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I was not able to attend the National Institute on Class Actions program in San Fransisco, but class action notice expert Dr. Shannon R. Wheatman (swheatman@gmail.com), was there and she graciously agreed to send me her notes of what sounds like another great conference.  I think that Shannon’s article also marks the first guest post on ClassActionBlawg, and I am very grateful for her contribution.  Shannon’s notes follow below. – PGK

Notes from the 13th Annual National Institute on Class Actions (San Francisco)

Following an introduction from Tydings & Rosenberg partner and National Institute on Class Actions founder, John B. Isbister, Columbia Law Professor John C. Coffee kicked things off with his annual review of developments in federal class action law.  His review covered trends and key decisions over the past five years.  He identified several key areas that he believes are likely to be addressed in the federal courts in the near future. 

Professor Coffee began his discussion on the burden of proof.  He cites a significant shift in the Second, Third, and Fifth Circuits’ adoption of the preponderance of evidence standard for certification.  This has resulted in a front-loading of issues that has typically been consigned to the end of a case.  One example given was on lost causation and damages issues, which may be dispositive, but now need to be addressed at the certification stage in order to prevail.

The First Circuit is resisting the preponderance of evidence standard and this issue will remain at the forefront over the next five years when other circuits decide whether to accept it or not.

The discussion then turned to “hybrid” class actions that seek to combine elements from Rule 23(b)(2) and Rule 23(b)(3) to award injunctive relief and monetary damages.  All circuits have agreed that “incidental” damages can be awarded but their definition of “incidental” differs.   The Ninth Circuit in Dukes v. Wal-Mart, 509 F.3d 1168 (9th Cir. 2007), deemed the damages to be incidental since the primary motive was injunctive relief. 

Since the predominance requirement of Rule 23(b)(3) is a “formidable opponent to class certification” partial certification is gaining acceptance.  Professor Coffee sees this as a possible fix for classes that fail the preponderance of evidence standard.  However, the Second Circuit in McLaughlin v. American Tobacco Company, 522 F.3d 215 (2d Cir. 2008), reversed partial certification because “larger issues such as reliance, injury, and damages” would need to be addressed in individual actions. 

For the past few years Professor Coffee has been discussing class-wide arbitration.  A number of courts have found specific arbitration clauses to be unenforceable and other courts have invalidated class-wide arbitration.  This topic was elaborated on in the first panel discussion.

Highlights of panel discussions

A Funny Thing Happened on the Way to the Courthouse . . . I Had to Litigate an Arbitration Clause!  Crafting, Opposing, and Arguing Clauses and Class-Action Waivers in Three Scenes

Following-up on the 12th Annual’s “I Could Have Sworn it was CAFA, Not Kafka!”  Dan Karon presented a true-to-life example of the evolution of an arbitration clause.   Scene I began with a defense attorney (Todd Fulks) talking with a consultant (Stuart Widman) about the enforceability of his client’s proposed arbitration clause in a mobile phone agreement.  This scenario provided a very entertaining overview of class arbitration challenges.  Scene II involved a discussion between two plaintiffs’ attorneys (Dan Karon and Vincent Esades) who wanted to go forward with a class action for breach of contract but first needed to get a court to rule that the class-action waiver was unconscionable.  Scene III provided a guest appearance from the Honorable Stanwood R. Duval Jr. of the Eastern District of Louisiana.  Judge Duval presided over a mock hearing on the alleged unconscionability of the arbitration clause.  The plaintiff’s attorney commented that the arbitration clause provided a “Willy Wonka effect” with it tiny font.  The most amusing part came when Judge Duval remarked that the arbitration clause “could have been written in invisible ink” in his response to the defense statement that consumers don’t read these agreements anyway so it doesn’t matter. 

Living on the Fault Line: Class Action Issues in California

This panel provided a discussion of the Golden state’s class action landscape.  Hillary Hehman of the California Administration Office of the Courts started the dialogue with an overview of a study on California class actions.  The study found that approximately 22% of class actions filed in California were certified (report is available at www.courtinfo.ca.gov/reference/caclassactlit.htm).  This study dovetails nicely with some research that I was involved in at the Federal Judicial Center that found that approximately 24% of class actions in federal courts were certified (report available at www.fjc.gov).

