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The U.S. Supreme Court issued its decision earlier today in Halliburton Co. v. Erica P. John Fund, Inc., No. 13-317 (Halliburton II), its most highly-anticipated class-action-related decision of the October 2013 term.  Those who were hoping for a sea-change in securities class action jurisprudence were left disappointed, as the Court, in an opinion authored by Chief Justice Roberts, declined to overrule its 25-year-old decision in Basic Inc. v. Levinson, 485 U.S. 224 (1988).  Rather than abolish the framework established in Basic, which provides a means for securities fraud plaintiffs to satisfy the elements of class certification through a class-wide presumption of reliance on material misrepresentations, the Court instead held that a defendant can rebut the presumption by demonstrating, at the class certification stage, that the alleged misrepresentations did not actually have any impact on the stock price.  In doing so, the Court reversed the Fifth Circuit Court of Appeals’ decision barring the defendant from offering evidence of non-impact on stock price at the class certification stage.

The Court distinguished its earlier decision in the same case, Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. ___ (2011) (Halliburton I), in which it held that a plaintiff should not be required to prove materiality of the alleged misrepresentation at the class certification stage.  The distinction between the issue of materiality of a misrepresentation (a merits issue not appropriate for the class certification phase according to Halliburton I), and the issue of whether a misrepresentation actually had a common price impact on the stock (a proper class certification question according to Halliburton II) is the key to making sense of the Court’s decision today.  As Justice Roberts stated:

[P]rice impact differs from materiality in a crucial respect. Given that the other Basic prerequisites must still be proved at the class certification stage, the common issue of materiality can be left to the merits stage without risking the certification of classes in which individual issues will end up overwhelming common ones. And because materiality is a discrete issue that can be resolved in isolation from the other prerequisites, it can be wholly confined to the merits stage.

Price impact is different. The fact that a misrepresentation “was reflected in the market price at the time of [the]transaction”—that it had price impact—is “Basic’s fundamental premise.” Halliburton I, 563 U. S., at ___ (slip op., at 7). It thus has everything to do with the issue of predominance at the class certification stage. That is why, if reliance is to be shown through the Basic presumption,the publicity and market efficiency prerequisites must be proved before class certification. Without proof of those prerequisites, the fraud-on-the-market theory underlying the presumption completely collapses, rendering class certification inappropriate.

Halliburton II, slip op., at 21-22.  In other words, a merits question that is indisputedly common to the class should not be considered prior to class certification, but a merits question that also bears on whether the issues to be resolved at trial are truly common or individualized in the first place must be considered as part of the class certification decision.

It’s not too late to register for this Thursday’s CLE program at the University of San Francisco.  See the particulars below.

CLICK HERE FOR MORE INFORMATION AND TO REGISTER

Who’s in Charge Here?: The Role of Lawyers, Clients, Insurers, and Judges in Class Actions and Mass Tort Litigation

Presented by the Class Actions and Derivatives Suits, Consumer Litigation, and Mass Torts Committees

Thursday, June 19, 2014, 12:00pm – 7:00pm

University of San Francisco Law School, San Francisco, CA

FREE PARKING AND 2 ETHICS CREDITS!!

The Gulf Oil Spill, the 9-11 terrorist attacks, massive product recalls and credit card data breaches—these and other large-scale conflicts generate correspondingly massive litigation, requiring courts, parties, attorneys, and insurers to adapt to increasingly complex challenges.  For this half-day CLE event, we have assembled a distinguished group of judges, academics, mediators, and counsel to discuss some of the most pressing issues facing the various stakeholders.

Our all-star panels will explore ethical and other standards for selecting and evaluating named class representatives; coverage and other current issues surrounding consumer data breach class actions; the balancing of individual plaintiffs’ interests in settlement of mass tort cases; and cutting-edge case management techniques gleaned for among the most tragic mass disasters of our time—the 9-11 attacks and the Gulf Oil Spill.

