the genies of a unified Congress or Supreme Court. In our common-law system, most of the real change occurs when lawyers convince a trial court to rule their way. (That then generates those cases for appeal that the Langdell method loves so much.) So why aren't more articles proposing new arguments for lawyers to make?
   
4. More work with primary litigation documents. District court cases shouldn't even be a cutting edge. Lawyers breed documents like crazy, and in these days of ECF and PACER, it is entirely possible to get access to entire court dockets without leaving the comfort of your office. So why aren't law professors taking more advantage of these rich seams of raw data? Imagine a survey of the most common commonality arguments. Or the most common discovery requests, and whether they get actual responses.
5. More natural experiments. There are 13 federal judicial circuits, 89 federal district courts, and 50 state court systems. Each of these has different judges, and come up with subtly different lines of cases. Economists love stuff like this; it means they can test all kinds of crazy theories. Why haven't our law professors done that? Got two different rules on experts at class certification? You can test how that affects certification rates, or filings of class actions. Where are these articles?
6. More predictions and more followups. Scientists make predictions, and then follow up on them later. Legal scholars make predictions ("The class action will die soon!") but rarely follow up on them. And yet, the followup is the most informative part. It even adds some drama--everyone loved when Oprah would revisit her best stories.
7. More changing of minds. Unless a scholar knows everything when she starts out, she should encounter facts that will change her views at points. (It's certainly happened to me.) Yet we rarely see that in scholarship.  Depaul professor Mark Moller recently did so in an interesting article on due process arguments. Why isn't this more common in articles? From a rhetorical standpoint, it adds credibility to an argument. And from a human-interest standpoint, it adds some drama.
8. Less overt ideology. Academics are certainly free to root for whomever they want and vote for whomever they like. But the ideal of the academic is that she is free to go where the facts lead. The appearance of partiality can harm even disciplines that should be immune from political controversy. So why not leave the partisanship to the lawyers and think tanks and tackle questions without preconceptions? I guarantee scholarship that aims toward neutrality is more useful to judges, and there is no question articles would be more interesting if we couldn't predict the results just from the author's name.
9. More fact-checking. Plaintiffs make one claim. (Class actions as a whole deter corporate wrongdoing.) Defendants argue the opposite. (Class actions in practice overdeter by focusing on government investigations.) The factual debate has a real impact on which legal rule is a better idea. Who's right? Legal scholars are ideally placed to referee these debates, particularly if they're seen as open-minded and not overtly ideological. 
10. More identification of stakes. Legal debates happen for a reason, and it's rarely just that one side is good and the other is not. Instead, specific arguments often involve specific strategic and tactical choices in litigation. Identifying the practical stakes to various legal positions helps to put those debates in context--for students, for judges, and for practitioners new to an area.

These suggestions are simple, but not easy. Fact-checking takes work. Convincing student editors that district-court rulings have merit will be a slog. But they should lead to scholarship that's both interesting to read and actually relevant to how lawyers argue (and judges decide) cases.

I've had my fill of top ten lists, and I'm sure you have too. Next week, we're back to the usual "case and a thought" method. So come back then for the classic case In re General Motors Pick Up Truck Fuel Litigation, and a review of Judge Posner's How Judges Think.

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 During the latter half of 2011, I was privy to the following exchange between a well-known law professor and a well-known practitioner:

PROFESSOR: Yes, I wrote a piece which concluded that the class action is dead. You heard it here.
PRACTITIONER: And yet plaintiffs keep filing the things …

That exchange (which I promise actually happened), summarizes the primary trend in class-action scholarship in the last year: declaring the device "dead," either because classes are now too hard to certify because of Dukes, too hard to bring in the first place because of Concepcion, or too expensive because of curtailment of attorneys' fees. Leave aside the fact that these arguments are most likely wrong (because, well, plaintiffs keep filing the things); they're dull as well. So, while the federal court system made it difficult to choose only ten significant cases this year, the rush of early autopsies of the class action made it difficult to scrape up ten interesting articles. That said, here are the Ten Most Interesting Class Action Articles of 2011:

1. Collective Justice or Personal Gain (Akron L. Rev. 2011) - Professor Stephen Meili provides outstanding empirical work on how plaintiffs' lawyers keep class-action plaintiffs involved in their in cases. It provides (1) a fascinating peek behind the curtain, and (2) great fodder for further discussion of whether plaintiffs' counsel are fulfilling their fiduciary duty to the class.
2. Unreliable Securities for Retirement Income Security: Certifying the ERISA Stock-Drop Class (Vanderbilt L. Rev. 2011) - This student comment cogently describes an emerging trend in securities class actions--the ERISA stock-drop class action--and one of the key controversies within that trend. When people ask why we bother having student-run law reviews, a piece like this helps to make the argument in support.
3. Embedded Aggregation in Civil Litigation (Cornell L. Rev. 2011) - The late Professor Nagareda discusses how even seemingly individual litigation can contain issues that require courts to make decisions about aggregating claims -- and he uses those cases to show why the constraints of Rule 23 are more than just "hypertechnical bugaboos." Fascinating reading.
4. Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements (Rev. Litig. 2011) (See also.) - Another excellent empirical study which asks: does class-action notice do what we intend it to? Most practitioners suspect that notice does not in fact actually notify the vast majority of class members about their claims. This study confirms that suspicion with cold, hard facts.
5. Two views of Class Actions (Fordham L. Rev. 2011) - Professor Lahav's article is hardly flawless, but the first half gets at a question that deserves a lot more discussion: are class actions primarily a joinder device or some other kind of legally transcendent entity? These two strains of thought continue to compete with each other as courts debate the propriety of various kinds of class actions, and some of the pre-certification tactics employed by the parties.
6. "Abandoned Claims" in Class Actions: Implications for Preclusion and Adequacy of Counsel (George Wash. L. Rev. 2011) - Abandoning claims (or "claim-splitting") has long been a practice of class-action plaintiffs. For almost that long, it has worried courts, who don't like to leave absent class members in the lurch. Professor Sherman provides a thoughtful review of various preclusion cases, and suggests that the phenomenon may be more of a superiority than an adequacy problem.
7. Financiers as Monitors (WP 2011). After the now-traditional "death of the class action" introduction, Professor Burch provides an interesting justification of third-party litigation financing, arguing that third-party financiers may provide a necessary monitoring role for entrepreneurial plaintiffs' lawyers. Having heard a number of financiers talk about how they fund litigation, I'd say that Burch's argument rings true.
8. Class Action Professional Objectors: What To Do About Them? (WP 2011) - Professor Lopatka and Judge Smith have provided an interesting analysis of class-action objectors. While they're largely critical of objectors, they do recognize that some objections have merit. So the question they seek to answer is: how should judges separate the legitimate objections from the objectors-for-profit? Their answer (large appeal bonds) won't be popular with some non-profit objectors, but they do put forward an intellectually honest proposal for discussion.
9. Overlitigating Corporate Fraud (WP 2011) - Professor Erickson asks a nagging question: do securities fraud class actions really deter corporate misconduct that has fallen through the cracks? Or do they just draft along behind government investigations and other existing enforcement mechanisms? She approaches this from a doctrinal rather than an empirical standpoint, but it's still a valuable first step in testing the deterrence justification that so many class-action proponents put forward.
10. Short Sales, Class-Action Lawsuits, and Potential Information Leakages (WP 2011). Professors Blau and Tew have noticed two interesting phenomena. First, some plaintiffs' lawyers leak their securities class-action complaints to short-sellers, a conclusion the professors reach by looking at spikes in short-sale activity just before a class action gets filed. (The tactic makes sense: short sales of the stock will put pressure on the corporation's management to settle a case. It may also raise some adequacy concerns, since what class counsel has done is to drive down the price of the stock in order to benefit themselves.) They also notice that post-filing short sales tend to correlate with the more successful securities class actions.

I get the impression, even from some of these articles, that academics think class actions aren't so much dead as dull; they're just kind of bored with the device as it stands. These professors tend to think that class actions are cool because of their ability to effect large-scale social change or raise big constitutional issues. Now that the Supreme Court has issued a record five opinions on class-action practice in a single year, I can see where it might be hard for them to identify the next area of constitutional import. Since, as Daniel Girard observed this year, we may have witnessed the end of the "Golden Age of the private attorney general" (a debatable but interesting observation), it's much harder to write articles that recommend new areas in which to file class actions.

Except: plaintiffs do keep filing the things. And, in doing so, they've raised a number of really interesting issues of legal strategy and civil procedure that the professors either haven't noticed, or don't think are worth their time. So here's a list of the ten most interesting articles that didn't get written this year.

1. The changing role of adequacy in class-action practice. Where does one strike the balance between a class representative who can provide discovery and oversight, and the ability to actually bring a class action without investing thousands in finding the "perfect" representative? How much does class counsel's role in the litigation matter? The Seventh Circuit in particular made three key rulings about adequacy this year: CE Design, Creative Montessori, and In re Aqua Dots. What do these cases suggest about the inquiries into adequacy of counsel and adequacy of representation?
2. The changing role of superiority. Should the analysis include the effects on non-parties to class actions? The Sixth Circuit has held that the superiority inquiry can look at the effect of a class action on a state's elderly population. How does the logic of that holding apply in the notoriously circular securities class actions? 
3. The evolving debate over the propriety of the motion to strike class allegations. Currently, the uneven development of motion-to-strike jurisprudence has resulted in vastly different practices across jurisdictions. What does this say about how Rule 1 and Rule 23 can intersect? How will motions to strike affect the kinds of class actions that plaintiffs bring? Do different holdings about the motion to strike result in different certification debates?
4. The emerging circuit split over the treatment of experts at class certification. There's one good article out there already, but it predates the rush of opinions that occurred this year. How do those affect the debate? Does Scalia's dicta in Dukes have any effect?
5. The class action and fiduciary duty. Various courts have recognized that named plaintiffs, counsel, and even judges have fiduciary duties to absent class members. But what are the precise contours of those duties? How (and how often) do courts actually enforce them?
6. The various new challenges to the "feasibility of joinder" aspect of numerosity. This has been a fascinating, though small, development over the last eighteen months, one that warrants more attention.
7. Public relations and class actions. Despite the increasing amount of raw data out there, no one has really done a comprehensive study of the role of public relations strategies in class-action practice, or an empirical study on their effectiveness. Do class actions with media pushes result in settlement or larger awards?
8. Follow-on class actions. Do class actions that follow recalls or investigations get certified as readily as "original" class actions?
9. Copycat class actions. What are the incentives for bringing them? How often do they actually work for the copycats? How do "original" plaintiffs and defendants fight them?
10. Settlement timing. At what point in litigation are class settlements most likely to occur? Most practitioners' intuition is that settlement occurs most frequently after certification. But is that actually the case? If not, what does that mean for class-action strategy?

I'll concede that these topics aren't as sexy as pronouncing on the latest Supreme Court opinions. But they're real trends and controversies, they touch on interesting aspects of representative litigation, and exploring them would be of real use to both practitioners and policymakers.

Regardless of whether those ten topics turn into articles, I have no doubt that the various battles still being fought over class certification on a daily basis will yield further scholarship. And, as soon as some aspect of class-action litigation turns sexy again, I'm pretty sure these same professors who pronounced the device "dead" will talk about its surprising comeback.

When that happens, remember: class actions were never dead. After all, plaintiffs kept filing the things.

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There's a fascinating strategic story buried deep within Snigdha Prakash's book on the early Vioxx litigation, All the Justice Money Can Buy: Corporate Greed on Trial. It's revealed in two passages, one toward the beginning of the book, one toward the end.

At the beginning of the book (and the trial it covers), New Jersey Superior Court Judge Carol Higbee [] proposes bifurcating several upcoming Vioxx trials into two phases: a general causation phase, followed by a damages phase. As Prakash reports:

The plaintiffs embraced the proposal. Trying several cases together would give them multiple opportunities to beat Merck in a single trial. And they believed the the trial's bifurcated structure would play to their strengths because Merck's deceptive marketing practices and scientific misconduct would take center stage first. Merck would have to wait until the second half of the trial to call the jury's attention to what had proven to be the strongest part of its case--how each plaintiff's lifestyle and preexisting injuries may have contributed to the alleged injuries.

(Pages 29-30, emphasis in original.) Then, at the end of the trial, after the jury renders a verdict that precludes recovery for at least one of the plaintiffs, the plaintiffs reverse their position.

"Counsel have anything they want to say about the verdict before we move on?" [Judge Higbee] said when she was seated.

"Your Honor, Mark Lanier, on behalf of the Hermans[es]," Lanier said, standing up. "It is my request that you enter a judgment, notwithstanding the verdict on question number 1, to allow the Hermans case to continue into Phase II."

Lanier was asking the judge to set aside the ground rules that the two sides had fought over so bitterly before the trial. Under those rules, the jury was to determine if Merck was liable, in principle, for the injuries of all the plaintiffs in Phase I of the trial, and resolve each plaintiff's specific claim against Merck in separate mini-trials in Phase II. Higbee had proposed the bifurcated structure as a way to try several cases simultaneously. The plaintiffs' lawyers had agreed, believing that the arrangement would increase pressure on Merck to settle, while Merck had strenuously opposed it. Now, Lanier was arguing that the trial structure he earlier supported had prevented the judge from reaching "a valid verdict."

(Page 266, emphasis added.) How did the plaintiffs get from point A, where they were enthusiastic supporters of bifurcation, to point B, where they essentially argued it was grounds for reversal? (And did so unsuccessfully, as it turns out.) Was this a case of hubris? The fog of war? Malpractice?

Unfortunately, Prakash doesn't care about these questions. They don't fit the story she wants to tell, which is

why [Lanier] was beating Merck when others weren't.

(Page 38.) Even more unfortunately--at least for Prakash--the trials in New Jersey that form the focus of her book don't progress how she predicted. Instead of watching a undefeated team take on a large and evil corporate defendant in a much-anticipated rematch, she witnesses a team score at best a partial victory that feels far more like a defeat. (Even the Humestons, plaintiffs who won at Phase I, would go on to lose at Phase II, at which point Judge Higbee would overturn the jury's verdict.)

Rather than embrace the nuances that drive complex litigation (there are rarely unsullied heroes or unambiguous villains, and even more rarely unequivocal victories), Prakash strives mightily to cram the facts in front of her into a straightforward story of good triumphing over evil, at least until the jury refuses to oblige her.

It's clear Prakash's model for All the Justice Money Can Buy is Jonathan Harr's A Civil Action. Like Harr, she embeds herself with the plaintiffs. And like Harr, she aspires to be a fly on the wall. But unlike Harr, she makes no attempt at journalistic depth. She does not try to get into the heads of the defense, the judge, or the jury. And the result is decidedly one-sided. While Harr was able to tell a story of how large-scale litigation warps the lives of everyone it touches, Prakash turns a series of trial transcripts into a high-school soap, where the cool kids try to take the Honors Society down a peg, and kind of succeed, but kind of don't. By the time she reaches the end of the trial, she is recounting a scene that could literally take place in a classroom, where a member of the trial team passes her a note mocking defense counsel and she laughs out loud, attracting the woman's attention.  (Page 244.)

That attitude is endemic to Prakash's book. Her verdict at the end is not that the plaintiffs made a mistake in structuring the trial as they did or presenting the evidence as they did, but that the jury made a mistake in not believing the story as the plaintiffs presented it. There are some interesting nuggets along the way--Mark Lanier is clearly a talented storyteller, and provides some worthwhile analysis on day-by-day trial presentation--but the fact that the plaintiffs appeared to make such a large blunder at either the beginning or the end of the case, and that blunder goes unexamined for the two hundred thirty pages in between, or the twenty pages afterward, mean that they're not quite worth the slog through the shallow cheerleading that takes up the remainder of the book.

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George Smiley is the rotund, perpetually cuckolded, but brilliant spymaster at the heart of many of John Le Carre's finest Cold War spy novels. He's on his way to becoming a cinematic icon, too, having now been played (in separate films) by Rupert Davies, Alex Guinness, Denholm Elliot, and now Gary Oldman (in a performance that rivals Guinness's finest), in the excellent recent release of Tinker, Tailor, Soldier, Spy. 