The remaining panelists (Jocelyn Larkin, Fred Alvarez, Honorable Steven Brick, and Mark Chavez) talked about privacy rights and communication with absent class members prior to certification.  In general, class member contact information is discoverable under California law.  The California Supreme Court in Pioneer Electronics v. Superior Court, 40 Cal.4th 360, 373-374 (2007), ruled that an opt-in procedure is not necessary to allow that communication. 

Hydrogen Peroxide Will Clear it up Right Away: Developments in the Law of Class Certification

This panel (Jessica Miller, John Beisner, Elizabeth Cabraser, Bonny Sweeney, and Shirli Fabbri Weiss) discussed the ramifications of the In Re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), ruling on class certification standards.   Hydrogen Peroxide shattered the myth that antitrust class actions are a given and laid out several predominance requirements for class certification. Elizabeth Cabraser noted, “merits matter more than they used to.”  The Hydrogen Peroxide ruling did not tell District Courts how far they should go in their merits analysis.  The federal judges have been put into a position where they do not have presumed expertise on deciding the merits so they are reluctant to certify if they are uncertain about the substance of the claims.  The panel suggested that in order to get a class certified you need to move for class certification as early as practicable, get as much discovery as possible, and bring experts in immediately.

A Survival Guide for Today’s Class Action Settlement

The final panel examined the substantive, procedural, and ethical issues that arise in the class settlement process.  Judge DuVal discussed the ethical pitfalls in the distribution and determination of attorneys’ fees.  He discussed the Fifth Circuit’s reversal of the approval of attorneys’ fees in the In re High Sulfur Content Gasoline Products Liability Litigation, 517 F.3d 220 (5th Cir. 2008).  Many lessons can be learned from this case, namely that a judge should not overly rely on the committees’ proposal of attorneys’ fees, ex parte hearings should not be held, supportive data on the distribution plan should be required, and sealing attorneys’ fee documents is a Big No-No.  Judge DuVal said the process must be transparent.  He noted that the court in Turner v. Murphy Oil USA, Inc. used a Special Master to determine fees since the attorneys were in disagreement.  He went on to discuss his work in the Katrina cases (In Re: Katrina Canal Breaches Consolidated Litigation) where plaintiffs’ attorneys waived their fees but were allowed to ask for an enhancement of costs.  Judge DuVal ended his discussion on attorneys’ fees by reminding the audience that “pigs get fed and hogs get slaughtered.”  So it is wise not to become a hog when it comes to attorneys’ fees.

The panel (Judge DuVal, John Hooper, and Mike Ciresi) had a lively discussion on the court’s injunctive powers to protect a settlement.  The All Writs Act and exceptions to the Anti-Injunctive Act aid courts but provide a tremendous opportunity for abuse.  Judge DuVal noted that he issued an injunction in the Katrina litigation against state courts to enjoin any other lawsuits against the agencies involved.

The discussion turned towards objectors.  John Hooper noted that “they are not all professional objectors, there are objectors who are professional.”  At this juncture

Judge DuVal talked about the difficulties with the Katrina cases and the objections that people had about the limited fund settlement.  Effective notice goes a long way to quiet objectors.  Judge DuVal remarked that the “notice in the case was excellent.”  I was the notice expert in the Katrina case and was very moved at the fairness hearing by Judge DuVal’s thoughtful opening remarks, which were meant for the numerous class members who lost so much when the levees failed.  These comments seemed to satisfy some of the objectors.

This provided a good segue into the final presentation on new media options for class action notice.  Katherine Kinsella, a leading expert in the design and dissemination of legal notice, provided an overview of traditional (newspaper, magazines, TV, radio, internet, banner ads, keyword searches) v. new media (mobile, blogs, social).  A tutorial on how new media can be used to reach a class member was demonstrated through text messaging.  Audience members were shown how to use their mobile device to text a short code (listed in a publication notice) in order to get more information about the settlement.  This process of having the class member send a text obviates the Telephone Consumer Protection Act, which bans sending unsolicited advertisements by text to anyone without prior express consent.