We are pleased to feature the Hon. Alvin Hellerstein, U.S. District Court for the S.D. of New York—who presided over the 9-11 cases; the Hon. Jon Tigar of the U.S. District Court for the N.D. of California; Tara Kelly, inside counsel at British Petroleum (Houston); Prof. Deborah Hensler of Stanford Law School; Assoc. Dean Joshua Davis of the University of San Francisco School of Law; Thomas Kang at the ACE Group (Los Angeles); and Jocelyn Larkin, Executive Director of the Impact Fund (Berkley), among our distinguished panelists.  Lunch will be provided, and the program will be followed by a sponsored cocktail hour, providing ample opportunities for networking.  Come join us for an enlightening afternoon!

Program Highlights:

  • Whose Class Is It Anyway? –The Policy, Practice, and Ethics Behind the Search for Named Plaintiffs (Ethics CLE Credit Applied for)
  • Recent Developments in Data Privacy Class Actions and Insurance Coverage
  • It’s The Trees Not the Forest – Considering Individual Interests in Mass Torts Settlements
  • Judicial Quasi-Class Actions – Managing MDL and mass tort litigation through judicial control over the appointment of lead counsel, attorneys’ fees, and cost-shifting

Faculty:

  • Hon Alvin K. Hellerstein, U.S. District Court of the Southern District of New York
  • Hon Jon S. Tigar, U.S. District Court for the Northern District of California
  • Professor Joshua Davis, University of San Francisco Law School
  • Professor Deborah Hensler, Stanford University Law School
  • Tara Kelly, British Petroleum, Houston, Texas
  • Thomas Kang, ACE North American Professional Risk, Los Angeles
  • Catherine Yanni, JAMS, San Francisco
  • Jocelyn Larkin, Impact Fund, San Francisco
  • Sheila Birnbaum, Quinn Emanuel Urquhart & Sullivan, New York, New York
  • Paul Karlsgodt, BakerHostetler, Denver, Colorado (Program Co-Chair)
  • Linda D. Kornfeld, Kasowitz, Benson, Torres & Friedman LLP, Los Angeles
  • Karen Menzies, Robinson Calcagnie Robinson Shapiro Davis, Newport Beach
  • Andrew McGuinness, Ann Arbor, Michigan (Program Co-Chair)
  • Rudy Perrino, Walsworth Franklin Bevins & McCall, Los Angeles
  • Rosemarie Ring, Munger, Tolles & Olson LLP, San Francisco
  • Christina Terplan, Clyde & Co., San Francisco
  • Timothy Tomasik, Tomasik Kotin Kasserman, Chicago, Illinois
  • Donna L. Wilson, Manatt, Phelps & Phillips, Los Angeles

Thanks to our Platinum Sponsors!

  • University of San Francisco School of Law
  • Heffler Claims Group
  • Gilardi & Co. LLC
  • Brown Claims Management Group
  • Garden City Group
  • Munger, Tolles & Olson LLP

Gold Sponsors

  • BakerHostetler
  • Clyde & Co.

The California Supreme Court issued its long-awaited decision in Duran v. U.S. Bank National Association yesterday, addressing the use of statistical sampling as a way of evaluating aggregate liability and damages in a class action. Although Duran is a wage and hour case, its analysis is pertinent to the use of statistical evidence in a variety of other class action contexts.

In the opening line of his majority opinion, Justice Corrigan referred to Duran “an exceedingly rare beast” because it was a wage and hour class action that had proceeded all the way through trial to verdict.  In the trial court, the plaintiff had presented testimony from statistician Richard Drogin, who had also notably served as an expert for the plaintiffs in Walmart Stores Inc. v. Dukes.  Drogin proposed a random sampling analysis that purported to estimate the percentage of the defendant’s employees that had been misclassified for purposes of entitlement to overtime pay.  The trial court did not rely on Drogin’s analysis but instead came up with its own sampling approach, which involved pulling the names of 20 class members, hearing testimony from these witnesses along with the named plaintiffs, and then extrapolating the court’s factual findings across the entire class in order to determine the defendant’s liability.

The supreme court affirmed a decision by the Court of Appeal holding that this sampling approach violated due process and was a manifest abuse of discretion.  Generally, there were two independent reasons for the supreme court’s conclusion: 1) the use of random sampling deprived the defendant of the opportunity to present individualized evidence supporting its defenses to the claims; and 2) the sampling method adopted by the court was inherently flawed and unreliable.

