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Posts Tagged ‘collateral estoppel’

This is the second of what will be six posts summarizing my notes of the six presentations at the ABA’s 16th Annual Class Actions Institute held last month in Chicago.  For more on this excellent conference, see this October 31, 2012 CAB Post.

Session 2 addressed a topic of great relevance to all class action practitioners, regardless of the subject matter area of practice.  It was entitled “The Class Definition That Works . . . or Does It?” Strategies for Pleading and Attacking Class Definitions;  The Most Basic and Most Ignored Step in a Class-Action Lawsuits Success or Failure.  The panel of academics, judges and practitioners discussed recent developments in the state and federal courts regarding the requirements for a class definition.  They also discussed practical tips for plaintiffs in articulating a class definition that will withstand attack at the class certification stage, and practical tips for defendants in defeating class certification by attacking the plaintiff’s choice of class definition.  Program Chair Daniel R. Karon moderated the panel discussion, which consisted of The Honorable James G. Carr, Bart D. Cohen, Donald Frederico, Professor Dean Robert Klonoff, Sabrina H. Strong, and Ranae D. Steiner. 

Here are some highlights of the pointers made by the panel during the presentation:

  • Many courts have accepted several additional elements as implicit under Rule 23 and similar state rules of civil procedure, including that the class definition be sufficiently clear and narrow so that the class is ascertainable and not overly broad.  These requirements are implied in order to ensure 1) that the class can be identified from a practical perspective; 2) that the defendant has notice of the claims being made against it and by whom those claims are being made; and 3) that the court can manage the litigation.
  • These issues can also be expressed through the other, express Rule 23 elements.  For example, if a class is not ascertainable, then there is no basis to conclude that numerosity is present.  Similarly, an inability to distinguish class members who have a claim from those who do not should lead the court to conclude that common issues do not predominate.
  • Many trial judges would prefer to consider issues relating to the class definition in terms of the express Rule 23 elements rather than by accepting addition, implicit requirements.
  • Rather than declining to certify altogether, courts are often willing to work with plaintiffs’ counsel to try to come up with alternative class definitions that resolve problems associated with a class as originally proposed.
  • Because most judges are not dealing with these types of issues on a daily basis, the involvement of counsel on both sides is essential to the judge’s well-reasoned evaluation of the potential legal and practical problems with the proposed class definition and whether those problems can be remedied without violating the rights of the defendant or absent class members or overburdening the court.

The panel grouped issues relating to class definitions into various categories.  The panel discussed each of these categories in reference to an example case.  In many instances, the categories overlap, and the example cases often illustrated more than one of the categories.  I have listed below, for each category, the key problems, the example case(s) discussed by the panel, and my notes on insights offered by panelists:

Lack of objective criteria for class membership

Issue – Membership in the class depends on criteria that cannot be established without looking at each class member individually.

Example –  Solo v. Bausch & Lomb Inc., MDL No. 1785, 2009 WL 4287706 (D.S.C. Sept. 25, 2009):  In class action seeking compensation for the lost value of tainted contact lens solution that purchasers were encouraged to dump out as part of a product recall, class defined as consisting of all purchasers who “lack[ed] full reimbursement” for the value of the solution purchased.

Notes – fixes proposed by panel members included 1) Expand definition to remove individualized issues, e.g. “all who purchased”, but this could create overbreadth problems; 2) create subclasses based on date of purchase, and estimate likely amount of consumption for members in each subclass.

Vagueness

Issue – The class definition is too vague and indefinite to determine who is in the class.

Example – Heisler v. Maxtor Corp., No. 5:06-cv-06634, 2010 U.S. Dist. LEXIS 125745 (N.D. Cal. Nov. 17, 2010): Class defined as anyone who experienced a hard drive “failure.”  The problem was determining what constituted a “failure” and limiting that phrase to failures caused by the alleged product defect. 

Notes – The Maxtor case provides an example of a decision where the court preferred to characterize the issues in relation to the express Rule 23 requirements.  The case also illustrates a common problem in cases where causation may be an issue.  By trying to limit class membership to only those individuals who suffered harm, the plaintiffs created a vagueness problem.

Failsafe Class

Issue – Class definition includes only those individuals who will ultimately prove their claims on the merits, so that class membership is not determined until a decision on the merits occurs.  The main problem with failsafe class is that it puts the defendant in a lose-lose situation.  Either the class wins at trial, binding the defendant to a classwide judgment, or the defendant prevails but gets no preclusive effect against absent class members.

