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Posts Tagged ‘class action settlement’

In keeping with the time-honored tradition of end-of-the-year top 10 lists, I’ve assembled my annual list of the top 10 most significant class action developments below.  Whether these are actually the top 10 most significant decisions over the past year may be subject to reasonable debate, so please feel free to add your own favorites in the comments section.

1. Certiorari denied in “moldy washer” cases - In my view, the single biggest development impacting class action practice over the past year was the Court’s decision not to take on the question of “issue certification” presented in the Sears and Whirlpool “moldy washer” cases.  This non-decision opens the door for significant litigation over whether isolated issues should be certified for class treatment even where significant individual litigation would be necessary following resolution of the class wide issues.

2. Judge Posner’s class action settlement decisions – Judge Posner wins the award for the jurist having the single biggest impact on class action practice in 2014.  In addition to the Supreme Court declining to take on review of his decision in one of the “moldy washer” cases, Butler v. Sears, Roebuck & Co., Judge Posner authored two significant (and harshly worded) decisions discussing the standards for evaluating the fairness of class action settlements, including Eubank v. Pella Corp., Nos. 13-2091, -2133, 2136, -2162, 2202 (7th Cir., June 2, 2014), and Redman v. RadioShack Corp., case number 14‐1470, 14‐1471 and 14‐1658 (7th Cir., Sept. 19, 2014).  These decisions are emblematic of a more general trend in the courts of subjecting class action settlements, especially coupon settlements, to ever-greater scrutiny.

3. Basic framework remains largely unchanged after Halliburton II – One of only three Supreme Court decisions of significance on class action issues this past year, the Court largely maintained the status quo in declining to overrule the framework for evaluating “fraud on the market” theory of reliance in securities class actions.

4. Whirlpool trial ends with victory for the defendant – Not long after the Supreme Court declined review, the first of the “issue” class cases went to trial against Whirlpool.  The trial ended in a defense verdict, although as I wrote in October, I’m not sure that’s necessarily a good thing for defendants in the long-term.

5. Court clarifies removal pleading standards in Dart Cherokee Basin Operating Co. v. Owens – In one of the Roberts Court’s most helpful class-action-related decisions, at least from a practical standpoint, the majority removed barriers to corporate defendants’ ability to remove cases under the Class Action Fairness Act (CAFA), clarifying that jurisdictional facts need only be pled, not supported by evidence, in the notice of removal.

6. California Supreme Court issues significant decision on the use of statistical evidence to support class certification – An individual state court decision has to be pretty significant to make my annual top 10 list, but I think Duran v. U.S. Bank National Association fits the bill.  The decision is one of the most comprehensive to date in addressing the potential pitfalls of reliance on statistics as a proxy for common, class wide proof.

7. Supreme Court holds in AU Optronics that consumer actions brought by state attorneys general are not “mass actions” subject to the Class Action Fairness Act – It’s probably a misnomer to call AU Optronics a “class action” case, since the issue presented was whether actions brought by state AGs on behalf of consumers were “mass actions.”  But because the case involved interpretation of CAFA, it makes this year’s list.

8. International class and collective action litigation continues to expand – Class, collective, and multi-party actions continue to expand outside of the United States and Canada.  Examples included France joining the list of Civil Law jurisdictions in Europe to enact a “class action” law, and a group action in Austria, joined by more than 25,000 litigants, challenging Facebook privacy policies.

9. Data breach class actions proliferate – High profile data breaches and hacking incidents made news, and resulted in class actions, in 2014.  From a rash of payment card breaches impacting customers of large retailers like Target and Home Depot to the more recent Sony hacking incident, data breach class action litigation shows no signs of slowing down any time soon.

10. Supreme Court grants, then dismisses, certiorari in Public Employees’ Retirement System of Mississippi, v. IndyMac MBS, avoiding a high court ruling on the question of whether statute of repose can be tolled for absent class members under the American Pipe tolling doctrine.  In what has become a trend of the past year, this is yet another missed opportunity for the Supreme Court to address a class action issues of significance.

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In case you missed it, the BakerHostetler class action defense team published its second annual Year-End Review of Class Actions last month.  The 2013 issue was expertly edited by Dustin Dow of our Cleveland office, and features contributions from other members of the firm’s class action defense team across the country.  The 54-page report has a thorough recap of the key class action developments in the U.S. Supreme Court as well as other federal and state courts, summaries of key developments in various substantive areas of law in which class actions are prominent, and a preview of what to look for in 2014.  Click the link above to download a copy.

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If you’re prosecuting or defending a class action or are interested in class action developments (and I’m not sure why on Earth you would be reading this otherwise) you’ll want to know about a great new ABA publication on the Class Action Fairness Act of 2005 (CAFA).  The Class Action Fairness Act, Law and Strategy, is a book of collected works written by experts on both sides of the bar and deftly edited by former ABA CADS Committee Chair Gregory C. Cook.  Those familiar with CADS (the Class Actions and Derivative Suits Committee of the ABA Section of Litigation) will recognize the names of many of the knowledgeable contributors.

