Here is part two of my insights from the 2013 DRI Class Action Seminar:

Standard Fire v. Knowles (blog post):  Ted Boutrous of Gibson Dunn, who argued for Standard Fire in the Supreme Court (I worked with him on the case), spoke about the Court’s decision striking down the use of a stipulation by a named plaintiff that he was not seeking to recover more than $5 million on behalf of the putative class, in order to avoid federal jurisdiction under the Class Action Fairness Act.  Ted talked about the importance of the Supreme Court’s point about “slicing and dicing” of putative classes, in which the Court used an example of a plaintiffs’ lawyer subdividing a $100 million class action into 21 just-below-$5 million class actions in order to evade federal jurisdiction.  Ted explained that the Supreme Court instructed that manipulation for the purpose of thwarting federal jurisdiction is improper.  The Court’s opinion also calls into question the adequacy of class representatives who manipulate class claims.  Knowles is also consistent with the fundamental principle that a class action is a procedural device implemented for the convenience and efficiency of the court system, where appropriate.  The named plaintiff has no personal right to bring a class action, as was reinforced by the Court’s decision in Genesis Healthcare.

American Express v. Italian Colors (blog post):  Michael Kellogg, who argued for American Express, spoke about this case, in which the Court upheld a class action waiver in an arbitration clause.  He said the opinion is notable for the broadness of its ruling and the sharpness of the dissent.  When the dissent suggests that the sky is falling, that tends to broaden the scope of the majority opinion.  In light of this decision, it should not matter whether a claim is state or federal, either way an arbitration clause can prevent a class action, unless Congress excludes the claim from the Federal Arbitration Act.  It also should not matter if the contract is commercial (as in American Express, which involved merchants) or a consumer contract.  Kellogg expects that many companies will add these provisions to their contracts, and perhaps also to their corporate charter or bylaws (to try to prevent shareholder class actions).  There will be lots of litigation over state unconscionability rules relating to contract formation.  There is also likely to be a push for legislation in Congress that would undermine the decision.  The Consumer Financial Protection Bureau also is expected to enact regulations regarding arbitration clauses in consumer financial services contracts.  (This would not impact insurance per se, but might affect some insurance company families that have financial services operations as well.)  As I noted in my blog post on AmEx, the expansion of arbitration in other industries may drive plaintiffs’ lawyers to sue insurers in class actions more frequently simply because insurance contracts generally do not have arbitration clauses (unless that changes).

Trial of a Rule 23(c)(4) Class Action:  Jim Muehlberger of Shook Hardy & Bacon spoke about a trial of an “issues” class action under Rule 23(c)(4).  He advised to lay the groundwork for decertification of the class, maybe after the close of the evidence, or earlier if there is some major development that warrants it.  Some of these trials are phased, with common issues tried in phase 1 and individual issues for the named plaintiffs tried in phase 2.  The defendant may want to insist on the claims of the named plaintiffs being tried in phase 1.  Jury research may be helpful in developing themes, testing how a jury might perceive the named plaintiffs and their claims, and whether or not to exclude jurors whose immediate family members are class members (the defendant should have the right to exclude these jurors but might not want to).   Jim suggested that in the opening, defense counsel should spend time on what a class action is, the plaintiffs’ obligation to prove the case on a classwide basis, and the weaknesses of the named plaintiffs’ claims.  The cross-examinations of the named plaintiffs are often far longer than the direct examination and important for the defense case.  It may be useful to use the class definition as a demonstrative exhibit.  It is important to remind the court that the class can be decertified at any time before final judgment, and that the defendant has the right to put on evidence relevant to that.  The closing for the defendant will often focus on the failure of classwide proof.  Jim anticipates we will see more class actions tried because defendants need to demonstrate that they will not settle every case that is certified.

Why Class Actions Have Not Decreased Following CAFA’s Enactment:  Jessica Miller of Skadden presented on why class actions have not decreased following CAFA.  The statistics show that Rule 23(f) petitions are being granted by the federal courts of appeals at a substantially lower rate in more recent years (36% from 1998-2006 and then 25% from 2006 to 2013).  The rates at which 23(f) petitions are granted also varies substantially between the circuits, with the Fifth Circuit granting 72% of defendants’ petitions (and reversing in 67% of cases in which review is granted), and the Ninth Circuit granting only 14% of defendants’ petitions, and then reversing in only 50% of cases where review is granted.  There has also been some resistance to federal jurisdiction under CAFA in the lower federal courts, with the Third and Ninth Circuits imposing a higher threshold for defendants to establish federal jurisdiction.

Ethics in Class Actions:  Kevin Clines of Hughes Hubbard & Reed presented on ethics in class actions.  He discussed the general rules about contact with members of a putative class and a certified class, noting that the rules vary in different jurisdictions.  In some cases it may be useful to remind counsel for objectors to class action settlements of their obligation to comply with those rules.  With respect to class action settlements, Kevin noted the recent authority regarding incentive awards to named plaintiffs, and restricting cy pres settlements, topics I’ve covered extensively on this blog (you can use the search function on the right-hand side of this page to locate relevant posts).  He recommended taking steps to ensure that settlement funds are secure when they are provided to a settlement administrator, and also that the administrator, and any vendors they use, have appropriate procedures to comply with privacy law obligations.

Tags: American Express, DRI, Knowles, Trials
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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

Read more about Wystan Ackerman
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