ExampleNudell v. Burlington N. & Santa Fe Ry. Co., 2002 WL 1543725 (D.N.D. 2002): The court denied certification after determining that class membership hinged on class members’ ability to prove all of the factual issues that would prove their claims on the merits, including that they owned land abutting a railroad easement, that they did not give consent to the placement of utility cables on the easement, and so on. 

Notes – The problem in Nudell may have been due to a failure to develop the record sufficiently to convince the court that class membership could be determined based on objective criteria.  This is an example of a case where problems with the class definition could be remedied.  The case ultimately settled on a classwide basis after the class was re-defined.

Overbreadth

Problem – Class includes members who did not suffer injury or who have no legal right to recover.

ExamplesSanders v. Apple Inc., 672 F. Supp. 2d 978 (N.D. Cal. 2009): In action for deceptive advertising, class definition included all persons who “own” a 20-inch iMac.  The court found this definition overly broad because it included individuals who didn’t purchase the product and those who weren’t deceived by the advertising.  Anderson v. United Fin. Sys. Corp., 281 F.R.D. 292 (N.D. Ohio 2012): Class was found to be overly broad because it included class members whose claims were time-barred and who had no private right of action.

Notes – In some cases, overbreadth can be cured simply by narrowing the class definition.  On others, however, overbreadth is a symptom of predominance issues that may be difficult to remedy.

Class Definitions in Class Action Settlements

The panel also discussed issues in class definition within the settlement context.  As is true with other threshold requirements, the courts are generally more lenient about class definitions in the settlement context than they are in the litigation context, in large part because manageability concerns are lessened when otherwise contested issues do not have to be resolved.  An example is the DeBeers diamond settlement, Sullivan v. D.B. Invs., Inc., 667 F.3d 273 (3d Cir. 2011), where the Third Circuit affirmed certification of a settlement class over objections claiming that some of the class members would not have had a private right of action due to variations in state law.  Whether the inclusion of class members whose claims are barred or significantly weaker than other class members should be a bar to certification of a settlement class probably depends on whether other class members will suffer as a result.  If it’s simply a matter of the defendant agreeing to waive defenses as to a portion of the class, then courts are more likely to overlook variations in the strengths and weaknesses of individual class members’ claims.

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In this era of globalization, one key issues in international class and collective actions is the recognition of foreign judgments by countries who lack the same collective or class action procedures.  I was recently introduced to a lawyer and scholar, Leandro Perucchi, who published his PhD thesis on this topic.  Dr. Perucchi’s book, with the German title Anerkennung und Vollstrechung von US Class action-Urteilen und -Vergleichen in der Schweiz, concludes that class action judgments and settlements can be recognized in Switzerland and be given res judicata effect.  

Foreign enforceability of class action judgments is an important question facing any litigant or court involved in international or transnational class action litigation.  Even when it is permitted (see this CAB entry discussing the Supreme Court’s Morrison v. Australia National Bank decision addressing foreign-cubed class actions), obtaining a class action judgment against a foreign defendant in the United States may be a hollow victory if the defendant lacks sufficient US assets and is located in a country that does not recognize US class action judgments as enforceable.

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Earlier today, the Supreme Court issued its third of four class action-related decisions for the October 2010 term.  In Smith v. Bayer Corp., No. 09-1205, the Court held that a federal court exceeded its authority when it issued an injunction preventing a state court from considering whether to certify a class on claims in which the federal court had previously denied class certification. 

Justice Kagan’s opinion involves a fairly straightforward academic analysis of the “re-litigation exception” to the federal Anti-injunction Act and principles of issue and claim preclusion: where a state court applies a different class certification standard than the standard applicable under FRCP 23, the issue decided in the federal action on class certification is not the same as the one to be decided in the state court proceeding.

However, the practical impact of the decision is that a plaintiffs’ lawyer who is unsuccessful in seeking class certification in federal court can try again in a state that applies a different class certification standard.  Of course, the successive class action is potentially subject to removal under the Class Action Fairness Act (CAFA), but if one of the exceptions to CAFA applies, such as the home state or local controversy exception, the Court’s decision paves the way for multiple bites at the class certification apple.

