- Hello everybody, and welcome to this CLE course, Introduction to Class Action Litigation. My name is Jacob Phillips, and I'm a class action attorney with Norman PLLC in Orlando, Florida. The goal here with this course is obviously to give a primer or a introduction to class litigation, for those who are thinking about dipping their toes in the water of class litigation, or just wanna know more about it, while also hopefully having some entertaining nuggets or different points of view for those who are more experienced class action practitioners. We'll see how successful we are at that. But that's the goal at least. Today's course is essentially broken into three different parts. Part one is going to be class action legal theory. Now kind of be just a introduction into how class actions work, what's the theory behind them, and some of the key cases over the years. Then we'll transition to part two, looking back at the class action theory, what are some of the public policy debates, some of the criticism, some of the defenses, both from a more conservative perspective, as well as a more leftist or progressive perspective. And then finally, we'll move to part three, which will be the more practical side of it, class litigation and practice. What's kind of the lay of the land and claims that are being brought and maybe even some pointers or more like food for thought for tactics and strategies in litigating class actions, both from a plaintiff side perspective, as well as defense side. So that's kind of the idea. Let's jump right in. In part one with the class action legal theory, we're gonna start with the 1966 amendment to Rule 23, which was basically the creation of the modern Rule 23 and to class actions as they exist now. Prior to the 1966 amendment, Rule 23 only provided for opt-in class actions. And what that means is that even if an individual met the class definition, they weren't a class member unless they affirmatively opted in. So for example, if you had a case where the class was defined as, say everyone who bought a Chevrolet from 1960 to 1965, you bought a Chevy in 1962 so you met the class definition. You still weren't considered a member of the class, however, unless you affirmatively opted it, unless you affirmatively said, yes, I want to be a member of this class. What did that mean? It meant basically two things. First, it created what's called one way intervention, which means that the individuals who met the class definition didn't really have to decide whether they wanted to be a class member or not until after the merits of the case were decided. And as you can imagine, this led to situations where if the plaintiff prevailed, people would say, you know what, I think I will opt in to this class, I think I will be a class member, please send me a check. But if the defendant won, then as you can imagine, people said, you know what, I don't think I'm gonna be a class member. I think I'll shoot my shot in my own case and not be bound by this judgment. So it created a heads I win, tails you lose type of situation between the class and defendants. And then the second thing that it meant is that essentially there were no small dollar class actions, meaning small dollar to individual class members. Obviously in the aggregate, that can be significant damages, but there was no small dollar per class member class actions, mostly because there's a cost for class members to follow along with the case, see the pleading, see what happens, and if they want to make an appearance, gather the proof to prove that they're class members and what have you. And you're just not gonna do that if you're entitled to 50 bucks or a hundred bucks, or what have you. And so prior to 1966, there were essentially no small dollar per class member class actions. That changes in 1966 when the rules committee for purposes of class actions for money damages, which as we'll see is Rule 23 . And that's essentially all we're gonna be focusing on today are class actions for money damages that in that context, it was flipped from an opt-in mechanism to an opt-out mechanism. So now post 1966, if you meet the class definition of a certified class, you are a class member unless you affirmatively opt-out. And so in our previous hypothetical, you bought a Chevy in 1962, you meet the class definition, you're a member of the class and you're bound by whatever judgment comes unless you affirmatively say, I don't wanna be a member of this class and you opt out. The ironic thing was that when this change was being debated, the concern, the fear, the opposition to it was that it was far too favorable to defendants, which is hilarious now. But at the time, the concern was that because of the opt out mechanism that defendants could essentially collude with their favorite plaintiff's attorneys and basically buy off class liability on the cheap. And so a defendant would realize that it screwed up. It would realize that it was facing pretty big liability, even before anyone knew, or before there was a case file, they could go to their, like I said, their favorite plaintiffs class action attorney, or their favorite plaintiffs attorney and say, Hey, man, we have this case for you. Why don't you file a suit? We'll settle on a class-wide basis. We'll give the class very little, but we'll handsomely reward you. And we can all go home and be happy. Everyone's at the class. That was what everyone was concerned would happen. And so the opposition to it came from consumer groups and the proponents of it were mostly businesses and corporations. That is not how it turned out. And it didn't turn out that way, mostly because people simply could not, or did not predict the effect that it would have in that it would incentivize the aggregation of small dollar cases. And so, whereas before they were in the opt in format pre 1966, those cases weren't viable. In the opt out format, they are viable and aggregating small dollar claims, incentivizes and creates a profit motive for attorneys to bring those claims. And that led to the creation of what are essentially all modern class actions, which are predominantly, and for other reasons, curtailing kind of mass Tot type cases, environmental Tor type cases. Most of your class actions today are those small dollar cases. And I don't think that corporations and businesses look back on their support for the 1966 amendment with very much approval or fond feelings. So that's how it passed. Let's move to what Rule 23 actually requires. What is a class action? What do you have to show in order to have a class action, to get a class certified? Rule 23 is broken down into a few sub-parts. First you have to show some threshold issues which are listed in the PowerPoint. We're gonna talk about those a little bit later, so we're gonna skip over those, but for purposes now, there's just a few things that you have to show before you even get to Rule 23. The class is ascertainable, the plaintiff defense of article three standing if you're in federal court, and the class is adequately defined, we'll come back to those in a little bit. The first thing you have to show other than the structural issues are that the prerequisites of Rule 23 are met. And there's four of them, numerosity, commonality, typicality and adequacy. What are these? Briefly Rule 23 , which is numerosity, basically, that just means there's enough people in the class such that joined there is in practical. It's the language that courts use. There's too many people, we can't have them all in one case, it would be ridiculous, and so we can't join them all. That means the class is sufficiently numerous. A lot of circuits say 40 is presumptively enough, some say 21, but the larger point here is, are there too many people to make it such that it's unrealistic for us to say, all of you come in one case and we'll have 50 litigants, and we'll figure all this out. A lot of times that can be easy. You got a thousand, 10,000, a hundred thousand class members. Numerosity is not very