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Posts Tagged ‘frcp 23’

Last Friday, the Seventh Circuit Court of Appeals issued a significant employment class action decision that may challenge conventional wisdom about the impact of the Supreme Court’s 2011 decision in Wal-Mart Stores, Inc. v. Dukes.   The opinion, authored by respected Judge Richard Posner, is McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 11-3639 (7th Cir., Feb. 24, 2012).

The procedural history of McReynolds is interesting, because the plaintiffs had actually moved for reconsideration of an earlier denial of class certification after the decidedly pro-employer decision in Dukes was announced.  Although the trial court judge was unconvinced to change his earlier decision, he did agree that Dukes presented a good basis for reconsideration of the class action issue, and expressly stated in his decision that he believed the case was a good candidate for an interlocutory appeal under Rule 23(f).

The Seventh Circuit accepted the appeal, and reversed the denial of class certification.  The Seventh Circuit panel recognized that individualized issues would prevent certification of any claims for back pay or damages, but held that certification of the issue of whether the defendant’s challenged employment policies had an adverse impact on members of a protected class would still be appropriate under Rule 23(b)(2), which allows a class to be certified for the purpose of awarding injunctive relief, and Rule 23(c)(4), which allows certification of particular issues.  Essentially, the case would be certified for the purpose of deciding whether the defendant’s challenged policies created a disparate impact to members of a protected class and for the purpose of ruling on plaintiffs’ request to enjoin the practices.  Any claims for back pay, compensatory or punitive damages would then have to be brought as separate proceedings. 

In reaching its conclusion, the court drew a key factual distinction between the practices being challenged in the case before it and the practices that had been challenged in Dukes.  In McReynolds, the practice being challenged was the company-wide policy of “permitting brokers to form their own teams and prescribing criteria for account distributions that favor the already successfulthose who may owe heir success to having been invited to join a successful or promising team.”  The court distinguished this policy, which it characterized as a firm-wide policy of Merrill Lynch, from the allegations in Dukes, which were that the lack of a uniform corporate policy on discrimination created too much discretion in local managers to create locally discriminatory policies.

I’ll be posting more on this decision within the coming week, so stay tuned…

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Ever since the U.S. Supreme Court issued its decisions in Smith v. Bayer and Wal-Mart Stores, Inc. v. Dukes, I have wondered aloud whether we would start to see a significant divergence between the standards applicable to class certification in the state and federal courts.  (See the Parting Thoughts Section of this August 31 SCOTUSBlog Post).  My home state of Colorado has been the first to end this speculation, adopting a decidedly more liberal standard for class certification in its decision yesterday in Jackson v. Unocal Corp. than the standards discussed in Dukes and many other lower federal court decisions. 

The main holding of the Colorado Supreme Court’s decision in Jackson can be summarized with the court’s statement that:

A trial court must conduct a rigorous analysis of the evidence and find to its satisfaction that each C.R.C.P. 23 requirement is established.

Jackson, Slip Op. at 18.  At first glance, this statement may not seem out of step with the “rigorous analysis” standard commonly recognized by the federal courts.  However, the majority’s intentional use of the phrase “to its satisfaction” rather than “by a preponderance of the evidence” makes the Colorado standard a potentially far less exacting hurdle.  A large portion of Justice Martinez’s majority opinion is dedicated to explaining why the court chose to make the class certification decision a matter of pure judicial discretion by the trial court rather than a matter of evidentiary proof.  The majority opinion makes reference no less than four times to the state’s “policy of favoring the maintenance of class actions” and juxtaposes this policy against a federal policy that the majority characterizes as “limiting class actions.” 

Also key to the majority’s analysis was the language of Colorado’s rule 23 allowing the court to make a “conditional” class certification order, language that has recently been removed from the federal rule.  Because certification can be tentatively granted and later revoked by the trial court in Colorado, the court reasoned, the applicable evidentiary standard should be more flexible and less definitive than the “preponderance” of the evidence standard applied in most federal courts, where (the Jackson court reasoned) the rule requires a single class certification decision.

