Last week I attended the Defense Research Institute’s third class action seminar, an event that I had the privilege of helping put together.  As I’ve done in past years, I will summarize my “takeaways” from the seminar here.

State Attorney General SuitsChristopher Curran, who argued Mississippi v. AU Optronics Corp. (blog post) in the Supreme Court, spoke about the decision.  Although the Supreme Court refused to allow a state attorney general parens patriae suit to be removed as a “mass action” under the Class Action Fairness Act, Curran stressed that the door may still be open for removal of such suits as “class actions.”  What constitutes an action under a state rule or statute “similar” Rule 23 remains undecided.  He noted that there is language in the AU Optronics decision to the effect that if Congress had wanted representative suits to be removable under CAFA it would have done so under the “class action” provision.  And the decision in Standard Fire Ins. Co. v. Knowles (blog post) explains that courts should not exalt form over substance in applying CAFA.  Defense lawyers may want to argue against the “parens patriae” label and focus on these principles articulated in AU Optronics and Knowles in seeking removal of state attorney general actions as “class actions” under CAFA.  Insurers faced these kinds of suits following Hurricane Katrina, and were able to successfully remove some of them.

How Harm to the Class Affects PredominanceBrian Murray of Jones Day spoke about how courts are applying the Supreme Court’s decision in Comcast Corp. v. Behrend, which held that, in order to certify a class, damages must be provable on a classwide basis.  In the front-loading washing machine litigation, however, the Sixth and Seventh Circuits have allowed certification, at least for liability purposes only, even where the evidence indicates that the vast majority of putative class members suffered no harm because they’ve never had a problem with their machine.  Murray noted that one issue defendants can focus on in this type of case is typicality – the named plaintiff, who typically is one of the 3% who were harmed and not the 97% who were not harmed, is not typical of the class.  If the plaintiff limits the class to people who were harmed, the class might be considered an improper failsafe class (although from an exposure perspective, the defendant would probably prefer this limitation).  Standing is another issue that can be raised – some circuits require the absent member of the putative class to have standing; an issue the Supreme Court has yet to address squarely.  Murray recommended that defendants try to force the plaintiffs to provide a damages model, test whether it aligns with their liability theory, and whether it actually yields a positive damages figure.  Defendants also may want to try to force the plaintiff to present a trial plan.

Issue Class Actions under Fed. R. Civ. P. 23(c)(4)Professor Laura Hines of the University of Kansas School of Law, who has published extensively about “issue” class actions under Rule 23(c)(4), noted that the rule itself is vague, stating that “when appropriate, an action may be brought or maintained as a class action with respect to particular issues,” without explaining when  an issue class action is or is not “appropriate.”  She noted that the framers of the 1966 amendments to Rule 23, which included this provision, viewed this as a mere “detail” and did not give much attention to it.  Prof. Hines rejects the view that an issue class action can be certified under (c)(4) without meeting the predominance requirement of (b)(3) where otherwise required.  In her view, any (c)(4) class action must satisfy the applicable portion of Rule 23(b).

Class Action Settlements:   A panel of in-house counsel, moderated by Michelle Thurber Czapski of Bodman PLC discussed practical considerations regarding class action settlements.  Key points I gleaned from this panel included:  (1) don’t forget to plan for the possibility that the settlement will receive significant publicity and might even “go viral” on social media; have a plan for media relations and investor relations; (2) defendants may want to consider using settlement counsel separate from the trial team in some cases so as not to divert the trial team from its focus; (3) consider proposing a settlement special master either to oversee negotiations or to oversee the settlement process; and (4) get a settlement administrator, and, if needed, a notice expert, involved early, probably before settlement terms are finalized.

Whether and How Individualized Damages MatterJoel Feldman of Sidley Austin presented on strategies for taking advantage of Comcast v. Behrend and its progeny.  One of Comcast’s strongest progeny, from a defense perspective, is the Halvorson v. Auto Owners Ins. Co., an Eighth Circuit decision holding that whether medical charges were reasonable required individualized analyses that would predominate over common issues, and that every putative class member was required to have standing (see my blog post on Halvorson).  Joel made a recommendation that I’ve made a number of times here – developing a detailed factual predicate demonstrating how individual trials are needed, showing the judge how a class trial would be unwieldy.  Joel also suggested that defendants consider placing the legal standard (Wal-Mart and Comcast) at the very beginning of their class certification opposition to emphasize it for the judge.  Not sure I agree on that but it’s an interesting strategy.

Arbitration and Class Action WaiversArchis Parasharami of Mayer Brown, one of the lawyers who litigated AT&T v. Concepcion (and who I served on the faculty with at a class action seminar last year), presented on  the latest developments in the use of arbitration provisions with class action waivers.  While these provisions are almost always enforceable now after Concepcion and American Express v. Italian Colors Restaurant, Archis noted that arbitration is not without its downsides:  defendants pay the costs; arbitrators are not necessarily bound by substantive law; and there is essentially no right of appeal (absent unusual circumstances).  For those kinds of reasons some companies (and I think this includes insurance companies) have not expanded their use of arbitration clauses as a means of class action avoidance.  Other companies do not have a practical means of creating a written contract governing their interactions with consumers that can include an arbitration clause.  Two areas where plaintiffs have continued to attack these provisions include: (1) if the arbitration clause forbids the assertion of federal statutory rights; and (2) if filing fees make access to arbitration impracticable. Both of those can typically be avoided when drafting the clause.  It is also not clearly settled whether an arbitration clause can waive public injunction claims. And plaintiffs’ lawyers are attacking the fairness of individual arbitrations on unconscionability grounds, and whether there truly was assent to the arbitration clause.  A key development to plan for is that the American Arbitration Association has issued new consumer arbitration rules effective September 1, 2014, which requires preapproval of the arbitration clause by AAA and public registration of it, and the clause must allow for a small claims court option.  The Consumer Fraud Protection Bureau study on arbitration clauses could be issued by the end of the year, and might lead to regulation of those clauses.

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Photo of Wystan Ackerman Wystan Ackerman

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class…

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class actions involving homeowners’ insurance coverage and market conduct/claim-handling practices. He has been prominently involved in high-profile property insurance litigation concerning the September 11th catastrophe and Hurricane Katrina, and Chinese-made drywall. Based in the insurance capital of Hartford, Connecticut, Wystan writes the blog Insurance Class Actions Insider, which was selected by Lexis Nexis as a top insurance blog for 2011.

Wystan 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. He always had strong interests in history, politics and baseball and his heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox). Wystan says it was his early fascination with Lincoln that drove him to practice law. As a high school senior, he was one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified his interest in law and government. He went on to Bowdoin College, where he wrote for the Bowdoin Orient and majored in government. After Bowdoin, he went on to Columbia Law School. He also interned in the chambers of then-Judge Sonia Sotomayor on the Second Circuit. Wystan graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole.

When Wystan’s not at his desk, flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation he often can be found watching “Dora the Explorer” or reading or playing whiffleball with his young daughter, helping his wife with her business, Option Realty, reading a book about history or politics, or watching the Boston Red Sox.

Read Wystan’s bio.