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Posts Tagged ‘9th circuit’

In an opinion entered in April in Rodriguez v. West Publishing Corp., the U.S. Court of Appeals for the Ninth Circuit stated its disapproval of the practice of plaintiffs’ counsel entering into incentive agreements with putative class representatives, which required their attorneys to seek successively higher payment in the event of class settlements in successively higher dollar amounts.  The court described the problem as follows:

Incentive awards are fairly typical in class action cases. See 4 William B. Rubenstein et al., Newberg on Class Actions§ 11:38 (4th ed. 2008); Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to Class Action Plaintiffs:  An Empirical Study, 53 U.C.L.A. L. Rev. 1303 (2006) (finding twenty-eight percent of settled class actions between 1993 and 2002 included an incentive award to class representatives). Such awards are discretionary, see In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000), and are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general. Awards are generally sought after a settlement or verdict has been achieved.

The incentive agreements entered into as part of the initial retention of counsel in this case, however, are quite different. Although they only bound counsel to apply for an award, thus leaving the decision whether actually to make one to the district judge, these agreements tied the promised request to the ultimate recovery and in so doing, put class counsel and the contracting class representatives into a conflict position from day one.

The court went on to approve the settlement, which called for the creation of a $49 million settlement fund to compensate a class consisting of aspiring lawyers who paid for  BAR/BRI bar review courses from August 1997 through July 31, 2006.  The court reasoned that although the incentive agreements were improper, there were two settlement class representatives who had not been parties to the agreements.  However, the court remanded for a reconsideration of the attorneys fees to be awarded to the class counsel who had negotiated the incentive agreements and the possibility of an award to counsel for objectors who successfully objected to the incentive fee agreements.

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It’s a little later this week than normal because I unexpectedly had to attend a hearing out of state, but better late than never.  Here are some blog posts of interest to class action practitioners from this past week…

The Complex Litigator has an extensive analysis of an upcoming Law Review article by Professor Sheila Scheuerman of the Charleston College of Law regarding “inferential preclusion of punitive damages claims in class actions.”

http://www.thecomplexlitigator.com/2008/05/has-the-united.html

For the latest in California class certification decisions, see The UCL Practitioner:

http://www.uclpractitioner.com/2008/05/new-class-certi.html

The California Wage and Hour Law weblog reminds the plaintiffs’ bar that some of the best ideas on employment class action strategies come from defense lawyers (right back at you)…

http://wagelaw.typepad.com/wage_law/2008/05/new-littler-rep.html

… and reviews a recent Ninth Circuit Court of Appeals decision regarding the ability of a district court in which a certified class action is pending to enjoin other competing actions:

http://wagelaw.typepad.com/wage_law/2008/05/district-courts.html

SCOTUS Blog provides links to case materials in for class action cases in which Petitions for Certiorari have been filed with the United States Supreme Court raising, including issues relating to class action arbitration bans in consumer contracts and removal issues:

http://www.scotusblog.com/wp/petitions-to-watch-conference-of-52208/

http://www.scotusblog.com/wp/petitions-to-watch-conference-of-52908/

Drug and Device Law Blog analyzes a recent Oregon Supreme Court decision in a class action lawsuit addressing whether having to undergo medical monitoring can be an injury sufficient support a negligence claim:

http://druganddevicelaw.blogspot.com/ (See Post entitled So Big And Yet So Small)

Class Action Defense Blog provides a detailed summary of a recent federal court decision certifying a class in an action against a pharmaceutical company for its alleged actions to prevent generic competitors from entering the market:

http://classactiondefense.jmbm.com/2008/05/glaxosmithkline_class_action_d.html

D&O Diary provides yet another excellent analysis of trends in subprime class action litigation:

http://www.dandodiary.com/2008/05/articles/subprime-litigation/variations-on-the-subprime-lawsuit-theme/

Federal Civil Practice Bulletin provides a link to an article by Vanderbilt Law Professor Amanda Rose regarding securities class action reforms:

http://federalcivilpracticebulletin.blogspot.com/2008/05/prof-rose-posts-article-on-reforming.html 