Without categorically rejecting the use of statistics as a tool in managing class action litigation, the supreme court identified numerous conceptual limitations on its use.  First, “[s]tatistical methods cannot entirely substitute for common proof . . . .  There must be some glue that binds class members together apart from statistical evidence.”  So, while statistics may serve as circumstantial evidence to support a common issue–such as the existence of centralized policy or practice, they may not be used as a substitute for establishing commonality or for avoiding individualized determination of individual issues–such as by generalizing effects of a given policy or practice on large groups of claimants where the effects vary in actuality.

Second, a trial court cannot utilize statistical evidence in a way that prevents the individual adjudication of individual defenses.  Although courts are encouraged to develop innovative procedures in managing individual issues, a court cannot ignore individual issues altogether or prevent them from being decided on an individual basis.

Third, if statistical evidence is to be used as part of a litigation plan for managing complex class action, the methods to be employed should be presented, evaluated, and scrutinized at the class certification stage.  The court should not simply assume that statistical methods will permit class treatment and certify the class based on this hypothetical possibility.

Fourth, the court must ensure that the statistical method to be employed has to be reliable, based on statistically valid data, and not prone to a high margin of error.  In other words, junk science or ad hoc, rough justice are not enough.

The Duran opinion is worthy of careful study for anyone considering the use of statistics in class certification proceedings, both in the wage and hour context and in class actions more generally.  It also provides a colorful illustration of the due process and manageability problems posed by the “trial by formula” approach to class actions that the United States Supreme Court criticized in Dukes.

Readers, don’t miss this exciting upcoming regional CLE program in San Francisco.  It’s a great opportunity to network with judges, academics, in-house lawyers and private practitioners who share a passion for class actions and mass tort litigation.  See below for a link to the registration page.  Hope to see you there!

CLICK HERE FOR MORE INFORMATION AND TO REGISTER

Who’s in Charge Here?: The Role of Lawyers, Clients, Insurers, and Judges in Class Actions and Mass Tort Litigation

Presented by the Class Actions and Derivatives Suits, Consumer Litigation, and Mass Torts Committees

Date and Time: Thursday, June 19, 2014, 12:00pm – 7:00pm

Location: University of San Francisco Law School, San Francisco, CA

Synopsis:

The Gulf Oil Spill, the 9-11 terrorist attacks, massive product recalls and credit card data breaches—these and other large-scale conflicts generate correspondingly massive litigation, requiring courts, parties, attorneys, and insurers to adapt to increasingly complex challenges. For this half-day CLE event, we have assembled a distinguished group of judges, academics, mediators, and counsel to discuss some of the most pressing issues facing the various stakeholders.

Our all-star panels will explore ethical and other standards for selecting and evaluating named class representatives; coverage and other current issues surrounding consumer data breach class actions; the balancing of individual plaintiffs’ interests in settlement of mass tort cases; and cutting-edge case management techniques gleaned for among the most tragic mass disasters of our time—the 9-11 attacks and the Gulf Oil Spill.

We are pleased to feature the Hon. Alvin Hellerstein, U.S. District Court for the S.D. of New York—who presided over the 9-11 cases; the Hon. Jon Tigar of the U.S. District Court for the N.D. of California; Tara Kelly, inside counsel at British Petroleum (Houston); Prof. Deborah Hensler of Stanford Law School; Assoc. Dean Joshua Davis of the University of San Francisco School of Law; and Jocelyn Larkin, Executive Director of the Impact Fund (Berkley), among our distinguished panelists. Lunch will be provided, and the program will be followed by a sponsored cocktail hour, providing ample opportunities for networking. Come join us for an enlightening afternoon.