The majority addressed two other issues that are closely related to the standard of review.  The first was whether a trial court may resolve factual disputes that overlap with the merits of the case.  On that issue, the majority reached the relatively uncontroversial conclusion that a court may consider disputes about facts that overlap with the merits, but “only to the extent necessary to satisfy itself that the requirements of C.R.C.P. 23 have been met.”  Slip op. at 27.   

The second issue was whether the trial court should resolve expert witness disputes in reaching its determination on class certification.  On this issue, the court’s holding was nuanced.  Although it recognized that the trial court must evaluate the competing experts’ opinions in order to determine whether the evidence at trial can be presented in a way to resolve the class claims through a common set of facts, the majority held that a trial court should not rule on the admissibility of the plaintiffs’ expert’s testimony at the class certification phase.  The majority again recognized that this holding was contrary to the holdings of several federal court decisions, but it reasoned that a different standard was justified under the Colorado rule because a trial court had the power to reconsider a preliminary certification order following a pretrial Shreck (the Colorado equivalent of Daubert, not to be confused with Shrek, the surly but loveable ogre) hearing on the admissibility of a plaintiffs’ expert’s testimony.  See id. at 31-32.

A strongly-worded dissent from Justice Eid, who was joined by Justice Rice, criticized the decision by stating, in summary, that:

the majority’s standardless approach makes class certification in Colorado essentially unreviewable by appellate courts and raises serious procedural due process concerns.

Slip Op. at 1 (Eid, J., dissenting).  Justice Eid’s dissent contains a wealth ammunition for academics, commentators, and the courts of other jurisdictions to question the majority’s reasoning.  But alas, for litigants in Colorado, it does not have the force of law.  So, rather than discuss it in depth, I simply commend it to your reading.

There are a host of questions that arise out of Jackson that will likely be the subject of future litigation in the Colorado courts, and I’ll address a few of them now.  However, I’ll apply the Colorado Supreme Court’s class certification standard to the following remarks by saying that they are preliminary and tentative and subject to later reconsideration as the record develops.

Does the Jackson decision mean that trial courts in Colorado should take a “certify first, ask questions later” approach to the certification question?  

This is a position that any party seeking class certification will likely take in the wake of Jackson.  However, a review of all four companion cases decided by the Colorado Supreme Court on Monday makes clear that this is not a permissible approach.  Jackson vests wide discretion in the trial court to grant or deny certification depending on whether the class certification elements are met to the court’s satisfaction, but it also requires the trial court to consider evidence presented by both sides in analyzing whether class treatment is appropriate.  These conclusions are reflected by the results in State Farm Mutual Automobile Insurance Co. v. Reyher, in which the court applied its new standard and held that a trial court had acted within its discretion in denying class certification after a rigorous analysis, and Garcia v. Medved Chevrolet, Inc., in which it determined that the trial court had erred by granting class certification without taking into consideration the evidence presented by the defendant showing that individual questions would predominate.

Is the “rigorous analysis” standard meaningless in light of the trial court’s vast discretion under Jackson?

 Justice Eid’s dissent argues that the majority’s decision renders the “rigorous analysis” requirement a purely procedural requirement.  In other words, as long as the trial court goes through all the motions, the court still has relatively unfettered discretion to grant or deny certification.  This may be true as an analytical matter, but as a practical matter, performing the “rigorous analysis” requires the trial judge to think critically about how the trial is actually going to be conducted.  It also prevents the trial judge from glossing over what may turn out to be insurmountable practical problems in fairly adjudicating the case through common, class-wide evidence.  Thus, even if a “rigorous analysis” is a purely procedural requirement, that does not mean that it will have no impact on the outcome of class certification motions.

Has the Colorado Supreme Court resurrected the pre-Dukes misinterpretation of Eisen as prohibiting any analysis of the merits of the case?

That the answer to this question is no may not be completely clear from the majority’s opinion in Jackson itself, but it becomes clear when Jackson is read in combination with Justice Martinez’s companion opinion in Reyher.  While, curiously, the majority opinion in Jackson makes no reference to Dukes, the opinion in Reyher cites Dukes approvingly in holding that a trial court cannot simply accept the plaintiff’s allegations as true.  The line that can’t be crossed is that the trial court cannot prejudge the merits, a conclusion that is consistent with the Supreme Court’s recent ruling in Erica P. John Fund, Inc. v. Halliburton Co.