Without spoiling its plot, I will mention that by the end of Tinker, Tailor, Soldier, Spy, the Circus (the British Secret Service) is in disarray. The mole that George Smiley uncovers, who was run by the Soviet mastermind Karla, had stopped critical missions. None of their information is trustworthy, because they don't knew who or what has been tainted by the mole.

So, at the beginning of the next novel, The Honourable Schoolboy, Smiley decides to take some backbearings.

[Smiley's] premise was, that in briefing [the mole], Karla was exposing the gaps in Moscow Centre's knowledge; that in ordering [the mole] to suppress certain intelligence which came the Circus's way, in ordering him to downgrade or distort it, to deride it, or even to deny it circulation altogether, Karla was indicating the secrets he did not want revealed.

'So we can take the backbearings, can't we darling?' murmured Connie Sachs, whose speed of uptake put her as usual a good length ahead of the rest of the field.

'That's right, Con. That's exactly what we can do,' said Smiley gravely. 'We can take the backbearings.' …

By minutely charting [the mole's] path of destruction--his pugmarks as he called them--by exhaustively recording his selection of files; by reassembling, after aching weeks of research if necessary, the intelligence culled in good faith by Circus outstations, and balancing it, in every detail, against the intelligence distributed by [the mole] to the Circus's customers in the Whitehall marketplace, it would be possible to take backbearings--as Connie so rightly called them--and establish [the mole]'s, and therefore Karla's, point of departure …"

(Identity of mole redacted.)  So, what does this have to do with class-action practice? Well, British spies aren't the only ones who can engage in backbearings. Class action practice is hardly the Cold War, but that doesn't mean that defense counsel can't use discovery requests to inform themselves about plaintiffs' theory of the case (assuming they have a coherent one).

Moreover, when plaintiffs serve overbroad discovery (which they often do), well-crafted objections can help to winnow down the requests into ones that one can take backbearings from.

This is something many lawyers do intuitively. (And I'm sure many plaintiffs' lawyers do, too.) Carefully reading subpoenas, document requests, interrogatories, and deposition questions can help a defendant learn where the plaintiff thinks her case may be the strongest, and where she may think she needs more evidence. Similarly, looking at where a plaintiff chooses to spend her resources (when that spending is visible) helps to give an idea of both the resources a plaintiff has available, and her priorities in the case. (The same operates in reverse, of course.)

Nor is discovery the only place from where one can take backbearings in litigation. As Richard Levick of the Bulletproof Blog wrote just the other day, as plaintiffs try digital recruitment strategies for class actions, corporations get early warnings of where litigation risks may arise. A potential defendant that is current on Twitter, Facebook, and getting regular Google alerts about itself will likely be able to respond more quickly to any actual litigation threats, because it can read the same requests and complaints as anyone else.

The takeaway from this should be pretty simple. Every action taken in litigation, as anywhere, leaks information. So it is always worth paying attention to what your adversary is doing. What they do about their case is often far more important than what they say.

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For most class-action defense lawyers, dealing with the press is, while rare, a necessary evil. Plaintiffs' firms have taken to issuing press releases whenever they file a complaint. However, for defendants, the media is usually a separate front, one that moves much faster than discovery, and one that offers more perils than payoffs. Moreover, outside of expensive PR firms, there are few sources of advice on how to deal with a case that attracts press attention.

Enter Kendall Coffey, a Florida lawyer who has been involved in some of the more high-profile cases of the last few decades, including the negotiations surrounding Elian Gonzalez and the infamous Bush v. Gore. His book, Spinning the Law: Trying Cases in the Court of Public Opinion, discusses how to litigate high-profile cases.

For the most part, Coffey's book is not a perfect fit for civil litigants. The book primarily focuses on high-profile criminal trials, since those tend to receive the most press coverage. And it relies heavily on Coffee's own experience (which he does relay well), and a series of cutesy aphorisms ("Defense attorneys will ruffle feathers to keep their clients from becoming a cooked goose") that don't convey a lot of information.

However, the concluding chapter, A Media Primer for Spinners, offers an excellent introduction to litigating cases that have a press component. Among the lessons Coffey imparts there:

Press coverage can influence judges.

The ears of judges often have a chronic buzzing, particularly because they are not prohibited from following the news coverage of their cases. The law presumes that judges will ignore the media monsoons drenching the courthouse and decide every legal issue as if nary a drop had fallen. If we assume, though, that judges are real people who live in the real world--sometimes a world of judicial elections--it follows that they are acutely aware of community feelings about media-intensive cases.

In other words, the more press coverage of a given legal dispute, the more information outside the pleadings that the judge will likely absorb. And since judges are susceptible to rhetoric and spin just like other people, press coverage likely influences their rulings. This is certainly something that Richard Scruggs relied on in his PR strategy for his Katrina class actions.

Press coverage can generate fact development.

Good press is also a recruitment poster for lawyers, experts, and even fact witnesses. Winnability magnetizes cases. Lawyers and experts may be mercenaries, but even hired guns prefer to be retained by winners. For the top professionals who can pick and choose their cases, many prefer a cause that is acclaimed to one that is being acclaimed to one that is being defamed. Even fact witnesses, the main determinant of most cases, can be more effective if they believe their testimony will be featured in a success story. Just as many prefer to join the team with all the cheerleaders, horrible publicity can impair recruitment efforts

Coffey is not the first to note that press coverage can encourage fact witnesses to step forward. [] But it's a point that bears repeating.  Moreover, press coverage can also help class action defendants develop facts. Once class members begin discussing newsworthy cases, they often provide lawyers with variations that demonstrate that a class may not be appropriate.

Getting press coverage can be as simple as filing reporter-friendly pleadings.

Courthouse files largely immunize their contents from the laws of defamation, so reporters rely overwhelmingly upon court papers and hearings. As a result, press-savvy lawyers craft court papers that not only nourish procedural requirements but also feed the press.

In high-profile cases, or even ones where just a few reporters are clearly paying attention, filing a pleading that's written in plain English, with clear, emotional themes, can pick up press coverage. Plaintiffs often exploit this in complaints, but there is no reason that defendants cannot use the same tactic.

Talking points are not a bad thing.

Some legal strategists anticipate the initiator's huge advantage by preparing their own legal document with their key facts. While the defense will rarely have enough time to fully respond in writing to the just-filed accusatory document, first responders should consider something as basic as a nation for a status conference--a request to discuss general issues about court scheduling--loaded with defendants' best facts.

While Coffey suggests motions for status conferences as a means of getting a theme out to defeat a case relying on publicity, if the facts are strong enough, one can also just buy an ad refuting the allegations, much like Taco Bell did earlier this year.

Lawyers still need to be careful.

[T]he high-profile case is no place for amateurs. Attorneys with minimal media exposure should not handle media relations without true professional help. As a compromise, outside press consultants should strategize regularly, but a client's regular spokesperson or a media-savvy member of the legal team should handle the communication. … Bear in mind, though, that communications with a press specialist may not be privileged from subpoenas, and care should be exercised, particularly when exchanging correspondence and email.

The biggest problem with a campaign of "spinning" is that the lawyer doesn't control the news outlets. Reporters are--for the most part--pretty bright, and conscientious enough to not just take one side of a story. So overtly trying to control a story often backfires. And leaving a paper trail of one's attempts only makes matters worse.

In general, I'd recommend Spinning the Law. While the meat for class-action lawyers comes at the end, he's an engaging writer, which makes the journey fun on its own.

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Last month, I wrote about an old article of Professor Cass Sunstein's, on Outrage.  In it, I mentioned that he discussed (albeit very briefly) an interesting idea, "rhetorical advantage." So, what does the term actually mean for folks interested in legal strategy?

What makes Professor Sunstein's usage in Outrage so interesting is that he describes rhetorical advantage more as a feature of terrain than a deliberate strategy. And, to this practicing lawyer, that makes a lot of sense. Any given group, be it appellate court justices on a particular circuit, or the jury pool of a particular area, has a set of shared assumptions and beliefs. (Call it "culture," if you like.) And those shared assumptions will make certain arguments seem more intuitive than others. This is what I think he means by "rhetorical advantage." And that has important implications for class-action practice.

Among other things, it explains why certain rhetorical strategies recur in class-action practice. Class actions themselves bring certain rhetorical advantages to litigation. They (at their best) promote efficiency. They pit David against Goliath.  The plaintiffs are human beings; the defendants are usually faceless corporations. (I discussed some of this before here.)

But that terrain can be modified. Dan and Chip Heath, in their business bestseller Made to Stick, investigated why certain urban myths (like the "Kidney Heist," in which a traveling businessman comes to after a wild night in Vegas to find himself occupying an ice-filled bathtub, sans kidneys) stick around, while other demonstrably true facts just don't penetrate our brains. In the course of their investigation, they identify six characteristics of "sticky" ideas--that is, ideas that stay in your head, and stay with other people as well.

Those six characteristics, which the Heath brothers combine into the handy mnemonic "SUCCESs":

SIMPLE. Every idea has a core. Every one. (You might also call it a kernel.) The trick is to identify it, express it, and be ruthless about defending it. (Examples: Southwest Airlines, at its peak, was "THE low fare airline." It didn't waste time with ideas or strategies that didn't fit this one mission.) There's no question that "simple" is difficult (though not impossible) for lawyers defending class actions. After all, our primary story at certification is: "It's complicated." (And some lawyers simply insist on throwing the kitchen sink into their briefs. The Heaths call this kitchen-sink urge "The Curse of Knowledge.") But there's usually an underlying reason why a case is too complex; identifying that, and expressing that simply, can be an important too.

UNEXPECTED. Many, many things vie for our attention every day. As a result, many of us are expert at tuning out unwanted messages; we've got highly developed internal spam filters. If a message fits the same old pattern as the spam that surrounds us ("Attention K-Mart shoppers …" "Exits are located at the rear of the aircraft …"), we're likely to ignore it. But if it breaks that pattern:

"Hey you, the guy in aisle five, you're standing right next to our 50% off sale items!"

We're more likely to pay attention. And then we're more likely to remember.

CONCRETE. Lawyers (and other folks trying to get their ideas to stick) deal in ideas.  And their primary vehicle for communication ideas is language. But as the Heaths put it:

"Language is often abstract, but life is not abstract."

It turns out that while abstraction may help us understand, it gets in the way of our remembering. Remember US v. Microsoft, the case that made David Boies's reputation? It's widely believed that the deposition of Bill Gates won that case. Why? In part, because it was a concrete image that people could come back to. Tying is abstract, and hard to get one's head around. A CEO looking shifty and sounding evasive, that's right in front of us. That's sights and sounds. That's concrete. And that's memorable.

CREDIBLE. Credible ideas tend to come from sources we can trust, or want to emulate. That's why celebrity endorsements work well in selling mass products. And it's why some judges tend to get more attention than others when they write opinions. But ideas can also have internal credibility. What does that mean? It means adding detail that enhances the credibility of the idea. Urban legends do this. (The Kidney Heist story got a boost once it was rooted in Las Vegas, because it makes sense an out-of-town businessman would do something stupid in Vegas.) From this perspective, by the way, plaintiffs' lawyers should be thanking the Supreme Court for Twombly and Iqbal. After all, what is "plausibility" but "buttressed with enough credible details?" Sure, it may be more work to file a case with visible signs merit, but they'd have to do that work at some point.

EMOTIONAL. We can probably all agree that people shouldn't litter. But, at the same time, "Don't litter" seems to be one of those pieces of message spam. We all hear it so much, it turns out many of us tune it out. Back in the 1980s, the state of Texas hired anti-litter campaigner Dan Syrek to figure out a way to get Texans to clean up after themselves. His (insanely successful) result: "Don't Mess With Texas," which the Heaths argue hit just the right blend of self-interest and regional pride to stay in people's heads. Want an example closer to home? Tort reform is a dry and abstract issue. Until tort reformers pointed to a lawsuit that awarded $2.86 million to a woman who scalded herself with McDonalds' coffee.  The story was so useful at generating outrage about dumb lawsuits and excessive awards that 17 years after it happened, a former plaintiffs' lawyer still felt the need to direct a documentary to try to blunt its effect. The simple truth is, long after facts leave, emotional responses stay with us.

STORIES. It's conventional wisdom that people respond better to stories than dry recitations of facts. But the Heaths take that insight one step further. It's not just that lawyers should all learn to "tell a story." It's that stories work well at all levels of persuasion. The Heaths explore the fact that, in almost all work contexts, people learn as much (if not more) through shop talk as they do through employee manuals. And shop talk usually means war stories: "here's what I did, and here's how it worked."  In other words, when briefing issues before a judge, it may not be enough to tell the story of this case, it's just as important to tell the story of a line of reasoning: "here's why we have adequacy," or "this is why the voluntary payment doctrine evolved, for a case like this."

(S)ticky. The Heaths use the analogy of Velcro throughout their book. Sticky ideas have hooks, the same way Velcro does. These six components, Simple, Unexpected, Concrete, Credible, Emotional, Stories, are the hooks that make ideas stick, even in a judge's head. And they tend to recur in successful class certification briefs. Go figure.

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This month's piece of "Classic Scholarship" constitutes a small exception. It's not exactly scholarship (it was adapted from a speech), and it doesn't focus exclusively on class-action practice. Nonetheless, Deborah Lilienthal's Litigation Public Relations: The Provisional Remedy of the Communications World, 43 N.Y.L. Sch. L. Rev. 895 (2000), contains some important insights for class-action practitioners.

Lilienthal's primary argument, that corporate defendants in litigation cannot afford to ignore public relations, is hardly controversial today. There is no question that plaintiffs' counsel consider public relations to be an important weapon in their arsenal against corporate defendants.  Nor is there any real question that public relations can form an important part of a defendant's litigation strategy. 

However, in the corners of Lilienthal's speech (which was then adapted into a law-review article), are a number of insights about the tensions that can arise between litigators and public-relations professionals. Among the most important insights she reveals:

Media fit new cases into ready-made stories. Lilienthal introduces her argument by noting the coverage in the 1970s of a famous alleged automotive defect. While the company was largely vindicated in the courts, the damage to the particular brand had already been done. And, as Lilienthal notes,

This expose by a "radical" publication in the seventies lead the way to the expose-driven, scandal-obsessed media of the eighties and nineties, where news coverage is framed in stories of winners and losers, bad guys and good guys, David and Goliath.

The "David and Goliath" story in particular is one that is attractive to both plaintiffs' lawyers and reporters. And it highlights a natural rhetorical vulnerability for corporate defendants.

Media coverage usually provides only a shallow understanding of complex topics. Or, as Lilenthal puts it:

Increased media coverage and public discussion, however, have not brought greater clarity about the law. As news and tabloid converge, the coverage of celebrity scandals - most of which are pending before a court of law - are open game for news and tabloid media alike.
What does this mean to lawyers? Two things. First, a lot more people know the law. Second, a lot more people think they know the law. If I may take a Machiavellian moment, these "legal" programs are supplying viewers with just enough law to make them dangerous. They are developing a cocktail-party familiarity with theories of tort liability, the grand jury process, even the exclusionary rule.

This widespread but shallow understanding of the law is even more prevalent today than it was ten years ago. Ten years ago, there were few, if any, legal blogs, and no widespread social media tools like Facebook or Twitter, that can broadcast announcements of complaint filings as if they were final verdicts. (I have nothing against Twitter; I use it myself. But I'm aware of the risk of distortion it carries.) For most class-action lawyers, who have trained hard in a specialized field of law, figuring out how to communicate complex arguments in simple terms can extremely challenging.

Most media abhors nuance. Media has always operated in an attention economy. And today, where outlets include 24-hour cable news, social media tools, and discussion forums, attention is even scarcer than it used to be.