controversial. Second one is commonality, which means that there is at least one common question, the answer to which will be equally applicable to class members and will be central towards resolving the claims of all class members. An easy example of this would be recent auto total loss litigation, where the plaintiffs bring a claim alleging that for when a car is totaled, the insurance policy provides that they're entitled to the actual cash value of that vehicle and that actual cash value includes sales tax. The defendant doesn't think sales tax is part of the actual cash value. And so they never pay sales tax. Nobody was paid sales tax. They're all entitled to actual cash value. The answer to the question of whether actual cash value includes sales tax is going to be equally applicable to all class members, and therefore is a common question. That's kind of an easy example. The third requirement is typicality. This one's an interesting one because I think actually the way that a lot of courts frame it is incorrect. So a lot of courts will say that there's significant overlap between typicality and commonality. And they'll try to say that, whereas commonality is comparing class member to class member, typicality is basically doing the same thing, except it's comparing the names plaintiff to class members. I don't think that's right. I think the courts that find that typicality actually overlaps with adequacy, not commonality are much nearer to the mark. But in any event, the main issue with typicality is whether the class members claims rise and fall with the name plaintiff. Are they bringing the same claim based on the same legal theory? Or are there issues or defenses, or what have you that are particular to the named plaintiff that are not particular to the class members? An example could be a case say that was about misrepresentation. Like someone said that a burger, someone sold burgers and said they were veggie burgers and they were not. There's commonality in that case, right? Like if you said it was a veggie burger and it wasn't, that's a misrepresentation, right? So we have a common question, but assuming that reliance is a element of the claim while presumably most all people buy veggie burgers because they're veggie burgers, right. I don't think there's too many people who go on and say, ah, veggie, not veggie, don't really care, I'll just buy the first thing I see on the shelf. Now you buy a veggie burger because it's a veggie burger. But if the named plaintiff was a friend of an attorney or something to that effect, knew that it wasn't a veggie burger bought it so that he could bring this suit. Well, he didn't rely on the misrepresentation, right? They have a pretty strong, affirmative defense that is particular to the main plaintiff that probably won't apply to the punitive class members and so we might have a typicality issue there. But the larger point here is that typicality is meant to ensure that if the name plaintiff prevails so too should all of the class, and if the name plaintiff loses so too should all of the class. And then finally, the last requirement is adequacy. There's essentially two components to this. The first one is, will the class council and are the class council skilled and experienced enough? And does the name plaintiff care enough such that they're going to adequately represent the class. That should not be controversial, it's very rarely the basis for denying class certification. Second one is a little bit iffy. The second component of adequacy seeks to identify whether there's a conflict of interest between the named plaintiff and at least some or all members of the class. A lot of times people think of the conflict of interest as between the named plaintiff and the attorneys' class council. And obviously that can be, I mean, if the attorney is the wife of the named plaintiff, that could theoretically be a conflict of interest and that the fear would be the named plaintiff isn't gonna care about the class. He's just gonna care about his wife making lots of money in attorney's fees. That can happen. It's rare. Mostly what the conflict of interest is seeking to measure is actually whether there's a chance that a jury could find something or the court could hold something that would benefit some class members and harm others. And so an example might be something like a company that changes the way that, changes its pay structure, changes the way that it pays its employees, maybe before they prioritized outcomes and how much people like to you, workplace environment. And they changed from that to prioritizing experience and punctuality or something. Obviously the change in the pay structure is going to help some people and hurt others. If you've been with the company for a long time and you show up one time, then you're gonna see an increase in pay. If you are young and don't show up on time, but you are a great salesperson and everybody likes you, your pay is gonna go down, right? Or if a crafty old veteran of the company files a class action on behalf of the other employees and says, this is breach a contract, you said you were gonna structure the pay one way, and then you tried to change it or vice versa. Well, whatever ruling comes from the court is gonna help some class members and hurt others, right? That's a conflict of interest. And would probably in that scenario, preclude class certification. That's Rule 23 . Rule 23 , which again, we're focusing solely on that rather than or . If you meet the four prerequisites of 23 , then there are two additional factors that must be shown to certify the class under Rule 23 . And those factors really run together. It's predominant in superiority. Predominance is just asks whether the common question that we talked about earlier, does that common issue or that common question predominate over individual questions. And really the best way to analyze this is just to take the elements of whatever claim you're bringing. And for each element, identify whether the proof that that element is met is common proof, will be subject to common proof, or whether each class member essentially would have to submit individual proof to meet that element or to show that element. And so to return to the total loss example that we used before, you're bringing a breach of contract, So we have, the elements are, the existence of a contract duty breach damages. all right. Well, existence of a contract presumably will be met because the defendant will say, yeah, these are all the class members so we have a contract. What is owed and whether the insurance company breached that duty is controlled by the contractual terms. And so if you have a form insurance policy with form language that every insured is insured under, well then whatever is owed and whether that contract was breached depends on the policy terms, which is common proof, right? So we have the first three elements and then we have damages. Well, that might be individualized. In fact, it is individualized. And the hypothetical we used before about whether sales tax is owed because $10,000, you have to look at the value of the vehicle and the state and local tax of wherever an individual insured happens to live in order to come up with the damages amount. So that is subject to individualized proof. But the elements that are subject to common proof, courts can easily find that those elements predominate over the individual element of damages. And in fact most circuits have a rule that common questions of liability predominate over individual questions of damages. But if a few of the other elements, if it wasn't formed contract language, and so you had to you had to submit into evidence your particular insurance policy. Okay, now we don't have common proof for the duty and then you start getting into issues of whether common questions, in fact, predominate. The second one is superiority. And as you can imagine, it often just follows form with predominance because if common questions predominate, then, well, let's