Is class certification now effectively unreviewable in the Colorado appellate courts?

The widely disparate outcomes in the three companion cases decided along with Jackson reflect that appellate review will still have a function after Jackson.  An appellate court may clearly find 1) that the trial court conducted a rigorous analysis of the evidence and acted within its discretion in either granting (Jackson, Patterson) or denying (Reyher) class certification; or 2) that the trial court failed to conduct a rigorous analysis of the evidence and therefore the case must be remanded (Garcia).   What is less clear is whether there ever going to be circumstances in which an appellate court could find that a trial court performed a rigorous analysis but abused its discretion in deciding the outcome of the class certification motion, and whether, if so, the appellate court could dictate the result of the class certification motion rather than remanding that decision to the trial court.

What are the practical implications of Jackson?

There many potential practical implications of the Jackson decision.  First, the standard in Colorado is clearly less stringent than the federal court standard.  This raises the prospect that plaintiffs will view Colorado as a favorable forum for class action litigation, and it will almost certainly raise the stakes in battles over forum selection and federal jurisdiction.  Moreover, given the trial court judge’s broad discretion over the class certification, the particular leanings and predispositions of the trial court judge become pivotal in the likely success or failure of a class action.

Second, the court’s emphasis on the tentative nature of class certification decisions under Colorado Rule 23 means that even once they are certified, class actions in Colorado are likely to be subjected to repeated efforts at decertification as the case progresses.

Third, the emphasis on the “rigorous analysis” standard increases the likelihood that, despite the lack of a clear standard for resolving the issue, class certification will necessitate a mini-trial involving the presentation of live witnesses and a fully-developed record, likely increasing the cost of discovery and the class certification process itself.

On the other hand, none of these potential impacts would be a drastic change from the way that class actions are already being litigated in the Colorado Courts.  Parties already fight over removal and forum selection, courts already conduct evidentiary hearings on class certification motions, and defendants already make repeated efforts at decertifying a class.  Thus, the legacy of  Jackson may ultimately be merely to validate the existing customs and practices for litigating  class actions in Colorado.

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As I noted in my post a few weeks ago for the SCOTUSBlog class action symposium, one issue to which I’m paying particularly close attention these days, particularly in the wake of the Supreme Court’s recent decisions in Shady Grove, Concepcion, Bayer and Dukes, is whether the state court class certification standards begin to diverge from increasingly more exacting federal standards. 

A recent article in the Wisconsin Lawyer caught my eye as a case in point for the potential divergence of state and federal class action standards.  A Call to Reform Wisconsin’s Class-Action Statute, authored by Paul Benson, Joe Olson & Ben Kaplan of the Milwaukee firm Michael Best, discusses the brief and arcane language of Wisconsin’s class action statute (Section 803.08 of the Wisconsin Statutes), which reads, in its entirety:

When the question before the court is one of a common or general interest of many persons or when the parties are very numerous and it may be impracticable to bring them all before the court, one or more may sue or defend for the benefit of the whole.

Benson, Olsen and Kaplan point out in their article that although the courts have generally looked to case law interpreting federal Rule 23 in deciding whether class certification is proper under the state rule, the broad statutory language leaves state trial courts with broad discretion in deciding what standards to apply in a particular case.  This, they argue, leaves the state rule open to uncertainty of application, inconsistent decisions, and forum shopping.   They propose that the state rule be reformed so that it more closely mirrors the federal rule.

It remains to be seen whether states like Wisconsin with ill-defined class action rules will become battleground for class action litigation, where plaintiffs can attempt to avoid the more rigorous standards now required in the federal courts. Even assuming that CAFA and other jurisdictional issues could be overcome, there could be a variety of practical reasons why plaintiffs’ lawyers would not want to pursue class action litigation in the Wisconsin courts.  However, Wisconsin’s broadly-worded class action rule provides at least a possible inducement to pursue litigation there.

In other words, for potential class action defendants (and in observance of National Talk Like a Pirate Day), Ye maye want to considarrrr steerrrin’ clear o’ Wisconsin, me maties!

