Consumer Law & Policy Blog

What Is the U.S. Attorney General Doing with Settlement Notices Under the Class Action Fairness Act?

by Scott Nelson

The Class Action Fairness Act (CAFA) requires that whenever a federal class action filed after the Act's effective date is settled, notice of the proposed settlement must be sent to relevant federal officials, which in most cases means the Attorney General of the United States.  But what does the Attorney General do with these notices?  It seems that is a mystery.

The Senate Judiciary Committee's Report on CAFA says that the point of the notice provision is "to ensure that a responsible ... federal official receives information about proposed class action settlements and is in a position to react if the settlement appears unfair to some or all class members or inconsistent with applicable regulatory policies."  Put another way, the provision is aimed at "adding a layer of independent oversight to prohibit inequitable settlements."  At the same time, however, the Senate Report stresses that the law doesn't actually require the Attorney General to do anything: "it should not be construed to impose any obligations, duties or responsibilities on the federal ... officials who receive notice of a class action settlement."  Thus, whether the notice provisions do any good depends entirely on what (if anything) the officials who receive them decide to do with them.

As far as I can tell, there is virtually no publicly available information about what the U.S. Attorney General does with CAFA settlement notices - who, if anyone, reviews them; what, if any, standards are used in reviewing them; and what, if anything, the AG does once it has reviewed them.  That's perhaps not terribly surprising, because the Department of Justice (unlike the FTC) didn't have any program for reviewing class action settlements before CAFA was enacted, and nothing in CAFA obligated DOJ to institute such a program.  But one might hope that the AG at least does something with the notices he receives.

If anyone has any information on this subject, we'd like to hear about it.  Meanwhile, we've submitted this Freedom of Information Act request to the Department of Justice seeking any documents that set forth the AG's policies and procedures for reviewing CAFA settlement notices, as well as documents indicating how many notices the AG has received and what (if any) actions he has taken as a result.  It's been reported that the California AG has received in excess of 40 CAFA settlement notices since the Act went into effect, so Alberto Gonzales has probably received even more, and there has to be some paper trail indicating what he does with them.

Maybe the CAFA settlement notices just go into some black hole at DOJ - which also has been known to happen with FOIA requests like mine.  But I hope that at least someone at DOJ is looking at these things, and that a fairly simple FOIA request may help shed some light on the subject.  We'll see - but I'm not going to hold my breath in the meantime.

New and Improved NACA Class Action Guidelines

by Charles Delbaum

Class action practitioners should  become familiar with September, 2006 revisions to the National Association of Consumer Advocates’ Guidelines for Litigating and Settling Consumer Class Actions, originally adopted in 1997. The initial Guidelines were published at 176 F.R.D. 370.  The new Guidelines, available at www.naca.net, are 70 single spaced pages. The Guidelines set out best practices governing difficult ethical and practical issues, are replete with fresh insights into important legal issues, and have proved to be persuasive authority to courts.

Eight topics are added, including how to settle a predatory lending class action while protecting homeowners’ rights to resist foreclosure, how to keep class representatives from being “picked off” by offers of individual relief, and preventing defendants from improper ex parte communications with customers who are class members. The revised Guidelines also clarify several existing guidelines, and delete two guidelines because intervening Fed. R. Civ. P. 23 amendments afford adequate direction. See, e.g., In re Educational Testing Service Praxis, 2006 WL 2513005 (E.D. La. 2006).  For reasons of space, this article only briefly reviews certain highlights of the revised Guidelines:

California Supreme Court Grants Review In Important Consumer Protection Cases

    By Brian Wolfman

    CL&P readers may recall that, back on September 15, I blogged about recent California appellate decisions holding that Proposition 64 -- which imposes tighter standing requirements for private litigation under California's consumer protection statutes -- requires plaintiffs to show reliance on a defendant's unfair or deceptive act or practice.  I noted that Public Citizen and the Center for Auto Safety had filed an amicus letter asking the California Supreme Court to review these cases.  That letter explained that a reliance requirement would be antithetical to one of the basic purposes of modern consumer protection statutes: to override the obstacles to proving common-law fraud, one element of which is reliance.

    I'm happy to report that today the California Supreme Court granted review.   We plan to file an amicus brief on the merits.  I will keep you posted.