back up. The superiority factor asks whether class adjudication is the superior method of adjudication. Is it better to adjudicate this case as a class action? Or would it be better to have some other form of adjudication, mostly individual adjudication? Well, if common questions predominate over individual questions, it's not hard to therefore finds that, okay then class action, class litigation rather is the superior form of adjudication. But if individual questions predominate, then it's pretty easy to find that what individual questions predominate and so individual litigation is better. And so oftentimes, not always, but oftentimes, the superiority factor will just follow form to the predominance factor. All of that to say, what are class actions? Well, the Amgen case, the Supreme Court in 1997 does a pretty good job of essentially encapsulating what we're talking about when we're talking about class actions. There's a quote in the PowerPoint. But essentially what the advisory committee dominantly had in mind, as it says, is vindication of the rights of groups of people who individually would be without effective strength to bring their opponents into court at all. That's what class actions are. When you have cases that nobody would, Judge Posner said, framed it as only a fool or a madman, I think, would bring a case where the cost to litigate exceeds the amount that you would receive in damages. So when you have those types of cases, nobody would bring an individual action, but there might be people who all were harmed to the tune of a hundred bucks, a 500 bucks, a thousand bucks. That's what a class action is. That's the modern conception of a class action. So what happens? You get a class certified. We have a good class action. Now what? Well after certification, the first thing that happens is notice goes out to the class members. The purpose of this it's basically to protect the due process rights of individuals, of absent class members. And so what a notice will do is it'll go out, it'll explain, Hey, looks like from the defendant's records that you're a class member. Here's what the case is about. Here's what the plaintiff is claiming. Here's kind of what the damages might be. And also here are your rights. One of those rights being to opt out of the class, if you don't wanna be bound by whatever judgment comes, win, or lose, then you have the opportunity to opt out and you can file your own case if you want. Or if you do nothing, you're sort of saying, okay, I'm hitching my wagon to this case, whatever happens, win or lose, will be binding on me. There are some provisions in there which we'll kind of skip over for now, but basically what type of notice has to be provided. Generally, if you have contact information, if you have an address or email address, you gotta give direct notice. In some cases it might be noticed by publication on a website or what have you. But generally we're talking about direct notice here. The point though, being we've gotta give, we've gotta explain the issues and the facts to the class members so that they can intelligently decide whether to opt out or not. After notice and a period for class members to exercise their right, to either stay in a class or to opt out, then you go to you go to trial or summary judgment on a class wide basis. I'm gonna go ahead and skip to settlement, partly because not too many cases are litigated to final judgment in a class's favor. They can be, I think we've had maybe six or seven over the past couple years that got litigated to a final judgment in favor of a certified class. But they're pretty rare. If class action ends favorably, it's typically due to settlement. And even if you do go to get a final judgment in favor of a certified class, typically unless you're reversed on appeal, it's gonna settle anyway to resolve some of the issues related to, well, A to avoid an appeal, but also B how are we gonna distribute money? How are we gonna provide notice? Some of those issues usually end up settling anyway, even if you do have a final judgment in favor of a certified class. So we're gonna go ahead and skip to settlement and assume that it was resolved favorably to the class in the form of a settlement. How do class action settlement work? They're governed by Rule 23 . There was a recent amendment in 2018 that had a somewhat significant impact on class settlements. But the basic structure has always been the same, which is that the parties, they reach an agreement. They go to the court and they seek preliminary approval. Preliminary approval is typically not too stringent. The court's essentially looking at, make sure there wasn't collusion, that there was no fraud, that there was negotiations at arm length and what have you. And then yes, looking at the settlement agreement, typically just to make sure that it's not clearly deficient, that they're not settling a claim worth a hundred bucks per class member, and it's a good claim and they're settling it for five bucks or something like that. But generally, as long as there's no fraud, no collusion, and that negotiations occurred at arm's length, preliminary approval is almost always going to happen. If the settlement is preliminarily approved, that then allows for notice to be provided to class members where the terms of the settlement and what they might expect to receive from the settlement are explained, and also gives the class members the right to object to the terms of the settlement if they so choose. This is not my area of expertise. I've never had an objection to a class action settlement, so I've never had to deal with it. But so to be brief, though, there's essentially three classes of objectors, one of which are harmful, one of which is useful and the other of which is basically pointless. The harmful type of objectives are serial objectors, who don't actually care. They're just kind of seeking a payout. And so you might have people who file an objection and then immediately reach out to the parties and say, Hey, I can hold this up for a year and we can go up on appeal and you can be delayed and all this can be held up, or you can gimme 10 grand and I can withdraw the objection. That's harder now post 2018 because of some of the changes made to Rule 23 , but that's one type of objector. The other objector, the useful objector are what might be called serial objectors, although that's a pejorative, but people who object a lot, but they do so for substantive purposes. These are your, for those of you who are steeped in class action litigation, these are your Ted Franks. These are your guys who really do bring a benefit, oftentimes not always, but oftentimes really do bring a benefit in that they do identify some weak settlements and oftentimes there are substantive improvements as a result of the objection, or they successfully stop a settlement from going through because it should be stopped. Again, that isn't to say that anybody always agrees with the settlements to which they object, but they're operating in good faith and they have substantive reasons for their objection. And then the third type of objection is kind of the pointless ones, which are just the one offs where you get a handwritten note to the court from someone saying that they love this company and this company would never do anything wrong to them and they just can't even believe anybody would file suit against this company, and what have you. And those those are adorable and generally have no effect on anything. After the objection periods, the parties then move for final approval. And that's when the close scrutiny typically occurs from the court. Both because if there are objections, they have to deal with the objections and the response to the objections. But also they generally, at that point, whether based on objections or not take a closer look at the settlement agreement and decide whether to prove it as the final judgment in the case. A few factors, which we'll go over pretty quickly here. There's