Non-lawyers - for better or worse - are far less deliberative than lawyers. They are looking for and want to give an absolute answer. Their perceptions of law and those involved in a legal battle are shaped by different factors than lawyers. And these non-lawyers are your future jurors. For lawyers to ignore this truism is virtual malpractice.

In class-action practice, non-lawyers are not just future jurors. They're future class members, future objectors, and future plaintiffs in other cases. A litigation strategy that is tone-deaf about public relations can alienate all of these different constituencies.

So what's the takeaway from Lilienthal's piece? Lawyers--especially defense lawyers--tend to be risk-averse and comfortable playing defense. While that instinct to deliberate can be helpful in motions practice, it may cause larger problems for the client when a crisis first breaks. PR professionals, reporters, and customers are not as deliberative, but they're hardly stupid. A savvy litigation strategy that marries solid PR practice with a vigorous defense (like, say Taco Bell's) can create a number of strategic opportunities for a defendant.

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So, it's the end of September. Let's talk baseball. And, since my beloved Red Sox have reverted to their old habits, we're not going to focus on this season. Instead, we're going to go back nine years and sixty-four years. And we're going to talk about two general managers. Billy Beane (the Brad Pitt of baseball management) and Branch Rickey (the Edward Herrman of baseball management). Between the two of them, these baseball managers came up with at least three innovations that changed the way the game was played. What were they?

Moneyball. What do you do when you want to be an American League pennant contender, but you don't have the same payroll as the big boys in New York and Boston? Hire a statistician instead. Have the statistician figure out which players are contributing the most to scoring or preventing runs, and which do so for the least amount of salary. Hire those guys. Sounds simple enough, but in 2002, the Oakland A's rode that strategy to first place in the AL West, including an AL record 20 wins in 22 days. How? At the time, no one else was doing it.

Jackie Robinson. Major League Baseball had a gentleman's agreement not to hire any blacks to play. (The only silver lining to this was a vibrant alternative set of teams, the Negro Leagues, that featured such great players--Hall of Famers, finally--as pitcher Satchel Paige, slugger Josh Gibson, and base-stealer James "Cool Papa" Bell.) Rickey was the man who decided to break the color barrier in the National League. A simple enough decision, probably, but hardly an easy one. He recruited former UCLA star and then-Kansas City Monarch Jackie Robinson, who spent one year with the minor-league Montreal Royals before braving racist fans and opponents in a blistering rookie year with the Brooklyn Dodgers.

Farm teams. Branch Rickey was the pioneer of the farm team, a method of developing home-grown talent for a ball club. Before that, scouts would try to recruit new talent from various semi-professional clubs; a risky proposition at best.

There's a common theme to these innovations. Baseball is a talent-oriented industry. To build a winning team, you need winning players. Rickey and Beane each recognized untapped (and therefore less-expensive) sources of winning players. Beane found players who could contribute to a team even if they weren't pretty enough to grab a scout's attention. Rickey began by taking players who needed seasoning and adding it, while in the process adding another source of revenue to his ball club's organization. Then he went straight for the talented, seasoned players that--because of virulent prejudice--no team would touch. There's no question that breaking the color barrier was costly in the short term, but it was far less expensive in the long term than maintaining it.

So what Rickey and Beane did was to find undervalued players. Finding (and employing) those players cost a little more in the short term, but it more than paid off in competitive advantage. How do we know? Today baseball is integrated, and scouts are continually looking for new sources of players. Every team has a farm team. And most teams have statisticians.

So what does this all have to do with class action practice?

Well, let's look at the lead counsel for each side of the 2010-11 Supreme Court term class action cases (I'm using this as a VERY loose proxy for "wicked smart class action lawyers") and where they each went to school.

• David Boies (Erica P. John Fund v. Halliburton) - Yale Law School
• Andrew Pincus (AT&T Mobility v. Concepcion) - Columbia University Law School
• Deepak Gupta (AT&T Mobility v. Concepcion) - Georgetown University Law Center
• Jonathan Hacker (Matrixx) - University of Michigan

• Richard A. Monahan (Smith v. Bayer Corp.) - University of Pittsburgh School of Law
• Philip S. Beck - (Smith v. Bayer Corp.) Boston University School of Law
• Theodore J. Boutros, Jr. (Wal-Mart Stores, Inc. v. Dukes) University of San Diego
• Joseph M. Sellers (Wal-Mart Stores, Inc. v. Dukes) Case Western Reserve School of Law
• David Sterling (Erica P. John Fund v. Halliburton) - The University of Texas School of Law

Pittsburgh, BU, San Diego, Case Western, UT. Hardly slouch schools. And yet there is a consensus that students from these schools can't get jobs in this market, because we have a glut of unemployed lawyers, and employed lawyers are often concerned with status and prestige.

It's no secret that the legal market is in turmoil right now. Firms are desperately looking to stay relevant, particularly given the competition they are receiving from technology and lawyers in other countries.

So here's what I'd do if I were in charge of a high-earning plaintiffs' firm. I would take $5 million out of my next contingency fee, and build a "farm firm" for recent law school grads. Offer a low base salary that would cover rent and a moderate student-loan payment, and then let them eat what they kill. If they're good enough, let them buy into the big leagues. Alternatively, I'd endow a clinic at a local law school. Students would have to interview for slots. Should we eventually no longer have a glut of just-graduated lawyers, I'd try to turn this into a law-school firm.

If I were rebuilding a a defense firm from the ground up, I'd do two things. First, I'd offer to take each of the complex litigation and civil procedure professors out to lunch. I'd want to pump them about their most promising students. Not just the ones that did best on the exams, but the ones that actually participated in class, and the ones that seemed most creative when asked offbeat questions. And I'd ask them specifically who seemed to underperform on their last exam. Those are the students I'd want to interview for jobs; and I'd want to start some of them right away as clerks. Yes, the search costs are slightly higher than just taking the appellate clerks and law-review editors, but I'm looking for students who exhibit skills other than just test-taking. Then I'd go to my best client, and make the following pitch: give us your lowest-tier class actions, the crazy, frivolous ones that are unlikely to turn into anything. Most companies have a few of these lying around. I'd offer to litigate these for a significant discount, provided I can use my new stable of clerks and first-years to do most of the work. The cases would still get partner attention, but they'd also get a significant discount to reflect the fact that they were essentially training cases.

While I doubt many current AmLaw firms would go for these ideas, my bigger worry is that they may not be crazy enough. Law firms (including class action firms) have the opportunity right now to grab and train great future lawyers on the cheap. And currently, most firms can't or won't do so. So it's only good strategy for someone else to.

[Image of Branch Rickey public domain, image of Billy Beane taken by Brett Farmiloe]

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This is a brief announcement that you can find a PDF copy of my article for the Cato Supreme Court Review at the following SSRN link.  

Thanks very much to the Cato folks for hosting a great CLE last week, and for publishing this.  

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 It's no secret that plaintiffs often choose cases, not so much because of the merits of the rulings, but because of the outrage they can generate. (Indeed, some plaintiffs' counsel openly discuss how they picture either how a particular cross-examination or closing argument will sound.)

As it turns out, a nine-year old lecture by Cass Sunstein sheds some light on ways in which defendants may be able to minimize the effects of outrage in class actions filed against them. (Full disclosure: Professor Sunstein taught several of my classes in law school.)

Sunstein's lecture discusses the ways in which outrage affects legal rulings. He focuses primarily on how juries decide punitive damages. And his conclusion explains much about how why defendants gets nervous about class-action verdicts:

The simplest lessons are that punitive awards are rooted in outrage; that levels of outrage command a degree of agreement among diverse Americans, at least in some domains; but that people have a great deal of difficulty in "mapping" their outrage onto a bounded scale. Among other things, we find that the process of group discussion dramatically changes individual views by making people move toward higher dollar awards. In other words, groups often go to extremes. The point has large implications for the role of outrage in deliberation and the effect of deliberation in altering outrage. We also find that people's judgments about cases, viewed one at a time, are very different from their judgments about cases seen together.

(Emphasis added.)  Professor Sunstein was focusing primarily on punitive damage awards. Nonetheless, his analysis has several implications for those defending class actions (which often rely on the same arguments as punitive damages):

Deterrence arguments are likely to be bunk. Plaintiffs' lawyers (and the academics who advocate greater class-action use) tend to stress the deterrent effect that class actions have on corporate defendants. But Professor Sunstein and his colleagues found that juries tend not to consider deterrence when awarding damages.

The first experiment found that varying the probability of detection had no effect on punitive awards. Even when people's attention was explicitly directed to the probability of detection, people were indifferent to it. People's decisions about appropriate punishment were unaffected by seeing a high or low probability of detection. Outrage is what matters, not the probability of detection. The second experiment found that strong majorities of respondents rejected judicial decisions to reduce penalties because of high probability of detection - and also rejected executive decisions to increase penalties because of low probability of detection. In other words, people did not approve of an approach to punishment that would make the level of punishment vary with the probability of detection. What apparently concerned them was the extent of the wrongdoing, and the right degree of moral outrage - not optimal deterrence.

(Emphasis added.)  In other words, while lawyers and scholars rely on deterrence as a justification for "punishing" corporate wrongdoing, no one's told the actual juries about this. (Nor are they likely to; punishment, through either punitive damages or class action verdicts, results in very large contingency fees.) To the extent that plaintiffs' counsel rely on deterrence-related arguments in justifying a class certification or summary-judgment ruling, defendants may be able to point to this research to steer the judge back to the merits of the arguments.

Defendants are likely to be better off with bench trials. I've written about this before. To the extent that juries tend to amplify--as opposed to dampening--the outrage of the most offended members, a defendant in a class action may be better off trying any eventual case in front of a judge instead. This option won't always be available to the defendant. But when it is, a defendant should think very hard about taking it.

Rhetorical advantage. Finally, in a comparatively minor part of his discussion, Professor Sunstein throws out the idea of "rhetorical advantage," a great concept that explains much about how plaintiffs' lawyers select cases.

What produces a rhetorical advantage? The simplest answer points to existing social norms, which of course vary across time and place. Among most Americans, existing norms make it easier to argue, other things equal, for higher penalties against corporations for egregious misconduct; but it is possible to imagine subcommunities (corporate headquarters?) in which the rhetorical advantage runs the other way. In extreme cases, those with a rhetorical advantage are on the correct side of a social taboo, whether mild or strong. In any case it is easy to imagine many other contexts in which one or another side has an automatic rhetorical advantage.

For all of the law review articles with "rhetoric " in the title, precious few actually develop this idea. (Somewhere along the line, legal academics decided that "rhetoric" was a theoretical tool to be used for critique, as opposed to an intensely practical discipline focusing on persuasion.) But it makes sense that plaintiffs' counsel would look for cases that can employ, not just the David versus Goliath trope, but other rhetorical advantages as well. To the extent defendants can focus on these areas, they can find their own means of combatting these advantages.

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This month, the Insight from Other Strategists feature turns from military thought to business strategy, a notoriously trickier thing to adapt to litigation. While there are certainly excellent business strategists who write knowledgeably about law-firm business strategy, it's harder to adapt their insights to the actual practice of litigation. (At least for defense lawyers; plaintiffs' lawyers, who are entrepreneurial to begin with, seem to make business and litigation decisions interchangeably, because the lawsuit itself is their product.) The reason for this seems to be that unlike a lawsuit or military engagement, where the competing parties are involved in an actual head-to-head encounter, business strategy operates more like a race: the competitor is definitely out there, but one makes progress by focusing on one's own performance more than by interfering with the other side's plans.

But just because business strategy doesn't immediately inform litigation strategy doesn't mean it can't say anything useful to class-action defense lawyers. One excellent is example is a a recent book by Richard Rumelt, a professor at UCLA Anderson's School of Management: Good Strategy/Bad Strategy: The Difference and Why It Matters.

Good Strategy/Bad Strategy is primarily a business strategy book, which as a practical matter means its second half is of more limited application to lawyers. (Examples of good business strategy aren't quite as useful to litigators in the middle of a case.) But the first half, in which Professor Rumelt identifies the difference between a good strategy and bad one, is of immense value. Professor Rumelt begins by identifying what a bad strategy looks like, and he identifies four red flags:

• Fluff--jargon that "create[s] the illusion of high-level thinking," and obscures the flaws or the hard choices in a given plan.
• Failure to face the challenge--which usually manifests as an inability to define exactly what the problem is that the party is trying to solve. It's often the result of a reluctance to make hard choices.
• Mistaking goals for strategy--a pretty common mistake; "grow by 30%" is a goal, not a strategy. How you plan to grow by 30%; that's a strategy.
• Bad objectives--What's a "bad objective?" A goal, any goal, that exists for the sake of being a goal. A good objective is a concrete, achievable goal that gets you further toward your ultimate objective. Bad objectives, on the other hand, mollify potential dissidents and then clutter to-do lists.

By contrast, Professor Rumfelt identifies "good strategy" as

coherent action backed up by an argument, an effective mixture of thought and action with a basic underlying structure I call the kernel.

(Emphasis in original.) This "kernel" has three elements:

• Diagnosis--a succinct statement of the problem, one that gets to the meat of the issue despite the flood of complex, often conflicting data.
• Guiding policy--this is the 30,000-foot view of the solution, the one that everyone can hold in their head easily as they come up against new permutations of the problem. This is rare, rare enough that Professor Rumelt actually states that "A good guiding policy itself can be a source of [competitive] advantage."
• A set of coherent actions--this is what makes strategy effective, instead of just academic. And it's hard to develop: a set of coherent actions means prioritizing, and often leaving out actions just because "they've always been done."

There are at least two immediate uses for this book in class-action litigation. First, and most obviously, defendants would be wise to use Professor Rumelt's model on themselves, to make sure that their strategies are "good" ones, instead of just an incoherent, rote "oppose everything the plaintiffs do" plan. Those, far too often, lead to bad results. 

But second, and possibly more importantly, most plaintiffs' lawyers are what Professor Rumelt would call "bad strategists," especially when it comes to class certification. This is not surprising, because for many of them, the fight is not over certification, but settlement. And it's not just with the defendant, but with each other. As a result, many plaintiffs do not think through how they would actually try a certified class with much, if any, rigor. And that is one of the largest weaknesses in most class-action cases. Because most courts want to know how the class action would actually be tried, and most plaintiffs are completely unequipped to offer a coherent trial plan.

Even with the business-strategy focus, I'd heartily recommend Good Strategy/Bad Strategy to complex litigators; there's a lot more in there of use than in this brief summary. Professor Rumelt has also begun blogging at StrategyLand, which is proving every bit as educational.

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 The other week, fellow blogger (and ABA Blawg 100 writer) Russell Jackson sent me a copy of Verdict for the Defense: Fighting Jackpot Justice with Firewall Defense Strategies by Greenberg Traurig lawyer Rob Herrington.  (Which just goes to show - sending books to bloggers can work.)

Verdict for the Defense provides a practical take on class action and mass tort defense, written for businesspeople rather than lawyers. (And you can tell. While most class-action books are heavy on the footnotes and the citations, this one alludes to the legal rulings, and focuses more on actual advice.) Herrington focuses on his area of expertise--products liability and consumer-fraud class actions--which enables him to provide specific counsel about how to head off potential class actions.