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Earlier today, the U.S. Supreme Court held oral argument in  Smith v. Bayer, which raises the question of a federal court’s power to enjoin a state court from considering class certification after the federal court had previously denied certification.  A copy of the argument transcript is available for download at the Supreme Court’s website.  Some of the key lines of inquiry from the Court can be summarized as follows:

  • Are there differences between FRCP 23 and West Virginia Rule 23 that should have prevented the application of issue preclusion?
  • Even if the elements of the two rules are substantially the same, does the fact that the West Virginia courts take a more favorable “tone” toward class certification mean that they are different for the purposes of an issue preclusion analysis?
  • Does an individual have a protected due process right to be heard on a procedural issue, such as the appropriateness of class certification, as opposed to a substantive right or cause of action?
  • Does it matter whether the plaintiff in the second case could have intervened in the first one?
  • Why isn’t it sufficient that the state court in a subsequent case can decide to apply issue preclusion, as opposed to the federal court enjoining the state court from even considering the question?
  • Does the absense of a formal judgment mean that the relitigation exception of the Anti-injunction Act cannot apply to class certification orders at all?
  • Can the plaintiff and his or her counsel who unsuccessfully sought class certification in one case be considered sufficiently representative of other absent class members and their counsel to satisfy the identity of interest requirement of issue preclusion?

Although most of the questions involved how the case should be decided under express statutory language and established legal principles, it seems reasonable to expect that the Justices’ views on federalism, and the proper balance between federal and state power, will flavor the Court’s decision.  The federalism theme is one that counsel for the plaintiffs, Richard A. Monohan, fell back to on several occasions during the argument.  Perhaps not coincidently, two of the members of the Court’s conservative bloc, Justice Scalia and Chief Justice Roberts, asked some of the more biting questions implicating the fairness of precluding a new party from re-litigating an unsuccessful attempt at class certification by a different party.

To this point, the Roberts Court’s direction on issues of federalism has been less than clear (see this September 2010 National Law Journal article by Marcia Coyle).  This case offers the opportunity to start charting a more specific course.  At the same time, this is the kind of case that can foster unpredictable alliances within the Court.  For example, the states’ rights supporters may find themselves joining forces with one or more Justices who see unfairness in preventing absent class members from having their day in court on the issue of class certification. 

On the other hand, predicting the outcome or rationale of Supreme Court cases is a lot like predicting the NFL playoffs.

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In my 2010 wrap up posted last week, I neglected to mention one of the three class action-related cases in which the United States Supreme Court granted cert in 2010.   Smith v. Bayer is an appeal of a case that did make my top 10 list, In re Baycol Products Litigation, 593 F.3d 716 (8th Cir. 2010).  The Court granted cert last September to address whether a federal court that has denied class certification has the power to enjoin the relitigation of the class certification issue by members of the would be class in a separate state court proceeding.  (See this link for the full text of the “questions presented”).  Oral argument is set for January 18, 2011. 

For an excellent preview of the “trifecta” of class action-related cases pending before the Supreme Court this term, see this December 20, 2010 article from Daniel Fisher at Forbes.com.

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In a case rife with lessons, a lawyer learned another valuable one today:  If you’re going to dish out the vitriol in your briefing with certain judges, be ready to be put in your place. 

The case of Thorogood v. Sears Roebuck & Co. is already famous for the suggestion made by plaintiffs’ counsel in oral argument that the Seventh Circuit panel’s three male judges poll their wives to see if they agreed whether the possibility that a stainless steel clothes dryer contained non-stainless components made them fearful of rust damage to their laundry.  The panel conducted the poll as suggested and the unanimous “no” result helped to solidify Judge Posner’s conclusion that the proposed fraud claims was not susceptible to common proof.

Today’s decision was an unusually lengthy denial of a rehearing petition, following an appeal of an earlier panel decision holding that the all Writs Act permits a federal district court to enter an injunction against future putative class actions in other courts on the same grounds in which the district court previously denied certification.  Judge Posner, also the author of the three previous decisions in the course of the litigation, explained the lengthy opinion by saying that it might be helpful to readers of the panel’s previous opinions in the case, as well as to the author of the petition for rehearing, “whose accusations are over the top, as we shall now explain, and who may wish to moderate his fury.”

Aside from being an exceedingly entertaining read (for anyone other than the petitioners’ counsel), the opinion is of interest for Judge Posner’s additional discussion of the potential (with an emphasis on the word potential) abuses of class action settlements by both plaintiffs’ attorneys and defendants.

No doubt there will great discussion about this opinion across the web in the coming weeks.

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It’s back!  We can’t promise that it will appear weekly, so we changed the name to Class Action Blogosphere “Periodic” Review.  But, as always, we have combed through our favorite blogs and news feeds to bring our readers up to speed on a some of the notable developments in class action news.

The End of Consumer Class Actions as We Know Them?

