Tuesday, June 26, 2012
I am following up on Alexandra's post on the Supreme Court's recent grants of certiorari in class action cases. As Alexandra points out, the Court is going to review two cases that address whether the plaintiffs have to prove the merits to obtain class certification. I just wrote an article, Proof of Classwide Injury, that addresses this very issue, and the article is about to be published very shortly. Here is the a link to a previous draft on SSRN and the abstract:
Federal courts have recently required proof of classwide injury to certify a class action for monetary remedies. Proof of classwide injury is defined as proof, which is common to the class, that the defendant's unlawful conduct injured every member of the class. This article argues that the requirement of proof of classwide injury arises from three fallacies about the class action. The first fallacy, the "all at once" fallacy, presumes that all issues in a class action must be determined in one fell swoop. I argue that the class action is not an "all at once" trial device but a trust device that entrusts the claims to class attorney so that he or she can make optimal investments on common issues. Thus, a class action can incorporate multiple trials, or even individualized trials. The second fallacy, the "extraordinary remedy" fallacy, analogizes the class action to extraordinary remedies like the preliminary injunction. Thus, proof of classwide injury is required because it allows a court to determine the plaintiffs' likelihood of success of the merits. However, in litigation involving numerous plaintiffs, the defendant can exploit economies of scale to invest in common issues that the plaintiffs cannot utilize in the absence of the class action. Thus, class certification is required before a merits determination, not after. The third fallacy, the "individualist" fallacy, presumes that individual trials as to each plaintiff's injury are required in the absence of proof of classwide injury to avoid compensating uninjured plaintiffs. I argue that individual trials will not necessarily result in more accuracy, and, more importantly, such accuracy is of secondary importance given the deterrence function of the litigation, which only requires an accurate determination of the defendant's aggregate liability. The article concludes that class certification only requires common questions concerning liability, not common answers as to individual injury. It also suggests factors other jurisdictions should consider in adopting, designing, and implementing similar collective procedures.
Monday, June 25, 2012
For those feeling this term lacked excitement because there were not any class action cases, the Supreme Court has recently granted cert on two cases that address the question of class certification and the merits and another case considering the role of class representative.
The question presented in Comcast Corp. v. Behrend (No. 11-864) is whether a district court may certify a class action without resolving whether the plaintiff class has introduced admissible evidence, including expert testimony, to show that the class is susceptible to awarding damages on a class-wide basis?
The question presented in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds (No. 11-1085) is (1) whether in a misrepresentation case under SEC Rule 10b-5 the district court must require proof of materiality before certifying a class based on the fraud on the market theory and (2) whether in such a case the district court must allow the defendant to present evidence to rebut the applicability of the fraud on the market theory before certifying on that theory.
Followers of the class action docket will recall that in the banner 2010 term in which the court decided Wal-Mart v. Dukes, the Court also held in Erica P. John Fund Inc. v. Halliburton, 131 S.Ct. 2179 (2011) that plaintiffs in a securities class action need not prove loss causation at class cert. But hints in the Wal-Mart opinion, particularly Justice Scalia's statement in the majority opinion that Daubert hearings may be appropriate at the class certification stage, indicated that the Halliburton case should not be read broadly. The grant of certiorari in these two cases indicates that the court will consider whether the plaintiff needs to prove his or her case in tandem with the class certification motion.
The Court also granted cert on a third class action case, Genesis Healthcare Corp. v. Symczyk (No. 11-1059), in which it will consider whether a named class representative who was given a Rule 68 offer of judgment before class certification has standing to represent the class that would fully satisfy her individual claim. In other words, should defendants be allowed to pick off class representatives with offers of settlement? This case has echoes of Evans v. Jeff D., 475 U.S. 717 (1986) in which the Court upheld a offer of settlement that gave the civil rights plaintiffs everything they wanted in exchange for a waiver of attorney's fees.
Tuesday, June 19, 2012
Not quite mass torts, but interesting from a complex litigation prespective anyway, so I hope our dear readers will forgive me.
This story concerns the use of the litigation system to intimidate small defendants into settling non-meritorious suits. One of the areas where this has come up is copyright litigation. Gideon Parchomovsky (Penn) and Alex Stein (Cardozo) recently wrote an article about this called the Relational Contingency of Rights (available on SSRN, forthcoming in the Virginia Law Review). The basic observation is an important one: legal rights afford no meaningful protection against challengers who can
litigate more cheaply than the rightholder and who can use this advantage to force the rightholder to give up her entitlement.
It turns out that some able litigants in Israel have taken their ideas and run with them. Unfortunately, the only link I have describing the litigation is in hebrew (here). Basically, an individual who refused to surrender to a pressing settlement demand filed a class action for over $10M against an Israeli company associated with a multinational copyright giant, Getty Images. The claim for the Israeli suit, as far as I can tell, sounds in abuse of process. Is America next? A defendant class action bringing lawsuit harassment claims?