The book covers nearly every CAFA-related topic conceivable, from the history of CAFA to the provisions expanding federal diversity jurisdiction in class actions and the provisions regulating federal class action settlements.  It can be used as a reference guide for the basic requirements of CAFA, but it also provides practical strategy tips for both plaintiffs and defendants in dealing with common and not-so-common CAFA issues.  Here is a summary of the Table of Contents:

  • Chapter 1 – Introduction and Overview
  • Chapter 2 – CAFA in Congress: The Eight-Year Struggle
  • Chapter 3 – Hey CAFA, Is that a Class Action?
  • Chapter 4 – The Amount in Controversy under CAFA: Have You Got What It Takes for Federal Court?
  • Chapter 5 – CAFA’s Numerosity Requirement, or How to Count from 1 to 100
  • Chapter 6 – Basics of MInimal Diversity in CAFA
  • Chapter 7 – Welcome to the Jungle: CAFA Exceptions
  • Chapter 8 – How CAFA Expands Federal Jurisdiction to Include Certain Mass Actions
  • Chapter 9 – Advanced Procedural and Strategic Considerations on Removal under CAFA
  • Chapter 10 – CAFA-Related Appeals
  • Chapter 11 – CAFA Settlement Provisions

Be sure to click the link on the title of the book, above, for information about how to get your copy.  If you don’t have it, chances are that your opponent will!

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Editor’s Note: The following guest post was authored by Sara Collins, contributor to the consumer finance website, NerdWallet.  The views expressed in Sara’s article are her own.  Although those of us who tend to represent defendants in consumer class actions may not agree with all of Sara’s views on the benefits of class actions, we can certainly learn something from reading a consumer advocate’s views on the subject.  The article also provides an easy-to-follow primer on how class actions work.  Many thanks to Sara for her contribution. 

Class Actions – Do They Actually Help Consumers? 

By Sara Collins

Consumers in the United States are sometimes victims of bad business behavior. These behaviors cover a huge range of bad acts, particularly in the field of securities. Class actions allow consumers to band together and fight against bad business. As such, they have a number of benefits for consumers and are quite helpful in evening the corporation versus consumer playing field.

What are Consumer Class Actions?

A consumer class action is simply a lawsuit which takes place in a federal or state court. The case is brought by one or a small handful of individuals, acting as representatives for a larger group of consumers, known as the class. Typically the case is seeking damages on behalf of the named individuals in addition to the entire class.

Why is a Consumer Class Action Necessary?

Traditionally, class actions are used to combine small-dollar claims for a large number of people. One small claim is generally too small for a cost-effective suit. Consumer class actions offer a helpful alternative, justifying the litigation expenses and immensely improving the consumer’s odds of success, particularly when it comes to larger corporations.

How do Consumer Class Actions Work?

When a class action is first brought, the court initially decides whether it is a proper class action. This is a process known as class certification. The parties then work towards a trial, though settlement negotiations can take place at any point.  If the parties decide to settle the case, the court must approve the settlement and then order notice given to class action members.

Do Class Actions Work?

They definitely do. Billions of dollars are given back to the public every year which come from consumer class actions. In most cases, the money is given directly to the victims of the suit, rather than going into the hands of the government, lawyers or other non-consumers.

What Long-Term Effects do Consumer Class Actions Cause?

Class actions help to make bad business practices unprofitable. Class actions aggregate the power of isolated consumers, allowing class actions to compete against corporate behemoths. It levels the playing field, forcing businesses to operate in honest and trustworthy ways.  Markets in other countries where class actions are not allowed often suffer from corporate abuses like stock manipulation, insider trading and other problems.

Do Lawyers Benefit Excessively From Consumer Class Actions?

One argument used by businesses to protest the prevalence of consumer class actions is to claim that the lawyers benefit excessively from the cases. In fact, attorney fees in class action cases average just between 20 and 30 percent of the amount recovered. In stark comparison, personal injury lawyers typically reap 35 to 50 percent of their case winnings. Clearly businesses are using false arguments in an attempt to eliminate class actions and thus damages sought against them.

What is the Class Action Fairness Act of 2005?

The Class Action Fairness Act of 2005 (CAFA) was enacted by Congress in order to curb abuse of class action suits in state courts. Evidence showed that many class actions were being filed which benefited the counsel, rather than the consumers. Additionally, many cases were filed in courts which showed prejudice against business defendants, a problematic issue.

CAFA was enacted to extend federal jurisdiction to these state courts in order to diminish such abuses. CAFA has had a mild success and while most benefits are for businesses, some benefits are extended to consumers. Primarily, the legislation limits the monetary benefits for the attorneys. This ensures that money won in settlements goes to the members of the class, rather than the plaintiff counsel.