Herrington's "firewall" strategy consists of seeking out--and then blocking off--several of the more common, preventable sources of class actions. Starting from the premise that the best defense is to be a good company (one I wholeheartedly agree with), he recommends a full audit of the company's most popular products (the ones most likely to get the company sued in a class action) to make sure there are no (1) significant problems lurking or (2) minor, but recurring issues that might serve as the basis for a complaint. He also recommends a review of customer service, to stave off lawsuits that might originate from disgruntled customers or common internet complaints. Some of Herrington's advice is clearly aspirational: most companies don't aim to have bad customer service, but instead find themselves fighting against constraints like organizational inertia. And companies should, of course, be careful that any product audits don't provide blueprints for subsequent class actions. But in addition to the common-sense exhortations, Herrington provides some immensely practical advice for enabling the defense of largely meritless class actions, including:

• Being careful about choice-of-law clauses. As Herrington points out, a number of companies employ nationwide choice-of-law clauses that provide little advantage in individual cases, but make bringing nationwide classes much easier for plaintiffs. By contrast, choosing the law of the consumer's home state can serve as both a gesture of goodwill to customers and not hand plaintiffs' counsel a free pass to a nationwide class.
• Changing up contracts frequently to take account of changing circumstances. Many companies operate in constantly-changing regulatory environments, with constantly-changing products. Under those circumstances, it makes little sense to rely on possibly obsolete boilerplate. By performing a yearly review of consumer contracts, a company can make sure that it catches any glitches earlier rather than later, limiting its exposure over time.
• Writing attractive arbitration provisions. While the Supreme Court's Concepcion opinion clearly establishes a preference for arbitration, it never hurts to make sure that the arbitration procedure is one that truly aggrieved customers would actually want to use.
• Adding "more than compliant" advertisements into a rotation if some ads appear vulnerable. Given some of the fraud theories out there, there is clearly no way to lawyer-proof advertisements. But, should an ad appear to be an attractive nuisance for the plaintiffs' bar, it may not require a complete overhaul of a sound advertising campaign. It is possible to make incremental shifts to reduce risk by adding advertisements that disclose even more information.

So, can defense lawyers get anything out of this? Yes. Leaving aside Herrington's advice on litigating class actions (which, while sound, is probably a little low in citations for lawyers), it provides good insight into what a conscientious client will be thinking. More importantly, Verdict for the Defense helps identify what the best practices should be among clients. And that should help class-action defense lawyers act more like trusted advisors than hired guns.

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 This month, in our piece of classic scholarship looks at an old University of Chicago Law Review comment on how to use class action. The Class Action Device in Antisegregation Cases, 20 U. Chi. L. Rev. 577 (1953). (JSTOR link here.)

The Comment takes a plaintiffs' view of how to use class actions to combat segregation (which it defined to mean "any policy of discriminatory treatment of a minority group"). It begins with an observation that even it called "obvious," but that sets up much of its argument argument: that "segregation is a group phenomenon."

One reason that the class action appears to be an advantageous method of securing relief for the group is that a favorable decree will in its terms apply to all members. A decree rendered in an action brought by an individual on grounds that he is being discriminated against will require the defendant to desist from such practices only where the individual is concerned. The position of the group will improve only if compliance with the decree by the defendant incidentally inures to the benefitof all members.But a decree rendered in a class action will benefit directly the group as a unit.

(Internal citation omitted.) This group benefit also gave class-action plaintiffs a rhetorical advantage over individuals who challenged segregationist policies.

Another advantage of the class action device in this type of case is that it aids the plaintiffs in showing the seriousness of the discriminatory practice complained of. Use of the device itself carries an implicit declaration that the alleged wrong is general, widespread, and a matter of state policy. Moreover, if the action were brought by an individual only on his own behalf, evidence of the group nature of the wrong might not be relevant. But in a class suit, evidence of discrimination against any and all members of the class would be admissible, enabling the plaintiff to broaden the nature of his proof and increase the difficulties of rebuttal.

In particular, the class allegations would add weight to an individual challenge. While it might be easy to dismiss an individual plaintiff as a crank, a class plaintiff began with more (implicit) gravitas.

Further, individual plaintiffs asking relief from discriminatory practices might be viewed by the court and by the community as malcontents or eccen- trics. The receptiongiven to the commencement of such an action would probably be much better if it were brought in the name of and on behalf of the entire group affected by the segregation. Class representatives would appear not so much as a few plaintiffs with a grudge, but as part of a group with a justifiable claim

And using class allegations would also help prevent what had apparently become a common problem: getting rid of a challenge to a discriminatory policy by granting relief only to that person who raised the challenge, by, say, admitting a single black to a segregated swimming pool. (This would be a prototype for the mootness arguments made today in consumer class actions.)

There is some doubt whether the same result would obtain if an action is brought for the benefit of an entire class.The Court of Appeals for Eighth Circuit has held that before a class action can be dismissed, there must be some evidence of permanent abandonment of the discriminatory policy complained of. The court in Morris v. Williams  said that one reason the action would not be dismissed on the claim of defendants' counsel that the discriminatory salary schedule had been replaced by a non discriminatory schedule was that "there is no assurance. . . that such usage and custom may not be resumed at any time, even though presently abandoned."

What can modern class-action defendants take from this? First, this article is a good reminder that not all class actions are bad. Defense lawyers see far too many meritless class actions propped up by "justice"-oriented rhetoric. It can make them jaded. And it can be good to be reminded that sometimes a class action is an appropriate remedy for certain cases. Second, this article does a good job of showing why so many of today's class actions seem so venal. Antisegregation activists were fighting true group problems, that could be solved with true group remedies. (Remember, these class actions took place before the 1966 Amendments. These litigants were looking for injunctive relief, not money, and not money dressed up as an injunction.) This is the difference between a modern "civil rights" class action like the Dukes case, and the actual civil-rights class actions like Morris: one was seeking actual change, the other money clothed in noble rhetoric.

Second, the history can provide some context as to why courts make some of the decisions they do today about class actions. From a defendant's perspective, a Rule 68 offer of judgment to an individual who is hoping to leverage a truly unique bad customer experience into a class action makes eminent sense, and seems perfectly fair. Nonetheless, many courts will still reject any attempt at the tactic. At the time Morris was decided, that judgment made sense: it reflected the action of a community determined to discriminate. In the context of a modern 23(b)(3) class action for money damages, it's harder to tell whether either party has the equities on its side.

It's always worth looking back at the history of the class action. The cases may change, but many of the tactics stay the same, even when they're not perfect fits for the case in which they're employed.

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And so we come to Sun Tzu. Poor, abused, overused, Sun Tzu, who's been drafted to advise on everything from sales to blogging.

Sun Tzu is popular because he's easy to quote.  Because Sun Tzu is so aphoristic, most books, commentators, etc., focus on either (1) how to apply those aphorisms in a modern context ("Know the enemy and know yourself, in a hundred battles you will never be in peril" is a popular one, at least measured in Kindle highlights); or (2) annotating the work to explain the true context of some of Sun Tzu's more popular sayings. (Which means, you're either getting disconnected advice or lessons in Chinese military history.)

But, at least as the author originally conceived the work, it was meant to communicate real strategic lessons to others like him. Leaving aside the easy aphorisms ("To subdue the enemy without fighting is the acme of skill …"), I'd like to focus on what one can glean by treating Sun Tzu as an actual strategist. So, today, let's focus on one of Sun Tzu's less glamorous, yet incredibly useful discussions: terrain.

Sun Tzu devotes an entire chapter to analyzing terrain. (Chapter X, for those reading along at home with the OUP's edition.) It discusses various kinds of ground, including "accessible, entrapping, indecisive, constricted, precipitous, and distant." And several other chapters (particularly on Marches and Maneovres) rely heavily on his analysis of terrain.

What does terrain have to do with litigation? Who cares what kind of ground the courthouse sits on?

Terrain matters because it's a central element of any strategy. (The OED defines terrain as a tract of land as regarded by a geographer or military tactician.) For soldiers, that means terrain is the actual ground on which they fight. As Sun Tzu points out, it matters what kind of ground one occupies. Certain ground offers tactical advantages. And different ground requires different tactics.

For lawyers, terrain is different. It's the facts and law that surround the case. But the effects are the same. Some of that terrain can be modified to help the lawyer, much as one might conform physical terrain into a defensible position. But some is just there, immovable. A lawyer can argue for different interpretations of a rule, but she can't change the text of a statute without the help of a legislature. And while she can highlight favorable facts and minimize unfavorable ones, she can't (short of unethical conduct) eliminate facts completely.

Or, as Sun Tzu put it:

Conformation of the ground is of the greatest assistance in battle. Therefore, to estimate the enemy situation and to calculate distances and the degree of difficulty of the terrain so as to control victory are virtues of the superior general. He who fights with knowledge of these factors is certain to win; he who does not will surely be defeated.

So far, so obvious. Most lawyers caution that you should know the facts and the law surrounding your case. But reading Sun Tzu on terrain lends one other insight that should help legal strategists, class action or otherwise: terrain can be analyzed.  And different basic strategies are best suited to different types of terrain.  

There's a dearth of good writing about legal strategy. Some of that is because insiders in a given case can't write about matters protected by work-product or the attorney-client privilege. But another reason for the void is that lawyers often claim their cases are exceptional because of specific facts, specific clients, or specific laws. We wind up cataloguing trees instead of learning to fight in forests. (There are solid marketing reasons to do this. This is how we sell ourselves as lawyers. Only we have the proper experience defending FDCPA class actions against mid-tier lending institutions in the Eastern District of North Carolina.)

It doesn't have to be that way. Rather than contenting ourselves with aphorisms ("Know the facts! Know the law!") or claiming that each unique case requires a unique, non-transferable strategy, we can start, like Sun Tzu, actually cataloguing the strategies that have evolved for different forms of legal terrain.

In other words, it's time for more discussions of how legal strategy actually works on the ground.

(Image is Kampa Dzong, Tibet [1904] John C. White [RESTORED], courtesy of Wikimedia Commons on a Creative Commons license.)

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It has been a while since I've tried to extract some strategic insight from sources other than the law, which means that a post on extra-legal strategy is probably overdue. In this case, I'm going to turn back to military strategist Carl von Clausewitz. (For more on Clausewitz, click here.) In particular, I want to focus on one of Clausewitz's most innovative concepts in On War: the problem of friction. As Clausewitz defines it, friction is the part of

Everything in war is very simple, but the simplest thing is difficult. The difficulties accumulate and end by producing a kind of friction that is inconceivable unless one has experienced war.

Economists might call these accumulated difficulties "transaction costs," but doing so doesn't quite capture the fact that a central feature of friction is the difficulty anticipating how it will manifest. Or, as Clausewitz himself puts it:

This tremendous friction, which cannot, as in mechanics, be reduced to a few points, is everywhere in contact with chance, and brings about effects that cannot be measured, just because they are largely due to chance. One, for example, is the weather. Fog can prevent the enemy from being seen in time, a gun from firing when it should, a report from reaching the commanding officer. Rain can prevent a battalion from arriving, make another late by keeping it not three but eight hours on the march, ruin a cavalry charge by bogging down the horses in mud, etc.

The same kinds of issues arise in litigation. Trials, for example, are not immune to weather delays. But these are hardly the only issues that constitute friction. An associate may hand over the wrong files in discovery. Or a partner may get cited for contempt after insulting a judge, changing the makeup of the team and giving a law firm extra personnel headaches. Or bad luck may strike a jury just before it renders a verdict. These kinds of twists are not foreseeable, but they have very real effects on litigation.

In many ways, this is the artful part of legal strategy. Coming up with a plan to defend (or prosecute) a case isn't necessarily that difficult. But anticipating and accounting for friction, and adapting to unknown frictions as they arise, that's what separates competent litigators from great ones. Or, as Clausewitz himself put it:

Friction is the only concept that more or less corresponds to the factors that distinguish real war from war on paper.

So how does one account for friction? Ironically, one of the best ways to do so is to plan out what one can in advance. It's generally easier to modify a plan on the fly than it is to simply react to events as they arise. And a well-thought-out strategy will often take into account what happens if key events go wrong, or key assumptions turn out to be untrue. If one's attention and energy will be occupied with friction once a case starts, it's particularly useful to have taken care of as much of the easy stuff as possible.
 

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Today's opinion, Doe v. Match.com, 2011 U.S. Dist. LEXIS 56567 (C.D. Cal. May 25, 2011), involves a plaintiff and a defendant who made the same mistake: prizing an immediate tactical move over the internal consistency of their positions. For the plaintiff, the inconsistency came from an attempt to turn an unquestionably horrific individual incident into a class action. For the defendant, it came from the desire to win each individual motion without considering the effect on its larger strategy.

The facts that the Jane Doe plaintiff alleged in her complaint are, without a doubt, horrific. Ms. Doe had subscribed to Match.com, a popular dating service. She met a man through the service who turned out to be a serial sexual predator (he had six prior convictions for sexual battery), who raped her. Doe pressed charges against her attacker and cancelled her subscription.

After canceling her account, Doe filed a lawsuit against Match.com. Instead of seeking damages for the horrible thing that happened to her, her lawyer made the case a class action that alleged Match.com's failure to screen for sexual predators put its other subscribers at risk. To support this story of customers in imminent danger, Doe's lawyer moved to enjoin Match.com from signing up any new subscribers until it implemented some kind of predator screening.

Match.com removed the case to federal court, where it defeated the plaintiff's motion for a temporary restraining order. During the hearing, Doe informed the court that she had cancelled her subscription. Based on that information, the court expressed doubts that Doe had actually suffered a cognizable injury that could be cured by future screening. (If she was no longer using the service, she was not in danger of meeting future predators through it.)

So, to protect the class-action part of her complaint, Ms. Doe subscribed for another six months. When Match.com moved to dismiss the case for lack of Article III standing, she argued that, since she was again a subscriber, she was in danger of meeting future predators.

The court, however, was not convinced by the tactic:

Here, Plaintiff has presented no evidence that she plans to use Defendant's services to meet other users. In fact, Plaintiff has stated that she only re-subscribed because "it came to my attention that I needed to be a member of Match to file a class action suit in Federal Court. . . ." Plaintiff's counsel also represents that Plaintiff has not answered any e-mails inquiring of her availability for dates since the alleged assault. Thus, the undisputed facts of the case at bar show a more tenuous likelihood of future injury than those in Lyons or Lujan.

...

Plaintiff's statements suggest that she does not intend to use Defendant's services for future dates, diminishing the possibility that she could suffer any injury caused by Defendant's failure to screen for sexual offenders.

(Emphasis added, internal citations omitted.)  The opinion sounds like a win for Match.com, except for one thing: because the case had not originally been filed in federal court, moving to dismiss on jurisdictional grounds (and Article III standing is a jurisdictional doctrine) did not eliminate the case. Instead of dismissing the case with prejudice, the district court simply remanded it to the Los Angeles Superior Court.

What can defense counsel learn from this case? Consistency is important for every party in litigation. Just as a court is unlikely to believe that someone who tactically re-subscribes to a service with no intention of using it is in danger of further harm, it's not likely to be sympathetic to a defendant who removes a case to federal court only to attack its right to be there once it arrives.

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This week, we begin a new feature at Class Action Countermeasures. Much as I occasionally look at classic class-action cases, I'm also going to look at classic scholarship once per month. That scholarship will have to have some connection to class actions or other kinds of aggregated litigation. And I'll be mining these articles for what they can tell us about the modern class action.

First up, a Harvard Law Review Note from 1955, titled The Challenge of the Mass Trial. This Note is occasionally credited with influencing the 1966 Advisory Committee's revisions to Rule 23, which created what we consider to be the modern class action.

The increased frequency of mass litigation due to the large scale on which American social and economic activities are organized has had a pronounced impact on the judicial system. A train crash or an antitrust prosecution, for example, may involve hundreds of claims or litigants, and courts on both trial and appellate levels may be faced with a choice between separate trials with the possibility of considerable expense and delay or a single trial with the risk of prejudice to one or more of the parties. Terming this “an acute major problem in the current administration of justice,” a committee of federal judges has recently set forth suggestions to assist the court in its conduct of mass trials without a jury. This Note will focus upon the mass single trial or consolidated action in which a jury is being used, and it will outline methods of procedure which may be available to the trial judge in dealing with mass litigation.

(Internal footnotes omitted.)

According to the Note, there are three possible elements to a mass trial: "multiple parties, multiple issues, and complex fact situations." These elements create obvious case management difficulties. Leaving aside the time (and expense) it takes to try multiple, complicated factual issues involving multiple parties, trying them in front of a jury runs a very high risk of hopelessly confusing the jurors. As the Note author observed:

Finally, the sheer volume of the single mass trial multiplies the possibility of error beyond that found in the ordinary trial, particularly in criminal cases, where there is always the danger of guilt by association.