Speaking of Philip Morris ... An Update on the Schwab Class Action and United States v. Philip Morris

by Scott Nelson

As most readers are probably aware (and as previously discussed in this blog by Stephen Gardner last month here), Judge Jack Weinstein of the Eastern District of New York certified a nationwide class action of light cigarette smokers in a RICO/consumer fraud action against the major cigarette manufacturers on September 25, 2006.  The order also denied summary judgment and set a trial date of January 22, 2007.  For good measure, Judge Weinstein denied certification of his summary judgment ruling for appeal and refused to stay the trial date.

The manufacturers went to the Second Circuit and filed a Rule 23(f) application for interlocutory review of the certification order on October 6, together with an application for a stay of pretrial and trial proceedings pending action on the Rule 23(f) application and resolution of the appeal if the application were granted.  The plaintiffs filed oppositions to both motions (I don't have links, but we'll try to find them).

On October 24, Second Circuit Judge Barrington Parker entered an order granting a temporary stay of pretrial and trial proceedings, pending the Second Circuit's decision whether to grant the Rule 23(f) application.  Otherwise, he referred the motion for stay pending appeal to the panel (whose identity is as yet unknown) that will decide whether to hear the Rule 23(f) appeal.  Then, on October 27, the Second Circuit clerk's office issued a notice to counsel that oral argument on the motion for stay will be heard by the panel on December 5.

Although the scheduled argument is on the motion for a stay, it seems likely that the principal factor determining whether a stay will be granted is whether the court will accept the Rule 23(f) appeal.  The case thus presents the somewhat unusual situation of a full oral argument before a court of appeals over whether it will accept an appeal for briefing and argument.  That the court is hearing argument on the issue also seems to call into question predictions, such as those of the Wall Street Journal, that review and reversal of Judge Weinstein's ruling by the Second Circuit is inevitable.  Meanwhile, the parties evidently won't know whether this massive case will be going to trial in January until December 5 at the earliest.

Meanwhile, on the subject of stays, the D.C. Circuit yesterday granted a stay of Judge Kessler's rulings in United States v. Philip Morris, effectively permitting cigarette companies to continue marketing light cigarettes and engaging in other activities found by Judge Kessler to constitute RICO violations, pending appeal.  The panel of Sentelle, Randolph and Tatel said nothing more to justify their ruling than that "Appellants have satisfied the stringent standards required for a stay pending appeal."   Well, that explains that.

Latest on NCLC's Miami Consumer Rights Litigation Conference

by Jon Sheldon

This year's NCLC Consumer Rights Litigation Conference is being held in Miami November 9-13. Here is the latest:

1. Over 660 people have already registered and the number is likely to exceed 700 by next week.

2. There is so much interest in this year's conference that room blocks have filled up at the Hyatt Regency (where the conference is being held), the Courtyard Marriott, and the Radisson Miami.  NCLC has arranged a group rate with the Marriott Biscayne Bay Hotel & Marina (1-800-228-9290) and the Doubletree Grand Hotel Biscayne Bay (1-800-222-8733). In order to receive the negotiated group rate of $169 per night, individual attendees must ask for the group block by name: National Consumer Law Center.  Both hotels are a short ride from the Hyatt Regency by Metromover, a free people-mover system that serves downtown Miami.

3.  The Friday (Nov. 9) intensive on Mortgage Servicing is already sold out, but there is still space available for the all-day Friday intensives on  Auto Sales and Financing Fraud and also Doing Well While Doing Good: Secrets to Running a Profitable Consumer Law Practice. 

4. Also Friday at 11:30 AM the main conference starts with over 10  roundtables and other special sessions. The main conference gets into high gear Saturday and Sunday with over 30 sessions to choose from on those days. This year's advance registration shows strong interest in predatory lending, foreclosures, arbitration, debt collection, and trial practice sessions, with fair credit reporting and auto topics not far behind. But there are many other options too--everything from electronic payments to reverse mortgages to ethical issues in class action settlements.

5. Monday  (Nov. 12)  there is still space available for two well-received intensives:  The Class Action Symposium and Beyond Bankruptcy Reform: Getting Mortgage Servicers on Track in Chapter 13, and Bankruptcy Reform Update.

6. We cannot list all the special meetings and events that are happening at the conference that weekend, but highlights are the NACA Media and Trial Advocacy Awards and the NACA annual meeting, the Carnival de Abogados, a special showing of MAXED OUT (pre-release of an amazing new movie on debt), and various special luncheons and receptions.

7. You can register in person at the conference registration table at the Hyatt Regency or go to http://www.consumerlaw.org.  All registrants are required to sign a certification relating to their representation of consumer rather than business interests.