Volume 19, Number 6
CHECKMATE IN CLASS ACTIONS: DEFENSIVE STRATEGY IN THE INITIAL MOVES
By Benjamine Reid and Chris S. Coutroulis
The fundamental benefit of a class action is that a dispute can be tried one time and then applied to a large number of individuals with similar claims. That benefit must be the starting point to analyze whether a class action is appropriate: Can this case, as pleaded, be tried en masse with nothing more than ministerial tasks to be done after the trial is completed? This question breaks down to two parts: In the beginning, must each putative class member prove some disputed fact to get into the class? At the end, must each putative class member participate in separate trials of substantial issues to recover? If the answer to either of these questions is yes, the benefits of class treatment will not be realized, and certification is not appropriate.
In navigating the opening of a class action, every early move should be directed toward getting the judge to understand that your mass injury case cannot be practicably tried as a class action. The purpose of the American judicial system is to provide a forum for the trial of lawsuits. This fundamental fact should not be lost in the class action context, even though most class actions will settle following the court's decision on class certification. This pragmatic point should not be allowed to change the analysis of whether a class should be certified at all, and procedural economies should not be permitted to impair the defendants' substantive rights. The relevant inquiry is whether a mass injury class action can be tried conclusively without prejudicing the rights of either side.
Once the philosophical underpinnings of your defense and trial plan have been developed, it's time to study the specific opening moves to ensure checkmate will follow. Common issues of law or fact must predominate over individual issues. It is at this juncture, along with a consideration of superiority, that most mass injury class certification battles are fought-and won or lost. At least four areas are ripe for the commonality defense in most mass injury class actions: causation, choice of law, statutes of limitations, and comparative fault.
Causation. This issue is the central factor against certification in at least three types of cases. In mass tort cases involving physical injury, class actions are rarely appropriate because exposure is usually a crucial element in the plaintiffs' cases. A similar problem often arises for plaintiffs in mass injury cases involving economic loss occasioned by fraud or misrepresentation. As with personal injury, the problem is that in order to recover, each putative class member must establish that he or she received or was exposed to a misrepresentation and that harm resulted from or was specifically caused by relying on the statement. A recent strategy involves bringing an action based on violation of a state unfair trade practices statute rather than the traditional common law fraud or misrepresentation theory, where the emphasis is on whether the fact of injury can be established on a classwide basis.
Choice of law. If the complaint seeks certification of a national class, choice of law issues rise to the top of the list of defenses. The initial analysis should look closely at each claim brought by the plaintiffs because choice of law issues may relate to specific counts. Even if the plaintiffs confine their class definition to a statewide class, conflict of law jurisprudence may remain a fertile ground on which to build a lack of commonality defense. In light of the mobility common in modern life, the fact that putative class members ended up in the same state may not thwart the defense. Exposure, reliance, diagnosis, harm, and other crucial criteria may have occurred in a number of different states. Simply asking for a statewide class does not mean that the law of that state will apply to all of the claims of all members of the putative class.
Statutes of limitations. As a point of departure, "borrowing statutes" serve to link the statute of limitations defense to the choice of law defense. The application of most borrowing statutes results in the necessity of a state-by-state analysis of the accrual issues. After a determination is made about which state's law will apply to the claim, you must evaluate the effect of the statute of limitations on that claim. In evaluating the statewide class action, the question of accrual is of obvious importance. Most claims accrue when the acts and harm giving rise to the claim are discovered. This principle of discovery is fraught with individualized issues.
Comparative fault. A final assault on claimed commonality finds its voice in the doctrine of comparative fault, which can relate to the putative class members or, in some states, to third parties. The fact that one or more of the claims permits the defense of comparative fault renders problematic the conclusion that the case can proceed as a class because each putative class member's fault must be based on that individual's acts or knowledge.
Tactics. Defense counsel should consider several initial tactical decisions when faced with a class action complaint. Defendants faced with litigating a class action in state court must examine their position and decide whether it would be better to remove the case to federal court. The defendant also should consider filing a motion to dismiss. The advantage of this approach is that when it works, it ends the case quickly, without the costs entailed in defeating class certification. It also provides a dry run in getting your position clearly before the court. The disadvantage if it doesn't work is that it may predispose the judge to grant certification later, due to assuming the issues were already determined at the pleading stage. A summary judgment motion can also be helpful if you have a strong argument, even though it may not be ruled on until after certification. If your motion is well grounded, having it before the court will let you argue that the prospect of summary judgment creates typicality and adequacy problems for the putative class representatives.
The Manual for Complex Litigation states that "precertification discovery should be structured to facilitate an early certification decision while furthering efficient and economical discovery on the merits" and that "[b]ifurcating class and merits discovery can at times be more efficient and economical (particularly when the merits discovery would not be used if certification were denied)." If discovery is bifurcated, there are advantages for defendants:
- As a practical matter, some class plaintiffs do not take a great deal of discovery precertification because they hope to obtain a quick settlement without a lot of cost. However, you will be able to depose the class representatives.
- Class plaintiffs often do not prepare their experts sufficiently for class certification purposes. They make an economic decision not to spend their investment on expert fees and, consequently, can be caught unprepared.
- A more practical benefit relates to the burden on your clients. Unless the specific problem raised in the complaint is known by your client, you may not be prepared to present important client witnesses on the merits. Such premature depositions can create serious problems in future litigation whether or not the class is certified.
Benjamine Reid and Chris S. Coutroulis are shareholders with Carlton Fields, P.A., and practice in the firm's Miami and Tampa, Florida, offices, respectively.
This article is an abridged and edited version of one that originally appeared on page 21 of Litigation, Winter 2002 (28:2).
Upcoming Events | Magazine | Solo Newsletter | Books | Membership | Committees | State/Local Bar | Products/Services | Feedback | ABA Network Home Page