(Emphasis added.)  The Note also contains a discussion of what may be the first modern mass trial, Gwathmey v. United States, in which the

appellate court concluded that the trial court had abused its discretion and had denied the defendants due process of law since, under the circumstances, the jury could not possibly have had an informed opinion.

Gwathmey continues to be a useful precedent for those facing mass tort cases, where mass trials are still a possibility under certain circumstances, and so where defendants still must be wary for how trying complex cases may prejudice their rights.

The Note also makes a number of suggestions about how to improve mass trials; among them:

1. allowing jurors to take notes;
2. allowing for consolidation of issues;
3. using a "model trial" (bellwether trial) to work out issues for subsequent plaintiffs; and
4. using a commission rather than a jury to find facts.

What is particularly interesting is how many of these proposed improvements are still good ideas today, 55 years later. While the Note itself was written before the modern revisions to Rule 23, it's surprisingly applicable to modern mass torts. And that makes it one of the earliest examples of classic class-action scholarship.

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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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As this blog has progressed, I've posted a few entries about how rhetoric and class actions interact. I've mostly assumed that everyone had a least a basic grounding in rhetorical techniques. But let's back up briefly. I'll start with a recommendation: if you'e interested in practical rhetoric, pick up Jay Heinrich's Thank You For Arguing: What Aristotle, Lincoln, and Homer Simpson Can Teach Us About the Art of Persuasion. Thank You for Arguing is hardly the only book on rhetoric out there, but it's one of the clearest and most practical. There are few better places to start. And early in the book, Heinrich explains in very clear terms the three classical components of rhetoric: logos, ethos, and pathos.

Logos is the appeal to pure logic. Does the argument make sense? Does it still make sense if you follow it to its logical conclusion? Logos is what most lawyers learned in law school.

Ethos is the appeal to credibility. As Heinrich puts it

In rhetoric, a sterling reputation is more than just good; it's persuasive. ... An audience is more likely to believe a trustworthy persuader, and to accept his argument.

A lawyer's ethos can come from a number of areas, including her professional reputation, the way she conducts herself in court, and the firm she has associated herself with.

Pathos is the appeal to pure emotion. According to Heinrich:

Logicians and language snobs hate pathos, but Aristotle himself--the man who invented logic--recognized its usefulness. you can persuade someone logically, but ... getting him out of his chair to act on it takes something more combustible.

(Emphasis in original.) When plaintiffs' lawyers or prosecutors focus on the victim's story while they're establishing liability -- that's pathos.

So, what does all this have to do with class actions? Class actions are lopsided when it comes to pathos. Rhetorically, they're all about the underdog taking on the big corporation. And corporations by themselves inspire little sympathy or empathy. So, rhetorically, how does the defense lawyer defend against a class action? By focusing logos and ethos. There are many, many logical reasons why a class action may not be viable. And ethos--the defendant's credibility--is almost always within its control.

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NERA Economic Consulting has released its annual study on Canadian securities class actions. It headlines the fact that there were a record number of active class actions (28). But some of the other trends it notes are as -- if not more -- interesting for class-action defense lawyers:

2010 was not substantially different from prior years.

In our 2009 update, we noted that Canadian securities class actions were continuing to mature. That year witnessed the certification of three class actions and the granting of leave to proceed under Part XXIII.1 of the Ontario Securities Act (OSA) in IMAX—rulings that we noted may ultimately prove to be an inflection point for this type of litigation. Although those judicial decisions may still prove to be a turning point, 2010 did not reveal any substantial upturn in filings or other trends as a result.

Canadian securities cases continue to focus on misrepresentations in accounting and operations.

Operational misrepresentations and accounting misrepresentations are historically the most common claims alleged by plaintiffs in Canadian securities class actions. This was also true for the cases filed in 2010, most of which involve allegations of operational misrepresentations, and two of which include allegations of accounting misrepresentations.

Canadian plaintiffs are getting faster at filing class actions.

Approximately one-third of the cases in our database of Canadian securities class actions were filed within two months of the end of the proposed class period, and almost two-thirds of all cases were filed within six months.

Cross-border class actions make up a significant portion of Canadian class actions.

As of 31 December 2010, there were a record 28 active Canadian securities class actions, representing approximately $15.9 billion in outstanding claims (including claims for punitive damages). Six of these are cross- border cases representing more than $11.6 billion in claims—about 73% of total claims. Excluding the $10 billion claim against CIBC, there is approximately $5.9 billion in outstanding claims, $1.6 billion (or 27%) of which are in cases with parallel US class actions.

NERA is not the only source to notice the cross-border trend (nor is it limited to securities cases), but it has done the best job of quantifying it. It also notes that in the wake of the US Supreme Court's ruling in Morrison v. Australian National Bank, this trend may actually decline.

All in all, the report makes interesting reading. So go, read.

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 Twenty-two years ago, political scientist Robert D. Putnam published an article in the journal International Organization. Titled "Diplomacy and domestic politics: the logic of two-level games," it argued that international trade negotiators have a more complicated job than most believe. Not only must they convince the negotiators across the table of the mutual benefits of their particular requests, they must also persuade their constituents back home ("behind the table") to accept the deal they ultimately work out.

Since Putnam published his article, this insight--that negotiators on behalf of organizations must negotiate both "across the table" and "behind the table"--has been cited so often it feels like just common sense. But Putnam did not limit himself to just identifying this two-level game. He also explored just how it affected the conduct of the negotiations themselves. And some of his conclusions can certainly inform how class-action lawyers negotiate class-action settlements.

For example, Putnam found that

the lower the cost of "no-agreement" to constituents, the smaller the win-set. [Ed. note: "win-set" refers to the set of agreements that could be ratified.] Recall that ratification pits the proposed agreement, not against an array of other (possibly attractive) alternatives, but only against 'no-agreement.' No-agreement often represents the status quo, although in some cases no-agreement may in fact lead to a worsening situation; that might be a reasonable description of the failed ratification of the Versailles Treaty.

(Emphasis in original.) This insight reflects one that negotiation scholars have known for a while: the better one's alternative to an agreement with the other side (sometimes referred to with the unwieldy phrase BATNA, or "Best Alternative to Negotiated Agreement"), the less likely a negotiation will succeed. Putnam also explained that

In this sense, some constituents may offer either generic opposition to, or generic support for, Level I agreements, more or less independently of the specific content of the agreement, although naturally other constituents' decisions about ratification will be closely conditioned on the specifics. The size of the win-set (and thus the negotiating room of the Level I negotiator) depends on the relative size of the "isolationist" ,forces (who oppose international cooperation in general) and the "internationalists" (who offer "all-purpose" support). All-purpose support for international agreements is probably greater in smaller, more dependent countries with more open economies, as compared to more self-sufficient countries, like the United States, for most of whose citizens the costs of no- agreement are generally lower. Ceteris paribus, more self-sufficient states with smaller win-sets should make fewer international agreements and drive harder bargains in those that they do make.

There are, of course, some important differences between trade negotiators and class-action lawyers. Class-action defense lawyers are legal agents of their clients, which means they may have less room to deviate from instructions than trade negotiators. And class-action plaintiffs' lawyers often have clients that lack the power to direct the litigation. In fact, in a class action, thethe class members often don't have a preference between "no agreement" and any agreement, because most of them aren't aware of the litigation at all. So the plaintiffs' counsel can cut whatever deal they see fit.

This is an important justification for fairness hearings on settlement. And it helps to explain why objectors have played such an important role in the development of caselaw on class-action settlements is that they have the incentive to act like an interested constituent of the plaintiffs' lawyers, rejecting deals that are no better than "no agreement" on behalf of the class.

So what can class-action defense lawyers take from this article? For those looking to ensure a lower-cost settlement process, it is worth considering not just what the plaintiffs' counsel will agree to, but what objections may get raised at the fairness hearing.

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Since it's the end of the year, it's worth taking a look back at what were the most interesting class-action articles this year. What do I mean by "this year"? Either the working-paper version of the article appeared in 2010, or the article was published then. (So Martin Redish's excellent article on cy pres relief qualifies, even though I wrote about that last December.) And what do I mean by interesting? It's a subjective judgment. While I took hits on this site as an indicator of audience interest (which elevated NERA's analysis of Italian class actions), articles that captured my interest--whether or not I wrote about them--also qualified. "Intereresting" does not mean "I agree with it." (After all, how interesting would that be?) Instead, it means "provokes thought or discussion."

So, without further ado, and in no particular order, the Ten Most Interesting Class-Action Articles of 2010:

1. Cy Pres Pathologies -- Northwestern professor Martin Redish challenged the use of cy pres relief in class action settlements. He based his analysis on the Rules Enabling Act. At the time, I did not think his analysis would gain much ground. It appears I was wrong; his article has already spawned a number of other articles.
2. Do Class Action Lawyers Make Too Little? -- This is the first (and maybe only) full-throated defense of huge class-action fees I've encountered. I disagree pretty strongly with the conclusions here, but that's often what happens when one writes a provocative article.
3. Apportioning Due Process: Preserving the Right to Affordable Justice -- Plaintiffs' counsel Elizabeth Cabreser tries an intellectual justification for certifying class actions and providing lucrative fees for counsel. It's an excellent example--and refinement--of some of the more effective rhetoric plaintiffs use when arguing for certification.
4. Italian class actions -- NERA's analysis of Italian lawsuits filed in the wake of its passage of a class-action act last year involves some good empirical work, and some insights as to why class actions are so prevalent in the United States, but not Europe.
5. Common Answers for Class Certification -- The late Vanderbilt professor Richard Nagareda will be missed. This article on the Dukes decision involved a deep and detailed look at exactly what we mean by predominance, and represented some of his best and most interesting work.
6. Lying and Getting Caught: An Empirical Study of the Effect of Securities Class Action Settlements on Targeted Firms -- Authors Lynn Bai, et al., test the "circularity critique" of securities class actions (that, because these lawsuits take money from the corporation and give it to the shareholders while extracting a fee, they wind up worse for shareholders than no lawsuit at all). They find that securities class actions can cause liquidity problems for the corporation, which can harm the class long-term, a finding that suggests that the SEC may be better equipped to handle to securities fraud.
7. Litigation Governance: Taking Accountability Seriously -- This is not the first article to compare running a class action to corporate governance, but John Coffee's discussion of "exit" reforms (allowing class members to opt out if they don't like the leadership) is thought-provoking, and has already led to at least one response. My guess is it will provoke several more.
8. Flawed but Noble: Desegregation and its Implications for the Modern Class Action -- I made several attempts over the course of this year to write a post about this article, but I could never find a good angle in. Nonetheless, this examination of the early history of the class action makes for interesting reading. It doesn't suggest any immediate strategic insight, but it will certainly help inform your understanding of what class actions are.
9. Litigation Daily on the Florida SBA beauty contest -- This article by the America Lawyer's Litigation Daily was great class-action journalism, providing some first-hand data about how securities plaintiffs' firms structure and sell themselves.
10. The Price of Pay to Play in Securities Class Actions -- The question of "pay to play" practices has become increasingly important in many areas where government hires private contractors. Professor Stephen Choi and his co-authors perform an important analysis of how these practices affect the fees that plaintiffs' counsel are paid in securities actions.

Hope your holidays have been happy, and see you in 2011.

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 In welcome news for content-starved class-action bloggers, NERA Economic Consulting (source of the perennially popular report on Italian class actions) has released its annual report on trends in securities class actions.

The report contains some of its usual data, always interesting but mostly just confirming existing trends. Among those:

• Overall, securities class-action filings are up again.
• The average settlement is $42 million; the median settlement is $11.1 million.
• Securities plaintiffs' lawyers earned $1.353 billion in aggregate fees.

The report also contains some other interesting facts with greater strategic implications. Among these:

• The Ninth Circuit is no longer tied with the Second Circuit, it is now the single greatest source of securities class-action filings.
• The predicted effect of the Supreme Court's ruling in Morrison v. Australia National Bank (fewer international securities cases) was muted by increased filings against Chinese companies.
• The time to file securities class actions continues to get shorter. Now the average time to file is 185 days from an announcement of adverse news. The median time to file is 30 days, which means more than half of all class actions are filed within a month. (If I had to guess, I'd say this is likely the result of plaintiffs' lawyers' increased focus on investment monitoring.)
• Cases based on product defects (including "defective" financial products) are up, so are breach-of-fiduciary-duty cases.

NERA's reports always reward careful study.  The news about the Ninth Circuit is intriguing; it may suggest that plaintiffs' counsel have decided that the Ninth Circuit is simply more hospitable to class actions.  And the increase in international class actions, coupled with the decrease in time to file, suggest that global business and pervasive media continue to affect the way in which plaintiffs build cases against corporate defendants.  That, in turn, suggests that defense firms will not go without work in 2011.

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 Class-action lawyers are no strangers to conspiracy. It forms the basis of many antitrust claims, as well as providing plaintiffs with a way of leveraging evidence against a poorer defendant into a case against defendants with deeper pockets.

Defending conspiracy class actions can be frustrating: savvy plaintiffs will often use any evidence of parallel conduct as evidence of conspiracy, and any lack of evidence as evidence of a coverup. Or, they could until the Supreme Court rendered its decision in Bell Atlantic Co. v. Twombly (as well as its companion case, Ashcroft v. Iqbal.) These two cases have provoked plenty of discussion among legal bloggers and academics. But a two-year old working paper by Cass Sunstein and Adrian Vermuele on Conspiracy Theories provides some context to the Twombly/Iqbal debate.

Sunstein and Vermuele define a conspiracy theory as

an effort to explain some event or practice by reference to the machinations of powerful people, who have also managed to conceal their role.

(Emphasis in original.) The definition, as they concede, embraces conspiracy theories that have turned out to be true (like Watergate), as well as some that are purely benign (like Santa Claus). Sunstein and Vermuele are more interested in the false, harmful theories, which

have some distinctive features, above all because of their self-sealing quality; the very arguments that give rise to them, and account for their plausibility, make it more difficult for outsiders to rebut or even to question them.

(Emphasis added.)  More specifically:

Those who accept such theories believe that the agents of the conspiracy have unusual powers, so that apparently contrary evidence can usually be shown to be a product of the conspiracy itself. Conspiracy theories display the characteristic features of a “degenerating research program” in which contrary evidence is explained away by adding epicycles and resisting falsification of key tenets.

(Emphasis added.)  So what does this have to do with Twombly? In that case, the Supreme Court required the plaintiffs to plead a conspiracy that was "plausible," and to do so using specific facts. Doing so filters out the worst aspects of a self-sealing conspiracy theory. Because the plaintiff must plead specific facts, logical contradictions in her conspiracy theory will be clearer, and those can justify dismissal. So can pleading a conspiracy with no obvious benefit to the defendant.

* * *

Today marks the end of the first year of Class Action Countermeasures. From my perspective, this experiment in blogging has been a rousing success. The blog has has gained more readers than I expected, thanks to the generosity of the legal blogosphere.  I've gotten to virtually "meet" a number of really interesting class-action bloggers.  And I got to announce my first book, on class-action stratgegy. (It makes an excellent holiday gift!)

I'm hoping for another good year in 2011. The Supreme Court seems intent on keeping class-action practice interesting.  And, despite one tragic loss, there is a thriving, diverse set of academics studying Rule 23. I also have a new project to keep me scouring SSRN and law review sites: I've contracted to co-author another book (with an old friend, Andrew Deguire).  It has the working title Complex Negotiation Strategy: A Business and Law Perspective, and should be due out in late 2012/early 2013. The blog won't change, although I may venture more into some more general strategic discussions--including a few on negotiations--on Thursdays. (I will always bring it back to class-action practice, the blog title is there for a reason.)

Anyway, I wanted to thank those of you who've been reading so far. I hope you've found this even a tenth as much fun as I have.

