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

Rule 23(b)(1) is the forgotten stepchild in Rule 23 jurisprudence. Rule 23(b)(3) gets attention because it's where the money is. Rule 23(b)(2) is essential to civil rights groups seeking injunctions, and drew attention from plaintiffs' lawyers seeking an end-run around what they viewed as Rule 23(b)(3)'s more stringent requirements. But case law on Rule 23(b)(1)(A) (which allows class actions to prohibit inconsistent adjudications) and (b)(1)(2) has been notably sparse.

Which is why many lawyers might not have caught one of the strange developments in the wake of the Supreme Court's ruling in Dukes. As Dean Robert Klonoff--author of, among other things, Class Actions & Other Multiparty Litigation in a Nutshell--points out in his new article Class Actions for Monetary Relief Under Rule 23(b)(1)(A) and (b)(1)(B): Does Due Process Require Notice and Opt-Out Rights?:

In Phillips Petroleum Co. v. Shutts, the Supreme Court stated that in a class action “wholly or predominantly for money judgments[,]” a court must afford class members notice and an opportunity to opt out. In both Ortiz v. Fibreboard Corp., and Wal-Mart Stores, Inc. v. Dukes, the Court reaffirmed the Shutts language. While the language in those cases can be characterized as dictum, these decisions raise difficult issues about whether (b)(1) actions require notice and opt-out rights as a matter of due process when significant monetary relief is sought.

(Emphasis added.)  As Dean Klonoff rightly points out, Rule 23(b)(1)(A) is compatible with monetary damages (although some courts have ruled that it is not appropriate under those circumstances), and Rule 23(b)(1)(B) "limited fund" class actions specifically contemplate monetary damages.  But Rule 23(b)(1) classes require only "reasonable notice," and do not allow opt outs.  So how do these fit in with the Supreme Court's jurisprudence?

Dean Klonoff's article traces Rule 23(b)(1) classes from its adoption in 1966 through the Supreme Court's decision in Ortiz and the implications of its ruling in Dukes. His conclusion:

Reasonable notice sufficiently protects the class members’ due process rights, and allowing opt outs would defeat the very purpose of a (b)(1) class and impede the rights of the defendant and unnamed class members.

This is the kind of question that class action academics should be asking. Most practitioners are more concerned with winning the immediate case for their clients than in checking whether the doctrine regulating the most obscure kinds of class actions stays consistent over time. While I can't say for certain whether I agree with Dean Klonoff's conclusions (primarily because I haven't done the research), I'm certainly glad he's addressing the topic.

[Disclaimers: Dean Klonoff wrote a nice blurb for the Class Action Playbook [http://www.amazon.com/dp/0199933782]; he also alerted me to the existence of his article.]

Tags: "Robert Klonoff" "Rule 23(b)(1)" notice Dukes

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A few weeks ago, I received a copy of the Fourth Edition of Class Actions & Other Multi-Party Litigation in a Nutshell in the mail. Since this is one of the "go-to" references for many practitioners, it seems worth discussion whether it's worth the investment to pick up the new edition.

A few disclaimers before I start. I received this copy without paying for it, presumably so I would review it. Dean Robert Klonoff was kind enough to provide a nice blurb for the first edition of the Class Action Playbook.  (That said, it hasn't stopped me from disagreeing with his work at times.)  

So, how is the new Nutshell? Like the previous editions, it's a great introduction to class-action law for law students and young practitioners. In just 470 pages, it manages to provide the basics behind each of the various concepts underlying Rule 23 and mass tort cases. Dean Klonoff clearly knows his stuff on Rule 23, and his updates manage to hit a number of major trends, including the effect of the Supreme Court's Dukes opinion, the move towards motions to strike class allegations, and the more nuanced analysis of the numerosity requirement that has occurred over the last few years. Like its predecessors, the Fourth Edition of the Nutshell appears aimed more at the law student than the practitioner. While there is a chapter on litigating class actions, it does not receive as much attention as discussions of the various legal doctrines underlying class-action litigation. That's a feature, not a bug. It's important to have a primer on the basic law governing class actions, and given how fast-moving that area of law has been, an up-to-date primer is essential.

