This third and final part of my takeaways from the DRI seminar will focus on the presentations on threshold dispositive motions in class actions, class action settlements, and responding to class actions in the press and on the Internet.
- Initial Dispositive Motions: John Beisner of Skadden (where I started my career) had some good thoughts on motions to dismiss and to strike class allegations: Motion to dismiss briefs should explain how a motion to dismiss in a putative class action relates only to the named plaintiff’s claims – new judges and those who have had few class actions may not realize that. One thing to be careful about in deciding whether to file a motion to dismiss is whether the outcome might narrow the case to one that is more likely to be certified. On motions to strike class allegations, one advantage defendants do not always recognize is that plaintiffs may have filed a complaint alleging an overly broad class to try to achieve the broadest tolling possible under American Pipe. An early motion to strike that at least narrows the class will limit tolling. Beisner said one hot issue on motions to strike is ascertainability, where the class is a failsafe class (i.e., the class is improperly defined as limited to persons to whom the defendant is liable) or a hard-to-pinpoint class (i.e., it is evident from the complaint that class members could not be even identified without individual adjudication). I’ve seen both of these in insurance class actions. He also suggested that, after Wal-Mart, one approach defendants may want to take in some cases is to challenge commonality on a motion to strike and save predominance for the opposition to class certification.
- Class Action Settlements: John Dougherty of DLA Piper highlighted several trends in class action settlements. In assessing attorneys’ fees, more courts are looking at a percentage of the class recovery (which sometimes does not include a cy pres award) together with a cross-check based on a lodestar calculation. In claims-made settlements, more courts are basing attorneys’ fees on the actual payout to the class instead of the gross potential settlement fund. Some objectors are arguing that if the proposed attorneys’ fees are not proportional to the benefit to the class, the class benefit should be increased rather than attorneys’ fees being reduced. He has not yet seen courts approving Internet-only or e-mail notice programs, but some solution is necessary where the class is so large that a mailing is prohibitively expensive.
- Responding to Class Actions in the Press and on the Internet: Richard Levick of Levick Strategic Communications gave a great presentation on how unfavorable information about a company moves so quickly on the Internet today, and how companies should be prepared in advance to respond to publicized new class action filings and communications crises that may lead to litigation. Companies should be ready to use SEO (search engine optimization) and SEM (search engine marketing, or paid advertising) to respond immediately to a crisis, so that when people type into Google seeking information about a crisis issue, they will also find positive information and explanation from the company. He highlighted how Taco Bell did this effectively when word spread that it was using filler in its taco meat, and the plaintiffs’ bar dropped a class action lawsuit. Joseph Suarez, in-house counsel at Procter & Gamble, also discussed, in the context of the Pampers DryMax class action litigation, how important it is for companies to engage negative voices on blogs, Twitter, etc., quickly, before incorrect information about a company’s product spreads. He talked about how P&G effectively used senior management and pediatricians to post comments online, although in retrospect they should have moved more quickly. P&G previously had a policy of not commenting on litigation, but more recently changed its stance. Adam Litpak, the New York Times’ Supreme Court reporter, talked about how companies should not refuse to comment on litigation. Instead they should come up with a sentence or two early on, and then talk further somewhat off the record, to open the line of communication with the reporter. It’s much easier for reporters to write negative things about a company and take the plaintiffs’ attorneys’ view when the company will not talk to them or allow its lawyers to do so.