Consumer class actions are needed to ensure the financial safety of consumers, particularly in the realm of securities. Class actions allow consumers to band together, combining resources in order to sue a corporation as a singular entity. In turn, all consumers reap the benefits of the settlement, helping to prevent future bad behavior from the corporation in question. Class actions undoubtedly have a positive effect on the world of consumers and it is vital they stay legal for the foreseeable future.

Sara Collins is a writer for NerdWallet, a personal finance site dedicated to helping consumers learn about new ways to save money.

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Yesterday, the ALPS 411 Blog published my guest post titled I got this email about a class action.  What should I do?  Among other things, the post addresses how one goes about deciding whether an emailed class action notice is real or spam (or worse). 

For readers not familiar with the company, ALPS is an attorney liability insurer and financial services provider headquartered in my home state of Montana.  Be sure to check out the ALPS 411 Blog for excellent content relating to a host of topics of interest to attorneys, including ethics, malpractice, risk management, and general practice tips.

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Congratulations to my BakerHostetler partner, Bob Abrams, and the rest of his antitrust litigation team on a successful result in the Southeastern Milk Antitrust Litigation.  Below is a copy of a press release summarizing the case and settlement.  Also see these links to articles from the Wall Street Journal and Huffington Post.

Settlement brings total award to more than $300 million; agreement includes substantial changes to business conduct in the Southeast dairy industry

CLEVELAND – January 22, 2013 – BakerHostetler is proud to announce the third and final settlement agreement with the remaining defendants in the Southeast Milk Antitrust Litigation (MDL 1899—E.D. Tenn.). Dairy Farmers of America (DFA) and the remaining defendants/co-conspirators in the lawsuit that claims violation of federal antitrust laws have reached a settlement agreement with the certified class of Southeastern dairy farmers across 14 states totaling $158,600,000.

“The Southeast milk market has been reformed to the benefit of dairy farmers,” said Robert G. Abrams of BakerHostetler, lead attorney for the plaintiffs. “The monetary recovery itself is very substantial and the resulting conduct changes will significantly and positively impact competition in the southeast dairy industry.”

The settlement was reached in advance of the January 22, 2013 trial date and brings the total award for the certified class to more than $300 million. Previous settlements were reached in July 2011 with defendants Dean Foods for $140 million as well as Southern Marketing Agency and James Baird for $5 million plus changes in milk marketing conduct.

In addition to the monetary award, DFA agreed to change its business conduct in the Southeast, including taking steps to increase raw milk prices; removing cancellation penalties on certain full-supply agreements with bottling plants and not entering into new full supply agreements during the Settlement’s term; modifying membership agreements to improve farmer ability to change cooperatives; enhancing price-related information on milk checks; boosting transparency through auditing and disclosure commitments; and facilitating delegate votes on additional meaningful changes to conduct.

“We have always believed strongly in the southeast farmers’ case—a belief that has now been vindicated by three excellent settlements,” said Abrams.

The BakerHostetler team working on behalf of the certified class of Southeastern dairy farmers was led by Robert G. Abrams and includes Robert Brookhiser Jr., Gregory Commins, Joanne Lichtman, Terry Sullivan, William DeVinney, Dan Foix, Carey Busen, Bridget Merritt, Nicole Skolout.

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Strafford Publications is sponsoring a webinar on class action settlement objectors next Thursday, January 10, 2013 at 1:00 EST. This is a reprise of a webinar that I did with New Jersey Appellate Law blogger Bruce Greenberg a year or so ago.  Due to a scheduling conflict, I won’t be able to participate this time, but my partner Casie Collignon will share her valuable insights instead.  For more information and to register, click the title of the program below:

Class Action Settlement Objectors

Minimizing and Defending Against Challenges by Professional Objectors, Government Officials and Public Interest Groups

A live 90-minute CLE webinar/teleconference with interactive Q&A


Thursday, January 10, 2013 (5 days) 1:00pm-2:30pm EST, 10:00am-11:30am PST

Description

Objections by outside attorneys, government officials and public interest groups can jeopardize or delay class action settlements. Both sides can face problematic objections from “professional objectors” who may appear to be motivated solely to extract part of the fee or take over as class counsel.

Government official objections are usually aimed at coupon settlements and settlement release language intended to bind state officials. Public interest groups that file objections have varied purposes and political agendas. Coupon settlements and cy pres provisions are natural targets.

Both plaintiff and defense counsel may take advantage of several key preventative measures and tactics to ward off and protect proposed settlements from non-class counsel objectors as well as government and public interest objections.

Listen as our panel of experienced class action attorneys provides a review of trends and case law developments in settlement objections from non-class attorney objectors and government or private interest objectors. The panel will discuss best practices for plaintiff and defense counsel to minimize and overcome challenges from objectors.

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