some threshold procedural factors that are addressed before you even look at the benefits, the substantive benefits to class members, the most obvious being whether there was any, again, whether there was any collusion, any fraud. Collusion is probably the better way to put it, fraud sounds terrible, but collusion, in the sense of that, negotiations were not occurring at arm's length. Obviously the best way to solve this is just to have a neutral involved in the, a mediator or an arbitrator involved in these settlement discussions who can say, look, I was there, they were negotiating at arm's length, there was disagreements, there's no collusion here. And you can avoid that. There's some indicia of collusion, even if there's not explicit, which we'll talk about in a second, but the best way to avoid that is to have a neutral, to have a mediator involved and integral to the process. Another one, which I don't have here, but another kind of threshold question or procedural factor is the information base that the parties had, especially the class council prior to agreeing to a settlement. What courts don't want is for class counsel to file suit not really know anything about discovery or the strength of the claim or the pros and cons, and just settle early prior to having inadequate information base. For good reason obviously, you don't want, class counsel's gotta come and say, we think this is a good deal. Well, how do they know if it's a good deal if they haven't explored, if they haven't taken discovery, if they haven't taken depositions? So that is say you have to litigate ferociously for years, but at least show that you got enough information that you can intelligently tell the court, this is why I think it's a good deal, this is why I took the deal on behalf of the class. If those threshold factors are met, then we move to the actual substantive benefits. The primary question here is, okay, what are the benefits that are provided to class members? And how do they compare to the total amount of damages that they would've secured if they had prevailed entirely at trial, multiplied by the probability of success. So to make it easy, if you have a claim that if you prevailed totally at trial, you'd make a hundred bucks per class member, and maybe you had a 50-50 shot at prevailing at trial. While if you settled for 50 bucks per class member, that's obviously going to be fair, that's obviously going to be adequate, and even less to some extent because you're avoiding costs that would otherwise come from the class and you're avoiding delays and time is money and all of that. So it doesn't have to be 50 bucks, it can be less, but once you start getting into the $5, $10 range for a pretty good claim, maybe that's not fair anymore. I think just my personal opinion is that courts actually give two short shrift to this factor and are overly focused generally on some of the procedural questions and particularly on the amount of attorney's fees to where you can get into a situation where if the primary focus is not on the substantive benefits, but on these sort of other peripheral factors, you can get a situation where you have a claim that's potentially worth, call it a hundred million dollars. And a very good attorney does a very good job and gets a 70 million settlement or call it an 80 Million settlement and ask for 25% in fees. And a court can say, no, 20 million, what a windfall, that's indicative of collusion or what have you, and not focus on the fact that even taking that away from the class, so they're still getting 60 cents to the dollar, and you have the same claim and someone can, a bad attorney can do a bad job and agree to a 10 million settlement and only ask for a million bucks in fees. And courts might say, oh, what a reasonable guy, only seeking 10% of the $10 million. This looks like a good settlement. Well, but now that class is getting 9 cents on the dollar, now that's an extreme example, but one thing I think the trend's changing a little bit, it is getting a little bit better, but I think one thing that could benefit class litigation, class members and just jurisprudential philosophy in general is if courts actually spent a little bit more time looking at the benefits and work quicker to not approve class action settlements, where there may not have been any collusion and the attorneys might not be seeking that much in fees, but the class just isn't getting enough. You rarely see a class action settlement denied solely because you know what, the class, they should have gotten more for the class. I remember seeing one from judge Byron in the middle district about two years ago and was just shocked cause it's very, very rare. Another factor is just a notice in claiming process. A lot of class action settlements require class members to submit claims, which is often unavoidable. But the question is whether that process is unnecessarily burdensome. It's one thing to have someone submit a claim because they have to confirm their address or they have to provide contact info or what have you, that might be necessary. But if the claim form requires class members to provide their social security number and the names of all their children and agree that if there's any, that if it's a false claim, they have to donate their kidney to the defendant or whatever. Okay, clearly what we're trying to do here is just keep the claim rate low and class actions elements often won't be approved if the claim process is unnecessarily burdensome. And then the last question is just one of attorney's fees. Are the attorney's fees reasonable. Now, presumably oftentimes if the attorney's fees, if a court deems attorney's fees excessive, a lot of settlements will put as a part of the settlement that the amount of attorney's fees is not a material part of the agreement. And so the court can chop the attorney's fees without disapproving of the entire settlement, which is often what happens, if court lowers the attorney's fees, that doesn't mean the settlement goes through. It just means the attorney's fees are lowered. Occasionally if the attorney's fees are so excessive, they can raise questions as to the fairness of the settlement in general, and could theoretically lead to the settlement just being disapproved entirely and the parties have to either starter over or go to trial. But oftentimes a reduction in attorney's fees isn't going to jeopardize the settlement in general. A good example, if you're looking for a lot of these issues in what can derive a class action settlement, there's a case, it's in the PowerPoint from the ninth circuit from last year, had an entertaining opening line that said we can perhaps sum this case, is how to lose a class action settlement in 10 ways. And if you're interested in knowing what to avoid, that case is a good way to start. The only thing I would quibble with is one of the things that the ninth circuit listed as a way to lose the class action settlement is that the defendant agreed not to challenge the plaintiff's attorney's fees amount. You often see courts highlight this issue called a clear sailing agreement where basically the plaintiff's attorneys agree, we're not gonna seek more than whatever $2 million in fees. And the defendant says, okay, well, we won't oppose a request for $2 million in fees. The court still has to approve it, but it's not gonna be a litigated fee hearing. And courts will say, well, that's indicative of collusion or whatever, but it puts parties into sort of a damned if you do, damned if you don't situation, because if there isn't an agreement as to attorney's fees, an agreement in the sense that the defendant's not going to oppose it, and so it's litigated, well then courts all of a sudden say, ah, this is the most useless form of litigation. The ideal is for the parties to agree on attorney's fees. Why are you wasting my time with this? And then if you turn around and agree, all of a sudden, ah, is that collusion I see. So it could put the parties into a