A few days ago on this blog, the ever-brilliant Tom Willging (at the Federal Judicial Center) posted a thoughtful set of comments about CAFA.
At the end of his post, Tom posed some interesting questions. Always at the ready with opinions, I thought I’d give him some (arguably) interesting answers.
I start with two caveats: (1) excepting the good work Tom and his cohorts do at FJC, most all knowledge about details of class actions is anecdotal; and (2) my own knowledge is largely limited to financial class actions, not civil or employee rights cases. That said, I've gotten enough anecdotes to feel comfortable in making sweeping statements.
So, here are my answers and thoughts on some of Tom’s questions:
Question:
Why did plaintiffs drop the class claims in so many cases?
Answer:
This one's easy: Because they've settled. For better or for worse. That is, they are either: (1) perfectly good settlements with classwide relief that the defendant did not want to run through an agreed approval process, or (2) complete and utter whore-outs by the plaintiff lawyers (I won’t call them “class counsel” because they are not acting in the interests of class members or anyone else except their firm's bottom line).
Let me illustrate both kinds:
The good kind
Before I came to CSPI, I handled a number of relatively small (500-2000 class member) classes for debt collection abuses, working with the fine Houston lawyer John Ventura (recently lost to cancer). The violations were quite clear--threatening garnishment where it was not possible, threatening criminal prosecution, threatening civil suit when none would occur, etc. Quite often, since we had the violations nailed down, the defendant would quickly seek settlement. Usually the defendant did not want to go through agreed certification and the fairness hearing, either to avoid copycat cases or to save attorneys' fees. The settlement would (1) require injunctive-type relief to stop the practice on which our suit was based and (2) disgorging all amounts collected in response to the offending form collection letter (either in refunds to class members or as cy pres). Because we got all the relief we sought, we were willing to dismiss without certification. We didn't need it and felt it would only be a form of taking coup--good for our egos but no benefit to the class. When we did this, we always filed a motion to dismiss (or notice of dismissal), explaining the settlement and getting the judge to approve the dismissal. We did this because we wanted our class actions cases to be transparent to the court, class members, and the public.
The bad kind:
A shakedown. The lawyers file the case, and quickly make it clear to the defendant that they can be bought off. Defendant, acting in its own interests and quite ethically, decides it's cheaper to pay off the lawyers than to fight the case. Plaintiff lawyers get paid; class gets nothing; no motion to dismiss filed; settlement remains a secret. In one of our pending lawsuits, two copycat cases were settled and dismissed without any fanfare (or notice to us, the lead case). The settlement is sealed, so I can only speculate that money changed hands.
A dismissal at an early stage is almost certain to be one or the other of these. It's impossible to tell which with any certainty, but a secret settlement augurs heavily in favor of a sell-out.
Question:
Why did three-quarters of the cases in our sample not show any motions for class certification?
Answer (really, mostly surmise):
This strikes me as a very high number, but it would largely be explained by my prior comment. One minor reason for early dismissal is if the defense counsel convinces class counsel that the case lacks some component of factual merit (e.g., the client actually got the notice the complaint says was not received). But this is very rare.
Another possibility is the result of a Rule 68 offer of judgment, which the plaintiff takes, often against advice of counsel. This certainly occurs, despite the best efforts and intentions of class counsel.
Question:
Is the litigation class on a path toward extinction?
From what I've seen, just the opposite. Cases that survive motions to dismiss and other dispositive motions seem to be going to trial more than before--at least I sure see many more of them that are tried, and I keep on top of class action developments.
Question:
Is the rate of termination by dispositive motion (29% of the non-remanded cases) typical of class action litigation in state courts?
Probably so. State courts are generally more willing to trust juries than too many federal judges are, so more are likely to survive a dispositive motion. Except, of course in Texas, where the Texas Supreme Court has abolished class actions but hasn't admitted it.
Question:
Why is it that about half of the removed cases were remanded to state courts? Data suggest that defendants do not remove all or even most state court class actions: What if any patterns describe the removed cases?
Answer:
Removal is a knee-jerk reaction by many defense counsel, and is often based on factually weak bases. In other words, a lot of cases are remanded because they were improperly removed. Possibly there is some room for docket management desires on the part of the federal judge as well, so that borderline cases go back, but the simple truth is that CAFA has created a whole new set of class action abuses, but by defendants in the form of time-wasting meritless removals.