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After the all the activity in the Supreme Court during the October 2010 term, why would anyone want to talk about a decision from the October 2009 term?  Isn’t that kind of like showing off your new Blackberry Curve the day after they unveil the iPhone 4?  I prefer to think about it this way–it’s like what they say about the NFL draft.  Sure, it’s fun to read all of Mel Kiper’s draft grades the next day, but you won’t really know how your team did until you have time to see the players perform on the field.

All these obscure metaphors are my way of introducing an upcoming live phone/web seminar in which I’ll be presenting entitled “Filing Class Actions in Federal Court After Shady Grove” scheduled for Thursday, July 14, 1:00pm-2:30pm EDT.  Here’s a synopsis of the program:

The Supreme Court’s Shady Grove ruling held that Rule 23 preempts state laws that otherwise bar statutory claims from being brought as class actions. Many believed an increase in class actions filed in federal court, particularly in the consumer protection and antitrust arenas would result.

One year later, the impact of Shady Grove on federal court filings remains unclear, mostly due to ambiguities in the Court’s decision and the differing plurality and concurring opinions regarding the standard for deciding which state-law restrictions do not apply in federal court actions.

The lower courts’ struggles to apply these different tests have resulted in divergent applications of Shady Grove. Nonetheless, plaintiffs and defendants can glean guidance from these rulings for arguing their positions regarding the applicability of a state-law restriction in federal court.

My fellow panelists and I developed this program to analyze the U.S. Supreme Court’s Shady Grove decision and discuss how lower courts have applied the ruling. We will offer guidance for practitioners to argue their positions on whether particular state-law prohibitions on class action claims should apply in federal diversity cases.

We will offer our perspectives and guidance on these and other critical questions:

  • Has the Shady Grove decision provided plaintiffs with additional opportunities for class action litigation?
  • How have lower courts applied Shady Groves‘ divergent tests for deciding which state laws restrictions will not apply in federal court actions?
  • Have there been any rulings since Shady Grove which dispensed with the state law restriction on class action claims?

After our presentations, we will engage in a live question and answer session with participants — so we can answer your questions about these important issues directly.

I hope you’ll join us.

For more information or to register >

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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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Just when we were starting to think that 2011 might mark the end of the great American class action…

Today, the Supreme Court issued a unanimous decision reversing a denial of class certification in the securities class action Erica P. John Fund, Inc. v. Halliburton Co., No. 09-1403, slip op (June 6, 2011).  In the opinion, authored by Chief Justice Roberts, the Court held that the Fifth Circuit Court of Appeals had erred by requiring a securities fraud plaintiff proceeding under a “fraud on the market” theory to prove loss causation as a prerequisite to class certification. 

The decision does not necessarily mean that class certification will be granted, however.  It just means that the denial of class certification cannot rest on the conclusion that the plaintiff failed to prove loss causation at that stage.  The case will be remanded to the Fifth Circuit, which may consider any other arguments against class certification to the extent that they have been preserved by the defendant.  See Slip Op. at 9.

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The United States Supreme Court will hold oral argument next Tuesday, March 29, 2011, in case of Wal-mart v. Dukes, No. 10-277.  The issue for review, at least so far, according to order granting certiorari, is:

Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2) – which by its terms is limited to injunctive or corresponding declaratory relief – and, if so, under what circumstances.

Hopefully, questions posed by the justices during the argument will also provide insight into what the Court meant in its somewhat vague directive that the parties brief the issue “Whether the Class Certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).”

Another thing I’ll be looking out for is whether the questions appear to limit the analysis to the employment discrimination context, or whether they portend a more general analysis of Rule 23 that could impact class actions in other subject matter areas.

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Class action notice expert and occasional CAB guest blogger, Dr. Shannon Wheatman, has a must-read article coming out on trends in class action notices.   The article, co-authored with plain language expert, Dr. Terri R. LeClercq, is being published in the University of Texas law journal The Review of Litigation and will be titled Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements.  As the title suggests, Wheatman and LeClercq have found that a majority of class action notices are still not meeting the plain language notice guidelines established by the Federal Judicial Center.  What’s more, their study suggests that many class action notices do not even meet the basic requirements set forth expressly in FRCP 23(c)(2)(B).