tough spot, particularly if the there's a fee shifting provision anyway, under the statute or law issue, cause in that situation it's not indicative of collusion at all. It's just the plaintiff might think that they could get a fee award of 5 million based on their load star and raids and multiplier. And the defendant might think they can only get two and a half. And so they agree to three and a half because that takes away the risk for both. So I think courts are a little bit too quick to harp on that, which the ninth circuit did, but a lot of the other issues raised in the ninth circuit are pretty useful as a list of things to avoid when negotiating a class action settlement. So some of the key legal developments in cases that have developed class litigation, and we're running pretty long so far, so I'm gonna run through these pretty quick. They're all listed in the PowerPoints CAFA, which has just moved a lot of state class actions into federal court, had a big effect. There's a couple listed there. The big one's probably conception, which was sort of the last of the myriad of arbitration cases throughout the 80s, 90s and into the 21st century where essentially the court transforms arbitration from, Congress said in the FAA, essentially you gotta treat arbitration agreements in a contract the same way you would treat any other provision in a contract, they're on the same footing because courts had been basically finding any reason that they could to avoid arbitration prior to the 1920s, 1930s. And so Congress said, okay, court, stop doing that. Just treat arbitration, let you treat any other contract. And throughout the 80s and then into the 90s, and now a few recent cases in the 2010s the Supreme court has interpreted that as meaning that any doubt about whether there's an agreement's arbitration has to be resolved in favor of arbitration, which is sort of an odd textual analysis, but there it is. And so that has had obviously a huge impact on classification which we'll get into a little bit later. Some of the other key legal developments in cases, I skipped a little bit ahead in the PowerPoint, but I list Mullins and Carra, that's basically a debate between circuits on the question of ascertain ability, Shady Grove, which just confirms that in federal court state procedural rules can't be used to curtail class litigation if the elements of Rule 23 are met. And then TransUnion, which relates to article three and we'll discuss in just a second. First, let's start though with ascertainability, which I had mentioned before was one of these threshold issues that have to be shown in order for a class to be certified. Prior to Carrera, which is the third circuit case, ascertainability was really about the class definition. And it asked whether the class was defined with reference to objective criteria. And the idea here was that if it wasn't and you couldn't identify class members without sort of mini hearings as to their state of minds, well, how do you show the elements of Rule 23 are met? How do you know if the class is numerous if you don't know whether someone's a class member until you examine their state of minds, then how do you show that there's any class members at all, let alone 40 or however many that you need. Same thing with predominance or superiority. How do you even determine whether those elements are met if you have to have, if you, if you have to first inquire as to the state of mind of class members. But if it's defined with reference to objective criteria, well then we have an ascertainable class. The class members are identifiable. In 2013, the third circuit came and said that that wasn't enough, objective criteria wasn't enough that to meet this ascertainability requirement, which is itself not in the text of Rule 23, it's an implied requirement. To meet that implied requirement, you had to show, not only that class members were identifiable by reference to objective criteria, but also that doing so was administratively feasible, which basically meant we have, the defendant has to have records of them. And so if you get into a position where it's say the sale of a retail good or whatever, and the manufacturer, the defendant doesn't know who Walgreens sold its product to, Walgreens probably doesn't know who Walgreens sold its product to. So you're in a position where it is objective criteria. You either bought the product or you didn't in a given location during a given time. So it is objective criteria, but to prove it, you essentially need the class members to say, yeah, I bought it. You have to accept their say so almost. And so the third circuit didn't like that and said that in that scenario, that's not administratively feasible, cause the defendant either has to have the rights to question the affidavit, which would mean that the class isn't superior or we're just going to remove the right from the defendant to be able to do that, which implicates their due process right. It's not a terrible argument, but, and it actually was adopted by many district courts and then unpublished opinions by a few other courts of appeal. Seventh circuit came out and disagreed in 2015 and basically said, this is nowhere in the text of Rule 23. And sure defendants have a due process right to challenge class membership, but they don't have a due process right to challenge class membership in a cost effective manner. It's up to them whether they want to take the time to hold these hearings and cross cross examine the class members. And for a while, that's where it sat. You kind of had the third circuit saying, there is an administrative feasibility component to ascertainability. And the seventh circuit saying there wasn't. There wasn't much movement other than at the district court level, but recently the ninth circuit, and even more recently, the 11th circuit, they've come out and agreed with the seventh circuit in finding that there is not administrative feasibility component to ascertainability. And as of now, the third circuit really stands alone. I think maybe the first circuit still has an unpublished opinion on it, but that's been a key development over the past couple years and allowed for more kind of retail good type class actions. The other key development recently is the TransUnion case from last year where the Supreme court held that a statutory violation alone is insufficient to establish jurisdiction, article three standing. In other words, an invasion of your legal private right is not enough. You have to show an additional factual injury in order to establish article three standing. I 100% disagree, but the point is, it doesn't really matter for our purposes. The question is what effect will that have on class action litigation? And oftentimes when we're talking about statutory violations alone, we are talking about class actions. Because again, you might have statutory damages of a thousand bucks or whatever, but an individual's not gonna bring that case. So oftentimes we are talking about class actions. And the effect is essentially to move statutory causes of actions that are class actions from federal court to state court. Justice Thomas in his dissenting opinion made precisely that point, state courts aren't constrained by article three and they have plenary jurisdiction. So the effect is that when your TCPA cases, your FCA cases, a lot of them are gonna end up in state court rather than federal court, which is ironic, precisely because it was businesses and corporations, defendants in other words, who were strong proponents of and were the reason for the passage of CAFA, the class action fairness act, and the whole point of CAFA was to make it easier to get class actions to federal court under the theory, which might have been, which might have been correct that state courts, you got your hometown judges who were on the bench because their trial attorney friends got them elected and these big corporations are coming in and they're getting railroaded by these friends and hometown judges given