This article is intended to help attorneys working on their first class action understand the impact of class action issues on discovery and on strategic approaches that counsel take on discovery.
People talk about bifurcating discovery. What is that?
At the class-certification stage, the relevant issues are whether the plaintiff proved his or her compliance with Federal Rule of Civil Procedure 23; in other words, only if the plaintiff proves that Rule 23’s requirements are satisfied may a class be certified. The U.S. Supreme Court has repeatedly reminded litigants and courts that it requires courts to “probe behind the pleadings” and that evidence is required to prove that Rule 23 is in fact satisfied, which sometimes involves some overlap with the merits of the plaintiff’s claim. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982). But the issues are also somewhat different in many ways; for example, the merits of the plaintiff’s claim are unlikely to turn on whether the plaintiff is an adequate representative of a class, whereas that is of critical importance at the class-certification stage (and, indeed, is one of the four Rule 23(a) requirements). Given that, parties often phase discovery and focus on the issues relevant to each stage of the case. And, indeed, the courts have recognized this: The parties are required at the mandatory Rule 26(f) conference to discuss whether it is beneficial to phase discovery. See Fed. R. Civ. P. 26(f)(3)(B).
There is sometimes an added benefit to a defendant: Putative class actions with low-value individual claims often do not proceed past a class-certification denial. (Hence, appellate courts developed the “death knell” doctrine to review class-certification rulings, now codified in the right to seek appellate review under Rule 23(f). See, e.g., Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 833–34 (7th Cir. 1999).) Thus, limiting discovery to class-certification issues can help a defendant to avoid incurring costs for discovery on merits issues if it can defeat class certification.
It sounds like bifurcation is based on the idea that class certification isn’t about the merits. Does that still work given the U.S. Supreme Court’s recent class action jurisprudence?
Some people think so, and other people don’t.
The situation is this: In Wal-Mart Stores, Inc. v. Dukes, the Court made clear that a plaintiff must prove, with evidence, that Rule 23’s requirements are satisfied. The Court explained that district courts are required to conduct a “rigorous analysis,” which “will entail some overlap with the merits of the plaintiff’s underlying claims.” 131 S. Ct. at 2552. Then in last year’s Comcast Corp. v. Behrend decision, the Court made clear that in at least some circumstances—judges, practitioners, and the academy all disagree on what those circumstances are—a plaintiff must provide a damages model that can determine damages on a class-wide basis based on the plaintiff’s theory of the case. 133 S. Ct. 1426 (2013). And to do that likely requires a plaintiff to understand more about the merits of the case.
What understanding more about the merits of the case means is still an open question. Is it actually the merits, or enough to put evidence before the district court showing why Rule 23’s requirements are satisfied? (Obviously, the defendant will put evidence before the court that the requirements aren’t satisfied, but the defendant generally does not need merits-related discovery to assemble that evidence.) That isn’t clear, and the Court has not said (in dicta or otherwise) that bifurcating discovery into class-related and merits-related issues was no longer viable. Consider, for example, Bussey v. Macon Cty. Greyhound Park, Inc., 2014 WL 1302658, at *6 (11th Cir. Apr. 2, 2014) (reversing order certifying class because district court “failed to conduct the ‘rigorous analysis’ required” and “instead deferr[ed] resolution of important questions bearing on the class certification analysis to the merits stage of the case”) (unpublished).
What about confidentiality agreements? Do I need one?
Yes. You need a confidentiality agreement. Although they vary in form, a good confidentiality agreement has two important procedures:
1. It permits companies and individuals to produce sensitive documents without the risk that they will be used outside the litigation. Documents can contain, for example, Social Security numbers, bank account numbers, or customer lists; all things that litigants might not want publicized. (A somewhat dramatic analogy arose in the Apple Inc. v. Samsung Electronics Co. Ltd. litigation, where a junior associate misread an “attorneys’ eyes only” coding to permit highly sensitive information to be distributed far and wide within Samsung. See William Dotinga, “Associate’s Goof Ends in Sanctions for Samsung,” Courthouse News Serv., Jan. 30, 2014.) Plaintiff or defendant, you should want this protection. Documents filed with a court are presumptively public, but because discovery materials are typically not filed with the court absent a dispute, discovery materials should receive some level of protection.2. It should have some control in place for the production of privileged documents. Many orders provide simply for the return of inadvertently produced documents, but Federal Rule of Evidence 502(d)–(e) permits parties to go farther and provide for the return of any production of privileged documents. The merits of one approach over the other can be debated, but at least some judges and commentators have suggested that proceeding without a 502(d) order could be malpractice. See, e.g., Jay Yurkiw, “Top 10 E-Discovery Developments and Trends in 2013: Part 2,” Tech. L. Source, Jan. 15, 2014 (quoting Magistrate Judge Andrew Peck as saying, “In my opinion it is malpractice to not seek a 502(d) order from the court before you seek documents. That doesn’t mean you shouldn’t carefully review your material for privileged documents before production, but why not have that insurance policy?”).
It can make your life easier if the confidentiality agreement provides that any document marked as confidential may be filed under seal without requiring that the court approve filing that particular document under seal. (This is sometimes referred to as a blanket sealing order.) They can be helpful, if you can get them, but not all courts are hospitable to the idea. For example, the U.S. District Court for the Northern District of Illinois has a policy against approving confidentiality agreements with blanket sealing orders. (Even if you don’t have one, it isn’t the end of the world; often opposing counsel will be willing to waive the confidentially designation as to specific documents when it comes time to file them. Don’t count on it, but most counsel are reasonable.)