The overall take away from this presentation was that new media is “exciting and sexy” but more time is needed for it to evolve to a level where it can reach mass numbers of people.   For example, currently only Facebook and MySpace offer coverage above 10% among adults 18 years of age and over, whereas, numerous magazines (for example, People, National Geographic, Parade, Better Homes & Gardens and Good Housekeeping) individually reach and in some instances greatly exceed 10% coverage.  Moreover, most of our media time is spent on traditional media (47.9% on TV alone).  For now new media can be used to complement the mass audience reach of traditional media.

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John B. Isbister, founder and chair of the ABA’s annual National Institute on Class Actions, graciously agreed to offer his insights into this year’s programs, the history of the event, and trends in class action litigation generally.  This year’s two programs are being offered in San Fransisco on October 30, 2009 and Washington, D.C. on November 20, 2009.  My Q & A with John follows.  Be sure to check out the links for sample audio clips from last year’s program.

What excites you most about this year’s Institute? 

There are a lot of changes in class action practice right now.  Hot issues include many of the issues that we are examining at the National Institute.  For example, the litigation about arbitration clauses with class action waivers and the changing law on class certification standards (the shift from “some showing” to preponderance of the evidence) will both be examined at the National Institute.  All of these changes are court driven; as opposed to many of the changes in the past that were a function of changes to Rule 23 and CAFA.  Court driven changes are things that can be affected by lawyers, so there is the opportunity for good lawyers to have a real  impact on how Courts deal with these issues.  We are very fortunate to have as speakers some of the best lawyers in the country who are dealing with these issues.  My hope is that the National Institute will make all of the people who attend better able to serve their clients and better handle these cutting edge issues.

Why the decision to split the Institute into two separate programs this year?

This is “customer driven.”  We wanted to do a program in California–an area that has a lot of class litigation.   However, we recognized that in today’s economy a California program probably would not attract many lawyers from the East Coast.  So we decided to do both an East Coast and a West Coast program to satisfy both markets.

Which one should I attend, the one in D.C. or the one in San Francisco? 

Both cover substantially the same material and both have a great faculty.  The difference is that the San Francisco National Institute has a program on California class actions.  If an attorney does a lot of California class actions, the San Francisco program will have a special attraction. For those who want a taste of what the Institute is like, we’ve recently posted audio from the rigorous analysis standard and consumer fraud class actions in federal court sessions at last year’s conference.

What do you see as the emerging trends in class action law?  

An increase in the difficulty in getting a class certified–primarily driven by the shift from “some showing” standard to the preponderance of the evidence burden of proof  standard.  I think this moves the discovery and litigation of a number of issues to the front of a case that at earlier times would have only been contested at trial.  This sets the stage for a battle of experts at the class certification stage, which is also something we’re covering online this month.  It also enables defendants, who traditionally are reluctant to go to trial in a class action to litigate these issues at a preliminary stage.  

How about trends in class action filings? 

While I think it is harder to get a class certified, I do not think this has slowed filings of class cases.  Class action plaintiffs’ lawyers continue to be creative in using this procedural device to look for ways to economically litigate large numbers of claims that probably could not be litigated on their own. The sub-prime/financial crisis sparked a record number of new class action filings.

This is the 13th year for the Institute.  Why do you think this program has been so successful for so long? 

We have consistently identified and addressed current issues in the area of class litigation.  We have also consistently attracted the best lawyers, academics and Judges to be on our facility.  This year we are again privileged to have Professor John C. Coffee open the program. Professor Coffee is one of the most quoted sources in the news on topics related to securities litigation, the financial crisis and class actions in those areas.  His presentation is an overview on developments in class litigation always gets  rave reviews and sets the stage for the rest of the day.  This year Professor Arthur Miller–the guy who wrote the book on civil procedure–will moderate a discussion with  three experienced federal Judges on current issues in class litigation.   John Beisner and Elizabeth Cabraser–two of the most respected defense and plaintiffs’ lawyers respectively will be together discussing changing class certification standards–you can’t get better speakers than those two.  Finally, this program is a great bargain. Attendees get a full day’s worth of CLE credit (including some ethics credit), they get to have lunch and network with other class action practitioners, and they get a great book of written material.  We  also have some nice discounts for members of the American Bar Association, and  particularly  members of the ABA Section of Litigation.