The article summarizes historical developments and best practices dealing with plain language notices in class actions, and sets forth the results of an empirical study of class action notices given between 2004 and 2009.  The study included publication notices given in both state and federal courts and in the settlement context as well as the contested certification context.   The notices had been used in cases involving a wide variety of subject matter areas, including “antitrust, banking and finance, consumer, employment, environmental, humanrights, insurance, pharmaceutical, privacy, securities, and telecommunications.”  The key findings included:

  • Over 90% of securities notices used an uninformative case caption in the header of the notice.
  • Most notices did not include a noticeable and informative headline to capture the attention of potential class members.
  • Over 60% of notices were written in less than an 8-point font.
  • The majority of notices failed to clearly inform class members of the binding effect of the settlement.
  • Over two-thirds of the notices with an opt-out right did not inform the class member that they could opt out of the litigation or settlement.
  • Over 75% of the notices did not tell class members they had the right to appear through an attorney.
  • Over two-thirds of the notices failed to satisfy the concise, plain language requirement of Rule 23.

Shannon R. Wheatman and Terri R. LeClercq, Majority of Class Action Publication Notices Fail to Satisfy Rule 23 Requirements, 30 Rev. Litig. 53, 58 (2011). 

For anyone who has flipped through People Magazine or Sports Illustrated recently, it is probably not a revelation to hear that class action notices are not meeting the requirement that they “concisely and clearly state in plain, easily understood language” certain basic information to class members.  For those of us responsible for carrying out class action notice plans that comply with the rules of civil procedure, however, this article is a reminder that we need to do better. 

Unfortunately, the article is not available online, but for more information on the print version, see the UT Law Publications website, or email Shannon Wheatman at swheatman@kinsellamedia.com.

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This article is about defending against class certification based on illogical, circular arguments in support of an oversimplified “one-size-fits all” legal theory based on an amalgam of facts that don’t describe any one class member’s actual experience.  (In other words, many defense lawyers would say, it’s about what you face in all class actions.)  Most class action defense lawyers are aware of numerous procedural devices that can be used challenge–and keep challenging–class certification, from the moment the case is filed until after the verdict is rendered.  A well-versed defense lawyer can also see all the fallacies in the plaintiff’s argument and the manageability nightmare posed by the prospect of trying the would-be class claims from the vary first reading of the complaint.  Armed with this knowledge, the defense lawyer knows the science of how to challenge certification.  But there is also an art to defending class actions, and part of the art is in knowing whether to challenge class certification at each available opportunity.  Of course, because this is about the art and not the science, there is no single answer to this question, but below I have tried to sketch out some of the possible considerations in making the decision to use various different procedural devices at different phases of the litigation. 

Motion to “Strike” Class Allegations

A motion to “strike” class allegations can refer to any preemptive motion challenging the viability of the case as a class certification even before a motion for class certification is filed.  One consideration in deciding whether to file a motion to strike class allegations is the standard of review that will be applied by the court.  Depending on the jurisdiction, how the motion is raised, and the predilections of the judge, a motion to strike class allegations may be reviewed under a variety of standards ranging from the “rigorous analysis” standard applicable to class certification motions, the “well-pleaded complaint” rule applicable to FRCP 12(b)(6) motions, or the “immaterial, impertinent, or scandalous” standard applicable to a motion under FRCP 12(f).  

As a practical matter, it is important to consider whether the record is sufficiently developed to permit a decision that class treatment is inappropriate.  Although failure on a motion to strike class allegations does not foreclose the ability to challenge certification in later proceedings, filing the motion too early in the case can backfire.  An undeveloped record can help the plaintiffs because it allows them to rely on supposition or speculation about what the common facts and legal issues might be.  If the judge denies the motion to strike class allegations because the issue is not sufficiently developed, he or she may then develop a preconception that class certification is appropriate.  For that reason, it is sometimes better to keep one’s powder dry and wait until class certification except in cases where the barriers to certification are obvious from the face of the complaint itself.  A motion to strike class allegations can be useful, however, when a plaintiff drags his feet in seeking class certification.

