As promised, here are some highlights of my notes from Friday’s 12th Annual National Institute on Class Actions:
What are the Hot Trends in Class Actions?
Following an introduction from Tydings & Rosenberg partner and National Institute on Class Actions founder and John B. Isbister, Columbia Law Professor John C. Coffee kicked things off with his annual review of developments in federal class action law. His review covered trends and key decisions over the past five years or so. He identified several key areas that he believes are likely to be addressed in the federal courts in the near future. They include:
- Who has the burden of proof in establishing or disproving the elements of class certification? Is a mini-trial necessary in which the court makes determinations of fact? If so, then what is the standard of proof? Is burden-shifting appropriate in certain cases?
- Under what circumstances is class certification appropriate under FRCP 23(b)(2) in “hybrid” class actions in which both damages and declaratory or injunctive relief are sought? What types of damages are “incidental” to equitable relief for the purpose of allowing certification under FRCP 23(b)(2)?
- Are civil RICO wire or mail fraud claims appropriate as an alternative to state fraud and consumer protection claims? Is reliance a required element? Can reliance be presumed?
- Is partial or issue class certification available if predominance cannot be proved as to all aspects of a given cause of action? Does partial class certification violate due process?
- Can company-wide, multi-job employment discrimination claims be certified as class actions?
- Are class arbitration waivers enforceable?
Which Decisions Are Class Action Lawyers and Commentators Talking About Most?
Here are some of the recent key decisions highlighted by Professor Coffee and others during the conference:
- In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006) (holding that a district court must resolve factual disputes necessary to make determinations of the elements of Rule 23).
- Teamsters Local 445 Freight Division Pension Fund v. Bombardier, Inc., Case No. 06-3794-cv (2d Cir. Oct. 14, 2008) (discussing the standard of proof for class certification).
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. ____ (2008) (Thomas, J.) (holding that a plaintiff need not show first-party reliance in order to assert a claim under the federal RICO statute).
- McLaughlin v. Philip Morris USA, Inc., 522 F.3d 215 (2d Cir. 2008) (rejecting class certification on various consumer fraud theories, including the “fraud on the market theory”).
- Morrison v. National Australia Bank Ltd., 2008 WL 4660742 (2d Cir. Oct. 23, 2008) (discussing federal jurisdiction over “foreign cubed” securities class actions).
Highlights of Panel Discussions
“CAFA & Consequences: Measuring the Impact of the Class Action Fairness Act of 2005″
This panel, moderated by Arnold & Porter partner Fern O’Brien, included panelists John H. Beisner of O’Melveny, Michael D. Donovan of Donovan Searles, and the Honorable Fred Biery, U.S. District Court Judge for the Western District of Texas.
One of the key topics discussed by the panel was the impact of CAFA in encouraging filings in federal court and the resulting increase in the assignment of cases to the multi-district litigation (MDL) panel. Class action practitioners will have to become more familiar with the MDL process as more class actions are filed or removed to the federal courts.
One of the panelists noted that although the number of class actions filed in federal court has increased, the number of “negative value” cases in the federal courts have not increased. “Negative value” is a term used to describe class actions involving claims where individual amounts in dispute would be far less than the amount necessary to litigate them.
The panel also discussed recent cases addressing the meaning of the “mass tort” provision, which subjects certain mass tort cases to CAFA even if they are not technically “class actions.”
“Consumer Fraud Class Actions on Life Support”
This panel was moderated by Scott L. Nelson, and attorney for the Public Citizen’s litigation group. The panelists were Nelson’s fellow Public Citizen lawyer Deepak Gupta, Greenberg Traurig partner Donald R. Frederico, and Quarles & Brady partner Cristina Hernandez-Malaby.
The Honorable Jack B. Weinstein of the U.S. District Court for the Eastern District of New York had also been scheduled to be on the panel, but word was that he tied up with a capital murder case.
The main focus of the panel’s discussion was the Second Circuit Court of Appeals’ decision in McLaughlin, in which it reversed Judge Weinstein’s certification of a class of purchasers of “light” cigarettes on a “fraud on the market” theory of common injury. They also covered Judge Weinstein’s more recent decision in In re Zyprexa Products Liability Litigation, 04-MD-1596, slip op. (E.D.N.Y. Sept. 5, 2008), in which the Judge appeared to be testing the limits of the McLaughlin holding. For of us who are too busy or lazy to read all 300 pages of the decision, Ms. Hernandez-Malaby suggests starting at page 230.