How much should I ask for as a plaintiff?
Given the state of documentary discovery in federal courts, the fact that the costs associated with collecting and producing documents are placed almost entirely on the producing party, and an incredibly broad scope of what might be discoverable, there is the temptation for plaintiff’s counsel to ask for as much as possible. After all, the reasoning goes, a good document might be produced, it’s easier to request everything and the kitchen sink than to think critically about what is really needed, and maybe the costs placed on the defendant as a result could be useful in encouraging informal settlement discussions or movement toward stipulating to key issues.
Resist that temptation for these reasons:
• Asking for more categories of documents won’t necessarily result in your receiving more documents. The more you ask for, the more defense counsel is likely to resist, and in the course of any subsequent meet-and-confers or motion practice, you’ll have a harder time convincing a skeptical judge or opposing counsel that the specific thing or things you’re pushing back on are what you really need, as opposed to the other 99 things you asked for (or whatever the number is). (This isn’t to say that sometimes a plaintiff might need a lot of documents. But there’s a distinct difference between a significant number of carefully targeted requests, which is more likely to be successful, and an overlapping morass. Good defense counsel can tell the difference between the two.)
• Asking for everything possibly relevant (up to and including the kitchen sink) can also backfire. There is typically a major informational asymmetry in (putative) class actions: The defendant knows more and has more than the plaintiff does. But because the plaintiff knows less and has less, it is more difficult for a plaintiff to refuse to provide what that plaintiff has as burdensome or unnecessary if at the same time that plaintiff’s counsel has attempted to occupy the field, as it were, with document requests.
How much should I provide as a defendant?
If provided with the typical broad discovery requests, you need to take some action to decide which of the documents the plaintiff is seeking—often in broad, ill-defined conceptual categories—you are willing to produce. You should not agree to produce “all responsive documents” in response to one of those categories.
Instead, take a careful, request-specific approach. For each request, consider on a holistic level what the plaintiff is likely really after, and try to shape a commitment that covers the plaintiff’s interest and that is doable for the client. Often, committing to produce documents in categories that cover what the plaintiff seems to be after and shaped in such a way that it is actually doable for the company can satisfy plaintiff’s counsel, and puts you and your client in a position to actually conduct the diligent search required to find the documents.
When crafting your responses and assembling your productions, you should consider two other principles:
1. It can be difficult to avoid producing documents in the defendant’s possession that concern the named plaintiff or plaintiffs. These are essentially the plaintiff-specific documents that would likely be produced in a vanilla individual case.
2. In shaping your commitment, give some thought to the arguments you expect to make to oppose class certification. You may want to use certain documents in support of your opposition, in which case ideally you would have produced them in advance, and you may want to make certain arguments as to why the plaintiff has not satisfied Rule 23. But if (hypothetically) you argue a class cannot be certified for reason X, and you refused to provide documents to the plaintiff about reason X, it can undermine the viability of your argument. (You do not have an obligation to produce documents that the plaintiff has not requested simply because you intend to use those documents in support of an argument. But you will be criticized if you use a document from a category you refused to produce in response to a reasonable document request.) This is not to say you have to commit to produce documents supporting any class-certification defense you might have—if faced with that request, object on the ground that it is premature and improperly requires you to disclose your work product—but this guiding principle ought to be remembered when committing to produce documents in response to a plaintiff’s substantive document requests. (This principle is equally applicable, if not more so, in responding to interrogatories and requests for admissions.)
What about depositions? Who should be deposed?
For both sides, the key to determining who should be deposed is the nature of the case and each relevant participant’s relationship to that side. A participant can be hostile, neutral, or friendly. A friendly participant will almost certainly be willing to submit a helpful declaration if asked; in contrast, neutral and hostile parties won’t.
Deciding whose depositions to take, then, requires some strategic thought about the class-certification motion:
1. Who is likely to have relevant information about the named plaintiff’s (or plaintiffs’) experiences?
2. Who will the other side likely offer declarations from in support of its position vis-à-vis class certification?
3. Of the people you identified in response to questions 1 and 2, are those people likely to know only about class-certification issues or about both class-certification issues and the merits?
What does the named plaintiff need to understand about the defendant to make a good showing under Rule 23? (This one really only matters if you represent the plaintiff.)
Generally stated, anyone you identify through this process should be deposed. There are exceptions. Parties are limited to taking 10 depositions per side and to taking someone’s deposition no more than one time. See Fed. R. Civ. P. 30(a)(2)(A)(i)–(ii). (The parties can propose a different number in connection with proposing a discovery plan to the court at the initial Rule 16 conference, and a party can always seek court approval to take someone’s deposition a second time.)
If you have more than 10 people on your list, then, you should decide if any of those 10 people can be safely skipped. If not, consider approaching the other side to stipulate to additional depositions or requesting leave of the court.
If you conclude that a potential deponent is knowledgeable about both class certification and merits issues, you need to ask yourself questions:
• Am I in a position to depose that person on both class-certification and merits issues now?
• How important is this person’s likely testimony to class-certification issues? How important to merits issues?
Answering those questions help you decide if a particular person should be deposed now, or not.
Keywords: litigation, class actions, derivative suits, discovery, depositions
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