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 Paul Karlsgodt of Classactionblawg.com got there first (in a post that should win "Title of the Month" hands-down), but Judge Posner's opinion yesterday denying rehearing (and announcing there will be no en banc rehearing) in Thorogood v. Sears Roebuck & Co. is still worth an extra post.  Not just because Judge Posner discusses the results of an informal poll of the panel's wives, not just because he cites a YouTube link of Simon Cowell, and not just because the ever-irreverent Above the Law is likely to feature the opinion as a classic benchslap.    

The primary reason to read the opinion is because it so thoroughly documents both the strategic choices plaintiffs' counsel may make, and the strategic incentives they face.  Some of this discussion is all the more credible because it comes from counsel's inadvertent disclosures:

Krislov says that “Sears’ resort to this Circuit for the preclusive shot is transparent forum shopping, looking for this Court’s derisory view of the claim to influence it into binding all class  members nationwide, because the Ninth Circuit’s standards are decidedly more favorable to plaintiffs’ claims.” This is what is known as chutzpah, since Krislov brought his copycat suit in California because, as he says unguardedly, “the Ninth Circuit’s standards are decidedly more favorable to plaintiffs claims.”

And some of the discussion is just the result of Judge Posner's typically prodigious research:

Krislov is concerned with harsh language in our opinion, but overstates the case when he decries “characterization of plaintiff class action lawyers as inherently corrupt and motivated primarily to sell out the class in order to gain large fees.” What we said was that the structure of class actions under Rule 23 of the federal rules gives class action lawyers an incentive to negotiate settlements that enrich themselves but give scant reward to class members, while at the same time the burden of responding to class plaintiffs’ discovery demands gives defendants an incentive to agree to early settlement that may treat the class action lawyers better than the class. Class action attorneys have an “inherent motivation” to enrich themselves at the expense of the class (and with the connivance of defendants), but motivation is not a synonym for action; any actual corruption or selling out is gauged case by case. The Boling letter is some indication that the present case is such a case. 

The criticisms in our opinion of the tactics employed by some class action lawyers are not criticisms made by judges alone, let alone by judges of the Seventh Circuit alone or members of this panel alone.

(Extensive citations omitted.)  I'll leave you with one further quote from the opinion, which comes after the extensive string cite I cut: 

Want more?  There is plenty more ...

Go, read the opinion.  It's a perfect starting point for understanding the strategic incentives plaintiffs' lawyers face.

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Class-action lawyers like long fact sections with many details. 

But Ernest Hemingway wrote a moving story using just six words:

For sale: baby shoes, never worn.

And Scottish comic-book team Grant Morrison and Frank Quitely told a famous superhero's origin in only eight:

Sometimes, if they're chosen properly, just a few words are best.

Happy Thanksgiving!

(Image used under fair use doctrine.)

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Yesterday, the Supreme Court heard oral argument on Concepcion v. AT&T, which posed the question of whether the Ninth Circuit had properly disregarded AT&T's consumer arbitration clause as unconscionable because it did not allow classwide arbitrations. As I mentioned yesterday, much of the advance reporting and commentary (with a few exceptions) painted the argument as the harbinger of an apocalyptic battle over the future of the consumer class action.

The reality was more sedate. Most reports on the argument (which Slate's Dahlia Lithwick described as "some kind of hideous jargon spill in the Gulf of Mexico") have stressed that the Court treated this primarily as an issue of federalism, specifically when to interfere with state law. Justice Scalia, usually considered the one of the most conservative (and therefore both pro-business and pro-state) Justices, focused his questioning heavily on issues of federalism. Specifically, he asked:

Are we going to tell the State of California what it has to consider unconscionable?

Justice Kagan--appointed by former University of Chicago Law School (go Maroons!) colleague President Obama and therefore expected to be pro-consumer--appeared to agree with Scalia's analysis:

It may be a good unconscionability doctrine or it may be a bad unconscionability doctrine, but it’s the state’s unconscionability doctrine.

Justice Alito (aided by some questions from Chief Justice Roberts) focused more on whether unconscionability can properly include unfairness to parties not currently before the court:

Traditional unconscionability in California and elsewhere focuses on unfairness to the party who is before the tribunal. So here it would be unfairness to the Concepcions, rather than unfairness to other members of the class who are not before the court.

What does this mean for the future of arbitration clauses? Several studies have shown that the more questions the Justices ask of a side, the likelier it is to lose.  In this case, at least according to published news reports, counsel for AT&T had to answer more and tougher questions than Deepak Gupta of Public Citizen, counsel for the respondent. While some of the questions Justices Alito and Roberts asked indicate a possible line of argument for upholding AT&T's arbitration clause, the early money would favor an opinion affirming the Ninth Circuit. Given that Circuit's reputation, that would make this opinion truly noteworthy. Of course, the Court will have the last word sometime in Spring 2011.

NOTE - This entry has been corrected.  It originally misidentified Public Citizen as "Public Justice." 

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Today, the United States Supreme Court hears oral argument in Concepcion v. AT&T, a case on appeal from the Ninth Circuit concerning whether the Federal Arbitration Act preempts states like California from requiring arbitration clauses to allow for classwide arbitration. (The venerable SCOTUSBlog has an excellent roundup of the issues and briefing.)

I'm not interested in pre-gaming the argument. (Although if I were a betting man, I'd lay odds on the Roberts Court finding in favor of AT&T.) I'm more interested in the rash of stories and op-eds (like this one from Vanderbilt Professor Brian Fitzpatrick) that make claims like

If the case is decided the way many observers predict, it could end class-action litigation in America as we know it.

You could say I'm biased. Class actions form the foundation of my practice. I write a blog about class-action strategy (and welcome to it). I just published a book on how to litigate class actions.  But it's simply not true that class actions will disappear if the Supreme Court rules in favor of AT&T on this issue.

Here are the assumptions that inform my conclusion. Class actions are big business for many attorneys. And class action lawyers are endlessly resourceful. The Private Securities Litigation Reform Act did not kill securities class actions. Nor, despite similar warnings, did the Class Action Fairness Act end consumer class-action litigation.

Does this mean that I think that Concepcion will have no effect on class actions? Hardly. If the Supreme Court rules in favor of AT&T, defendants will have a powerful tool for making sure that plaintiffs' attorneys can't gin up minor complaints into bet-the-company litigation. It will be more difficult to bring certain kinds of consumer class actions; most notably the kind where the claims do not describe harms consumer care about. (How do we know when consumers don't care? They don't bother to claim their money. For many consumer class-action claims, the response rate is very low--between 2 and 20 percent. This is one of the reasons why cy pres relief is so popular among plaintiffs' lawyers, and so controversial otherwise.)

But reducing the number of low-merit consumer class actions does not mean there will be no consumer class actions; there are many consumer class actions where there is no contract (and hence no arbitration clause) at issue. Nor does it mean that there will be no way for wronged consumers to get redress. Among other methods:

• Many companies provide voluntary customer-satisfaction programs.
• Many companies will be providing attractive bilateral arbitration provisions. (AT&T's covered most costs, and provided a $7,500 bonus to consumers who got more than AT&T had first offered.)
• State consumer-protection laws that offer attorneys' fees still exist. (So do lemon laws.)
• State and federal consumer-protection agencies exist.

Moreover, there are a number of different kinds of class actions that an arbitration clause likely would not apply to. Among those are:

• Consumer class actions that do not involve form contracts.
• Various antitrust class actions.
• Securities class actions.
• Environmental class actions.
• Civil rights class actions.
• Labor and employment class actions.

I don't believe I live in a world where corporations can do no wrong. Some can and do; and deterring wrongdoing is a noble policy goal. But I also don't live in a world where all class-action plaintiffs' lawyers selflessly bring only meritorious claims. Many don't; and those claims do nothing to deter actual wrongdoing. Finding the proper balance between under- and over-deterrence of corporate misconduct is not easy. It's a game of constant adjustment, and no matter which way the Supreme Court rules in Concepcion, either plaintiffs or defendants will have some adjusting to do. But if the Supreme Court rules in favor of AT&T, class actions will not disappear. It will just be harder to bring the kinds of class actions that will provide little actual relief for the class. And, if I were a betting man, I'd lay money on the side that says that even then, there will still be consumer class actions for me to defend.

UPDATE (12 November 2010) - Welcome Overlawyered readers!  If you haven't already, please also check out Ted Frank's post at Point of Law, which very lucidly covers similar points.  Also, look here for a brief postgame analysis of the argument.

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Paul Karlsgodt over at ClassActionBlawg.com has an outstanding post up that outlines his thinking on when (and how) a defendant should challenge the certifiability of a class.  He explicitly recognizes that 

[T]here is also an art to defending class actions, and part of the art is in knowing whether to challenge class certification at each available opportunity. Of course, because this is about the art and not the science, there is no single answer to this question, but below I have tried to sketch out some of the possible considerations in making the decision to use various different procedural devices at different phases of the litigation.

(Emphasis in orginal.)  The general advice that follows is a very helpful summary of the different opportunities to challenge the certification of a class.  

I'd quibble with only two aspects of his post: (1) Paul and I have slightly differing opinions on the usefulness of the motion to strike class allegations.  (2)  I would really have liked to see his take on whether to file a motion to deny certification (a rare, but increasingly useful strategic option).  

But these are quibbles.  What Paul has done here is what co-author Brian Anderson and I were aiming at with The Class Action Playbook: he's given an excellent summary of each opportunity to challenge a class, and set out his views of the risks and benefits to each challenge.  

Go, read it for yourself.  I assure you, it's time well-spent.  

[Dislcosure: Paul gave this blog an early boost, and provided a very nice review of the Playbook.]

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Screenwriter/former stand-up comedian (and executive producer of the affable heist show Leverage) John Rogers wrote a great piece five years ago on how Democrats--then the party in the political wildnerness--needed to "Learn to Say Ain't."  I'm linking to the whole, but the nutshell version is: Rogers, a Boston-raised physics geek, was having trouble winning over audiences in heartland comedy clubs until an experienced road comedian named "Boats" Johnson gave him two concrete pieces of advice:

(1) Bring a beer with him onstage and sip from it during his set, and

(2) Learn to say "ain't."

After that, Rogers didn't die onstage so often, because both of these things signalled to his audience that, no matter what the jokes he made, he shared some common ground with them. Or, as he put it:

My bigger point, leaving all the fancy policy stuff to the wonks who delight in them, is that the art of politics is convincing people to connect with you. When you have an idea, and the other guy has an idea -- if you don't connect in some primal way with the listeners your idea is never even going to get considered, no matter how much better it is on a rational level.

(Emphasis in original.)  Rogers made this point even more effectively in a follow-up post a year later: 

Learn to Say Ain't isn't about being something you're not, or all things to all people. (and if that's how you read it, you were really just looking for something to disagree with in order to reinforce your own beliefs. Sorry.) what Boats taught me back then is that we all have common ground, and if you want to communicate your idea clearly, you need to start with the common ground of your audience and then get them to meet you halfway. It's about boiling your idea down to what really matters. This is not about lying -- this is about telling the truth in a more effective manner.

(Emphasis in original.) Rogers has expressed surprise at how popular this post has been. He shouldn't. It's one of the best examples of practical rhetoric out there. This is a guy who did standup in small clubs far from home for years; he had to learn the practical stuff.

Rogers was talking about politics in particular, class-action lawyers could benefit from this advice as well. Complex litigation is, for lack of a better word, complex. A lot of lawyers, when they're briefing or arguing a class action get caught up in the minutiae of the argument, and lose sight of the themes that are going to make sense to a judge (or, should the case progress, a jury). Plaintiffs' lawyers in class actions have a few natural advantages: for example, their cases often loosely fit the "David versus Goliath" story.  Defense lawyers--whose main point often boils down to "it's more complicated than that"--will have a harder time figuring out what really matters.  But that hardly means they should stop trying. Paradoxically, the best way to explain why a case is too complicated to try to a single jury is often to find a simple theme that unites the various problems with trying the case.  

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Tomorrow, October 1, 2010, The Class Action Playbook goes on sale.    So, today and tomorrow, I'm running run brief excerpts from the book's introduction to give readers an idea of the approach my coauthor Brian Anderson (the O'Melveny & Myers lawyer, not the Brewers' play-by-play announcer) and I have taken.  Today, a brief discussion of the strategic approach to class actions:

[C]lass actions are different than other civil litigation. Any lawsuit requires a lawyer to think strategically along one dimension: Will the tactics he adopts help his client win the case on the merits? In class action litigation, because of the centrality of the debate over whether to certify a class, there is another dimension: Will these tactics help the lawyer obtain (or defeat) class certification? These two dimensions may conflict. Strategies that may help a litigant win a motion on the merits can undermine its arguments when debating certification, and vice versa.

What is strategy? The term means different things to different people. Some legal scholars define strategy as the accumulated choices made by a litigator —a possibly accurate description, but not very enlightening. Carl von Clausewitz, perhaps the premier military strategist in Western history, referred to strategy as “the use of engagements for the object of a war.” That definition is more useful when applied to litigation, although it is worth removing from a purely military context, and making a few of Clausewitz’s assumptions explicit. For our purposes, strategy is:

(1) a plan for action toward a goal;
(2) that comprises a series of actions over time; and
(3) that assumes other parties will oppose (or otherwise interfere with) the plan.

This definition combines the hallmarks of both the classic and modern definitions of strategy. Clausewitz and similar strategists draw a distinction between strategy and tactics. Tactics are short-term plans for handling an immediate conflict. Strategy is the longer-term coordination of tactics. But the most important component of our definition of strategy is the one that Clausewitz only assumed. Strategy does not operate in a vacuum: It assumes the existence of other parties who will, at worst, actively oppose the strategy, and, at best, merely get in the way. Our definition of strategy includes this dynamic quality: Unlike a mere plan, a strategy aims to anticipate and respond to the actions of each side in class-action litigation.

The purpose of this book is to discuss the points at which class-action litigators—whether representing plaintiffs or defendants—must make strategic decisions. We identify those decision points, and then discuss the tactical choices available to each side. To the extent possible, we also try to evaluate the strength of various tactics available in each circumstance.

At the risk of sounding immodest, I'm quite proud of this book.  It's garnered a few nice reviews already, and I'd encourage those interested in learning more about class-action litigation to check it out.  That said, I'm not stupid.  There's one big objection to address: why would anyone interested in bringing a successful class action read a book written by a pair of defense lawyers, including one who writes a blog called Class Action Countermeasures?  It's a valid question, one that I'll answer in tomorrow's post.  

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National Economic Research Associates, Inc. (NERA), an excellent source for statistics on litigation, has released a report on the recently-implemented class-action law in Italy: Italian Class Actions Eight Months In: The Driving Forces. 

The report describes (for those of us in the US) the law governing class actions in Italy. Class actions are opt-in, not opt-out like in the US. And they are limited to contractual claims, products-liability claims, anti-competitive claims, and "unfair commercial practices" claims. Classes are deemed "admissible" (roughly equivalent to certified) unless the claim is "manifestly unfounded," there is a conflict of interest, the rights at issue "are not homogenous" or the lead plaintiff cannot adequately represent the interests of the class. In addition, the lead plaintiff must be a consumer, and must have "an interest" in the suit.

In addition, the Italian law provides that there can be no more than one class action for a given matter (which implies some kind of automatic consolidation of additional lawsuits), and conforms to general Italian civil practice in that there is no pretrial discovery. (That's not a misprint: no pretrial discovery.)

The authors also observe that nonprofit consumer associations, rather than plaintiffs lawyers, are the primary drivers behind class-action litigation. As a result, they anticipate that these plaintiffs may push more for reform of business practices than for large damages awards. Specifically:

Consumer associations may aim to send a signal to the overall industry and push for changes in current business practices; they are thus less likely to be enticed to settle by monetary offers alone. An example is the Intesa case: Codacons [a consumer association] sought monetary damages but also sought to change the way in which the bank operated in charging fees and interest on lines of credit. During mediation, Codacons was willing to forsake its claim of €1,250 per account holder in exchange for a settlement of €1 per account holder and a change in the bank’s contract renouncing the challenged fees for all account holders.

