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Posts Tagged ‘classwide proof’

The Class Actions, Mass Torts and Derivative Suits Subcommittee of the Colorado Bar Association, now ably chaired by my BakerHostetler partner, Casie Collignon, held its first CLE luncheon of the year this past Friday.  The program, United States Supreme Court vs. Class Actions in 2013, featured excellent commentary about the Supreme Court’s 2013 class action decisions by The Honorable Marcia Krieger, Chief Judge, U.S. District Court for the District of Colorado, Seth Katz of Burg Simpson, and John Fitzpatrick of Wheeler Trigg O’Donnell.  Here are just a few of the many insightful observations made by each of the speakers:

Judge Krieger opened by observing that none of the cases this term have been a surprise from the standpoint of what a trial court judge would have expected given existing law.  Amgen was predictable because the question of materiality in a securities fraud case is unquestionably a common issue, so it is not surprising that it is a question for trial, not a prerequisite for class certification.  Standard Fire can be viewed as a straightforward application of agency law: a plaintiff cannot bind a class of people that he or she doesn’t yet represent.  Comcast exemplifies the importance of examining the plaintiffs’ theory of liability and the relationship to the theory of loss.  Damages are not the same as loss.  The theory by which the plaintiff establishes loss determines the measure of damages.

When asked to identify any trends that she has been seeing in class actions recently, Judge Krieger identified issue certification as a key trend.  She has been seeing more situations where the factual issues may be individualized but there are common legal issues that can be resolved classwide.  She noted that she has been inclined to grant partial certification limited to the common legal issue(s) in that situation.

From the plaintiffs’ perspective, Katz agreed that the outcome of Standard Fire was not surprising, and he went as far as to say that the outcome was correct, noting that plaintiffs’ attorneys shouldn’t be afraid of the federal courts.  Although the holding of Amgen was favorable to plaintiffs, Katz noted an issue that should be of great concern to plaintiffs, and that is the commentary from the conservative wing of the court suggesting that they might be willing to revisit the fraud-on-the-market presumption adopted in Basic Inc. v. Levinson.  Katz sees the potential of a 4-4 split on that issue, with Chief Justice Roberts being the deciding vote.  He predicts market studies being commissioned by both sides over the coming years to demonstrate or disprove the continued efficiency of the markets.

Comcast, Katz noted, caused a collective sigh of relief in the plaintiffs’ bar because it does not go as far as many would have feared by requiring Daubert hearings at the class certification phase.  He noted that one positive impact for plaintiffs arising from the “death of Eisen” (the rejection in decisions like Wal-Mart and Comcast of the idea that merits questions were off-limits at the class certification phase) is that it gives plaintiffs’ counsel an opportunity to obtain merits discovery much earlier in a case than was allowed previously.  On the other hand, Katz expressed fear about the possibility that the Court is trying to raise the bar for plaintiffs with a subtle change in the language about what common proof is necessary on the issue of damages.  Where earlier decisions required that damages be “susceptible to classwide proof,” the Comcast majority phrased the standard as requiring the plaintiff to “prove classwide damages.”  Katz predicts that defendants will argue that this means damages must be uniform, as opposed to simply being susceptible to formulaic calculation.  He noted, however, that the few lower courts that have interpreted Comcast so far have rejected a broad application of the decision.

Fitzpatrick combined philosophical commentary about the evolution of class actions with some practical tips for defense lawyers.  Standard Fire, he argued, is proof that judicial hellholes still exist.  He pointed to Amgen as an example of the dangers of accepting conventional wisdom, pointing out that the outcome in that case might well have been different if the defendants had stipulated to the existence of an efficient market.

Comcast, Fitzpatrick said, provides an opportunity for defendants to prevail at the class certification stage by discrediting a plaintiffs’ expert.  Focus not just on the opinions themselves, he suggested, but also on 1) the existence of bias; 2) the expert’s credentials, and 3) flaws in the methodology.  Scour the country for transcripts about the plaintiffs’ experts.  Look at misstatements and exaggerations in the expert’s CV.  Make sure you find and read all of their prior statements in books, media, and transcripts.  Just as important, Fitzpatrick reminded defense practitioners, is the make sure to prepare your own experts for class certification.

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The United States Supreme Court issued its decision in Comcast Corp. v. Behrend, No. 11-864 today.  In a 5-4 decision, the Court held that the class of cable subscribers had been improperly certified.  Justice Scalia, writing for the majority, reasoned that the expert testimony offered by the plaintiff to show that antitrust damages were capable of class-wide proof addressed alleged damages that did not logically flow from the plaintiff’s theory of class-wide liability.  The majority held that the trial court had erred by refusing to consider questions concerning the expert testimony on damages that might overlap with the “merits,” while the Third Circuit had erred by accepting the plaintiffs’ contention that it had a class-wide theory of damages through expert testimony without actually scrutinizing the factual basis for that contention:

The Court of Appeals simply concluded that respondents “provided a method to measure and quantify damages on a classwide basis,” finding it unnecessary to decide “whether the methodology [was] a just and reasonable inference or speculative.” 655 F. 3d, at 206.  Under that logic, at the class-certification stage any method of measurement is acceptable so long as it can be applied classwide, no matter how arbitrary the measurements may be.  Such a proposition would reduce Rule 23(b)(3)’s predominance requirement to a nullity.