big attorney's fees and outrageous opinions and whatever. So let's get it outta there. Let's get it to federal courts, more objective, it's they're appointed for life. And so CAFA made it easier for that to occur. And now with TransUnion and Spokeo before it, but especially TransUnion, we're in a situation that at least for statutory causes of action, oftentimes we're gonna be right back to state court. All right. So that was obviously probably longer than I wanted. So I'm gonna move pretty quickly through these public policy debates about class kind of what we were just discussing, class actions, the theory behind them. I'm gonna start with some criticisms. You have different criticisms from the left side of the political aisle, let's call it, or end of the political spectrum versus those that you get from the right. So what's interesting to me is that after the passage of, after the amendment, rather of Rule 23 in 1966, the first real effort to get rid of Rule 23, essentially, or at least significantly amend it actually came from the left, came from Ted Kennedy and a few other senators on the left who were acting in accordance with the Carter administration. And their theory is what became the primary criticism of class litigation from the left. The theory is essentially we want, there will be, there has to be, and we want regulation of companies, of businesses, of corporations, of defendants. The question is, is it gonna come from the private sector or is it gonna come from the state? And Ted Kennedy and the leftist criticism of class actions is that they want it to come from the state. They don't want the private sector to be the one regulating businesses and corporations. And so it's kind of a classic big government, small government divide in that there needs to be regulation. We think we need to fund regulatory agencies more than they are so that they have more of the ability to regulate and to go after these businesses corporations when they do wrong. And we don't want that regulation coming from the private sector, cause it could be arbitrary or what have you. So that's kind of the primary criticism from the left. So the primary criticism from the right, rather than being, the primary criticism on the left is kind of anti corporation, but anti private enforcement. The primary criticism from the right is anti private enforcement, but it's more pro corporation. It's kind of the stereotypical complaint is class action attorneys are all greedy. They're inventing these cases. Most of them are without merits and they're doing it just to use the threat of huge liability and damages to kind of get these nothing nuisance settlements, right? The idea being that most of these lack merits, and certainly the cons outweigh the pros, that sure, there might be a meritorious case here or there. Certainly we do want accountability when corporations do wrong, but that's rare, and it's not worth the 90% of cases that are silly and are basically extorting these corporations under the threat of big liability. I don't agree with it, but there it is. And listed in the PowerPoint by the way, are a few really good examples, both from the left and the right sort of outlining some of these criticisms that we've been discussing here. So then what are the defenses? Well, I'll start with the primary defense from a more conservative perspective, a very good example of this by the way, is "The Conservative Case for Class Actions", which was a book written by Professor Fitzpatrick. Brian Fitzpatrick is a professor at Vanderbilt and a former Scalia clerk. It's a good little book. But basically the defense is except the premise of the Kennedy criticism, that okay, there's going to be regulation. The question is, should have come from the state or from the private sector. Except that the defense is, well, it should come from the private sector and kind of the classic conservative and libertarian economic philosophy is that the private sector is more efficient and less corrupt than the government. And so someone with a profit motive is gonna get more damages and is gonna do it more efficiently than a salaried employee for the federal government or state government. And they're less susceptible to corruption because if Walmart crawls over broken glass to get a president elected, how likely is it, or so goes to theory, how likely is it that that president is gonna then turn around and tell his subordinates that they need to go after Walmart and investigate Walmart. And if something's awry, maybe not too likely. And also the more, classic corruption is also more likely for the government. I mean, if a corporation pays off the head of an agency not to investigate it, then that corporation doesn't get investigated. But if a corporation pays off one class action attorney not to bring a claim, well, there's 10 more that'll take its place, right? And so that's the primary defense from the right. The private sector is just better at this and always has been. And we need to know that based on economic principles that have been proven correct over hundreds of years. The primary defense from the left is that they look at Ted Kennedy's criticism and saying, oh, we want state regulators doing the regulating, not the private actors. And then they say, why not both? The main problem we have is big business and these cheating corporations and businesses. And if the state wants to go after them great. And if class action attorneys want to go after them, great. And if they both wanna go after them, all the merrier. That's basically the primary defense from the left. It's beyond the purview of this course to kind of get into the merits of the various cases, but we've hopefully provided you some resources that can, if you're interested in some of these debates, those can get you started. And I love talking about this stuff so feel free to reach out to me if you just wanna talk about it. You'll have my contact info at the end. Alright. So finally getting into part three, which is kind of class litigation in practice. What's the lay of the land? Well, a few things. First, obviously there's the trends towards more class actions going back to state court rather than in federal court, although it's hard to see what the impact of that is so far. Another trend is the Supreme court a year ago or so decided a TCPA case, the Facebook case in which they, the TCPA by the way is very oddly written, let's put it that way. And so there had been a divergence of opinions on how to interpret a key component of the TCPA, and the Supreme court adopted an interpretation that significantly narrowed the type of TCPA claims that can be brought. And in response, several states, most notably, Florida, and then recently Oklahoma adopted essentially state equivalent to the TCPA. So you're starting to see a lot of smaller class actions maybe being brought in state court that essentially mirror what had previously been TCPA cases. And so that's another interesting trend. We'll see how that goes over the coming years. What's interesting is that both Florida and Oklahoma especially Florida, are, the legislature is heavily dominated by the Republican party. But this regulatory bill, which you would think would generally, you wouldn't think regulatory bills often come and are drafted by ends passed by heavily Republican legislatures. But I guess they were confirming one of the points or one of the lines that the Supreme court had, even as they narrowed the TCPA. In the opener Justice said something to the effect of Americans don't really agree on anything anymore. But one thing they do agree on is that telemarketing is the worst, and that is being shown as these Republican legislatures turn around. They couldn't pass a regulatory piece of legislation fast enough. But that'll be interesting to see some of those work their way through state court. The primary issue, not primary issue, the key issue now in classification though, are what's subject to arbitration and what's not. And so we're seeing