Concurrently, consumer associations also have (maybe only implicitly) the goal of increasing the clout of the association. Thus, consumer associations may aim to increase their own visibility. This is a further reason why they are less likely to be enticed to settle by monetary offers alone. They may aim to increase their own visibility because part of consumer associations’ power comes from their reputation and the widening of their association base; thus, publicity is likely to be more important to them than to US plaintiff law firms. Consequently, the reputational damage suffered by defendants could be larger in the current Italian situation than it would be with US-like plaintiff law firms.

(Internal footnotes omitted.) This leads to what I consider the most interesting part of the paper, which is NERA's description of the effects of the law. In eight months, consumer-association plaintiffs have filed six actions, only one of which (the Intensa case, mentioned above) reached the admissibility stage. (The court denied admissibility because the lead plaintiff had not personally been charged the fees challenged in the lawsuit.)  From these six cases (and another fifteen that have been "announced" but not filed), the authors infer that

Consumer associations seem to be adopting different strategies with respect to class action. Some, like Codacons, have been filing a comparatively high number of class actions and announcing claims for billions of Euros; others, like Unione Nazionale Consumatori, have filed fewer and financially less ambitious class actions, promoting themselves as more realistic in their aims. Unione Nazionale Consumatori’s Secretary General stated that the class action law needs to be used with moderation, intelligence, and practicality. He vowed to follow these principles by choosing the suits that could be brought to a conclusion in a short time and maybe choosing those defendants that would be more prone to settle. He has not spared criticism towards those consumer associations following the strategy of filing many claims and issuing loud proclamations. Indeed, he compared some of the announcements of claims for billions of Euros to a farce.

(Internal footnotes omitted.)

What can we learn from the Italian case so far? Not much, with only eight months of experience on which to draw. But it does suggest that reducing the monetary incentive to file a class action could reduce the number of actions filed per capita. And it also suggests that even when one removes that incentive, finding good plaintiffs remains difficult. Which is unfortunate, because, as I've mentioned before, I might be willing to switch sides to bring cases in Florence.

(Photo from Wikimedia Commons, used under GNU license.) 

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John J. Mearsheimer is one of the foremost modern proponents of the theory of "offensive realism" in international relations. While he has written extensively on foreign policy and strategy, the best summation of his theory is in his 2001 book The Tragedy of Great Power Politics.  The theory, in a nutshell, is that great powers (like the United States and China) are ultimately doomed to resolve their differences in violent clashes. Why?

The structure of the international system forces states which seek only to be secure nonetheless to act aggressively towards each other. Three features of the international system combine to cause states to fear one another: 1) the absence of a central authority that sits above states and can protect them from each other, 2) the fact that states always have some offensive military capability, and 3) the fact that states can never be certain about other states' intentions. Given this fear--which can never be wholly eliminated--states recognize that the more powerful they are relative to their rivals, the better their chances of survival.

According to Mearsheimer, this fear for survival inevitably pushes great powers into violent conflict with each other, and pursuing noble goals like spreading democracy will not prevent the tragic outcome.

This gloomy view of international relations is based on three core beliefs. First, realists, like liberals, treat states as the principal actors in world politics. Realists focus mainly on great powers, however, because these states dominate and shape international politics and they also cause the deadliest wars. Second, realists believe that the behavior of great powers is influenced mainly by their external environment, not by their internal characteristics. The structure of the international system, which all states must deal with, largely shapes their foreign policies. Realists tend not to draw sharp distinctions between 'good' and 'bad' states, because all great powers act according to the same logic regardless of their culture, political systems, or who runs the government. It is therefore difficult to discriminate against states, save for differences in relative power. In essence, great powers are like billiard balls that vary only in size.

Mearsheimer explains the implications of his theory throughout the book, and while I don't agree with all his conclusions, he makes a persuasive case.  I'd heartily recommend it to anyone looking for a thoughtful take on international relations.

So why am I talking about this book in a blog about class-action strategy? Am I so dense as to argue that class-action plaintiffs and defendants are like great powers in the international system? Almost. I think Mearsheimer's theory of "offensive realism" offers at least two insights to class-action defendants.

The first insight is that one doesn't necessarily need to know what the other is actually thinking to make informed guesses about the strategy it will employ. I've written before about how, to defendants, plaintiffs' lawyers' motives often seem as opaque as the Soviet Union's did during the Cold War.  As a result, it is worth looking at the constraints that plaintiffs' lawyers face when trying to guess how they might act. Looking at the structure of the plaintiffs' world (instead of at their motives) also helps defendants avoid the mistakes that can come with lazy demonizing. It doesn't matter whether plaintiffs' lawyers are "good" or "bad," what matters is how they react to their environment.

And that's the second insight offensive realism can provide. I'm not so foolish as to argue that Mearsheimer's theory describes class-action plaintiffs and defendants. But I do think it comes awfully close to describing class-action plaintiffs by themselves. (For a dissenting metaphor, see the Manhattan Institute's various Trial Lawyers Inc. reports.) There is no central authority that regulates plaintiffs' lawyers. In fact, a common complaint among defendants is that class-action plaintiffs' lawyers are not even regulated by their clients. Every plaintiffs' firm has some offensive capability (the ability to file lawsuits). And entrepreneurial plaintiffs' counsel often must compete fiercely against each other. Given the need to grow or die, it's no wonder that class-action firms file lawsuits that outside observers may consider meritless or overblown. The analogy is far from perfect, but frankly, it's not a bad place to start.

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 Two weeks from today, on September 17, 2010 at 10 AM, I'll be participating (along with Overlawyered's Walter Olson) in a webinar hosted by the Washington Legal Foundation titled: Legal PR, Trial Lawyers’ Style: How Plaintiffs Seek Advantage Outside of Court and Proactive Countermeasures for Defendants.  

As the WLF describes it:

This interactive program examines the various communications and public relations strategies plaintiffs’ attorneys utilize in specific cases and to accentuate their role in civil justice, and provides strategies defendants can use to respond to trial lawyer PR and positively turn the “spin” to their advantage.

Please feel free to join us.  It should be an interesting program.  

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 In the world of class actions, case brought under the Federal Labor Standards Act (FLSA) stand apart from other class actions. Unlike a standard Rule 23 class action, the plaintiff in an FLSA action has the option of filing a class action under Rule 23, a collective action under the FLSA, or both.

What is a collective action? Like a class action, a plaintiff in a collective action trades individual control over her lawsuit for the economies of scale and the bargaining leverage that come with group litigation. But FLSA collective actions follow different procedural rules than Rule 23 class actions, ones generally considered more permissive. FLSA certification usually occurs in two parts. First, in the "notice stage," the trial court decides whether it should notify other “similarly situated” employees who might wish to opt in to the litigation. If the court decides in favor of notice (and with it, conditional certification), it informs the putative class members with a court-ordered notice and gives them an opportunity to opt into (not out of) the class. After any other plaintiffs opt in, discovery commences. After discovery is complete, the defendant can move for decertification. If the court decertifies the proposed opt-in class action, it dismisses the opt-in plaintis without prejudice to reasserting their claims individually.

This more permissive procedure means that employment actions under the FLSA have become a growth industry for plaintiffs' lawyers. And the difference in procedure means that the strategies for opposing certification are different. So how does one oppose an FLSA action? Shook Hardy lawyers William C. Martucci and Jennifer Oldvader have published an article in the Kansas Journal of Law & Public Policy answering just that question. (The cite, for those interested, is 19 Kan. J.L. & Pub. Pol'y 433.) And they have several strong proposals for opposing the increasingly-common practice of filing concurrent Rule 23 class actions and FLSA collective actions:

• Attack the "common scheme or plan" allegation. "One way of gathering such evidence is to collect declarations from other employees, who can provide vital information on compensation and time-clock policies as well as how these policies are put into practice." If the declarations show that the "policy" was implemented in different ways at different times by different people, a court will have a harder time certifying a class.
• Argue that enough discovery has occurred to allow for heightened certification standard. "Generally, the rationale behind the "lenient" conditional certification standard is that a plaintiff has not had time to conduct any discovery at the conditional certification stage. However, where discovery has occurred, a defendant may be able to successfully argue that a heightened standard of review is more appropriate."
• Argue the conflict between collective action and class action. "When faced with the possibility of an opt-in FLSA collective action and an opt-out state law class action, a defendant may be able to successfully argue that a district court should decline to exercise supplemental jurisdiction because the state law class action predominates over the FLSA collective action."

Martucci and Oldvader focus their article on "off the clock" actions where plaintiffs are allegedly not paid for time they worked (as opposed to misclassification actions, where plaintiffs are denied overtime because their job does not qualify for it). But their tactical advice is sound. For attorneys looking to defend these kinds of cases, this is essential reading.

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Geoffrey Miller is one of the few law professors out there who consistently investigates real empirical questions about class actions. He's published on the role of objectors in class-action settlements, the use of non-pecuniary relief, and even the effect of judicial review on settlement rates. So when Miller comes out with a policy proposal--as he does in a recent article in the University of Illinois Law Review, it's worth paying attention to what he says.

Miller starts from the premise that "something is wrong with settlements." (If one were glib, one could say that his critique proves that something is right with settlements. Nobody's pleased with them.) His proposed solution? The preliminary judgment. As Miller proposes it, at any point, a party could move the court to declare whether it believed the plaintiff could establish her case by a preponderance of the evidence currently available.

A preliminary judgment is simply a tentative assessment of the merits of a case or any part of a case, based on the same sorts of information that the courts already consider on motions for summary judgment. The difference between a preliminary judgment and a summary judgment is that the court, in a preliminary judgment, would not be limited to deciding issues with which no reasonable jury could disagree. Instead, the court would provide its own provisional judgment on the merits of the case based on the information provided by the parties. A preliminary judgment, once given, would convert into a final judgment after the expiration of a reasonable period of time - say, thirty days. Any party against whom a preliminary judgment is issued, however, would have the right to object prior to the expiration of the period (with or without explanation), in which case the judgment would be vacated and the case would proceed according to ordinary rules of procedure. Like other threshold rulings, the preliminary judgment would then have no preclusive effect in the continuing litigation.

(Internal footnote omitted.)  According to Miller, this "preliminary judgment" would offer more information to the parties than a ruling on other preliminary motions--presumably because it would apply the same decision rule that applies at trial. He also believes it would reduce litigation costs.

In reality, while the motion for preliminary judgment would likely prove another useful tool, there is no reason to believe that it would be immune from the strategic behavior prompted by other versions of preliminary motions. Preparing a motion for preliminary judgment would not be costless. Defendants would have strong incentives to file early preliminary judgment motions, much as they already do with other preliminary motions. (This analysis would hold true whether one believes that defense counsel file early motions to rid themselves of frivolous cases, to frame the remainder of the litigation, or simply to run up their hourly bills.)

The lesson Miller's analysis suggests is a simple one, and one that this blog has advocated for some time now: Challenge both certification and merits as early as possible. While this isn't quite the same as getting a "preliminary judgment," the same advantages Miller touts operate. Each side gets an early look at the merits of the case. If the case lacks merit, the court should recognize the strength of the defendant's arguments and dismiss it (or at least strike the class allegations). If the case has some merit, better the defendant learn that as early as possible.

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Bench trials comprise a significant percentage of class-action trials. And class-action defense lawyers are often conflicted about whether it's better to try a case in front of a jury or a judge. A judge may be better equipped to sort through some of the more complex issues in the case, but sometimes complexity can favor the defense in front of a jury. Moreover, many defense lawyers consider a judge who has certified a class to have already stated some opinion on how the case should proceed.

So what do lawyers need to be aware of when trying a class trial to a judge? According to an article by Paul Holland in NYU's Clinical Law Review ("Sharing Stories: Narrative Lawyering in Bench Trials"), the most important thing to remember is that judges like stories just as much as jurors do. More importantly, Holland identifies at least three places where bench trials significantly differ from jury trials, each of which has implications for a class trial:

• Opening statements carry greater risk than in jury trials. "Jurors are generally trial novices, eagerly awaiting the entertaining lawyer storytellling characteristics of an effective opening. In contrast, judges are likely to see the lawyers' openings, however diverting, as the only thing standing between them and the evidence upon which their decisions should rest. Judges are unlikely to interrupt an opening statement, but may quickly dismiss lawyers they believe to be off-track." This factor may play to a class-action defendant's strengths; it blunts, at least in part, the rhetorical effectiveness of the David v. Goliath story many class plaintiffs like to tell.
• Framing decisions as easy may backfire. "When decisions appear to be easy, they will be made quickly, often by automatic thinking and shortcuts." And judges' automatic thinking will include the various patterns they recognize from years of watching lawyers maneuver against each other in court. For a class action, this means that the defense should may not need to worry quite as much about the delicate balance of making issues simple enough for a jury to grasp, while still preserving the complexities of a classwide trial for appeal.
• Judges often give more feedback than juries. Since the judge is both referee and factfinder, nothing prevents her from asking questions during the course of the trial, or signaling that she is more interested in some kinds of evidence than others. (In fact, for a judge with a backlog of cases, cutting straight to the relevant factual questions is probably the most responsible thing she could do.) Of course, in focusing in on what she considers relevant, the judge gives the lawyers valuable feedback on what she thinks of the case, allowing for midcourse corrections. In a class trial, that updating can prove particularly helpful for balancing the risks of an adverse verdict against the costs of a classwide settlement.

Given the wide variation in judicial temperament, the single most important factor in deciding whether to pursue a bench trial is still the specific judge who would be trying the case. But knowing the risks specific to a bench trial can help a defense lawyer make the best decision possible for his client.

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Followers of this blog have probably noted (and probably with some chagrin) that I rarely discuss just-released cases, because I'm more interested in what we can learn about the strategies in a case than breaking the latest legal news. This case, though, is different, because last week the Eleventh Circuit released an opinion on jurisdiction under the Class Acton Fairness Act (CAFA) that is baffling in large part because it ignores the ways in which parties actually litigate a class action.

In the recently-decided Cappuccitti v. DirecTV (11th Cir. Jul. 19, 2010), the Eleventh Circuit dismissed a class action for lack of subject-matter jurisdiction under CAFA.

As part of its reasoning, it held that at least one plaintiff must allege more than $75,000 in damages:

While § 1332(d) may have altered § 1332(a) to require only minimal diversity in CAFA actions, there is no evidence of congressional intent in § 1332(d) to obviate § 1332(a)’s $75,000 requirement as to at least one plaintiff.

(Citation omitted.) 

How did the court reach that conclusion?  Plaintiffs Renato Cappuccitti and David Ward sued DirecTV, Inc., claiming that DirecTV wrongfully charged its subscribers fees for cancelling their subscriptions prior to the subscriptions’ expiration. They brought suit in federal court under CAFA (both plaintiffs were Georgia residents, DirecTV is a California corporation, and the amount in controversy exceeds $5 million). DirecTV moved to dimiss and to compel arbitration. The district court refused to compel arbitration, and partially dismissed the plaintiffs' claims. DirecTV appealed the denial of arbitration.

The Eleventh Circuit never reached the arbitration question. Instead, it held that it lacked subject-matter jurisdiction over the case because neither of the plaintiffs had alleged a claim worth more than $75,000. As the opinion puts it:

in a CAFA action originally filed in federal court, at least one of the plaintiffs must allege an amount in controversy that satisfies the current congressional requirement for diversity jurisdiction provided in 28 U.S.C. § 1332(a). Such a conclusion is compelled by the language of § 1332 as well as the general principle that federal courts are tribunals of limited jurisdiction whose power to hear cases must be authorized by the Constitution and by Congress.

The Eleventh Circuit based its holding on a reading of several cases interpreting the "mass action" provisions of CAFA.  But it also worked from the assumption that its job is to reduce the number of class actions filed in federal court:

If we held that § 1332(a)’s $75,000 requirement for an individual defendant did not apply to § 1332(d)(2) cases, we would be expanding federal court jurisdiction beyond Congress’s authorization. We would essentially transform federal courts hearing originally-filed CAFA cases into small claims courts, where plaintiffs could bring five-dollar claims by alleging gargantuan class sizes to meet the $5,000,000 aggregate amount requirement. While Congress intended to expand federal jurisdiction over class actions when it enacted CAFA, surely this could not have been the result it intended.