EDTexWeblog.com discusses a federal district court’s denial of a motion to dismiss a class action filed under the Federal Odometer Act:

http://mcsmith.blogs.com/eastern_district_of_texas/2008/05/motion-to-dismi.html

Northern Law Blog discusses the benefits of responding to class action settlement notices.

http://www.northernlawblog.com/2008/05/class-action-lawsuits.html

Smart Blog discusses a lawyer’s rating website that successfully defeated a class action lawsuit on First Amendment grounds:

http://smartblog.typepad.com/smart_blog/2008/05/no-good-deed-go.html

A (very) left-of-center blog criticizes Barak Obama’s support of CAFA.  (Not to get too political, but this post only helps solidify my own support of Mr. Obama.  No doubt a major press release of my endorsement will follow):

http://proletariat.wordpress.com/2008/05/09/obama-and-the-class-action-fairness-act/

istockanalyst.com provides an extensive commentary of both potential abuses in class action lawsuits in general and issues regarding a particular shareholder class action attacking a proposed merger between satellite radio providers…

http://www.istockanalyst.com/article/viewarticle+articleid_1853716.html

…but InjuryBoard.com defends the benefits of class action lawsuits:

http://cleveland.injuryboard.com/miscellaneous/benefits-of-class-action-lawsuits.aspx?googleid=238998

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Does a United States Circuit Court of Appeals decision not to review an order granting or denying class certification mean that the appellate court agreed with the class certification order?  Not necessarily.

Since 1998, Rule 23(f) of the Federal Rules of Civil Procedure has provided a way to seek appellate review of a federal district court’s grant or denial of class certification.  However, appellate review is completely discretionary.  The rule states that a “court of appeals may permit an appeal” of a class certification order if filed within 10 days.  FRCP 23(f) (emphasis added).  This means that before considering any of the issues raised on appeal, the court of appeals first considers whether to allow the appeal to go forward at all.  The court of appeals has “unfettered discretion whether to permit the appeal” and “[p]ermission to appeal may be granted or denied on the basis of any consideration that the court of appeals finds persuasive.”  Rule 23, comment to 1998 amendments. 

Thus, when a U.S. Circuit Court of Appeals denies permission to appeal a class certification order, the denial has no obvious meaning in terms of the ultimate resolution of the issues sought to be raised by the appeal.  Denial could mean that the court agrees with the underlying decision regarding class certification, but more likely it means that the court simply did not believe that it was necessary to resolve the issues on interlocutory (before trial and/or final judgment) review.   Normally, interlocutory issues may not be appealed at all, the exception to this rule being where interlocutory appeal is allowed by a specific statute or rule.  See 28 U.S.C. 1292.  As the 1998 comments to Rule 23 note, a Federal Judicial Center study “supports the view that many suits with class-action allegations present familiar and almost routine issues that are no more worthy of appellate review than many other interlocutory rulings.”  So, the fact of denial of a request under Rule 23 for review of a class certification order doesn’t mean that the court of appeals agrees with the substance of the order.

Any number of things can happen to a class certification order even if interlocutory review is denied.  The trial court can exercise its discretion under Rule 23(c)(1)(C) to alter or amend the order at any time.  Later proceedings at the trial court level, especially the development of key facts, can change the court’s decision on certification.  Alternatively, the parties may reach a settlement in which they agree to alter the class definition for settlement purposes, subject to the trial court’s approval.  Still another possibility is that the court of appeals may review a court’s pretrial class certification decision as part of an appeal after a final judgment is entered by the trial court, either as a result of a trial or as a result of other rulings on the merits of the claims.  The fact that a court of appeals denied permission to appeal a class certification decision before a final judgment does not bar it from considering those issues in an appeal taken as of right after the final judgment.  As a result, it is possible–although rarely do proceedings ever get this far in practice–for a trial court to grant certification, have a trial on the claims for which the class was certified, and enter judgment for or against the class, only to have the court of appeals later reverse the initial order granting class certification.

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