I have only two very small criticisms of the Nutshell. First, in a few areas, it stretches to preserve the sense of conflict in the law where case law may actually have been largely settled. (The most striking example is in his discussion of claim-splitting, where Dean Klonoff offers only a 1978 district court case, Sullivan v. Chase Inv. Servs., Inc., 79 F.R.D. 246 (N.D. Cal. 1978) to counter the numerous appellate courts that have held that plaintiffs who split claims are not adequate class representatives.) The second small issue is that, because this is the Fourth Edition of the Nutshell, there are a few places where, structurally, the analysis dives into slightly more history than may be strictly necessary to understand some concepts. (For example, in the wake of CAFA, I'm not sure that an extended discussion of Zahn v. Int'l Paper Co. is strictly necessary to understand federal jurisdiction over class actions.) I get the impression these are holdovers from previous drafts that might go if the Nutshell were being written from scratch today instead of receiving a thorough updating. Of course, getting more analysis rather than less is hardly a major problem, and may provide valuable context to the law student.

The bottom line is that, like previous editions, this Nutshell is an excellent, inexpensive introduction to the law of class actions. Recommended.

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The tactic is more common that one might imagine: when plaintiffs file their motion for certification, they may include an expert report from a noted law professor, testifying that their case is ideally suited for certification under Rule 23. Now, on one side of the certification debate, you have practicing lawyers zealously representing their client, and on the other, a ostensibly neutral expert in civil procedure. How can a defendant effectively oppose a motion like this?

By excluding the expert, which is easier than it first appears. Take the case of Walsh v. Principal Life Insurance Co., 266 F.R.D. 232 (S.D. Iowa 2010). In this ERISA class action, the plaintiff alleged that the the defendants had violated the statute by persuading her (after letting her go from her job) to roll over her 401(k) [http://en.wikipedia.org/wiki/401(k)] contributions in order to buy their "proprietary" investment products.

To support her motion for class certification, the plaintiff offered two experts: Robert Klonoff, Dean of Lewis & Clark Law School in Oregon, and Mark Johnson, a "sought-after speaker on the topic of ERISA and benefits plans." She offered each expert to testify about how the case had met the standards of Rule 23. The defendants challenged the admissibility of both experts' testimony. They did not question their expertise on ERISA or Rule 23. (Nor could they credibly. Dean Klonoff, for example, is the author of Class Actions and Other Multi-Party Litigation in a Nutshell, and co-author of the casebook Class Actions and Other Multi-party Litigation: Cases And Materials.). But they did point out that both experts had been offered to testify about a legal conclusion: whether certification was appropriate in this case. And that is the one area for which expert testimony is not admissible because it cannot help the court. The court largely agreed:

"[E]xpert testimony on legal matters is not admissible. Matters of law are for the trial judge, and it is the judge's job to instruct the jury on them." S. Pine Helicopters, Inc. v. Phoenix Aviation Managers, Inc., 320 F.3d 838, 841 (8th Cir. 2003) (citing United States v. Klaphake, 64 F.3d 435, 438-39 (8th Cir. 1995)); see also Burkhart v. Washington Metro. Area Transit Auth., 112 F.3d 1207, 1213, 324 U.S. App. D.C. 241 (D.C. Cir. 1997) ("Each courtroom comes equipped with a 'legal expert' called a judge."). In distinguishing admissible testimony from inadmissible testimony, the task for the Court is to ask whether the expert's opinions bear on some factual inquiry or whether they bear solely on the legal conclusions that are urged. In other words, "an expert may offer his opinion as to facts that, if found, would support a conclusion that the legal standard at issue was satisfied, but he may not testify as to whether the legal standard has been satisfied." 

(Internal quotations left in to preserve the Burkhart parenthetical.) The court did find that Johnson had made some factual observations about ERISA plans, so it allowed his testimony for that limited purpose.  Then it denied plaintiff's motion for certification, because the question of how the defendants persuaded each class member was necessarily individualized.

So what's the takeaway in this case? When faced with an "expert" on Rule 23, remember: "Each courtroom comes equipped with a 'legal expert' called a judge." And his is the only opinion that matters.

[Full disclosure: Dean Klonoff very generously provided a blurb for The Class Action Playbook (first under Editorial Reviews).]

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