Program Highlights:

  • Whose Class Is It Anyway? –The Policy, Practice, and Ethics Behind the Search for Named Plaintiffs (Ethics CLE Credit Applied for)
  • Recent Developments in Data Privacy Class Actions and Insurance Coverage
  • It’s The Trees Not the Forest – Considering Individual Interests in Mass Torts Settlements
  • Judicial Quasi-Class Actions – Managing MDL and mass tort litigation through judicial control over the appointment of lead counsel, attorneys’ fees, and cost-shifting

Faculty:

  • Hon Alvin K. Hellerstein, U.S. District Court of the Southern District of New York
  • Hon Jon S. Tigar, U.S. District Court for the Northern District of California
  • Professor Joshua Davis, University of San Francisco Law School
  • Professor Deborah Hensler, Stanford University Law School
  • Tara Kelly, British Petroleum, Houston, Texas
  • Thomas Kang, ACE North American Professional Risk, Los Angeles
  • Catherine Yanni, JAMS, San Francisco
  • Jocelyn Larkin, Impact Fund, San Francisco
  • Sheila Birnbaum, Quinn Emanuel Urquhart & Sullivan, New York, New York
  • Paul Karlsgodt, BakerHostetler, Denver, Colorado (Program Co-Chair)
  • Linda D. Kornfeld, Kasowitz, Benson, Torres & Friedman LLP, Los Angeles
  • Karen Menzies, Robinson Calcagnie Robinson Shapiro Davis, Newport Beach
  • Andrew McGuinness, Ann Arbor, Michigan (Program Co-Chair)
  • Rudy Perrino, Walsworth Franklin Bevins & McCall, Los Angeles
  • Rosemarie Ring, Munger, Tolles & Olson LLP, San Francisco
  • Christina Terplan, Clyde & Co., San Francisco
  • Timothy Tomasik, Tomasik Kotin Kasserman, Chicago, Illinois
  • Donna L. Wilson, Manatt, Phelps & Phillips, Los Angeles

After years of debate, France has finally passed its first “class action” law. Act No. 2014-344 of 17 March 2014 (relatif à la Consommation) went into effect on March 18. Chapter One of the new law introduces a new collective action procedure to adjudicate claims arising out of anti-competitive behavior and certain other consumer protection claims. Like the group action laws of many other civil law countries in Europe, the new procedure is very different from consumer class actions as they are known in the United States and other common law countries. The law creates a simplified opt-in collective action procedure that can only be enforced by an approved consumer association, not by individual litigants.  However, it is a significant development for a jurisdiction that has long resisted implementing collective action procedures of any kind.

Here is a link to the google translation of the Act in English.

Thanks to friend of ClassActionBlawg Larissa Clare Pochmann da Silva for tipping us off to this new development.

For a more detailed summary of the various aspects of the new law, see this Lexology article authored by Jérôme Philippe, Maria Trabucchi, Stephane Benouville, Dimitri Lecat and Alexandra Szekely of Freshfields Bruckhaus Deringer LLP.

I’m pleased to announce that I’ll be co-chairing an ABA Regional CLE conference on June 19 in San Francisco. The program is being organized jointly by the Class Actions and Derivative Suits, Mass Torts, and Consumer Litigation Committees of the ABA’s litigation section. We’ve put together some top-notch panels on some very timely topics and we hope to see you there. See below for a program synopsis.  Click here for more information and to register.

This half-day CLE event will explore selected key issues in consumer class action and mass tort litigation and the roles played by claimants, defendants, other stakeholders, and decision makers in bringing and resolving class actions and mass disputes. Our all-star panels will cover a variety of topics, all focused around this common theme, including legal ethics, data privacy, and cutting-edge case management and dispute resolution procedures. This program is a can’t-miss event for lawyers, judges, policymakers, and academics alike.

Location:
University of San Francisco Law School
2130 Fulton Street
San Francisco, CA 94117

Event Date & Time
June 19, 2014
12 p.m.–7 p.m.

Registration Fee
Section of Litigation Members and Government Attorneys: $125
Non-Section Member: $185

Renowned notice expert and friend of ClassActionBlawg.com, Shannon Wheatman of Kinsella Media, recently published an article with some insightful tips on ensuring successful notice in class action settlements.  In the article, titled Cutting Through the Clutter: Eight Tips for Capturing Class Members’ Attention and Increasing Response, Dr. Wheatman shares eight specific ideas for ensuring meaningful notice in an age of ever-increasing media fragmentation.  For more information and to download a copy, click the title of the article above.

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