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The ABA’s 13th Annual National Institute on Class Actions, the gold standard in class action CLE conferences, is coming up this fall.  This year’s format is a little different.  They will be holding two sessions, one on each coast.  The dates and locations are:

Friday, October 30, 2009
San Francisco, CA
8:00 AM – 5:00 PM PT

Friday, November 20, 2009
Washington, DC
8:00 AM – 5:00 PM ET   
       
According to program founder and chair, John Isbister:

Each session will begin with the popular presentation by Professor John C. Coffee on new developments in class action litigation.  Also, on the agenda are programs that examine issues concerning arbitration and class action waivers, recent developments in the standards for certifying a class, and advice for both plaintiffs and defense counsel on settling class actions.  The session in San Francisco will include a program on the class action landscape in California courts, while the Washington, DC session will feature a roundtable discussion on current issues in class actions with three federal judges moderated by Professor Arthur R. Miller.

It sounds like you can’t go wrong with either option, so start making your reservations now.  A full description of the programs and the speakers is in the program brochure, which is also available on the web registration site:  http://www.abanet.org/cle/programs/n09cac1.html

I’ll have some comments on each of the topics and sessions over the coming weeks.  Stay tuned…

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As promised, here are some highlights of my notes from Friday’s 12th Annual National Institute on Class Actions:

What are the Hot Trends in Class Actions?

Following an introduction from Tydings & Rosenberg partner and National Institute on Class Actions founder and John B. Isbister, Columbia Law Professor John C. Coffee kicked things off with his annual review of developments in federal class action law.  His review covered trends and key decisions over the past five years or so.  He identified several key areas that he believes are likely to be addressed in the federal courts in the near future.  They include:

  1. Who has the burden of proof in establishing or disproving the elements of class certification?  Is a mini-trial necessary in which the court makes determinations of fact?  If so, then what is the standard of proof?  Is burden-shifting appropriate in certain cases?
  2. Under what circumstances is class certification appropriate under FRCP 23(b)(2) in “hybrid” class actions in which both damages and declaratory or injunctive relief are sought?  What types of damages are “incidental” to equitable relief for the purpose of allowing certification under FRCP 23(b)(2)?
  3. Are civil RICO wire or mail fraud claims appropriate as an alternative to state fraud and consumer protection claims?  Is reliance a required element?  Can reliance be presumed?
  4. Is partial or issue class certification available if predominance cannot be proved as to all aspects of a given cause of action?  Does partial class certification violate due process?
  5. Can company-wide, multi-job employment discrimination claims be certified as class actions?
  6. Are class arbitration waivers enforceable?

Which Decisions Are Class Action Lawyers and Commentators Talking About Most?

Here are some of the recent key decisions highlighted by Professor Coffee and others during the conference:

Highlights of Panel Discussions

“CAFA & Consequences: Measuring the Impact of the Class Action Fairness Act of 2005”

This panel, moderated by Arnold & Porter partner Fern O’Brien, included panelists John H. Beisner of O’Melveny, Michael D. Donovan of Donovan Searles, and the Honorable Fred Biery, U.S. District Court Judge for the Western District of Texas.

One of the key topics discussed by the panel was the impact of CAFA in encouraging filings in federal court and the resulting increase in the assignment of cases to the multi-district litigation (MDL) panel.  Class action practitioners will have to become more familiar with the MDL process as more class actions are filed or removed to the federal courts.

One of the panelists noted that although the number of class actions filed in federal court has increased, the number of “negative value” cases in the federal courts have not increased.  “Negative value” is a term used to describe class actions involving claims where individual amounts in dispute would be far less than the amount necessary to litigate them.

The panel also discussed recent cases addressing the meaning of the “mass tort” provision, which subjects certain mass tort cases to CAFA even if they are not technically “class actions.”

“Consumer Fraud Class Actions on Life Support”

This panel was moderated by Scott L. Nelson, and attorney for the Public Citizen’s litigation group.  The panelists were Nelson’s fellow Public Citizen lawyer Deepak Gupta, Greenberg Traurig partner Donald R. Frederico, and Quarles & Brady partner Cristina Hernandez-Malaby.

The Honorable Jack B. Weinstein of the U.S. District Court for the Eastern District of New York had also been scheduled to be on the panel, but word was that he tied up with a capital murder case.