a rise in investigations of, and the bringing of cases where arbitration is usually not an issue. And so insurance, you're seeing a rise in insurance class actions, bank fee cases. A lot of times, things where you won't be subject to a contract, or if you are, the contracts for whatever reason, just often don't have arbitration provisions. Insurance policies have appraisal provisions and so they don't have arbitration provisions, but appraisal can often be avoided. I'm not very experienced in bank fee litigation so I'm not really sure why banks don't have arbitration provisions. I'm assuming there might be some specific federal regulation about it, I don't know, but for whatever reason they aren't. And so there's been a significant rise, especially in state levels smaller bank fee cases. And then a lot of statutory causes of action, because oftentimes there aren't contracts involved in that. Your TCPA case, the whole point is you're telemarketing to someone you don't know if it's a viable claim. And so often those aren't averageable and so definitely arise, especially with these many TCPA cases. On the flip side, kind of your consumer good where you're signing a contract, virtually all of those are gonna have arbitration provisions now. And so rental cars, cable companies, cell phones, car purchases, a lot of those claims simply aren't viable anymore. And so that's kind of the first issue. Anytime you're evaluating a claim is okay, is this claim arbitrable. Now the exception would be that there are some cases in which case firms are saying two can play at this game. And there's definitely been a significant rise in mass arbitration, which is basically when someone, it is what it sounds like, someone files 30,000 arbitration to sign up 30,000 clients, they file 30,000 arbitration agreements and tell the defendant, okay, what do you do now? And a recent example of this was, I think something like 34,000 individual arbitrations were filed against Uber based on some discrimination claim. And Uber's response was to have its eyes opened about how sometimes class actions are really good. And so they sued AAA the arbitration company and made the argument, we don't owe them something like $90 million in fees, because this is really just one case and it should be decided on a classified basis and we don't wanna pay them all this money. And the New York court of appeals wasn't really having any of it and said, you drafted the contract and you've defended the class action waiver, and you've defended the arbitration for vision in court. You can't turn around now when it suits you and say, oh, nevermind, we like class actions in this case. Those can be pretty difficult though, because it it has to be a very specific type of claim where you don't really have to look at very many documents because obviously if you do, then that makes it inefficient. But enterprising attorneys are figuring out ways to make it work. And it'll be interesting to see if that has an effect on defendant's willingness to even include arbitration provisions in contracts moving forward. But it's a little bit too early, I think, to tell whether it'll have that much of an impact or not. Let's end then by sort of briefly discussing, maybe if just a few pointers food for thought, I'm not gonna pretend that I'm some great attorney, has awesome advice for everyone or whatever, but just a few things, take it or leave it, take it for what it's worth. Thinking through tactics and strategy and actually litigating class actions. Start from the plaintiff side. I'm actually following along in the PowerPoint as I go. And I see now that it says, start from the beginning and work backwards. That's a very difficult thing to do. That should say, start from the end and work backwards. The basic principle here is that, and this is just my framework or analysis when I'm evaluating whether something is a viable class claim, which is, I just start at the very end. Assuming we prevail, how are we distributing the money to class members? Do we have their addresses? Do we have their contact info, what have you. That depends in turn on what are the measure of damages? Is this gonna be a case where they're individually calculable or is this an aggregate damages case where there's an aggregate amount and there's gonna be some sort of a provided distribution to class members. That question in turn then determines what you, or that question rather depends in turn on what the theory of liability is and how you're gonna prove causation. So now you're in the trial, you're discussing trial and so on and so forth. You move your way backwards from there to class cert, I think the most effective way of writing, drafting a motion for class certification is to basically just tell the court, here's what trial's going to look like. Here's what trial's going to look like. And because we can explain it to you, it can be done on a classified basis. And then you work backwards from there on the elements of Rule 23. But the primary point is court, don't be worried we can have a trial and here's what it's gonna look like. We already know what it's gonna look like, and then work your way backwards from there to the complaint. Now what's the import of this. The point is one of the debates that plaintiff class actions attorneys can have is how thoroughly to plead the, how much to give your actual theory of class-wide liability in the complaints. Because what that means in effect is listen, you should be able to survive the pleadings, right? If you're not worried about sort of the class component of it, if you're just worried about surviving a motion to dismiss, you should be able to do that. It's not hard to avoid a motion to dismiss. But oftentimes what that can do is just kick the can down the road. I'll give an example. There's cases out there now, I'm involved with some of them, but cases that have been filed, where again, their total loss cases and insurance companies, what they're doing is in determining the amount of money a car is worth, they're taking comparable vehicles listed for sale, and they're making various adjustments to them. One of which is what's called a sale adjustment or a negotiation adjustment, or what have you. And their theory is car dealers list cars for 22,000 but that means they're willing to sell them for 21,000. And the plaintiff's theory is that that's not true. If a car's listed at 22,000, especially today, especially since COVID, car's listed at 22,000, it's selling for 22,000, maybe even more. And so the theory is that projected sole adjustment or that negotiation adjustment, that that's made up, it's invented, it's not supported by the market, right? If you make that theory clear in the complaint, you're more likely to get dismissed on the pleadings because a court is more likely to say, well, more likely than the alternative. So the alternative way of pleading it right, is just defendant said that the car was worth this much. They made a bunch of mistakes. They picked the wrong vehicles, comparable vehicles. They did some other adjustments. I'm gonna prove it. And I say, actual cash value isn't what they say. I say it's higher. Well, that survives the pleadings. Actual cash value is a question of fact. A jury might agree with the plaintiff and not the defendant for whatever reasons you're gonna survive the pleadings. But you just kick the can down the road, right? Because then when you get to class cert, that can't be your theory at class cert. Theory at class cert has to be this specific component, this adjustment based on negotiation, I think is illegitimate. And if it's illegitimate for one person, it's illegitimate for everyone else, there's no justification for it, right? Well, that might get you through class cert, but now the court knows what your theory is. And the court can say, well, there's nothing in the policy that says, this seems like a reasonable thing to me. And I don't see anything in the policy that says they can't do this very specific thing. So I'm