Response to a motion for class certification 

There are not many situations in which a class action defendant will not want to object to the motion for class certification when it is filed.  However, there are few strategies short of a complete objection that might be appropriate in certain cases.  One is to consent to class treatment on limited issues.  Issue certification, although not often applied in practice, is expressly permitted under FRCP 23(c)(4) (“When appropriate, an action may be brought or maintained as a class action with respect to particular issues.”).  This strategy may be useful when there are certain common threshold legal or factual questions that, if resolved in the defendant’s favor, can end the litigation short of a full trial on the merits.  Certification of issues can allow the defendant to obtain a collateral estoppel effect of a favorable decision on those issues, as to the entire class.  FRCP 23(c)(4) can also be a useful tool to combat a common plaintiff’s strategy in which the plaintiff relies on a few legal or factual issues that are indisputably common in an attempt to justify class treatment of an entire claim that would require resolution of facts or issues that are clearly not common.

Motion to reconsider class certification

Many of the considerations in deciding to move to reconsider a class certification order are the same as in moving to reconsider any other trial court order.  However, class certification orders are inherently preliminary and subject to change.  Given the court’s on-going obligation to assess the appropriateness of certification, the court should at least theoretically give the motion more thoughtful reconsideration than it might other motions.  Arguments that go beyond a mere claim of unfairness to the defendant in having to defend against class claims, such as the argument that the certification order will lead to manageability problems, may have a greater likelihood of success than a run-of-the-mill motion to reconsider.  Other factors to consider in deciding whether to move to reconsider a class certification order may include:

1) What are the prospects for appeal?  Will moving to reconsider simply give the judge a chance to correct any obvious errors in the class certification analysis but still reach the same outcome?

2) Is the judge someone who is ever apt to reconsider his or her orders?  A big part of the strategy at this phase or any other phase is to know the judge’s tendencies and disposition as well as possible.  Some judges will deny motions to reconsider out of hand.  Some will give every motion careful consideration regardless of how many times the same issue comes before them.  (I have had judges who seemingly reversed course multiple times on the same issue in the same case).  Still other judges are so unpredictable that every motion seems like a roll of the dice. 

3) Are there clear logical, legal, or factual errors in the court’s analysis that might be outcome-determinative?  By “clear” error here, I’m not referring to any particular standard of appellate review.  I mean, as a practical matter, is the error clear enough that a judge is likely to admit it herself.

 4) Might further development of the factual record improve the likelihood of success later?  You may note that this is a recurring theme.  See the section below on motions to de-certify.

Rule 23(f) appeal 

Whether interlocutory appeal is available at all in state court class actions will vary from state to state.  These days, Rule 23(f) will apply to allow discretionary interlocutory appeal in most federal class actions, although the standards for accepting discretionary appeal differ from circuit to circuit.

When it is available, interlocutory appeal of a class certification order is never mandatory, so there are still a few factors to consider before deciding to appeal.  Many are the same as those discussed above with respect to motions to reconsdier.  In particular, the defendant should consider whether the odds of decertification by the trial judge after the case is more developed might be greater than the odds of successfully appealing the initial order.  If so, it might be better to wait, since an unfavorable ruling by the appellate court will only serve to solidify the class certification order in the judge’s mind and further embolden class counsel.

Motion requiring class counsel to submit a trial plan

A trial plan is a document that may describe, among other things, the the claims and theories of liability, the witnesses and evidence that will be used to prove those claims, and how the presentation of evidence on behalf of the class will proceed.  For a defendant, it can be a useful tool in bringing to light practical manageability problems in adjudicating the claims on a classwide basis.  In some states, a trial plan is a requirement, but it most courts, it is simply something that a judge may order in his or her discretion as part of his or her inherent authority over management of the case.  However, in jurisdictions in which there is no express rule or precedent, it may be difficult to educate a judge about what a trial plan is or why it may be useful in ensuring that the case is manageable as a class action for trial.  Therefore, a defendant has two hurdles to overcome in getting the judge to order a trial plan; 1) explain what a trial plan is, why it is different than a scheduling or trial management order, and why it might be useful; and 2) then convincing the judge to exercise his or her discretion to order one.