The dissenting Justices would have dismissed the writ of certiorari as having been improvidently granted.  The dissent’s criticism of the majority’s holding has more to do with the procedural posture of the case and the methodology used by the majority in reaching its factual conclusions than with the legal class certification concepts underlying the majority’s reasoning.  In particular, the dissent faulted the majority for having changed the issue on review after the conclusion of briefing and took issue with the majority’s analysis of the factual basis for the expert’s opinions.

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Along with leading Colorado Employment attorney Todd J. McNamara, I’ll be presenting at a breakfast seminar at the CBA-CLE next Tuesday with the (hopefully) self-explanatory title: Wal-Mart v. Dukes: Reshaping Class Certification.   The particulars follow below.  Hope to see you there!

When:

July 12, 2011 8:30 AM – 9:30 AM

Where:

CLECI Large Classroom
1900 Grant Street, Suite 300
Denver CO 80203
(303) 860-0608

Credits:

General credits: 1.00

Prices

CBA Member $59.00
CBA Labor & Employment Section Member $29.00
CBA Litigation Section Member $29.00
Non Member $69.00
 
July 2011
 
Wal-Mart v. Dukes: Reshaping Class CertificationLIVE IN DENVER
 
 
Program Description:
 
When it issued its decision in Wal-Mart Stores, Inc. v. Dukes, the Supreme Court did much more than simply end one of the largest class action suits in American history. It also set a host of new ground rules for federal courts to evaluate class certification, both in employment discrimination cases and in other types of class actions. This program will discuss the significant potential impacts of this landmark decision on a host of issues, including 1) evaluation of merits issues at the class certification stage; 2) the potentially broadened scope of the commonality element of FRCP 23(a); 3) the standards for evaluating expert testimony at the class certification stage; 4) the threshold standard needed to establish “common proof” of an employment or other business practice; 5) the use of statistical evidence in support of class certification; and 6) the standards for adjudicating claims for monetary relief under FRCP 23(b)(2). The program will examine what the Court had to say about these and other topics, and it will also explore the questions that remain unanswered following the decision.
 
Presented by Paul G. Karlsgodt, Esq. and Todd J. McNamara, Esq.
 
Agenda:
8:00 am – 8:30 am Registration
8:30 am – 9:30 am Program (Continental Breakfast Provided)
 
 
Faculty:
 
Paul G. Karlsgodt, Esq.
Baker Hostetler
 
Paul Karlsgodt is a litigation partner whose practice emphasizes class action defense and other complex commercial litigation. Mr. Karlsgodt has represented insurance companies and other FORTUNE 500 companies in numerous nationwide and statewide consumer class action lawsuits and related litigation. He has represented clients in class action lawsuits involving sales and marketing practices, insurance coverage, claims adjustment practices, corporate securities, retailer/dealer disputes, employment and taxation.
 
Mr. Karlsgodt is editor and primary contributor to the legal blog, http://www.ClassActionBlawg.com, which covers a variety of class action-related issues, including decisions, trends, best practices, news and reform, both in the U.S. and throughout the world. He also founded and served as the first Chair of the Class Actions, Derivative Suits and Mass Torts Subsection of the Litigation Section of the Colorado Bar Association. He remains an active member of the Subsection.
 
 
Todd J. McNamara, Esq.
McNamara Roseman & Kazmierski LLP
 
 
Todd McNamara opened his own firm in 1995 and limits his practice exclusively to employment law matters. Mr. McNamara was lead private class counsel in Wilkerson, et al., v. Martin-Marietta, the largest age discrimination claim brought within the State of Colorado, which settled for a reported $7.6 million. Mr. McNamara secured the first race discrimination verdict in the United States against a real estate franchise for failure to award a sales agency to an African-American in Tyler v. ReMax. Most recently, Mr. McNamara, together with class cocounsel, settled a $3.85 million disability discrimination case against the United States Postal Services.
 
Todd has previously served as co-chair of the Colorado Bar Association Labor Law Committee, and is a member of the National Employment Lawyers Association. He serves as an arbitrator and mediator for the American Arbitration Association Employment Panel. He is co-editor of FederalEmployment Jury Instructions and has just recently completed a seventh supplement to that publication, which is used throughout the United States by both lawyers and judges. He is a co-chapter editor with the Practitioners Guide to Colorado Employment Law and has published a number of other articles on employment law issues in both Trial Talk and The Colorado Lawyer. Todd is a Fellow of The College of Labor and Employment Lawyers, one of approximately only 20 in Colorado.

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