gonna rule against you at summary judgment when I would've ruled against you on the pleadings if I had known what your theory actually was, except that in the meantime, you've incurred $250,000 in cost hiring your experts and everything. So yes, pleading it one way can make it more likely to get through the pleadings, but really as a plaintiff's class action attorney, if I'm gonna lose, I wanna lose on the pleadings. And so I want my complaints to match class certification, which is going to match the trial. Rather than sort of taking it one step at a time, seeking to get past the pleadings and then figure it out from there. The rejoinder might be from, some people would say, yeah, but if I can get past the pleadings and I can wrangle lot of the settlements somehow, which if that's your perspective, then God bless you, I suppose. A part of that by the way, means also identifying those areas of the claim that you're not going to be able to class out basically, which means oftentimes narrowing, unless it's a statutory violation type of case, making it a narrower claim that otherwise might be able to be. There might be a component of the claim that's classifiable and a component that's not. Well, pigs get fed, hogs get slaughtered, bring the narrow claim. Now there can be an issue raised as far as claim splitting goes, where you're essentially waving that part of the claim because it's not certifiable, and the defendant can argue while they're waving the claim on behalf of the class, the class gonna be bound by that, that makes them inadequate. Oh, I'm usually not too worried about that. I wouldn't be too worried about that. A, because there's at least some law that claim splitting doesn't even apply in the context of class action, at least in the fourth and sixth circuit. And second that's what the notice is for, that's what the ability to opt out is for. You can give the class notice and say, Hey, look, we're seeking 500 bucks in damages on your behalf. There's a chance that you have a claim for 2000. We're not seeking that. So if you wanna bring your case for 2000, by all means, opt out and file your own individual action. Their due process rights aren't being affected as long as they're provided notice of that. And meanwhile, getting the class certified for $500 per class members is better for you and better for the class than trying to get the class certified for 2000 and getting certified for nothing or not getting certified, I guess, is a better way of putting that. Those are just a few tips from the plaintiffs side. From the defendants side, kind of the flip side of the argument that I was just making, I'll put it like this, cause I would not to tell the defense bar what to do and what not to do. I hate when defendants answer complaints, I can't stand it. And I love when they file a motion to dismiss. Again, because if I'm gonna lose, I wanna lose on the pleading side. I don't wanna lose on summary judgment. In fact, there was at least one instance where we voluntarily dismissed the case because there was an answer. Thought it was a pretty good claim, but I wasn't sure. And I wanted to kind of find out. It was a pure question of law and I just wanted the legal determination from the court on the pleadings. And wasn't gonna incur the cost to prove up class cert only to find out that maybe I was wrong. Obviously nobody's harmed by that because nobody's rights were affected. The class hadn't been certified yet. So anyway, all of that to say I can only give you my perspective and take that how you will. The second thing that I like to see from the plaintiff's side, when I get an opposition to class certification is a focus on predominance. I love seeing that. What I don't like seeing is a focus on adequacy and typicality, cause I think that is the much harder argument to refute. And basically this comes down to a question of due process. And so the problem with focusing, from my perspective, what makes it easier to persuade a court to reject arguments from defendants opposing predominance is that usually those come down to, it's more in theory. Oh, there could be this individual issue. We might have this individual issue. And it's not that hard in theory to tell the court like, Hey , don't worry about that. It's probably not even gonna come up and if it does, we can deal with it. In any event, this is the central issue and it's clearly predominant over these little hypothetical things that defendant's bringing up. The typicality adequacy argument can be more practical in the sense that the defendant isn't saying, oh, we don't wanna have to deal with all these individual issues. Look at all these individual issues we might have to deal with. And that's just gonna take a lot of time and cost a lot of money. And it means that there's no predominance. Reframing that as a, oh sure, we'll be happy to deal with all these individual issues and these individual arguments that we have and these individual affirmative defenses and what have you. But when, when is that going to happen, your honor? That's the argument of, the plaintiff isn't calling all of the class members to trial. We're ready, we have these defenses, we want to cross examine about them. We've talked to employees, our employees, and they have these things they wanna raise as far as conversations they had with the insured or the consumer, whoever. And we need to get to the bottom of this to whether that means they released the claim or they would have you, but when is that going to happen? Because oftentimes from the plaintiff's side, what you're doing is like, okay, if there's questions of damages or what have you, those could be done in hearings or under the magistrate or whatever, and kind of set it aside. But if the focus is on, no, this goes to arguments we have about class members that go to liability and that we're eager to have, and we want to get to the bottom of, and to be able to do so we need to cross examine them. When is that going to happen? Either it's never going to happen, in which case our due process rights are being taken away or it is going to happen, but it can only happen from a plaintiff against whom we don't have these arguments, which is an adequacy problem, right? So the plaintiff can't get the evidence that the class, if the class member was there, that they would be able to bring their own evidence, their own state of mind, whatever. They would be able to refute it through evidence that they have, that plaintiff doesn't have access to. Plaintiff can make the argument, but doesn't have the evidence, which means it's a weaker argument, which means they cannot adequately represent the class member because they are not typical of the class member. We don't have this argument against plaintiff. We have it against the class members. Plaintiff either doesn't make the argument because they have no interest in it because we don't have the argument that's to them, or they do but it is inevitably a weaker argument than the class member would make were the class member there because the class member would inherently have his actual perspective, not conjecture from the named plaintiff. I don't know if that makes sense, but I think that line of argument better made obviously, and tailored to the specific case can in many instances, be a much more effective argument than focusing on predominance. And oftentimes predominance for whatever reason seems to be the focus of oppositions to class cert. I'll go ahead and end there. I'm a few minutes over. I had a lot of fun doing this. I hope there was at least a few little tidbits and nuggets in there that everyone could get something from. If you want to discuss any of this, if you want to reach out, if you just wanna argue about class litigation and class action theory, I very much enjoy that. So feel free to reach out to me. Our website is Normanspllc.com. Most of my contact information is on there. If you want to email me, it's [email protected]
And yeah, really enjoyed it. Hope you guys did too.