The panel also covered several other topics, including
- Superiority analysis in “no-damages” class actions under FACTA.
- RICO claims as an alternative to traditional consumer fraud claims.
- Claims claiming injury due to reliance by others.
“Unpacking the ‘Rigorous Analysis’ Standard”
This panel, moderated by NYU Professor Geoffrey Miller, included James P. Muehlenberger and the Honorable Nanette K. Laughrey of the U.S. District Court for the Eastern and Western Districts of Missouri. UPDATE 11-10-08: The third panelist was David S. Stellings, an able replacement for his partner, Elizabeth Cabraser.
The panelists discussed the approaches taken by the various federal Circuit Courts of Appeals in applying the “rigorous analysis” standard for ruling on class certification and provided their views from a plaintiff’s, defendant’s, and judge’s perspective. Key decisions discussed included:
- General Telephone Company of the Southwest v. Falcon, 457 U.S. 147 (1982) (articulating “rigorous analysis” standard).
- Teamsters Local 445 Freight Division Pension Fund v. Bombardier, Inc., supra.
- In re IPO Securities Litigation, supra.
“I Could Have Sworn It Was CAFA, Not Kafka!” The Metamorphosis of Ethically Prosecuting, Defending, and Settling Multi-State, Class-Action Cases — A Surreal-Life, Three-Act Play.”
I couldn’t begin to describe this presentation in a way that would do it justice, but let’s just say that it was both entertaining and surprisingly true to life. The play starred its creator, plaintiffs’ lawyer Daniel R. Karon, his colleage on the plaintiffs’ side, Vincent J. Esades, defense lawyers Cari K. Dawson and Steven Glickstein, and notice administrator Katherine Kinsella.
“Class Actions Sans Frontières”
The day ended with the presentation that I had been anticipating most eagerly, a panel discussion on developments in global and multinational class actions. Sylvie Rodrigue of Ogilvy Renault in Toronto led an intriguing discussion of this new and fast-developing area, with a panel that included Cohen Milstein partner, Lynda Grant, former managing partner of Shook Hardy & Bacon’s London office, Laurel Harbour, McCarthy Tétrault’s David I.W. Hamer, and Charles Wright, of Siskinds in London, Ontario.
Here are a summary of the key issues discussed:
- Worldwide class action settlements can be risky due to problems with the ability to enforce foreign judgments that purport to bind class members in other countries.
- “Foreign cubed” securities class actions are a hot topic. The Second Circuit Court of Appeals’ recent decision in Morrison v. National Australia Bank Ltd., supra, appears to limit the circumstances in which these cases can be brought in the U.S. court, but the court also refused to adopt a bright-line rule that would prohibit all “foreign cubed” class actions.
- The International Bar Association has created a task force charged with preparing guidlines for when foreign class action judgments can be enforced.
- Class certification guidelines in Canadian provinces tend to be more relaxed than those in the U.S., and class certification decisions in Canadian courts often come sooner than in U.S. courts when parallel proceedings are filed.
- Group action procedures in Europe are expanding but are still not in wide use.
- A task force has been created to look into protocols for coordination between U.S. and Canadian courts in parallel actions.
- General counsel for multinational companies need to consider exposure on a global basis when making settlement decisions, not just U.S. exposure.
- Developments in class action law in Canada have made pursuing a joint litigation strategy in both Canada and the U.S. financially and legally viable, as opposed to just a few years ago, when a case may have been worth pursuing only if it could somehow be brought in U.S. courts.
- Increased coordination between plaintiffs’ counsel, outside counsel for defendants, and judges will become ever more important in the future.
Overall, this was one of the better class action CLE conferences that I have attended. The speakers were all top-notch practitioners, academics, or judges who provided a well-rounded range of perspectives. The topics were all timely and interesting. If you have the means, consider attending next year. If you’re interested in purchasing the audio from this year’s event, it should be available within a few weeks according to the ABA’s website.