This reasoning is puzzling, because the vast majority of federal class actions aggregate smaller claims. In fact, much of the federal court's Rule 23 jurisprudence is based on the benefits that derive from allowing plaintiffs to aggregate small-dollar claims. (It also ignores footnote 12 of the Supreme Court's Allapattah opinion, and its own opinion in Evans v. Walter Industries, Inc., each of which accept that the $5 million aggregate requirement replaced the $75,000 individual requirement.)

With the issuance of the Cappuccitti opinion, the Eleventh Circuit has made itself an outlier on CAFA jurisdiction.  (Placing it in opposition to the Second, Third, Fifth, Sixth, Seventh, Eighth, and Tenth, Circuits)  Given the odd result of the Cappuccitti opinion, it is likely that plaintiffs who wish to keep cases out of federal court will file them in Georgia, Florida, and Alabama.  Defendants should prepare themselves accordingly.  

UPDATE, 15 OCTOBER 2010 - The three-judge panel that decided this case subsequently reversed itself in a per curiam opinion.  

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I’ve written before that plaintiffs’ lawyers consider public relations to be an important weapon in their arsenal. But how, exactly, do they use it when they’re involved in a case?

Recently, a collection of emails between the former Scruggs Katrina Group (the firm former lawyers Richard and Zach Scruggs put together to prosecute class-action and qui tam claims related to Hurricane Katrina) and PR firm The Rendon Group were made public, providing an inside look at how the relationship can work. (For the story on why these emails were made public, see Rendon Group, Inc. v. Rigsby, 2010 U.S. Dist. LEXIS 60138 (D.D.C. Jun. 17, 2010).) The emails were first made available by Mississippi’s YallPolitics blog, and have also drawn comment from the bloggers at Overlawyered and The Insurance Coverage Blog. (In fact, the Insurance Coverage Blog features prominently in the emails themselves.)

So, assuming the normal warnings in a case like this (every case is unique, blogger may not have perfect information, be careful what you read on the internet …), what can we learn from these emails?  (Citations are to Bates numbers in the collection.)

• Public relations does not mean just press relations. It should come as no surprise that many of these emails between a plaintiffs’ firm and a PR firm concerned newspaper coverage. But some involved less traditional media. As Overlawyered and The Insurance Coverage Blog note, some of the emails discussed ways of countering the ICB's coverage of SKG.  And, more interesting, some emails reported on how Rendon employees built a favorable Wikipedia page on qui tam plaintiffs the Rigsby sisters. (TRG 000957)
• Negotiating around public officials can be difficult. I’ve written before about how plaintiffs’ lawyers seem to have a love-hate relationship with public officials and politicians. On the one hand, they can be a valuable source of information and pressure.  On the other, they can have different, conflicting agendas. As one of the PR executives describes it: "This is a lawsuit. The game is that the lawyers and judge surprise attack each other constantly. Throw in a Senator, Congressman, Attorney General, Governor and about 2 dozen major news outlets....much less State Farm's PR engine...you never know what's going to happen or when." (TRG 001118)
• Plaintiffs' lawyers have differing agendas. This should come as no surprise to most defense lawyers. But watching the mechanics from the inside is always instructive. As Scruggs himself puts it: "Maybe I should resume trying to build plaintiff lawyer consensus, although SF has hitherto opposed it, probably because there were already too many moving parts. Senter wants peace--not process, e.g., our class bringing only the latter. Walker would be given orders to broker peace, altho Merlin and the like want only piece and Judy/Anita only blood." (TRG 001145)
• Sometimes, the PR target is not the defendant, but the judge. It’s no secret that plaintiffs frequently look for intelligence on judges. (And there are emails in this collection that discuss the judge’s age, his class action experience, and the fact that he “Gets overturned a lot.” But what may be surprising is that plaintiffs also use public relations as a way of putting pressure on the judiciary to rule their way. As one email from Rendon reveals, "We think SF should not be the focus but the judiciary." (TRG 001598) What does that mean? From the same email: “Getting the Wash Post, Legal Times, National Law Journal etc to be interested in the issue. Maybe court TV... client wants John Roberts to be aware of the dysfunction.”

What’s the lesson we can learn from this? For class-action plaintiffs, litigation can be a multi-front war. While the defendants may not choose to fight on every front, they should at least be aware of what those fronts are. 

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 For the most part, this blog has focused on tactics that defendants may use to oppose class certification. But another important part of class action defense is being alert to new trends in class-action practice. And, in the last few years, a new type of class action has arisen that is worth looking at more closely: the data-breach class action, which seeks to hold companies liable for revealing customer data once they've been hacked.

For example, take In re Hannaford Bros. Co. Customer Data Security Breach Litigation. The specific opinion affirmed a remand of a class action under CAFA's home-state exception (a class of Florida citizens had sued a Florida corporation in Florida state court), but the underlying facts describe the archetypical data-breach class action. As the court described them:

Defendant Kash N' Karry Food Stores, Inc. operates a chain of grocery stores in Florida. A computer hacker stole the credit card information of customers who had shopped at Kash N' Karry's stores between December 2007 and March 2008. Plaintiff Thomas Grimsdale, III regularly shopped at Kash N' Karry's stores in Tampa, Florida during this period and paid for his purchases using his bank debit card.

On April 4, 2008, Grimsdale sued Kash N' Karry in Florida state court, alleging that Kash N' Karry had failed to adopt adequate security measures to protect its customers' credit card information. He sought to represent a class of approximately 1.6 million persons who had “used credit/debit cards at [Kash N' Karry's] stores between December 7, 2007 and March 10, 2008 and/or had their personal and sensitive Confidential Information stolen and/or compromised as a result of the [security] Breach.”

Information security is a growing concern among American businesses.  And a number of plaintiffs' firms have begun filing data-breach class actions.  Data-breach class actions have qualities that are--at least superificially--appealing to the plaintiffs' bar. Data breaches are often events that present small (or ambiguous) harms to a large number of potential class members. And if the security breach can be tied back to a single incident, then there may be common issues applicable to a class.

Does this mean that data-breach class actions unbeateable? Hardly. It is often difficult to prove any actual injury in a data-breach class action. And, if some class members' data was actually used illegally (while the rest remained untouched), it will be difficult to certify a class without getting into the merits of all class members' claims.

But, given the vulnerability of personal data, and the growth in filings of data-breach class actions, it is certainly worth defense counsel's time to think through the issues presented by these kinds of cases.

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A number of legal blogs have already noted a study published last month on attorneys’ ability to predict the outcomes of their cases. Titled “Insight or Wishful: Lawyers’ Ability to Predict Case Outcomes," it found that lawyers systematically overestimate their chances of success in litigation.

The design of the study was elegant. The authors (from Charles Sturt University, University of Gothenburg, John Jay College of Criminal Justice, and the University of California) asked 481 lawyers to predict the success of a matter they were currently working on. (The lawyers gave the matters code names to preserve client confidentiality.) Then, the authors waited. After the matters had been concluded, they went back and asked the lawyers how the cases had gone. Comparing the outcomes to the predictions yielded the result that has prompted all the discussion. In general, the lawyers predicted between 64% and 70% confidence in succeeding at their clients’ goals, but they actually succeeded only about 54% of the time.

This result should not be surprising, even to most attorneys. The profession attracts overconfident personalities. (I don’t know about you, but it seemed at least 75% of my law school class entered expecting to graduate in the top 10%.) Several of the specific findings are particularly interesting. Namely:

• More experienced attorneys are not immune from the effect. In fact, experienced attorneys were as likely to be overconfident as they were to estimate their success correctly.
• Attorneys got overconfident as they got closer to trial. This result makes sense. Leaving aside any investment (financial or emotional) the attorney has made in the case as it progresses, most lawyers refine their case to its most persuasive as they approach trial.  When you're that intent on selling your story, you run the risk of buying into it yourself.
• Looking at reasons why they might not succeed did not affect attorneys' overconfidence. What’s really surprising in this result was that attorneys rarely considered either their client’s culpability or their own comparative abilities as possible reasons they might not succeed.

What does all this have to do with class action strategy? For defendants, it may counsel launching strong challenges against the case earlier rather than later. The logic behind that recommendation: class-action plaintiffs’ lawyers are not immune from these effects. In fact, since they tend to be entrepreneurs who have to sell their partners and clients on a legal theory, they may be even more conditioned to overestimate their chances of success. (Lawyers in the mold of Bill Lerach may be particularly prone to this problem.) As a result, these lawyers are less likely to respond to reasonable settlement offers, or to discovery that reveals flaws in their cases. That means that the feedback they are most likely to respond to will come directly from the court. In other words, strong, early merits challenges are not just a defendant’s best chance to win on the merits, but also to settle on fair terms.

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These days, quoting old military strategists is cliché. The movie villain or vacuous i-banker who cites Sun Tzu to sound smart and tough was overused by the mid-1980s. And by the ‘00s, reading the Art of War to look serious just looked sad.  Far too many writers have applied strategists like poor, overworked, Sun Tzu to sales management, real estate, poker, even blogging. And, in doing so, they’ve diluted their effectiveness.

But here's the thing: old military strategists, like Sun Tzu or Carl von Clausewitz, actually have things to say about complex litigation.

Complex litigation (and class actions in particular) involves two large entities marshaling large resources in order to fight a protracted campaign. That campaign will have a number of individual skirmishes (motions to dismiss, depositions, summary judgment, class certification, trial), each of which has larger strategic importance. And determining how to conduct those skirmishes, and how to allocate one's resources in general, requires a constant assessment of one's own strength, one's adversary's position, one's allies' positions (in multiparty litigation), and the probability of various outcomes. The old military strategists wrote about just these problems. Some of what they said clearly doesn't apply to litigation. (For example, I can think of no reason to assemble lawyers in the "tortoise formation.") Still, many of the principles these strategists were considering do have application to modern class-action litigation.

Today, very quickly, we'll look at a concept from Carl von Clausewitz. Clausewitz, a Prussian military officer who played a minor role in repelling Napoleon in 1812 (for which he shows up briefly in Tolstoy’s War and Peace), and who helped unite Prussia. His book On War is largely considered to be one of the seminal works on military strategy. And one of the concepts Clausewitz articulated best was the idea that a strategist needs to know his enemy’s strength of will.

If you want to overcome your enemy, you must match your effort against his powers of resistance, which can be expressed as the product of two inseparable factors, viz. the total means at his disposal and the strength of his will. The extent of the means at his disposal is a matter -- though not exclusively -- of figures, and should be measurable. But the strength of his will is much less easy to determine and can only be gauged approximately by the strength of the motive animating it. Assuming you arrive in this way at a reasonably accurate estimate of the enemy's power of resistance, you can adjust your own efforts accordingly; that is, you can either increase them until they surpass the enemy's or, if this is beyond your means, you can make your efforts as great as possible.

(Emphasis in original).

Determining the "total means at disposal" may not be as easy for the modern lawyers as Clausewitz suggests. (Although it is getting easier.) But you can get a general idea of an adversary's strength by looking at the constraints it faces. What is the manpower of the opposing firm? How many lawyers show up on the pleadings? How much revenue does the opposing firm seem to have?

Strength of will is more difficult to determine, but there are some indicators that can help the analysis. How much money is at stake? Is this a smaller class action that is just making up part of the portfolio for a plaintiffs' firm?  Or is it a larger case on which a plaintiff’s firm could make its reputation?

Using this idea of “strength of will” as a way of approaching their case, defense lawyers can better determine just how long a case might last, and just how expensive it might be to settle.

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One aspect of grand strategy in litigation is making preparations for the possibility of getting sued. Preparing to get sued does not mean that a company has done something wrong. While some lawsuits are valid, others are not. And, given the pressures that entrepreneurial class-action lawyers face, it is inevitable that some will file lawsuits regardless of merit. In an atmosphere like this, preparing for lawsuits in advance is a necessary caution. 

Corporations really do make these preparations. In their working paper “Litigation Risks and Corporate Cash Holdings,” professors Matteo Arena and Brandon Julio found that the concentration of securities class actions in a particular industry "is a strong predictor of actual litigation events." (In other words, the more lawsuits already filed in a particular industry, the more lawsuits likely will be filed in the immediate future.) They also found (as one might expect) a strong correlation between that concentration and the amount of cash companies in that industry stockpiled. Companies stockpiled additional cash whether or not they were actually sued. (The authors subjected their hypothesis to a mathematical technique known as “simultaneous equations” to confirm that the companies weren’t just being sued because they had extra cash on hand.)

The authors made several other observations as well. Among them, increased litigation risk makes it harder to find auditors, depresses stock price, and increases managerial turnover. What lessons can we draw from all of this?

• Start talking to clients before they're sued if they're in a high-risk industry that's just been hit. They may be putting aside money in anticipation of a case anyway, and learning about how they conduct business can be very helpful for hitting the ground running once they are actually served with a complaint.
• Be specific with clients about the consequences of litigation risk. Even in the best of companies, the incentives may not align for preventing litigation. Minimizing risk (which can be hard to quantify) may take a backseat to increasing revenue, or ensuring that the current stock price is as high as possible. (It’s not like we lawyers are immune to these pressures.) The consequences of increased litigation risk are concrete things that will matter to firm management. Stock price affects their compensation. Managerial turnover means their jobs are at risk.

No one can predict exactly when a given company will be sued. But knowing generally what risks a company may face (even just by virtue of the industry it competes in) can enable defense lawyers to get a head start on some of the preparations for complex litigation.

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What is grand strategy? It's a term that's usually thrown around in military, security, and foreign policy circles. As the military historian Liddell Hart defined it in his classic book Strategy:

[T]he role of grand strategy – higher strategy – is to co-ordinate and direct all the resources of a nation, or band of nations, towards the attainment of the political object of the war – the goal defined by fundamental policy.

...

while the horizons of strategy is bounded by the war, grand strategy looks beyond the war to the subsequent peace. It should not only combine the various instruments, but so regulate their use as to avoid damage to the future state of peace – for its security and prosperity.

What does this mean for class actions? It means that often, the best defenses against a class action don't involve a specific lawsuit. Instead, they involve larger policies and strategic decisions. For one thing, it is possible to have a firm-specific (or client-specific) "grand strategy" for fighting class actions. The most obvious grand-strategic move is one that law firms sell to clients all the time, a compliance policy. If a corporation has a robust compliance policy, it is less likely to get sued for breaking the law.

But some corporations are just located in industries where they're more likely to be sued in class actions. A corporation like that might decide that part of its grand strategy will be to oppose every class action on Rule 23 grounds and settle class actions where the plaintiff has a valid claim on a named-plaintiff basis. Its goal over time could be twofold: (1) build a reputation as a vigorous litigator, which should deter those plaintiffs looking for a quick settlement; and (2) make incremental changes in class-action law to eliminate the worst plaintiff-side abuses. Specific law firms may have grand strategies as well. For example, throughout the 2000s, O'Melveny & Myers, under the leadership of John Beisner, made part of its goal to create a legislative environment that curbed the worst of plaintiff-side abuses. Part of that effort involved providing scholarship that analyzed the reasons why some plaintiff practices made for bad policy. One outcome that grand strategy helped produce was passage of the Class Action Fairness Act. These are hardly trade secrets, Beisner's scholarship is published, and he mentions his CAFA testimony in his firm biography. [Disclaimer - I worked at OMM during the period I'm discussing.]

The most important part of developing grand strategy is recognizing that defending a lawsuit, even a "bet the company" lawsuit, still must fit into a company's (or law firm's) larger goals. Defense lawyers tend to treat this statement as a truism: of course you align your strategy with your client's goals. But treating this advice as strategy instead of marketing can help lawyers develop far more robust defenses to class actions.

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