I recently attended the ABA’s 2011 National Institute on Class Actions.  I will try to highlight here what I saw as key points that either I had not heard before or provided an interesting new twist on an important issue.  I’ll split this up into several posts because there is a fair amount to discuss. 

Prof. Jack Coffee of Columbia Law School (who taught me when I was there) has spoken at this conference every year, providing an annual review of key developments in class action law.  He  focused on the impact of the three Supreme Court cases this year.  Here is what I saw of particular interest: 

• Prof. Coffee predicted that we will see an increase in injunctive-only class actions under Rule 23(b)(2), with plaintiffs lawyers seeking attorneys’ fees for winning an injunction.  He noted that settling these cases can raise serious conflicts of interest because the fee award may come at the price of a reduced recovery to the class.  It is also unclear whether, after an injunctive-only class action goes to final judgment, the class members can still sue separately for damages – Rule 23(b)(2) does not provide for any opt out right, and claim splitting rules might apply.  There may be questions about whether class counsel can provide adequate representation if, in this type of case, the class members will lose their right to seek damages.  In insurance class actions, I don’t see this as a major area of likely exposure for insurers because most insurance class actions are really seeking damages and any injunctive relief is really a request for damages in disguise.  The Seventh Circuit’s opinion in Kartman v. State Farm (see my prior blog post) explains this.  But there may be some circumstances where injunctive relief can be sought in an insurance case without it being a request for damages in disguise, if the injunction does not relate to claim adjustments or premium calculation.
• Prof. Coffee suggested that, in response to Wal-Mart v. Dukes’s holding that defendants must have the opportunity to prove their individualized affirmative defenses, plaintiffs’ attorneys may use three tactics.  First, they may try to use Iqbal and Twombly to challenge affirmative defenses that are not pled with particularity.  It is not clear that these decisions apply to affirmative defenses, and in my mind a defendant in a class action cannot be expected to investigate, at the time of filing its answer, all of the putative class members’ claims to be able to plead individualized defenses with particularity — that is completely impractical and courts should recognize that.  Second, Prof. Coffee suggested that plaintiffs may seek only partial certification on a general liability issue, leaving the affirmative defenses to be resolved in a separate individual lawsuit after adjudication of the class action (he cited Engle v. Liggett Group, Inc., 945 So.2d 1246 (Fla. 2006) as an example of this approach).  I think the ALI Principles of Aggregate Litigation, if followed with respect to partial certification, will make partial certification more challenging for plaintiffs (see my prior blog post on this).  Where the common issues on which certification is sought are intertwined with the individual issues that are the subject of the affirmative defenses, the ALI Principles would counsel against certification.  Third, Prof. Coffee suggested that in a 23(b)(2) injunctive case, the defendants will not have a Seventh Amendment right to a jury trial on equitable relief claims, and thus affirmative defenses could be assigned to a magistrate for individual hearings.  Whether that is practical, of course, depends on the size of the case.
• In discussing Smith v. Bayer Corp. (which held that the Anti-Injunction Act barred a federal court from enjoining a state court class action after denial of certification in federal court on the same issue), Prof. Coffee noted that there is an open question about whether a federal court can enjoin a state case while the federal court decides whether to approve a proposed class action settlement.  He noted that it is unclear whether the federal court has jurisdiction over absent class members or opt outs in this context, and that this is an issue the Supreme Court may need to take up.  In my mind, if an injunction were not allowed this would create some significant practical problems – the federal court settlement requires significant time to provide notice and conduct the hearing, and if the state court judge refuses to stay the state case and pushes it towards certification that creates a race between the federal and state systems (and a waste of resources in one of them).  Class action notice is also expensive, and defendants may be unwilling to incur that cost while continuing to be subjected to state court litigation.        
• With respect to class action settlements, Prof. Coffee said we should all keep our eyes out for the Third Circuit’s forthcoming en banc opinion in Sullivan v. DB Investments, Inc.  This decision is expected to address the propriety of a nationwide settlement on state law claims in the post-Wal-Mart era.  It potentially could have a major impact on class action settlements going forward.