Consumer class actions require substantial time and resources. And, success requires class counsel to contend with a number of procedural and substantive hurdles. Anticipating some common challenges ahead of time can assist in streamlining your path to success.
One of the biggest impediments to a consumer class actions is the arbitration clause accompanied by a class-action ban or waiver. Determining if your client’s contract contains one should be your first task. Many consumer contracts are available online, so you can easily look it up during your first meeting or phone call. Also, be sure to stay apprised of the evolving legal landscape on this issue, because the Consumer Financial Protection Bureau (CFPB) recently proposed a rule prohibiting arbitration agreements and class-action waivers in consumer contracts for a broad array of financial products and services.
Choice of Law and Venue
If the contract doesn’t contain an arbitration clause, you should next look to see if it limits where your client can file suit or specifies that another state’s law will control. A choice-of-law provision can often help a plaintiffs’ argument that uniform legal issues exist, as all issues will be decided under the law required in the contract.
Pre-Suit Notice Requirements
Pre-suit notice requirements often arise in consumer contract disputes, so be sure to thoroughly investigate all conditions precedent to filing suit. California law, for example, requires pre-suit notice for breach of warranty, Consumer Legal Remedies Act, and breach-of-contract claims. Statutes can require that notice be (i) tendered a certain number of days before filing a complaint, (ii) delivered via a particular method of service or to a particular person or entity, and/or (iii) asserted on behalf of the individual plaintiff and/or the prospective class. The existence and sufficiency of your notice must then be detailed in your complaint. Failure to comply with both timing, content, and pleading requirements of pre-suit notice may be fatal to your claim.
Understanding local rules is integral in any case, but is particularly sensitive in class actions given that the class action device is essentially a procedural mechanism. Not all jurisdictions treat class actions the same. For example, the Central District of California generally requires that a motion for class certification be filed within 90 days after serving the complaint unless otherwise ordered by the court. Failure to comply with this requirement can be fatal to your claim, so be sure to file or request an extension early in the litigation process to avoid dismissal.
Client Solicitation and Social Media
When soliciting clients through different media outlets, be sure to understand the relevant ethical rules. If your communications are limited to a specific jurisdiction, such as through a local newspaper, you may only be required to be compliant with that state’s ethical rules. However, if you solicit through a website, such as Facebook, you are required to comply with the ethical rules in each jurisdiction that the website reaches. Also, if you have already filed a complaint, your solicitation communications may be affected by rules governing attorney-client communications, confidentiality, and pretrial publicity.
Additionally, because class actions involve a lot of people in the same situation as your client, your client may want to share information about the potential class action. During your first conversation with your prospective clients, speak with them about the importance of keeping your conversations confidential and not posting anything on social media about your conversations, the case, the defendant, or the underlying purchase or situation.
Class actions are costly and time-consuming, so consider teaming with other firms. However, anticipate the scope of the desired relationship and vet potential firms on that basis. If you are looking for a firm with substantial resources, will you have to sacrifice a substantial amount of litigation control? If you are looking for a firm with a specific practice area, will you need to bear the brunt of the costs? Co-counsel arrangements can involve a delicate balance of time, money, and resources so you really want to do your research before agreeing to work with another firm. While firms sometimes will suggest a preset-percentage approach to fee shifting, check your state’s ethical rules to see if they require that time be split using a pro rataapproach, which more accurately reflects the work performed by each firm.
Audra Petrolle is an associate with Rose Law Group in Phoenix, Arizona.