The main focus of the panel’s discussion was the Second Circuit Court of Appeals’ decision in McLaughlin, in which it reversed Judge Weinstein’s certification of a class of purchasers of “light” cigarettes on a “fraud on the market” theory of common injury.  They also covered Judge Weinstein’s more recent decision in In re Zyprexa Products Liability Litigation, 04-MD-1596, slip op. (E.D.N.Y. Sept. 5, 2008), in which the Judge appeared to be testing the limits of the McLaughlin holding.  For of us who are too busy or lazy to read all 300 pages of the decision, Ms. Hernandez-Malaby suggests starting at page 230.

The panel also covered several other topics, including

  • Superiority analysis in “no-damages” class actions under FACTA.
  • RICO claims as an alternative to traditional consumer fraud claims.
  • Claims claiming injury due to reliance by others.

“Unpacking the ‘Rigorous Analysis’ Standard”

This panel, moderated by NYU Professor Geoffrey Miller, included James P. Muehlenberger and the Honorable Nanette K. Laughrey of the U.S. District Court for the Eastern and Western Districts of Missouri.  UPDATE 11-10-08: The third panelist was David S. Stellings, an able replacement for his partner, Elizabeth Cabraser.

The panelists discussed the approaches taken by the various federal Circuit Courts of Appeals in applying the “rigorous analysis” standard for ruling on class certification and provided their views from a plaintiff’s, defendant’s, and judge’s perspective.  Key decisions discussed included:

“I Could Have Sworn It Was CAFA, Not Kafka!”  The Metamorphosis of Ethically Prosecuting, Defending, and Settling Multi-State, Class-Action Cases — A Surreal-Life, Three-Act Play.” 

I couldn’t begin to describe this presentation in a way that would do it justice, but let’s just say that it was both entertaining and surprisingly true to life.  The play starred its creator, plaintiffs’ lawyer Daniel R. Karon, his colleage on the plaintiffs’ side, Vincent J. Esades, defense lawyers Cari K. Dawson and Steven Glickstein, and notice administrator Katherine Kinsella.

“Class Actions Sans Frontières”

The day ended with the presentation that I had been anticipating most eagerly, a panel discussion on developments in global and multinational class actions.  Sylvie Rodrigue of Ogilvy Renault in Toronto led an intriguing discussion of this new and fast-developing area, with a panel that included Cohen Milstein partner, Lynda Grant, former managing partner of Shook Hardy & Bacon’s London office, Laurel Harbour, McCarthy Tétrault’s David I.W. Hamer, and Charles Wright, of Siskinds in London, Ontario.

Here are a summary of the key issues discussed:

  • Worldwide class action settlements can be risky due to problems with the ability to enforce foreign judgments that purport to bind class members in other countries.
  • “Foreign cubed” securities class actions are a hot topic.   The Second Circuit Court of Appeals’ recent decision in Morrison v. National Australia Bank Ltd., supra, appears to limit the circumstances in which these cases can be brought in the U.S. court, but the court also refused to adopt a bright-line rule that would prohibit all “foreign cubed” class actions.
  • The International Bar Association has created a task force charged with preparing guidlines for when foreign class action judgments can be enforced.
  • Class certification guidelines in Canadian provinces tend to be more relaxed than those in the U.S., and class certification decisions in Canadian courts often come sooner than in U.S. courts when parallel proceedings are filed.
  • Group action procedures in Europe are expanding but are still not in wide use.
  • A task force has been created to look into protocols for coordination between U.S. and Canadian courts in parallel actions.
  • General counsel for multinational companies need to consider exposure on a global basis when making settlement decisions, not just U.S. exposure.
  • Developments in class action law in Canada have made pursuing a joint litigation strategy in both Canada and the U.S. financially and legally viable, as opposed to just a few years ago, when a case may have been worth pursuing only if it could somehow be brought in U.S. courts.
  • Increased coordination between plaintiffs’ counsel, outside counsel for defendants, and judges will become ever more important in the future.

Summary Notes

Overall, this was one of the better class action CLE conferences that I have attended.  The speakers were all top-notch practitioners, academics, or judges who provided a well-rounded range of perspectives.  The topics were all timely and interesting.  If you have the means, consider attending next year.  If you’re interested in purchasing the audio from this year’s event, it should be available within a few weeks according to the ABA’s website.

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