It's almost 5:00 p.m. and I'm preparing to live-blog Cutting-Edge Topics In Class Action Litigation, which is taking place in Oakland at the offices of Wendel, Rosen, Black & Dean LLP. Many thanks to Wendel Rosen, the Alameda County Bar Association, Judges Robert Freedman, Steven Brick, and David Flinn, along with research attorneys Philip Obbard and Walter Stemmler for allowing me to live-blog this event.
The materials look great, and range from the Contra Costa County Superior Court's complex department's standing order, to case management orders in Alameda County, to rulings regarding communications with absent class members, motions for class certification, class notice and decertification, and various rulings regarding motions for approval of class action settlements.
The moderator, Hunter Pyle, is introducing the panelists: Judges Freedman and Brick from Alameda County's complex department, Judge Flinn from Contra Costa County's complex department, and Messrs. Obbard and Stemmler who are research attorneys in the Alameda County complex department.
Press the "refresh" button periodically for updates to this post throughout the evening.
Judg Freedman is introducing the program and the materials. He conducts a live survey of the audience, finding that only about 5 of the over 100 people here have tried a class action to trial. Other interesting facts: Judge Freedman notes that about 50% of the complex case load in Alameda County is class actions, and about 70% of the class actions are employment-related.
Mr. Stemmler then discussed recent decisions regarding pleadings challenges: Arias v. Superior Court in which the S. Ct. clarified that UCL claims must be plead as class actions in order to bring representative claims, but claims under PAGA do not need to be plead as class actions; and Amalgamated Transit Union Local 1756 v. Superior Court in which the S. Ct. held that neither PAGA claims nor UCL claims can be brought by unions.
With respect to what needs to be included in a pleading, Mr. Stemmler notes that the class must be adequately defined so that it is ascertainable or else the complaint may be subject to demurrer. Also note the rules require that "class action" be in the header and that there be a separate section of the complaint discussing class action allegation.
Mr. Obbard took on the issue of the role of the named plaintiff post Proposition 64. The defendants are moving for summary judgment against the named plaintiff in advance of class certification, regardless of the risk that they face under Fireside Bank. If a named plaintiff loses that motion, then the named plaintiff will no longer be adequate or typical, and plaintiffs' counsel then seek to substitute a new named plaintiff and face the attendant problems of statute of limitations and whether the new plaintiff's claims relate back.
Judge Flinn noted that there are 140 active cases in Contra Costa County's complex department now, out of which about 1/3 are class actions and most of the class actions are wage and hour claims. Consumer cases comprise the next most common type of class actions in Contra Costa County's complex department.
With respect to pleading, Judge Flinn cautioned plaintiff's counsel to think it through before you file, because it is extraordinarily expensive to bring a case through class certification and fail to obtain a certified class. He recommends Cohelan on Class Actions for model pleadings.
Judge Freedman suggests meeting and conferring early in order to develop a discovery plan in a collaborative way that will stage discovery and protect the confidentiality of any truly confidential material. Judge Flinn notes that the major defect with protective orders is that they have failed to address the need for sealing orders when confidential material is to be used in court.
Judge Freedman often schedules a case management conference to be held shortly after the class certification motion is filed in order to address additional discovery needed by defendants to oppose the motion and by plaintiffs in order to address the opposition.
Judge Flinn suggests taking a key witnesses' deposition early on in order to assist with understanding the defendant's organization. This will help narrow the discovery needed later on, and may also help the plaintiff define what that discovery will consist of.
Judge Freedman notes that he and other complex judges are often willing to be available during depositions to assist with issues that may arise during that deposition, and have even conducted an in-court deposition in order to create a "model" deposition for numerous subsequent depositions that would be conducted without the court's assistance.
Judge Brick noted that he dislikes drawing a distinction between merits and class related discovery, because the distinction is often difficult to draw. In his department, he has found that competing letter briefs may be sufficient to resolve those issues that cannot be resolved by the parties, rather than requiring a full-blown motion to compel.
Judge Flinn cautioned that while mediation provides a very broad privilege, but that settlement discussions outside of the context of mediation are not necessarily privileged. Consequently, beware of what information is being disclosed in the settlement context outside of mediation.
Precertification Communication with Absent Class Members
Judge Brick notes that defendants have the information that plaintiffs need in order to move for class certification, including the contact information for the class members, so plaintiffs ask defendants to provide that information to them. In response, defendants have asserted the privacy rights of consumers, and the California Supreme Court has approved a process by which an "opt out" notice has gone out prior to the disclosure of that information to plaintiffs' counsel. However, there have been numerous questions raised since then, such as whether an opt out letter is required in employment class actions (Judge Brick opined that it is not required and Judge Flinn agreed). As a practical matter, Judge Brick recommends against informing class members that if they opt out, their contact information will not be produced to plaintiffs, but rather, that it will be produced only pursuant to a court order.
With respect to the actual communications with class members, Mr. Obbard explains that parties have a First Amendment right to speak with potential witnesses, but must be careful not to mislead them or some kind of corrective communication may be required. Defense counsel must be clear to explain to absent class members that they represent the company and that the witness may have an interest adverse to the company's. Also, defense counsel should be careful that the interview does not occur in a coercive environment (e.g., with supervisor present). Defense counsel are permitted to meet with absent class members to offer settlements. See Chindarah v. Pick Up Stix, Inc. (2009) 171 Cal.App.4th 796. However, the judges cautioned that there should be full disclosure and that such offers should be made in a noncoercive context.
