Here is the second installment of my insights from the ABA National Institute on Class Actions:

  • Arbitration:  Paul Bland’s comments on arbitration were, well, anything but bland.  He commented that plaintiffs are being “run over like a lawn mower” with arbitration clauses containing class-action waivers, and that arbitration clauses can basically prevent any class action.  In his view, individual arbitrations are viable for plaintiffs’ lawyers only where the individual damages are large enough, in which case a plaintiffs’ firm can sign up numerous people individually and bring mass individual arbitrations.  He noted that the Consumer Financial Protection Bureau has the power to restrict arbitration clauses for the entities under its jurisdiction, but it has not taken any action yet.  Prof. Myriam Gilles suggested that mass assignments of claims might be possible unless precluded by an anti-assignment clause.  As I’ve noted before (see my August 22, 2011 blog post), insurance is one industry that has not expanded the use of arbitration following the AT&T v. Concepcion and American Express v. Italian Colors decisions.  There are potential regulatory or statutory impediments in some jurisdictions, and reasons why insurers would not want to implement arbitration.  But this might make them a greater target for class actions if they are one of few industries that do not use arbitration clauses (except for appraisal provisions in property coverage and arbitration clauses in some uinsured/underinsured motorist).
  • Standing:  Prof. Linda Mullenix suggested that whether a named plaintiff in a putative class action can have standing to sue without a manifestation of injury will depend on the underlying substantive law.  She does not view Comcast v. Behrend as having anything to do with standing.  There was significant discussion by the panel of the Third Circuit’s decision in Carrera v. Bayer Corp., holding that the plaintiff must prove with evidence, on a motion for certification, that the class members can be identified.  The plaintiffs’ bar seems to view this as a potential major impediment to class actions, although it seems to me to be a fairly obvious requirement at the class certification stage.
  • Unusual Approach to Class Action Case Management:  Judge William G. Young of the District of Massachusetts described his unusual approach to handling consumer class actions.  He likes to conduct a jury trial of the individual named plaintiff’s case, within 2-3 months after the case is filed.  These are typically short trials that take 2to 3 days.  If the plaintiff loses, the case is over.  If the plaintiff wins, he will not enter judgment but will have a good idea about whether or not the case is appropriate for class certification.  Some defendants argue that this approach creates a one-way intervention problem, but other defendants have praised the approach.  It functions similarly to a bellwether trial in a multi-district litigation (MDL) case.   Judge Young has found this approach more useful for purposes of evaluating class certification issues than conducting a lengthy evidentiary hearing on class certification, which he disfavors.