One story is, by far, the biggest news in the class action world.  Today, the U.S. Supreme Court will hear argument in the case of AT&T Mobility Services v. Concepcion.  The key issue is whether class action exemptions in consumer contracts are enforceable even when state contract law bars such exemptions.  AT&T argues that the Federal Arbitration Act preempts state contract law.  Thus, if a class action exemption is tied to an arbitration clause it is enforceable despite contrary law at the state level.  For an accessible read, check out Brian T. Fitzpatrick’s story in the San Francisco Chronicle…

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/06/INA41G6I3I.DTL

… and see also

All Writs Act Better than Collateral Estoppel

Class action defense lawyers may have a new tool to use against copycat class actions; particularly those involving plaintiffs’ lawyers who attempt to extort settlements through threat of discovery.  It’s called the All Writs Act.  It was used by Judge Posner in the Seventh Circuit to grant an injunction blocking a copycat class action in another jurisdiction.  The case is called Thorogood v. Sears, Roebuck & Co.  For more information check out Andrew Trask’s November 10 post on Class Action Countermeasures.  Judge Posner even cites Trask’s new book, The Class Action Playbook.  (See CAB Review of the book here).

http://www.classactioncountermeasures.com/2010/11/articles/discovery/using-the-all-writs-act-to-block-copycat-class-actions/

For a slightly different take on Posner’s decision, read Russell Jackson’s post on Consumer Class Actions & Mass Torts.

http://www.consumerclassactionsmasstorts.com/2010/11/articles/predominance-1/7th-circuit-enjoins-relitigation-of-denial-of-class-certification/

Motion to Dismiss + Discovery = Motion Granted?

The Rule 12(b)(6) Motion to Dismiss can sometimes feel like a mini-motion for summary judgment.  Over the years, courts have been more willing to consider information beyond merely the pleadings including documents that are referenced by plaintiffs and central to their claims.  Anything more is supposed to convert the motion to dismiss into a motion for summary judgment, right?  Maybe not.  One court has apparently permitted discovery in the context of a Rule 12 Motion to dismiss.  Get the story in a post titled Preemption, Pleading & Rule 11 at Drug and Device Law.

http://druganddevicelaw.blogspot.com/2010/11/preemption-pleading-rule-11.html

Big Changes Coming for Rule 26 and Expert Witnesses

The communications between attorneys and their expert witnesses are currently discoverable in federal court. Not for long.  Federal Rule 26 is about to change in a way that will protect certain communications between counsel and expert.  The rule change will also extend work product protection to the draft reports of experts.  Check out the latest post in the North Carolina Business Litigation Report.

http://www.ncbusinesslitigationreport.com/2010/11/articles/discovery-1/work-product-protection-for-communications-between-lawyers-and-expert-witnesses-coming-next-month-under-revised-federal-rules-of-civil-procedure/

Hooters Waitresses Have no Class … Action?

Always read the fine print.  According to the Washington Post, whatever the Supreme Court decides in AT&T Mobility Services vs. Concepcion may have ramifications for a class of waitresses trying to sue Hooters.  You see, the job application has an arbitration clause that bars lawsuits.

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/05/AR2010110507318.html?hpid=moreheadlines

Oppress Me, Please

Professor James C. Morton reports on a Canadian decision allowing class certification of a case seeking the remedy of “oppression” in his blog, Morton’s Musings.  Doesn’t sound like a very pleasant  remedy to us, but they march to the beat of their own drummer north of the border.

http://jmortonmusings.blogspot.com/2010/11/oppression-remedy-properly-sought-in.html

You Mean to Tell Me that Fast Food Makes you Fat!?

Sean P. Wajert of Mass Tort Defense reports on a recent decision denying class certification to a plaintiff seeking to hold a fast food chain responsible for allegedly misleading consumers into thinking that its fare poses no health risks.

http://www.masstortdefense.com/2010/11/articles/class-action-alleging-false-food-ads-rejected/

Securities Class Action Filings Down

As reported in the Conference Board’s Governance Center Blog by guest contributor Anthony Galban, Sr. V.P. of Chubb & Son, securities class action filings are down significantly in 2010.

http://tcbblogs.org/governance/2010/11/04/guest-contributor-securities-class-action-filings-are-down-but-will-the-trend-continue/

Hot Pockets are Fast and Tasty

Greg Mersol of Baker Hostetler’s new Employment Class Action Blog reports on the latest in a series of California decisions denying class certification in a wage and hour case seeking to hold an employer liable for not ensuring that its employees to take meal breaks.

http://www.employmentclassactionreport.com/class-action/another-court-denies-certification-of-a-california-meal-break-class/

Describe that Class for Me Again?

The Complex Litigator‘s H. Scott Leviant reviews a recent California Court of Appeal decision holding that class certification was not appropriate because the proposed class was not ascertainable.

http://www.thecomplexlitigator.com/post-data/2010/11/1/in-sevidal-v-target-corporation-an-unascertainable-class-doo.html

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