Mr. Obbard notes that prior to class certification, there is no attorney-client relationship between plaintiffs' counsel and the absent class members, but after class certification there is an implied relationship until and unless the absent class member opts out. There is also the possibility of an express attorney-client relationship between absent class members who have retained plaintiffs' counsel but are not on the pleadings. Mr. Obbard recommends that plaintiffs' counsel communicate the fact of these relationships to defense counsel in order to avoid improper contact.
Mr. Stemmler notes that the Arias case raises an interesting issue - because PAGA claims do not need to be plead as class actions - of whether and when there is an attorney-client relationship between plaintiffs' counsel and the employees who would be embraced by the PAGA claims.
Voluntary Dismissal of Class Claims
Judge Freedman emphasized that court permission is required. There must be a showing of what consideration - if any - is being received in exchange for the dismissal of the class claim. The court must be satisfied that there is no collusion and that the individual plaintiff is not being rewarded at the expense of the absent class members. Judge Flinn added that he also wants to know if the attorney is receiving any compensation and, if that compensation is substantial, he wants to see time records. Finally, there is a question as to whether notice to the class members will be required.
As an aside, if the named plaintiff is not typical, Judge Flinn will generally permit discovery to locate a substitute named plaintiff.
The Main Event - The Class Certification Motion
Mr. Stemmler noted that plaintiffs sometimes fail to clearly define what claims they are seeking to certify in their motion. See Hicks v. Kaufman and Broad Home Corp. (2001) 89 Cal.Ap.4th 908. Mr. Stemmler also noted that problems arise when the parties are using a representative sample of the class members from which to obtain evidence. For example, one party may conduct a survey without bringing the other party (or the court) into the process, and may find out later that there are objections to the manner of that survey, or that the survey has no utility beyond class certification. So it is important that parties think ahead as to how the survey will be used throughout the case, and it is ideal to confer with the opposing party regarding the survey before it is implemented.
Now we're taking a 10 minute break....
Back from the break....
Mr. Obbard cautions that plaintiffs' counsel must consider the elements of each claim and how each can be proven on a common basis. Focus on the evidence in your case and whether that evidence is common. Also, consider whether the alternative of certifying a subclass would be acceptable.
Judge Flinn instructs that he takes a pragmatic approach to class certification. If the plaintiff can show him how the case can actually be tried to a jury on a common basis, the plaintiff is going to have a much better chance of getting a class certified.
With respect to subclasses - Mr. Stemmler notes that the Court may get involved in defining the class and/or subclasses and there can be a lot of flexibility in how this process works. He recommends, however, that plaintiffs' counsel are proactive in thinking these issues through in advance of filing their motion.
Judge Flinn noted that the issues with notice include whether the class members are clearly given an opportunity to opt out; whether the method is reasonable; and who pays the cost. With respect to this last issue, Judge Flinn says that he is ultimately influenced at the time of the fee motion by whether plaintiffs' counsel have invested in the cost of notice.
Motions to Decertify
Judge Flinn: Such motions are very rarely granted.
Judge Brick: But that doesn't mean they are very rarely made. Often the decertification motion is a way to raise the manageability issues at a later date. Plaintiff can counter those motions by showing how the case will actually be tried.
Trial Management Plan
Judge Brick: The trial courts will want to look at the trial management plan at least four months before trial, and often at class certification.
Judge Freedman: Federal Judicial Center's Manual on Scientific Evidence is quite helpful in considering the use of statistical evidence. Also see Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715. Mr. Obbard notes that in Labor Code cases, because the defendant bears the burden of proof, the defendant may also have to put on the statistical evidence showing that all of the class members were properly classified.
Judge Freedman notes that cases involving both equitable issues that need to be tried to the court and legal issues that need to be tried to a jury can be quite daunting in terms of creating a trial plan. He recommended looking at Hoopes v. Dolan (2008) 168 Cal.App.4th 146, but notes that in that case, if the equitable case was decided in defendant's favor, the case was over, and that may not always be the case. Judge Brick notes that it is rare to not include a 17200 claim in a Labor Code case these days (and would be unlikely in light of the Rudy Exelrod case), but 17200 claims are not jury trial claims.
Judge Brick - Kullar v. Foot Locker Retail, Inc. (2009) 168 Cal.App.4th 116 states that the record has to show what is the value of the case if the plaintiff wins the whole game at trial, and what are the factors showing why the settlement should be significantly less than that. Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804-807 establishes standards for showing under what circumstances the requested incentive award is fair. In particular, the amount of time expended by the named plaintiff will be considered.
Mr. Stemmler - the court typically issues a tentative ruling notifying the parties of perceived deficiencies and providing the parties an opportunity to address those in advance of the preliminary approval hearing. Often the deficiencies are found within the draft notice - for example, that the notice is unintelligible or fails to direct the class members to the Court's website where the complete settlement agreement may be found.
Mr. Obbard - Alameda County practices a "holdback" procedure whereby a certain portion of the attorneys' fees are held back until there has been a final accounting of the money to be paid to the class for a period of about 30-40 days after the claims period is concluded. Usually that represents about 10% of the attorneys' fees.
Judge Freedman - if considering a cy pres recipient, it should line up with the case itself - for example, if the case involves a statewide class, the cy pres recipient should not be entirely local.
Judge Flinn - with respect to requests for attorneys' fees, he uses the lodestar method, but uses percentage as a check on the lodestar. He always requires time records, they will be sealed and returned.
Judge Brick - With respect to fees and costs assessed against losing party - see Garcia v. Santana (2009) 174 Cal.App.4th 464, 473-77. Garcia holds that when determining reasonable attorneys' fees, reasonableness includes ability to pay.
During the final question and answer session, Judge Brick noted that Los Angeles complex departments are no longer taking wage and hour class actions at all.