Motion to decertify

A motion to decertify can be a powerful weapon if timed properly.  The court has the power and obligation to continue to reassess certification, and as trial approaches, the rubber starts to meet the road.  The plaintiffs’ theories have to solidify, and the factual record is complete.  Now that trial is approaching, presumably the plaintiffs have had to settle on one or more legal theories, and the factual record is finally developed.  It should be much easier at this point to articulate the fallacies in the plaintiff’s theories, and give specific examples showing why the trial is either going to be unmanageable or unfair to the defendant.

The big factor in filing a motion to decertify is timing.  The case has to be developed enough to convince the judge that it isn’t what the plaintiffs promised in the original class certification, but not so close to trial that the case has reached the point of no return in the judge’s mind.

The success or failure of a motion to decertify will also depend to some extent on the law of the jurisdiction on what types of changed facts or other circumstances are necessary to justify the motion.  In Colorado, the Supreme Court’s recent decision in Farmers Ins. Exchange v. Benzing, 206 P.3d 812 (Colo. 2009) addresses this issue.

“Halftime” motion at trial

For many practitioners, the idea of challenging certification at trial may be more of an academic discussion than anything, since it is so rare for a class action to reach the trial phase.  However, in the few cases that have reached the trial phase, it will finally be time for the plaintiffs to put their money where their mouths were at the certification phase and actually prove their claims by common evidence.  It may be that when the evidence is finally introduced, it only proves the individual class representatives’ claims, or is so general that it doesn’t prove one or more elements of the claims of anyone.  The same arguments that supported denial of class certification should now have come into clear focus, and there is no longer any room for debate about what the evidence “might” show in order to justify class treatment.  Thus, on issues of typicality, commonality, and predominance, where the judge may have given the plaintiffs the benefit of the doubt at the certification phase, after the evidence is presented, the judge may now be bound to conclude that these elements of class certification are not in fact satisfied.

However, there are a number of strategic reasons why a defendant would not want to file a halftime motion challenging the appropriateness of the class certification order, including a) the jury appears favorable to the defendant; or b) the plaintiffs’ presentation of their case-in-chief was weak.  These considerations may especially be important if there is a possibility of individual litigation if the class is decertified.  Instead of formally challenging certification at this phase, a better strategy may simply be to seek a judgment as a matter of law that the class failed to prove its claims because it did not prove them by common evidence.  In this way, the defendant may get a binding judgment precluding all future litigation on the issue rather than simply an end to the litigation at hand.

Post-trial motions and appeal of an adverse verdict in favor of a certified class

Thankfully, I’ve never been faced with this situation, so I can only offer this obvious guidance: You should probably challenge the certification order if you get this far!

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I’m embarrassingly late in reporting on them, but I would be remiss if I did not mention two key recent United States Circuit Courts of Appeals decisions addressing the legal standards governing class certification under FRCP 23:

In American Honda Motor Co. v. Allen, No. 09-8051 (7th Cir., April 7, 2010) the Seventh Circuit held that a district court abused its discretion by failing to conduct a Daubert inquiry into the admissibility of expert testimony before relying on that testimony in determining that the plaintiff had met his burden of establishing the elements of class certification. 

Meanwhile, in Dukes v. Wal-Mart Stores, Nos. 04-16688 and 04-16720 (9th Cir., April 26, 2010) (en banc), the Ninth Circuit Court of Appeals clarified that circuit’s standards for conducting the “rigorous analysis” necessary to determine whether the elements of Rule 23 are satisfied.  Following extensive discussion of the history of class certification standards both outside and within the Ninth Circuit, the court articulated class certification standards that essentially mirror those recognized in the Second Circuit’s decision in In re IPO Securities Litigation, 471 F.3d 24 (2d Cir. 2006).  However, applying those standards, the court came to a very different result, affirming certification of a nationwide class of thousands of female employees seeking injunctive and declaratory relief, back pay, and punitive damages arising out of allegedly common, discriminatory employment practices.

Both decisions are worthy of careful reading and study, and you will no doubt hear more about both decisions in the weeks and months ahead.

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